IWS Kumar Cleaners v. The Senior Divisional Commercial Manager Northern Railway

1. The petitioner has filed the present petition under Section 11(6) of the Arbination and Conciliation Act, 1996 for appointnent of an arbitrator.

2. Both the parties had entered and executed an agreernent dated 28tr' August, 2002 with regard to the work for steam cleaning of Linen and dry cleaning of Blankets for Bed Rolls, Public Retiring Room, Main Delhi Station. In view of the tender issued by flre respondent on 15th February, 2002, the clairn of the petitioner is that the petitioner had completed the work to the.tune of {31,85,046/- under the said contact. Bills of the said work were duly raised by the petitioner from time to time. However, the respondent continued deducting the amount of security deposit from the salne. Since the respondent did not release the outstanding amount of <3I,85,0461-, thereforg the petitioner served many communications/ /: a Arb.P.No.485/2012 Page I ofS 2013:DHC:8041 reminders to release the same. Finally, by communications dated 191h Novernber, 2009 and znd December, 2009, the respondent asked the petitioner to attend a negotiation meeting in the charnber of CTM, DRM Office, New Delhi. The same was attended by the petitioner but no final decision with regard to the said meeting was passed nor outstanding amount has been released to the petitioner. Thereafter, the petitioner has been writing various letters for release of the said arnount. However, no palnnent was received. Under the said circurnstances, the petitioner issued a legal notice dated 13tl' February,2091[2] which was duly replied by the respondent on 9tl' March, 2OI[2] and accepted the claim of the petitioner. Howevel the said outstanding amount was not released. Left with no option the petitioner issued a final notice dated 12th April, 2OI[2] invoking clause 15 of the agreernent dated 28th August2002 thereby calling upon the respondent for appoinnnent of sole arbitrator i.e. Divisional Railway Manager, Northern Railway, New Delhi, to adjudicate and decide the dispute with regard to outstanding amount of{3I,85,046/- along with interest thereon and damages and corapensation. Despite of internal correspondence in the deparfinent of the respondent for release of the pending payment of the petitioner no arnount was paid. The petitioner left with no petition has filed the present petition.

3. Notice of thq petition was duly accepted by the counsel on 12th December, 2012. However, no reply to the petition has been filed. Learned counsel for the petitioner has informed the Court that when the petition was listed on 12th December, 2012, the time for reply was taken by the respondent but the respondent on 13th December,.2012 appointed Sh.Vivek Srivastav[4] ADRI\OOp, DRM Office, New Delhi, as the sole arbitator to, J Arb.P.No.485/2012 Page 2 ofS J adjudicate the disputes between the parties. Her submission is that the sole arbifi'ator has been appointed after filing of the present petition which is not permissible in view of the seffled law on this aspect.

4. In Datar Switchgears v. Tata Finance Ltd.' Q000) 8 SCC 151, the Suprerne Court explained as under: *I[9].'So far as cases falliog Under Section 11(6) are concerned, such as the one before us, no time limit has been prescribed under the Act whereas a period of 30 days has been prescribed Under Section 11(4) and Sectionll(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite pary to appoint an arbitrator and the opposite pary does not make an appointnent within 30 days of the demand, the right to appoinfinent does not get automatically forfeited after expry of 30 days. If the opposite party makes an appointnent even after 30 days of the demand, but before the fust parry has moved the Court under Section 11 that would be sufficient. In other words, in cases arising Under Section 11(6), if the opposite party has not made an appointnent within 30 days of demand, the right to make appointnent is not forfeited but continues, but an appointrnent has to be rnade before the former files application Under Section 11 seeking appointnent of an arbinator. Only then the right of the opposite party ceases. V/e do not, therefore, agree with the observation in the above judgments that if the appointnent is not made within 30 days of demand, the right to appoint an arbitrator Under Section 11(6) is forfeited.

20. In the present case the respondent made the appointrnent before the appellant filed the application Under Section 11(6) though it was beyond 30 days from the date of demand. In our view, the appointnent of the arbinator by the respondent is valid and it cannot be said that the right was forfeited after expiry of 30 days from I ! Arb.P.No.485/2012 Page 3 of[5] the date of demand. 2t. We need not decide whether for purposes of Subclauses (4) and (5) of Section 11, which expressly prescribe 30 days, the period of 30 days is mandatory or not." The decision in Datar Switchgears (supra) was further affirmed in Punj Lloyd v. Petronet MHB Ltd., Q006) 2 scc 151.

5. In the case of Slklra Promoters Pvt. Ltd. Vs. Municipal Corporation of Dethi, decided on 17tr' November,2011 in kb.P.No.I06l20I[1] and I.A.No.5815/2011 by S.Muralidhar, J. who has taken the same view after discussing both the decisions referred above as well as Union of India v. Bhurat Battery Manufucturing Co. (P) Ltd., in which case it was held that Section 11(8) of the Act would come to the aid of the appellant therein only if "the appellant appointed the arbitator within 30 days from the date of receipt of request to do so from the respondent or the extended tirne, as the case may be." Since that was not done "the appellants are estopped from making an appoinnnent of the arbitrator in terms of Clause 24 of the agreement after Section 11(6) petition is filed by the respondent. Once Section 11(6) petition is filed before the Court, seeking appointnent of an arbitator, the power to appoint an arbitator in terms of arbination clause of the agreement ceases."

6. In view of the settled law, it is clear that the respondent had forfeited its right to appoint the arbitator after the expry of statutory period' The discretion of appointrnent of sole arbitrator is now left with the Court. Thus, the appoinnnent of ll4r.Vivek Srivastava is not a valid appointnent in accordance with law. The prayer made in the petition is allowed..l Arb.P.No.485/2012 Page 4 ofi L -"/

7. Justice O.P. Dwivedi, (retired) (Mob.9818000320), is appointed as sole Arbitrator to adjudicate the disputes between the parties arising out of the agreement dated 28th Augu st 2002 to be conducted under the aegis of Delhi High Court Arbination Centre. The fees of the Arbinator be also paid under the said Rules.

8. The petition is accordingly disposed of.

9. Copy of this order be communicated to the learned Arbitator as well as the Secretary to the Arbination Cente forthwith. Copies of the same be also given dasti to the leamed counsels for the parties.

JUDGE MARCH 08,2013 I