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2007 DAILYLAW 2634 (DEL)

BHANU CONSTRUCTION COMPANY LIMITED v. POWER GRID CORPORATION OF INDIA LIMITED

2007-10-10

Sanjay Kishan Kaul

body2007
SANJAY KISHAN KAUL, J. ( 1 ) THE plaintiff was awarded a contract for supply of accessories, erection, testing and commissioning of 220/132 KV sub-stations at Birpara, Siliguri and purnea on 7. 7. 1983. The formal contract was executed on 25. 8. 1983 between the plaintiff and defendant No. 1 for a sum of Rs. 279. 83 lakhs. The project was to be completed by May 1984 but defendant No. 1 failed to hand over the sites to the plaintiff and the work could commence only on 05-03-1984. The project was completed in November 1986 but according to the plaintiff there were certain claims liable to be paid to it by defendant No. 1 for having executed some additional work, the details of which were made known to defendant No. 1 by the plaintiff through a letter dated 06-12-1984. Since then a number of requests were made by the plaintiff to make such payment but to no avail. ( 2 ) THE agreement between the parties contained an arbitration clause and on 10-06-1994, the plaintiff through a letter requested defendant no. 1 to refer the dispute to arbitration. Accordingly, the plaintiff invoked the said arbitration clause. The matter of even the appointment of the arbitrator dragged down for a couple of years and finally vide letter dated 3. 6. 1996, Mr. S. K. Sinha, defendant No. 2 was appointed as the arbitrator. ( 3 ) THE present suit has been filed by the plaintiff under Sections 11 and 12 of the Arbitration Act, 1940 (hereinafter referred to as the said Act) for removal of the arbitrator for misconducting the proceedings on account of various aspects as set out in the plaint. ( 4 ) DEFENDANT No. 1 entered appearance on 10. 4. 1997 and took eight (8) weeks time to file reply. No reply was filed. None appeared for defendant No. 1 on 9. 12. 1997 and defendant No. 1 was proceeded ex parte. There has been no appearance thereafter also on behalf of defendant No. 1. In the meantime, defendant No. 2 informed the plaintiff regarding the change of venue for arbitration from Patna to Calcutta due to the transfer of the Sole Arbitrator. The plaintiff has filed the affidavit of evidence of Mr. B. V. Rao, Managing director of the plaintiff. There has been no appearance thereafter also on behalf of defendant No. 1. In the meantime, defendant No. 2 informed the plaintiff regarding the change of venue for arbitration from Patna to Calcutta due to the transfer of the Sole Arbitrator. The plaintiff has filed the affidavit of evidence of Mr. B. V. Rao, Managing director of the plaintiff. ( 5 ) A large part of the pleadings and the affidavit contained the disputes on merits between the parties, which need not be referred to since that is not an aspect to be considered by this Court. ( 6 ) LEARNED counsel for the plaintiff states that apart from any other reason, the prolongation and the change in the place of hearing of the arbitration itself would give a cause for replacement of the arbitrator under the said Act. Learned counsel has referred to the fact that the arbitrator was appointed on 3. 6. 1996 and the first hearing was held on 10. 4. 1997 after about ten (10)months. The proceedings were held at Patna and a request was made to shift the venue of proceedings to Delhi since the head office of defendant No. 1 at the relevant stage was at Delhi and though the plaintiff has its office at hyderabad, it was willing to come to Delhi as there were other arbitrations also going on at Delhi. ( 7 ) THE matter, however, proceeded at Patna but thereafter the venue was shifted to Kolkata owing to the transfer of the sole arbitrator to the said place. It is the case of the plaintiff that in such an eventuality the arbitrator ought to have demitted the office and a fresh arbitrator should have been appointed, which did not happen. ( 8 ) A list of proceedings held before the arbitrator show that undoubtedly there have been requests for adjournments on both sides, at the same time, it is also apparent that dates are being fixed by the arbitrator after months together. In my considered view, the whole object of providing for alternate dispute resolution through arbitration is to have expeditious resolution of the disputes and this very fundamental principle is defeated if the arbitration drags on for years together and dates are fixed after months. In my considered view, the whole object of providing for alternate dispute resolution through arbitration is to have expeditious resolution of the disputes and this very fundamental principle is defeated if the arbitration drags on for years together and dates are fixed after months. ( 9 ) DEFENDANT No. 1 has not appeared to contest the matter and in my considered view the aforesaid facts itself is sufficient to appoint a new arbitrator. ( 10 ) IN view of the aforesaid, the petition is allowed and Lt. Gen. D. P. Sehgal, avsm (Retd.), Member of TDSAT (Retd.), 708, Sector-23, Gurgaon (Mobile no. 9999255555) is appointed as the sole arbitrator to enter upon reference and adjudicate the disputes between the parties. ( 11 ) THE sitting fee of the arbitrator will be fixed by the arbitrator himself but subject to a maximum fee tentatively fixed at Rs. 1. 50 lakh apart from out of pocket expenses to be shared equally by the plaintiff and defendant No. 1. ( 12 ) THE records be remitted by defendant No. 2 to the new arbitrator for commencement of proceedings afresh.