M/S Durga Welding Works vs Chief Engineer Railway … on 4 January, 2022

caselaws

Supreme Court of India
M/S Durga Welding Works vs Chief Engineer Railway … on 4 January, 2022Author: Ajay Rastogi

Bench: Ajay Rastogi, Abhay S. Oka

NON­REPORTABLE
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S).54 OF 2022
(Arising out of SLP(Civil) No(s). 28682 of 2019)

M/S. DURGA WELDING WORKS ….APPELLANT(S)

VERSUS

CHIEF ENGINEER, RAILWAY
ELECTRIFICATION, ALLAHABAD & ANR. …..RESPONDENT(S)

JUDGMENT

Rastogi, J.

1. Leave granted.

2. The instant appeal has been filed assailing the order dated 26 th

July, 2019 declining to appoint an Arbitrator in exercise of its
Signature Not Verified

Digitally signed by
Indu Marwah
Date: 2022.01.05
10:34:03 IST
Reason:

1
power under Section 11(6) of the Arbitration and Conciliation Act,

1996(hereinafter being referred to as “the Act”).

3. The seminal facts not in dispute are that the tender of the

appellant was accepted and the same was communicated by letter

dated 30th November, 2006 in reference to which a contract

agreement was executed between the parties containing clauses 63

and 64 of the general conditions of contract containing the clause of

arbitration for settlement of claims and/or disputes between the

parties. Since there were claims which could not be settled, the

appellant served a legal notice dated 3rd August, 2009 for

appointment of an Arbitrator and for settlement of claims.

Although, there was no express reference made of clauses 63 and

64 in the notice, but the pith and substance of the notice dated 3 rd

August, 2009 was for settlement of disputes through the process of

arbitration in terms of the clause of arbitration under general

conditions of agreement which is a part of the contract agreement

executed between the parties.

4. It is not disputed that the notice dated 3 rd August, 2009 was

duly served upon the respondents. It is alleged that since the

2
respondents failed to appoint an arbitrator pursuant to notice dated

3rd August 2009, Arbitration Petition(ARBP No. 61 of 2009) came to

be filed on 23rd October, 2009 in the High Court of Orissa for

appointment of an Arbitrator under Section 11(6) of the Act.

5. It reveals from the record that just after filing of the arbitration

petition, the appellant has completely forgotten of taking action in

furtherance thereto and it was never in notice of the respondents of

such petition being filed since no notice was served at any stage.

6. In the meanwhile, the respondents vide letter dated 28 th

January, 2010, in response to the letter of the appellant dated 3 rd

August, 2009 asked the appellant to select two names from a panel

of four persons.

7. It is alleged that immediately thereafter, on 17 th February

2010, Miscellaneous Case No. 4 of 2010 was filed in Arbitration

Petition No. 61 of 2009 seeking an order restraining the

respondents from appointing an Arbitrator and that application too

remained pending and no action was taken up by the appellant to

pursue either the Arbitration Petition No. 61 of 2009 or the

Miscellaneous Case No. 4 of 2010 before the High Court.
3
8. In the meanwhile, by letter dated 28 th August 2010, two

officers from the panel suggested by the respondents were selected

by the appellant and in furtherance thereto, the respondents

constituted an Arbitration Tribunal by letter dated 24 th September,

2010. The appellant thereafter appeared before the Arbitral

Tribunal on 25th October, 2010 and preferred statement of claim.

The respondents also submitted their statement of defence on 15 th

November, 2010.

9. The appellant thereafter appeared before the Arbitral Tribunal

on 27th December, 2011 and submitted an application that the

Tribunal has not been nominated within the stipulated time and

hence, the constitution of the Arbitral Tribunal is not valid and

further submitted that the Tribunal should not proceed with the

arbitration proceedings. The fact still remains that the arbitration

petition filed by the appellant on 23rd October, 2009 has not seen

the light of the day except the fact that it was filed in the Registry of

the High Court.

10. Since the Arbitral Tribunal was constituted, with consent of

the appellant, the Tribunal proceeded with the arbitration

4
proceedings and since the appellant failed to participate despite the

opportunity being afforded, ex­parte award came to be passed on

21st June, 2013 rejecting the claim of the appellant. The fact is that

finally in the arbitration petition filed by the appellant, notices were

issued to the respondents by the High Court in the year 2016,

almost 3 years after passing of the ex­parte award dated 21 st June,

2013. The High Court, taking note of such peculiar facts and

circumstances, dismissed the arbitration petition by an Order dated

26th July, 2019 with liberty to the appellant to submit its objections

under Section 34 or 37 of the Act, if so advised.

11. We have heard learned counsel for the parties and with their

assistance perused the material available on record.

12. The exposition of legal principles is indeed well settled by this

Court in Datar Switchgears Ltd. Vs. Tata Finance Ltd. & Anr. 1

followed in Punj Lloyd Ltd. Vs. Petronet MHB Ltd.2 that once an

application under Section 11(6) of the Act has been filed for

appointment of an Arbitrator before the High Court, the

respondents forfeited their right to appoint an Arbitrator and the
1 2000(8) SCC 151
2 2006(2) SCC 638
5
High Court alone holds jurisdiction to appoint an Arbitrator in

exercise of power under Section 11(6) of the Act. Indisputedly, the

appointment of an Arbitrator was made by the respondents after

arbitration petition was filed by the appellant under Section 11(6) of

the Act in the Registry of the High Court on 23rd October, 2009.

13. This Court cannot be oblivious of the peculiar facts and

circumstances brought to our notice that after filing of an

arbitration petition on 23rd October 2009 in the Registry of the High

Court, the appellant completely slept over the matter and the

respondents were never served of any notice of the Arbitration

Petition (ARBP No. 61 of 2009) filed before the High Court of Orissa.

At the given time, when the respondents called upon the appellant

to suggest and select two names out of the panel of four for

constitution of the Arbitral Tribunal, the appellant vide letter dated

28th August, 2010 selected two officers from the panel suggested by

the respondents. Pursuant thereto, the Arbitral Tribunal was

constituted by the respondents vide letter dated 24 th September,

2010 and the appellant thereafter appeared before the Arbitral

Tribunal on 25th October, 2010 and submitted his statement of

6
claim and in furtherance, statement of defence was submitted by

the respondents.

14. The fact still remains that except the letter being once sent by

the appellant on 27th December, 2011 informing of the arbitration

petition being filed under Section 11(6) of the Act before the High

Court, no steps were taken thereafter to pursue his arbitration

application and since the appellant had not participated before the

Arbitral Tribunal after filing of the statement of claim, ex­parte

award came to be passed by the Arbitral Tribunal on 21 st June,

2013. It may be noticed that notices were issued for the first time

by the High Court of the arbitration petition filed by the appellant in

the year 2016 almost 3 years after passing of the ex­parte award

dated 21st June, 2013.

15. In the given facts and circumstances, the High Court was not

inclined to exercise its jurisdiction under Section 11(6) of the Act for

appointment of an Arbitrator and dismissed the petition by an

Order dated 26th July, 2019 with liberty to the appellant to submit

objections against the ex­parte award dated 21st June, 2013 under

Section 34 or 37 of the Act, if so advised.

7
16. In our considered view, so far as the question of law is

concerned, certainly being settled that after the application has

been filed for appointment of an Arbitrator under Section 11(6) of

the Act, before the High Court the respondents forfeited their right

to appoint an Arbitrator under the clause of arbitration thereafter

but from the narration of facts which has been noticed by us, we

are of the view that no error was committed by the High Court in

dismissing the petition filed under Section 11(6) of the Act for

appointment of an Arbitrator by an Order dated 26 th July, 2019.

17. Consequently, the appeal fails and accordingly dismissed.

18. Pending application(s), if any, stand disposed of.

……………………………..J.
(AJAY RASTOGI)

…………………………….J.
(ABHAY S. OKA)
NEW DELHI
JANUARY 04, 2022

8