S.B.MAJMUDAR - (1.) LEAVE granted in all these appeals.
(2.) BY consent of parties, these appeals were heard together as they arise out of a common judgment passed by the Division Bench of the High Court in original side appeals as well as out of identical orders passed in review petitions arising from the same common judgment. A few relevant facts leading to these appeals are required to be noted at the outset. BACKGROUND FACTS : The common appellant is a contractor and common respondents are the Konkan Railway Corporation and its officers. The contractor entered into four contracts for executing the work of the respondent No. 1 corporation, which had issued an advertisement inviting tenders for the construction of the "Mangalore-Udupi New Broad Gauge Railway Line Earthwork" and for other ancillary works. Four different contracts were entered into by the appellant-contractor with the respondent-corporation in connection with the laying of the aforesaid broad gauge railway line. It is not in dispute between the parties that the contractor did proceed with the work for some time, but ultimately all the four contracts giving rise to these appeals were terminated by the respondent-authorities. We are not concerned with the merits or demerits of the said exercise undertaken by the respondent-authorities in the present proceedings at this stage. All these contracts were terminated in the first half of the year 1992. It has to be noted at this stage that these contracts were entered into by the appellant-contractor with the respondent-authorities in the closing months of the year 1990. After the said termination of contracts and handing over the incomplete work of the contracts by the respondent-authorities to other contractors, the appellant-contractor raised certain disputes arising out of the working of the said contracts in the closing months of the year 1994. It has also to be noted that, by that time, no final bills were prepared by the respondent-authorities in connection with the work actually done by the appellant-contractor under these four contracts. It is the case of the appellant-contractor that despite the raising of these disputes which were not favourably responded to by the respondent-authorities, when the appellant-contractor demanded reference to arbitration pursuant to the terms of the contractual agreement, the respondent-authorities did not comply with the said demand and, on the contrary, wrongly rejected the claims put forward by the appellant-contractor and did not refer the disputes for adjudication by the arbitrators as laid down by the terms of the contracts. A s the respondent-authorities did not comply with the procedure for appointment of arbitrators for resolving these disputes, the appellant-contractor moved the High Court of Bombay on its original side under Section 8 read with Section 20 of the Indian ARBITRATION AND CONCILIATION ACT, 1940 (hereinafter referred to as 'the Act'). After hearing the parties, the learned single Judge of the High Court directed the respondent-authorities to comply with the procedure of appointment of arbitrators as per the contracts agreed to between the parties. However, the learned Judge did not accept the further prayer of the appellant-contractor that arbitration should be entrusted to independent arbitrators as the respondent-authorities had failed to carry out their contractual obligations under the contracts by appointing arbitrators as per the said provisions. Identical directions issued in all the four suits by the learned single Judge to the respondent-authorities to refer the disputes for appointment of arbitrators as per the terms of the contract after following the machinery provided therein, were accepted by the respondent-authorities by not challenging the said Orders partially granting the prayers of the appellant. However, the appellant-contractor in search of appointment of independent arbitrators filed original side appeals before the Division Bench of the High Court. The Division Bench of the High Court, mainly relying on additional affidavit filed by the respondent-authorities in appeals, took the view that the appellant-contractor had not followed the gamut of the procedure regarding raising of demand for reference to arbitration as per clause 63.1.1 of the contract and, therefore, it could not be said that the respondent-authorities have forfeited their right to refer the disputes to the arbitrators as laid down by the relevant clauses of the said contracts and, hence, the directions issued by the learned single Judge for referring the disputes and differences which are arbitrable under the arbitration agreement for adjudication and consequently directing the Chairman-cum-Managing Director of the respondent-authorities to nominate arbitrators within six weeks as per the relevant clause of the contracts, were confirmed by the Division Bench of the High Court and the appeals of the appellant-contractor were dismissed. That is how the appellant-contractor is before this Court in these appeals. RIVAL CONTENTIONS : Learned senior counsel for the appellant-contractor, Shri Dave, vehemently contended that on the facts of the present four cases, the High Court ought to have held that the appellant-contractor had followed the procedure laid down by clause 62 read with Clause 63.1.1 of the contract and had raised appropriate demands with the respondent-authorities for referring the disputes to arbitration and as the respondent-authorities, instead of responding to the said demands and following the procedure laid down by the contractual terms, have rejected the claims on merits, there was no option left for the appellant-contractor but to approach the Court under Section 8 read with Section 20 of the Act. That as the respondent-authorities have failed to comply with the procedure laid down for resolution of disputes through arbitration as per the contract, it was open to the Court to appoint independent arbitrators as requested by the appellant-contractor. Instead, the Court wrongly relegated the appellant-contractor to the procedure of arbitration under the contracts. That the respondent-authorities, in this connection, had missed the bus and it was not open to them to once again fall back upon the machinery of arbitration under the contract, having earlier failed to discharge their contractual obligations in this connection at the relevant time. The appellant-contractor was driven to file proceedings in the Court for no fault of his. It was, therefore, submitted that the Court may appoint a retired Chief Justice or retired Judge of the Supreme Court stationed at Bombay to adjudicate the disputes in these present cases. That the appellant-contractor will have no objection to the respondent-authorities appointing two arbitrators as per the terms of the contract, but the retired Chief Justice or retired Judge of the Supreme Court may be appointed as Chairman of the arbitration board, thus comprising of three arbitrators. In support of these contentions, various decisions were pressed in service.
(3.) SHRI Dave, learned senior counsel for the appellant-contractor, also pointed out that when the appellant-contractor filed suit before the High Court invoking Section 8 and Section 20 of the Act, it was clearly averred in the plaints in all the four cases that the appellant-contractor had followed the procedure laid down by clauses 62 and 63 of the contract and as the respondent-authorities have failed to comply with his demand for appointment of arbitrators as laid down therein, independent arbitrators had to be appointed by the Court. That in their written statements no grounds were raised by the respondent-authorities before the trial Court, to the effect that the appellant-contractor had failed to follow the procedure of clause 63.1.1 of the contract and, therefore, there was no occasion for the respondent-authorities to comply with the procedure laid down by the said clause on their part. Hence, it was not open to the respondent-authorities, for the first time in appeal by way of further affidavits, to make a somersault and to raise such a new point which was accepted by the Division Bench and that too without giving any opportunity to the appellant-contractor to file an affidavit in reply in this connection. That the objection regarding the alleged non-compliance with the time schedule by the appellant-contractor as per clause 63.1.1 of the contract was clearly waived by the respondent-authorities. Under these circumstances, the Division Bench was in error in dismissing the appeals on this ground. SHRI Dave, learned senior Counsel for the appellant-contractor, however, fairly stated that as the disputes are lingering since years, it is high time that these disputes are resolved at the earliest by the arbitrators and, therefore, he does not press for any remand to the High Court and that this Court may decide his grievance regarding non-appointment of independent arbitrators in the present proceedings in the light of the admitted well established facts emerging from the documentary evidence on record and may pass appropriate orders in this connection. Dr. Singhvi, learned senior counsel for the respondent-authorities, on the other hand, submitted that the correspondence between the parties which has been brought on record and which is tabled by him by way of a chart in connection with all these four cases, and on which there is no dispute between the parties, clearly indicates that the appellant-contractor had not followed the procedure laid down by clause 63.1.1 of the contracts and consequently, there was no occasion for the appellant-contractor to contend with any emphasis that the respondent-authorities, in their own turn, had failed to comply with their statutory obligations under the said clauses and as the respondent-authorities have already accepted the Order of the learned single Judge for referring the disputes to arbitration by following the machinery provided in the contracts, it is too late in the day for the appellant-contractor to contend that the respondent-authorities were guilty of breach of the machinery provisions regarding appointment of arbitrators as laid down in the contracts and, therefore, it was open to the Court to appoint independent arbitrators for resolving these disputes between the parties. He also submitted that in the light of the arbitration agreement binding between the parties Section 8(1) of the Act did not apply, as arbitrators were not to be appointed by consent of parties but were to be appointed by the Chairman-cum-Managing Director after following the procedure laid down in the contracts and equally there was no occasion for the Court to exercise powers under Section 20(4) of the Act as it could not be said that the respondent-authorities, on the facts of these cases, have failed to discharge their obligations under the clauses pertaining to appointment of arbitrators, and hence, all that could be directed by the High Court is to call upon the respondent-authorities to appoint arbitrators as laid down under the relevant clauses of the contract governing the procedure for appointment of arbitrators. That such directions are given by the High Court and which are acceptable to the respondent-authorities.;