- (1.) Both these appeals have been filed by the State of Rajasthan through Executive Engineer, Public Works Department, Division Baran, District Baran challenging the orders dated 30th January, 2010 passed by the District & Sessions Judge, Baran (hereinafter referred to as 'the lower court') in Civil Misc. Case No.51/09 and 35/03 respectively.
(2.) The short facts giving rise to these two appeals may be narrated as under: (i) The appellant had issued NIT for the construction of link road of Bilasgarh District Baran. The bid of the respondent No.1 M/s. Parmanand Contractor being the lowest one, an agreement bearing No. 29/97-98 was entered into between the appellant and respondent No.1. The respondent No.1 was also issued the work order for the construction of the road, however, according to the appellant, the work was not completed by the respondent No.1 within the stipulated time limit of 15 months from the date of commencement. As against that, according to the respondent No.1, the work could not be completed due to various hindrances created by the appellant and due to the extra additional work which the appellant had directed to carry out. Thus, the differences and disputes arose between the parties and on 30th March, 2000 the respondent No.1 made an application, invoking Arbitration Clause No. 23 of the agreement, for referring the disputes to the Standing Committee. The said application remained pending with the appellant. According to the respondent No.1 he had sent various reminders but the appellant did not refer the dispute to the Standing Committee. (ii) Ultimately, the respondent No.1 moved an application under Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the said Act') for the appointment of the sole arbitrator before the High Court. The said application was registered as SBCMA (Arbitration) No. 11/02. This court vide order dated 10.5.02 appointed Shri C.B. Lokwani, (Retd. Addl. Chief Engineer, Irrigation Department, Baran) as the sole arbitrator to adjudicate upon and decide the disputes between the parties. The said order was passed after hearing the learned counsels for the parties and following observations were made in the said order :- "Notice for appointment of the Arbitrator in terms of Clause 23 of the agreement alongwith the cheque dated 31.3.2000 was given by the applicant on 30.3.2000. Mr. Hanuman Choudhary submits this cheque was immediately encashed, may be in April,2002. Despite this the Engineer-incharge did not refer the dispute to the Committee for arbitration. Thereafter, this application was filed on 6.11.2001. Even if it is taken that the Engineer-incharge has referred the dispute to the Committee after the filing this application, it is clear that the respondents lost the right to refer the dispute to the Committee for arbitration in view of the law laid down by the Supreme Court in the case of Datar Switchgears Ltd. vs. Tata Finance Ltd. and another, 2000 3 ArbLR 447. The meeting of the Committee for arbitration was fixed for 5.4.2002 vide notice dated 16.3.2002 i.e. after the expiry of period of 30 days computed from 30.3.2000. Therefore, an independent Arbitrator is required to be appointed." (iii) Pursuant to the said order dated 10.5.02, the sole arbitrator was appointed by the High Court. It appears that during the pendency of the proceedings before the High Court, the counsel for the appellant had referred the dispute between the parties to the Standing Committee and the Standing Committee issued notices to the respondent No.1 contractor but the contractor did not remain present before the said Standing Committee. The said Standing Committee thereafter passed the order dated 10.5.02 rejecting the claims of the respondent-contractor. It is pertinent to note that the Standing Committee passed the order dated 10.5.02, despite the fact that the High Court had appointed the sole arbitrator to adjudicate upon and to decide the disputes between the parties, after hearing the counsels for the parties. (iv) The respondent-contractor therefore being aggrieved by the said order dated 10.5.02 passed by the Standing Committee, filed the objections under Section 34 of the said Act before the lower court which was registered as Civil Misc. Application No. 35/03. The lower court vide the judgment and order dated 30.1.10 allowed the said application and set aside the order dated 10.5.02 passed by the Standing Committee. Being aggrieved by the said order passed by the lower court, the appellant has preferred SBCMA No. 1357/10. (v) It further transpires that pursuant to the appointment of the sole arbitrator by the High Court, the arbitration proceedings had commenced before the said arbitrator, in which the appellant also participated and also submitted their counter-claims. The arbitrator vide award dated 3.9.03 partly allowed the claim of the respondent-contractor to the extent of Rs. 6,50,458/- out of claim of Rs. 22,10,553/-. Being aggrieved by the said award the appellant filed the objection application under Section 34 of the said Act before the lower court, which was registered as Civil Misc. Application No. 51/09. The lower court vide the order dated 20.1.2010 dismissed the said application and confirmed the award made by the arbitrator. Being aggrieved by the said order, the appellant has preferred the SBCMA No. 1358/10.
(3.) It has been sought to be submitted by the learned Dy. Govt. Counsel Mr. Hari Barath, for the appellant in both the appeals that the arbitrator could not have proceeded further while the disputes were referred to the Standing Committee in view of Clause 23 of the agreement and in view of the fact that the Standing Committee had passed the order dated 10.5.02 rejecting the claims of the respondent-contractor. He also submitted that the lower court also could not have entertained the application of the respondent-contractor under Section 34 of the said Act, when the case did not fall under any of the grounds mentioned under Section 34(2) of the said Act. Relying on the decision of the Supreme Court in case of BSNL & Anr. Vs. Dhanurdhar Champatiray, 2010 1 SCC 673, the learned Govt. counsel has submitted that the right of the parties to appoint arbitrator would not automatically cease after the expiry of 30 days of receiving the request to appoint arbitrator from the other party, but will continue till the application under Section 11(6) was filed by the other party. According to him, in the instant case, the High Court should not have appointed the arbitrator as per the order dated 10.5.02 by holding that the appellant had lost the right to refer the dispute to the Standing Committee. The learned Govt. Counsel has also relied upon the judgment of the Supreme Court in case of State of Rajasthan & Anr. Vs. Ferro Concrete Construction Pvt. Ltd., 2009 12 SCC 1to submit that the sole arbitrator appointed by the High Court had committed legal misconduct and error apparent on the face of record by awarding certain claims of the respondent-contractor though there was no evidence adduced by him and therefore, such an award was liable to be set aside under Section 34(2) of the said Act. The Govt. Counsel has also argued that the arbitrator appointed by the High Court was known to the respondents and therefore, he could not be said to be an independent arbitrator.;