Aparesh Kumar Singh, J. - (1.) The applicant has invoked the jurisdiction of Hon'ble the Chief Justice of this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of 2nd Arbitrator in terms of Arbitration Clause 26.3 of the EPC agreement No.SHAJ/PROC/EPC/04 of 2015-16 dated 22nd May, 2015. The petitioner was awarded work for strengthening and widening / reconstruction of Chattarpur-Japla (MDR-127) Road for an estimated value of Rs.115,22,97,900/-. The agreement was executed with the State Highways Authority of Jharkhand established under the State Highways Authority of Jharkhand Act, 2007. The respondents had terminated the agreement on 9th June, 2016 vide letter No.756 alleging breach of contract. Petitioner had approached this Court in writ petition W.P.(C) No.4964 of 2016 being aggrieved by the termination order. In the writ proceedings the respondents were directed to entertain the request for conciliation made by the petitioner in terms of Article 26.2 of the agreement. The respondent, however, declined to allow further extension of time to the petitioner to complete the work as the agency had achieved 3% financial progress in 12 months and had not taken up most critical items. They accordingly refused to accept the revised schedule proposed by the petitioner to complete the work. The writ petitioner thereafter served a notice for appointment of an Arbitrator invoking Clause-26.3 of the agreement through letter dated 26th July, 2017 through their lawyer (Annexure-2 to the present application). On their part they had nominated one Arbitrator Hon'ble Mr. Justice Poonam Srivastava (Retd.), Former Judge of this Court as an Arbitrator and requested the respondent- State Highway Authority, Jharkhand to nominate its Arbitrator so that the two arbitrators may select the third arbitrator to constitute the tribunal in terms of Clause 26.3.2. This request was received by the respondent on 1st August, 2017 as per the statements made at paragraph-19 of the counter-affidavit. The respondents replied thereto vide their letter dated 15th September, 2017 inter alia taking plea of pendency of the writ application. On merits they attributed breach of promise on the part of the contractor petitioner in completing the scheduled work within time. The writ petition was withdrawn on 22nd September, 2017.
(2.) In these background facts, learned senior counsel for the petitioner has pressed the prayer for appointment of the 2nd arbitrator in terms of the arbitration clause agreed between the parties. Clause 26 containing the arbitration clause is quoted hereunder :- Any Dispute which is not resolved amicably by conciliation, as provided in Clause 26.2 shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 26.3.2. Such arbitration shall be held in accordance with the Rules of of the International Centre for Alternative Dispute Resolution, New Delhi (the "Rules") or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Act. The venue of such arbitration shall be Ranchi and the language of arbitration proceedings shall be English. "Dispute Resolution 26.1 Any dispute, difference or controversy of whatever nature howsoever arising under or out of or in relation to this Agreement (including its interpretation) between the parties, and so notified in writing by either Party to the other Party (the "Dispute") shall, in the first instance, be attempted to be resolved amicably in accordance with the conciliation procedure set forth in Clause 26.2. 26.2 The parties agree to use their best efforts for resolving all Disputes arising under or in respect of this Agreement promptly, equitably and in good faith, and further agree to provide each other with reasonable access during normal business hours in all nonprivileged records, information and data pertaining to any dispute. Conciliation In the event of any Dispute between the Parties, either Party may call upon the Authority's Engineer, or such other person as the Parties may mutually agree upon (the "Conciliator") to mediate and assist the Parties in arriving at an amicable settlement thereof. Failing mediation by the Conciliator or without the intervention of the Conciliator, either party may require such Dispute to be referred to the Chairman of the Authority and the Chairman of the Board of Directors of the Contractor for amicable settlement, and upon such reference, the said persons shall meet no later than 7 (seven) business days from the date of reference to discuss and attempt to amicably resolve the Dispute. If such meeting does not take place within 7 (seven) business day period or the Dispute is not amicably settled within 15 (fifteen) days of the meeting or the Dispute is not resolved as evidenced by the signing of written terms of settlement within 30 (thirty) days of the notice in writing referred to in Clause 26-1-1 or such longer period as may be mutually agreed by the Parties, either Party may refer the Dispute to arbitration in accordance with the provisions of Clause 26.3. Arbitration Any Dispute which is not resolved amicably by conciliation, as provided in Clause 26.2 shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 26.3.2. Such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (the "Rules") or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration Act. The venue of such arbitration shall be Ranchi and the language of arbitration proceedings shall be English. 26.3.2 There shall be a Board of three arbitrators, of whom each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules. 26.3.3 The arbitrators shall made a reasoned award (the ' Award). Any Award made in any arbitration held pursuant to this Article 26 shall be final and binding on the Parties as from the date it is made, and the Contractor and the Authority agree and undertake to carry out such Award without delay. 26.3.4 The Contractor and the Authority agree that an Award may be enforced against the Contractor and/or the Authority, as the case may be, and their respective assets wherever situated. 26.3.5 This Agreement and the rights and obligations of the Parties shall remain in full force and effect, pending the Award in any arbitration proceedings hereunder. 26.3.6 In the event the Party against whom the Award has been granted challenges the Award for any reason in a court of law, it shall make an interim payment to the other Party for an amount equal to 75% (seventy five per cent) of the Award, pending final settlement of the Dispute. The aforesaid amount shall be paid forthwith upon furnishing an irrevocable Bank Guarantee for a sum equal to 120% (one hundred and twenty per cent) of the aforesaid amount. Upon final settlement of the Dispute, the aforesaid interim payment shall be adjusted and any balance amount due to be paid or returned, as the case may be, shall be paid or returned with interest calculated at the rate of 10% (ten per cent) per annum from the date of interim payment to the date of final settlement of such balance."
(3.) Though learned counsel for the respondents has also taken a plea that the petitioner has not exhausted the preliminary exercise of conciliation but that plea is not worth acceptance. From the face of the orders passed in the writ petition which are enclosed as Annexure-4 and 5, it is evident that efforts towards conciliation to settle the dispute between the parties were made, but failed. It is, therefore, evident that the ingredients for invoking the jurisdiction of the Hon'ble Chief Justice or his delegate for appointment of an arbitrator under Section 11(6) of the Act of 1996 has been fulfilled: (I) there is an agreement between the parties. The agreement contains a dispute resolution mechanism which provides for arbitration. The arbitral tribunal is to consist of three arbitrators; two to be appointed by the parties and the third to be nominated by the two arbitrators. The dispute relating to breach of promise between the parties resulting in the termination of the agreement is also prima facie made out. The respondents have failed to appoint the 2nd arbitrator in terms of the arbitration clause within a period of 30 days from the date of receipt of the notice i.e. 1st August, 2017. The merits of the dispute cannot be gone into in its proceeding. In such circumstances, the prayer for appointment of the 2nd arbitrator deserves to be allowed.;