Sarkar and Sarkar Vs. State of West Bengal - Court Judgment

Excerpt:
- order1. this is an application u/ ss. 11 and 12 of the arbitration act, 1940 praying for revoking the authority of the chief engineer, irrigation & water-ways directorate as sole arbitrator and for appointment of a fit and proper person to act as arbitrator in his place with like power to act in the reference and to make an award as he had been appointed in accordance with the arbi-tration agreement.the facts may be briefly stated as follows :--in response to an invitation by the respondent-state of west bengal to tender for constructing a linking work of d.b.m.c. for c.h. 769 to c.h. 779.16 the petitioner submitted its tender for the said work and the said tender was accepted by the respondent-state of west bengal by the letter dated 17th march, 1978. the petitioner was asked to complete the work by 30th march, 1979. the said accepted tender contains a clause being clause no. 25 for settlement of dispute relating to any question, claim right, matter or things whatsoever in any way arising out of or relating to the contract for reference to the sole arbitration of the chief engineer of the department of directorate of irrigation of water-ways, government of west bengal or to any arbitrator appointed by him. the petitioner made every attempt to complete the work within the stipulated period but it could not be completed within the said period due to various default on the part of the respondent. with great difficulties the petitioner completed the said work on 12th june, 1980 to the entire satisfaction of the respondent. the petitioner by his letter dated 12th april, 1979 to the executive engineer, m.n.c. division, rampurhat claimed enhancement of tender rate for execution of the work during the extended period as the price of the materials and the rate of labour has been enhanced in the meantime. the petitioner by his letter dated 10th july, 1980 to the said executive engineer lodged his outstanding claim as well as claimed interest at the rate of 18% per annum under the interest act. thereafter, final bill was drawn by the respondent on 25th september, 1980 and the same was paid on 6th june, 1981. as the said final bill did not include all the dues payable to the petitioner, the petitioner by his letter dated 6th june, 1961 to the executive engineer, m.n.c. division, rampurhat stated that the final bill amount was accepted by the petitioner without prejudice to its claim for realisation of his legitimate dues which was not included in his final bill. in the said letter the petitioner made a claim of rs. 3,23,113/- within thirty days from the day of his letter, in default of whichit would be construed that dispute had arisen for which the petitioner would take step for having the dispute referred to arbitration. as no action was taken in terms of the said letter dated 6th june, 1981, the petitioner by his letter darted 17th may, 1984 to the chief engineer, irrigation & water-ways director rate asked him to arbitrate the claim, a list of which was enclosed therewith and to refer the same to arbitration within thirty days from the date of receipt of this letter. it was also indicated in that letter that if no appointment of arbitrator was made within the time specified in that letter, it would be construed that he had accepted the office of the arbitrator in which case he was asked to enter into reference forthwith and in case nothing was heard from him within thirty days from the receipt of this letter the petitioner would file an application on the ground that he, was neglecting and/or refusing to enter into reference. as nothing had been heard from the said chief engineer, the petitioner sent a reminder by the letter dated 8th february, 1989 but the chief engineer neither appointed an arbitrator in terms of clause 25, nor did he himself enter into reference and; has, therefore, failed and/or neglected and/of refused to act as such arbitrator. in the circumstances, it is submitted that the authority of the said chief engineer as arbitrator be revoked by this court and a fit and, proper person be appointed to act as' sole arbitrator in place of the said chief engineer.2. the state of west bengal filed anaffidavit-in-opposition praying for dismissalof the application on the ground that thiscourt has no .jurisdiction to entertain thepresent application as neither the contract nofthe performance of the contract has ariserwithin the jurisdiction of this court. it is alsocontended that the claim of the petitioner ishopelessly barred by limitation and that in thecircumstances there was no necessity forappointing any arbitrator to resolve thealleged dispute and claim. it is also contended,that the chief engineer, irrigation & waterways directorate is a necessary party.3. in course of hearing the petitioner has been directed to serve a notice upon the chief engineer, irrigation & water-ways department and to add him as respondent no. 2 and to serve notice of this application upon the said engineer. thereafter, the petitioner has amended the cause title of the application and has added the chief engineer, irrigation & water-ways directorate as respondent no. 2. the respondent no. 2 has also filed an affidavit-in-opposite in which it is contended that no letter dated 17th may, 1984 addressed to the chief engineer, irregation & waterways directorate is traceable in the records of the office and there is reason to believe that since no such leter was received in the office of the chief engineer, the question of taking any action in the said letter does not arise. it is further contended that since the demand for arbitration was made only through letter dated 8th february, 1989 by contractors, the matter was being examined and before any decision could be taken the petitioner moved this court. he has also adopted the statements made in the affidavit of nabakumar mondal submitted on behalf of the respondent no. i. an affidavit-in-reply has been filed on behalf of the petitioner contesting alt the allegations made by the respondent in their affidavit-in-opposition.4. the first point for decision in this petition as to whether this court has any territorial jurisdiction to entertain the present petition. it is contended on behalf of the .respondents that since the agreement between the petitioner and the state was executed at suri in the district of birbhum and the entire work was execurted at rampurhat sub-division in the district of birbhum then the court in the district of birbhurn has the jurisdiction to entertain the present petition and in support the supreme court decision report in m/s. bakhwater singh balkissan v. union of india reported in : air1988sc1003 has been cited.5. on behalf of the petitioner it is submitted that the petitioner has filed this application for revoking the authority of the chiefengineer, irrigationwater-ways directorate and the office of the said chief engineeris in writers buildings within the jurisdictionof this court and therefore, this court hasterritorial jurisdiction to entertain this petition.6. there is no doubt that the contract was executed at sur and the works under the said contract were also performed in the rampurhat sub-division of the district of birbhum. therefore, the appropriate court in the district of birbhum could entertain such an application. but the office of the chief engineer whose authority is sought to be revoked is situated at writers' buildings within the jurisdiction of this court. therefore, this court has also territorial jurisdiction to entertain the present petition. i would, therefore, hold that this court has territorial jurisdiction to entertain the present petition.7. the second contention raised by the respondent is that the petitioner is guilty of delay of acquiescence, that no reasonable cause has been shown as to why the contractor moved this application on 26-6-90, that the prayer for arbitration through this application is barred by law of limitation, that in any event the contractor cannot come for arbitration to this. court after expiry of period of three years from 6-6-81, that is, the date of acceptance of the final bill and the present application is, therefore, barred under art. 137 of the limitation act, 1963. in support of the above contention the decision of the supreme court reported in : [1988]3scr351 inder singh rakhi v. d.d.a. has been referred to.8. on perusing the above decision i find that this is the decision in which the supreme court has held that in an application u/ s. 20 of the arbitration act art. (37 of the limitation' act is applicable and right to apply accrues for the purpose of 137 when the dispute between the parties arises. in that decision it has also been held that where final bill had not been prepared and the assertion of the claim was made on february 28, 1983 and there was non-payment the cause of action would arise from that date and the application u/ s. 20 having been filed in court in january, 1986, the application was within time.9. this case has no application to the facts of the present case. in this case the petitioner prays for revoking the authority of the arbitrator on the ground that the arbitrator appointed under the agreement had failed and neglected to enter into reference. it is submitted on behalf of the petitioner that the petitioner applied before the chief engineer by his letter dated 17th may, 1984 either to appoint an arbitrator or to enter into reference but he has failed and neglected to do so, that he again issued the reminder dated 8th february, 1989 asking him to appoint an arbitrator but he again failed and neglected either to appoint an arbitrator or to enter into reference himself and that is why he has moved this court for revoking his authority. whether a claim for arbitration would be barred or a not would have to be decided by the arbitrator himself. the application for arbitration before the named arbitrator has to be made within the period of three years from the date on which the cause of action to apply for the same arises. in this case final bill was paid on 6th june, 1981. the petitioner claims that he accepted the same without prejudice and made a claim of rs. 3,23,113/-to the executive engineer by the letter dated 6th june, 1981 and when no attempt was made to make such payment he asked the chief engineer by his letter dated 17-5-84 either to appoint an arbitrator or to enter into reference. if is contended by the petitioner that the chief engineer did nothing then he again wrote to him in february, 1989 but he also did not make any response. the chief engineer has, however, stated in affidavit-in-opposition that the letter dated 17th may, 1984 was not traceable and he presumed that the same was not sent. as to whether such a prayer for reference was made on 17th may, 1984 or not is a matter to be decided by the arbitrator on taking proper evidence. whether the claim is barred by limitation or not is a matter for the arbitrator to decided. therefore, this court should not in this proceeding decide that question the respondent may take such a plea before the arbitrator that the claim is barred by limitation and it will be for the arbitrator to decide that question.10. therefore, we are unable to dismiss this application on the ground that the petitioner's claim is barred by limitation as this court should not enter into that question in this proceeding.11. let me now see whether the petitioner has succeeded in proving that the authority of the chief engineer should be revoked or not. according to the petitioner, the claim for reference was made first on 17th may, 1984. if that story was true then there could be no reason as to why the chief engineer would not either appoint an arbitrator in terms of the arbitration clause to decide that dispute or to assume himself as arbitrator. the respondent no. 2 admits to have received the letter dated 8th february, 1989 asking him to enter into reference. in the affidavit-in-op-position it is contended that after receiving that such latter the respondent no. 2 was considering as to whether the petition of the petitioner would be considered or not but in the meantime the present application has been filed the present application has been filed more than one year after the sending of the letter dated 8th february, 1989, the chief engineer who under the arbitration clause had to appoint an arbitrator did not take any step whatsoever nor did he write to the petitioner dismissing his prayer for reference of the dispute to arbitration. this long silence for more than one year is sufficient to indicate that he failed and neglected either to appoint an arbitratror or to enter into a reference himself. in such a case relying on the decision of our high court reported in : air1980cal86 i am of the view that when within reasonable time the arbitrator did not appoint an arbitrator it should be presumed that he himself wanted to enter into reference but when he did not enter into reference himself after having failed and neglected to appoint an arbitrator there is a clear case in which he has failed and neglected to enter into reference being the sole arbitrator appointed under the agreement and it is fit and proper that his authority should revoked.12. in the result the application is allowed.13. the authority of the chief engineer, irrigation and water-ways directorate is hereby revoked. shri a.c. maitra senior advocate high court 31, ballygunge terrace calcutta 700 029, is appointed an arbitrator in place of the chief engineer to decide the disputes raised by the present petitioner and the arbitrator so appointed shall within four weeks from the date of communication of the said order enter into reference and then proceed with the arbitration strictly in terms of the provision of the arbitration. act. the arbitrator shall get a remuneration of 50 gms. per day and shall also be permitted to appoint a stenographer and his fees as well as the costs of stenographer and other costs of arbitration shall be borne equally by the plaintiff and the respondent no. 1.14. in the circumstances i direct both the parties to bear the respective costs themselves. all parties and the arbitrator shall act upon the signed copy of the operative portion of this judgment. the prayer for stay is made verbally and is rejected.

Judgment:
ORDER

1. This is an application u/ Ss. 11 and 12 of the Arbitration Act, 1940 praying for revoking the authority of the Chief Engineer, Irrigation & Water-ways Directorate as sole Arbitrator and for appointment of a fit and proper person to act as Arbitrator in his place with like power to act in the reference and to make an award as he had been appointed in accordance with the Arbi-tration Agreement.

The facts may be briefly stated as follows :--

In response to an invitation by the respondent-State of West Bengal to tender for constructing a Linking Work of D.B.M.C. for C.H. 769 to C.H. 779.16 the petitioner submitted its tender for the said work and the said tender was accepted by the respondent-State of West Bengal by the letter dated 17th March, 1978. The petitioner was asked to complete the work by 30th March, 1979. The said accepted tender contains a clause being Clause No. 25 for settlement of dispute relating to any question, claim right, matter or things whatsoever in any way arising out of or relating to the contract for reference to the Sole Arbitration of the Chief Engineer of the Department of Directorate of Irrigation of Water-ways, Government of West Bengal or to any arbitrator appointed by him. The petitioner made every attempt to complete the work within the stipulated period but it could not be completed within the said period due to various default on the part of the respondent. With great difficulties the petitioner completed the said work on 12th June, 1980 to the entire satisfaction of the respondent. The petitioner by his letter dated 12th April, 1979 to the Executive Engineer, M.N.C. Division, Rampurhat claimed enhancement of tender rate for execution of the work during the extended period as the price of the materials and the rate of labour has been enhanced in the meantime. The petitioner by his letter dated 10th July, 1980 to the said Executive Engineer lodged his outstanding claim as well as claimed interest at the rate of 18% per annum under the Interest Act. Thereafter, final bill was drawn by the respondent on 25th September, 1980 and the same was paid on 6th June, 1981. As the said final bill did not include all the dues payable to the petitioner, the petitioner by his letter dated 6th June, 1961 to the Executive Engineer, M.N.C. Division, Rampurhat stated that the final bill amount was accepted by the petitioner without prejudice to its claim for realisation of his legitimate dues which was not included in his final bill. In the said letter the petitioner made a claim of Rs. 3,23,113/- within thirty days from the day of his letter, in default of whichit would be construed that dispute had arisen for which the petitioner would take step for having the dispute referred to arbitration. As no action was taken in terms of the said letter dated 6th June, 1981, the petitioner by his letter darted 17th May, 1984 to the Chief Engineer, Irrigation & Water-ways Director rate asked him to arbitrate the claim, a list of which was enclosed therewith and to refer the same to Arbitration within thirty days from the date of receipt of this letter. It was also indicated in that letter that if no appointment of Arbitrator was made within the time specified in that letter, it would be construed that he had accepted the office of the Arbitrator in which case he was asked to enter into reference forthwith and in case nothing was heard from him within thirty days from the receipt of this letter the petitioner would file an application on the ground that he, was neglecting and/or refusing to enter into reference. As nothing had been heard from the said Chief Engineer, the petitioner sent a reminder by the letter dated 8th February, 1989 but the Chief Engineer neither appointed an Arbitrator in terms of Clause 25, nor did he himself enter into reference and; has, therefore, failed and/or neglected and/of refused to act as such Arbitrator. In the circumstances, it is submitted that the authority of the said Chief Engineer as Arbitrator be revoked by this Court and a fit and, proper person be appointed to act as' Sole Arbitrator in place of the said Chief Engineer.

2. The State of West Bengal filed anAffidavit-in-Opposition praying for dismissalof the application on the ground that thisCourt has no .jurisdiction to entertain thepresent application as neither the contract nofthe performance of the contract has ariserwithin the jurisdiction of this Court. It is alsocontended that the claim of the petitioner ishopelessly barred by limitation and that in thecircumstances there was no necessity forappointing any Arbitrator to resolve thealleged dispute and claim. It is also contended,that the Chief Engineer, Irrigation & Waterways Directorate is a necessary party.

3. In course of hearing the petitioner has been directed to serve a notice upon the Chief Engineer, Irrigation & Water-ways Department and to add him as respondent No. 2 and to serve notice of this application upon the said Engineer. Thereafter, the petitioner has amended the cause title of the application and has added the Chief Engineer, Irrigation & Water-ways Directorate as respondent No. 2. The respondent No. 2 has also filed an Affidavit-in-Opposite in which it is contended that no letter dated 17th May, 1984 addressed to the Chief Engineer, Irregation & Waterways Directorate is traceable in the records of the office and there is reason to believe that since no such leter was received in the office of the Chief Engineer, the question of taking any action in the said letter does not arise. It is further contended that since the demand for Arbitration was made only through letter dated 8th February, 1989 by Contractors, the matter was being examined and before any decision could be taken the petitioner moved this Court. He has also adopted the statements made in the affidavit of Nabakumar Mondal submitted on behalf of the respondent No. I. An Affidavit-in-reply has been filed on behalf of the petitioner contesting alt the allegations made by the respondent in their Affidavit-in-Opposition.

4. The first point for decision in this petition as to whether this Court has any territorial jurisdiction to entertain the present petition. It is contended on behalf of the .respondents that since the agreement between the petitioner and the State was executed at Suri in the District of Birbhum and the entire work was execurted at Rampurhat Sub-Division in the District of Birbhum then the Court in the District of Birbhurn has the jurisdiction to entertain the present petition and in support the Supreme Court decision report in M/s. Bakhwater Singh Balkissan v. Union of India reported in : AIR1988SC1003 has been cited.

5. On behalf of the petitioner it is submitted that the petitioner has filed this application for revoking the authority of the ChiefEngineer, IrrigationWater-ways Directorate and the office of the said Chief Engineeris in Writers Buildings within the jurisdictionof this Court and therefore, this Court hasterritorial jurisdiction to entertain this petition.

6. There is no doubt that the contract was executed at Sur and the works under the said contract were also performed in the Rampurhat Sub-Division of the District of Birbhum. Therefore, the appropriate Court in the District of Birbhum could entertain such an application. But the office of the Chief Engineer whose authority is sought to be revoked is situated at Writers' Buildings within the jurisdiction of this Court. Therefore, this Court has also territorial jurisdiction to entertain the present petition. I would, therefore, hold that this Court has territorial jurisdiction to entertain the present petition.

7. The second contention raised by the respondent is that the petitioner is guilty of delay of acquiescence, that no reasonable cause has been shown as to why the Contractor moved this application on 26-6-90, that the prayer for Arbitration through this application is barred by law of limitation, that in any event the Contractor cannot come for Arbitration to this. Court after expiry of period of three years from 6-6-81, that is, the date of acceptance of the final bill and the present application is, therefore, barred under Art. 137 of the Limitation Act, 1963. In support of the above contention the decision of the Supreme Court reported in : [1988]3SCR351 Inder Singh Rakhi v. D.D.A. has been referred to.

8. On perusing the above decision I find that this is the decision in which the Supreme Court has held that in an application u/ S. 20 of the Arbitration Act Art. (37 of the Limitation' Act is applicable and right to apply accrues for the purpose of 137 when the dispute between the parties arises. In that decision it has also been held that where final bill had not been prepared and the assertion of the claim was made on February 28, 1983 and there was non-payment the cause of action would arise from that date and the application u/ S. 20 having been filed in Court in January, 1986, the application was within time.

9. This case has no application to the facts of the present case. In this case the petitioner prays for revoking the authority of the Arbitrator on the ground that the Arbitrator appointed under the agreement had failed and neglected to enter into reference. It is submitted on behalf of the petitioner that the petitioner applied before the Chief Engineer by his letter dated 17th May, 1984 either to appoint an Arbitrator or to enter into reference but he has failed and neglected to do so, that he again issued the reminder dated 8th February, 1989 asking him to appoint an Arbitrator but he again failed and neglected either to appoint an Arbitrator or to enter into reference himself and that is why he has moved this Court for revoking his authority. Whether a claim for Arbitration would be barred or a not would have to be decided by the Arbitrator himself. The application for arbitration before the named Arbitrator has to be made within the period of three years from the date on which the cause of action to apply for the same arises. In this case final bill was paid on 6th June, 1981. The petitioner claims that he accepted the same without prejudice and made a claim of Rs. 3,23,113/-to the Executive Engineer by the letter dated 6th June, 1981 and when no attempt was made to make such payment he asked the Chief Engineer by his letter dated 17-5-84 either to appoint an Arbitrator or to enter into reference. If is contended by the petitioner that the Chief Engineer did nothing then he again wrote to him in February, 1989 but he also did not make any response. The Chief Engineer has, however, stated in Affidavit-in-Opposition that the letter dated 17th May, 1984 was not traceable and he presumed that the same was not sent. As to whether such a prayer for reference was made on 17th May, 1984 or not is a matter to be decided by the Arbitrator on taking proper evidence. Whether the claim is barred by limitation or not is a matter for the Arbitrator to decided. Therefore, this Court should not in this proceeding decide that question The respondent may take such a plea before the arbitrator that the claim is barred by limitation and it will be for the Arbitrator to decide that question.

10. Therefore, we are unable to dismiss this application on the ground that the petitioner's claim is barred by limitation as this Court should not enter into that question in this proceeding.

11. Let me now see whether the petitioner has succeeded in proving that the authority of the Chief Engineer should be revoked or not. According to the petitioner, the claim for reference was made first on 17th May, 1984. If that story was true then there could be no reason as to why the Chief Engineer would not either appoint an arbitrator in terms of the Arbitration clause to decide that dispute or to assume himself as Arbitrator. The respondent No. 2 admits to have received the letter dated 8th February, 1989 asking him to enter into reference. In the Affidavit-in-Op-position it is contended that after receiving that such latter the respondent No. 2 was considering as to whether the petition of the petitioner would be considered or not but in the meantime the present application has been filed The present application has been filed more than one year after the sending of the letter dated 8th February, 1989, The Chief Engineer who under the Arbitration clause had to appoint an Arbitrator did not take any step whatsoever nor did he write to the petitioner dismissing his prayer for reference of the dispute to arbitration. This long silence for more than one year is sufficient to indicate that he failed and neglected either to appoint an Arbitratror or to enter into a reference himself. In such a case relying on the decision of our High Court reported in : AIR1980Cal86 I am of the view that when within reasonable time the Arbitrator did not appoint an Arbitrator it should be presumed that he himself wanted to enter into reference but when he did not enter into reference himself after having failed and neglected to appoint an Arbitrator there is a clear case in which he has failed and neglected to enter into reference being the Sole Arbitrator appointed under the Agreement and it is fit and proper that his authority should revoked.

12. In the result the application is allowed.

13. The authority of the Chief Engineer, Irrigation and Water-ways Directorate is hereby revoked. Shri A.C. Maitra Senior Advocate High Court 31, Ballygunge Terrace Calcutta 700 029, is appointed an Arbitrator in place of the Chief Engineer to decide the disputes raised by the present petitioner and the Arbitrator so appointed shall within four weeks from the date of communication of the said order enter into reference and then proceed with the Arbitration strictly in terms of the provision of the Arbitration. Act. The Arbitrator shall get a remuneration of 50 Gms. per day and shall also be permitted to appoint a stenographer and his fees as well as the costs of stenographer and other costs of Arbitration shall be borne equally by the plaintiff and the respondent No. 1.

14. In the circumstances I direct both the parties to bear the respective costs themselves. All parties and the Arbitrator shall act upon the signed copy of the operative portion of this judgment. The prayer for stay is made verbally and is rejected.