The mere fact that the a criminal case has been registered, in the considered opinion of the Court, cannot act as an embargo on the adjudication of the entitlement of the Petitioners for payment so as to hold up the arbitration proceedings indefinitely. In fact, the arbitration proceedings can be conducted by taking into account the aforesaid issue for decision in addition to such other issues that may legitimately arise.
IN THE SUPREME COURT OF INDIA
Arb. C. (C) No. 13 of 2014
Decided On: 19.01.2015
China Railway Shisiju Gr. Corporation and Ors.
Vs.
New Delhi Municipal Council and Ors.
Vs.
New Delhi Municipal Council and Ors.
Coram:Ranjan Gogoi, J.
Citation:(2015) 16 SCC258
1. By this application Under Section 11(6) of the Arbitration and Conciliation Act, 1996, the Petitioners seek appointment of an Arbitrator to go into the disputes and differences that have arisen with the Respondents from a contract/agreement signed on 9th June, 2008 for "improvement/upgradation of Shivaji Stadium", particularly "construction of Sport Facility Block, Hockey Stadium, Parking, Lifts, etc.". After the said work was awarded to the Petitioner No. 1 by resolution of the Respondent - Municipal Council dated 28th April, 2008, the Petitioner No. 1 claims to have appointed the second Petitioner, an Indian Company as its agent pursuant to Clause 18 of the General Conditions of Contract. It appears that an issue with regard to unauthorized sub-letting of the contract work in favour of the second Petitioner arose which led to a criminal case being registered by the Central Bureau of Investigation (CBI), inter alia, against the first Petitioner. As a sequel to the aforesaid criminal proceeding, the bank account of the first Petitioner was frozen and resultantly the contract was also rescinded and attempts were made to invoke the bank guarantees that were furnished in connection with the work. Be that as it may, what transpires is that though, according to the Petitioner No. 1, the works were executed, payment of substantial amounts are due and are not forthcoming. In the above circumstances, the Petitioner No. 1 had addressed a communication dated 13th December, 2013 to the Chairperson of the New Delhi Municipal Council, invoking the arbitration Clause contained in the Agreement dated 9th June, 2008 (Clause 25), for appointment of an Arbitrator as agreed to by and between the parties in the aforesaid arbitration Clause.
2. As no response has been forthcoming, the present application has been filed.
3. The Respondents have filed their counter and have opposed the claims made by the Petitioners and have also contended that the arbitration proceeding should not commence until the criminal case, instituted by the CBI is finalized.
4. At the hearing today and pursuant to the earlier orders passed by this Court, the Respondent - Council has suggested the names of two arbitrators, who, according to it, should jointly conduct the proceedings "in view of the sensitivity of the case".
5. The facts revealed by the respective pleadings of the parties clearly indicate that disputes and differences have arisen over the entitlement of the Petitioners to receive payment for the work done under the agreement. The mere fact that the a criminal case has been registered, in the considered opinion of the Court, cannot act as an embargo on the adjudication of the entitlement of the Petitioners for payment so as to hold up the arbitration proceedings indefinitely. In fact, the arbitration proceedings can be conducted by taking into account the aforesaid issue for decision in addition to such other issues that may legitimately arise.
6. Admittedly, the arbitration clause (Clause 25) contemplates the conduct of the arbitration proceeding by a sole arbitrator. The Chairperson of the Respondent Council is the Competent Authority under the agreement to make the appointment in terms of the arbitration clause. Though the time fixed under the Agreement for making such appointment was over, yet the Court had permitted the Chairperson to so act. However, the communication placed before the Court on behalf of the Chairperson indicates the names of two arbitrators who, according to the Chairperson, should hold the proceedings jointly. As the said suggestion is plainly contrary to the arbitration clause the Court is of the view that the leave granted to the Chairperson of the Respondent Council to appoint the Arbitrator should be recalled. It is ordered accordingly. Instead, the Court appoints Shri Justice A.K. Patnaik, a former judge of this Court to act as the sole Arbitrator. The terms of appointment of the learned Arbitrator will be mutually settled by the parties in consultation with the learned Arbitrator.
7. Let this order be communicated to the learned Arbitrator so that the arbitration proceedings can commence and conclude as expeditiously as possible. The Arbitration Petition is disposed of accordingly. No costs.
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