Section 11 (6) of the Arbitration Act
Order of the Designated Judge cannot be Challenged
High Court Division :
(Special Original Jurisdiction)
Borhanuddin J } Bangladesh Water
Sardar Md Rashed } Development Board
Jahangir J }â€¦â€¦â€¦â€¦..Petitioner
Judgment } Additional District
July 23rd, 2018 } Judge 6th Court,
} Chittagong and another
Arbitration Act (1 of 2001)
Section 12 (4)
Neither the law nor the contract agreement prescribes any qualification that the arbitrator has to be a different person depending on the nature of the dispute rather from the provision of law it appears that Court has unfettered discretion under Sub-section (4) of Section 12 of the Act in the matter of appointment of an arbitrator after hearing the parties.. .. .... (12)
Panchu Gopal Bose vs Board of Trustees for Port of Calcutta, (1993) 4 SCC 338; Union of India vs DP Singh, AIR 1961 (Patna) 228; You One Engineering and Construction Co. Ltd VS National Highways Authority of India, AIR (2006) SC 3453; Executive Engineer, Prachi Division, Bhubaneswar vs Gangaram Chapolia, AIR 1980 (Orissa) 51; Nagendra Nath Chakrobarty vs State of West Bengal, AJR1987 (Cal) 199 and State of Orissa vs Gokulananda Jena, AIR (2003) SC 4207 ref.
Arobinda Kumar Roy, Advocate-For the Petitioner.
Kamal-ul-Alam with Md Masud Alam Advocates-For the Respondent No. 2
Borhanuddin J : The rule nisi has been issued calling upon the respondents to show cause as to why the order dated 6-4-2016 passed by the learned Additional District Judge, 6th Court, Chittagong, in Arbitration Miscellaneous Case No.1 of 2014 allowing the Miscellaneous Case and appointing third Arbitrator should not be declared to have been done without lawful authority and is of no legal effect and/or pass such other or further order or orders as to this Court may seem fit and proper.
2. Facts relevant for disposal of the rule are that the petitioner herein appointed respondent No.2 construction contractor as per contract agreement and work order dated 18-3-1991; After completion of works respondent No.2 submitted final bill; The petitioner paid the bill in part deducting some items; Respondent No.2 claimed to settle the bill in full but the petitioner did not pay heed; Three committees were formed to settle the claim but yielded no result; The petitioner vide memo dated 31-3-2013 informed respondent No.2 that the claim cannot be considered for acceptance; Then the respondent No.2 as 1st party served notice on 29-4-2013. upon the petitioner for arbitration vide clause 65.2 of the contract agreement informing that the 1st party nominated Mr Md Abdul Quddus an advocate of Chittagong District Bar Association as arbitrator and requested 2nd party- petitioner to appoint arbitrator within 30 days from the date of receipt notice complying provisions of Sub Section 4(b) (c) of Section 12 of the Arbitration Act; In response, petitioner appointed Mr Md Humayun Kabir, a retired Chief Engineer of BWDB as its arbitrator; Both the arbitrators failed to agree regarding appointment of third arbitrator; Due to disagreement, 1st party-respondent filed an application in the court of learned District Judge, Chittagong, under Sub-Section 4(b)(c) of Section 12 of the Arbitration Act praying for appointment of third arbitrator to resolve dispute between the parties in accordance with law proposing three names. The application is registered as Miscellaneous Case No.1 of 2014.
3. The petitioner herein as 2nd party filed written objection denying averments made in the application and contending interning that after completion of construction work 1st party-respondent submitted final bill incorporating some items beyond the contract agreement as such those bills were not paid. Further contending that nature of the arbitration work requires a person having technical knowledge to be appointed as third arbitrator to resolve the dispute and proposed names of three persons, one is a retired Chief Engineer another is a Professor Chittagong University of Engineering and Technology and third one is a retired District and Sessions Judge.
4. After hearing the parties and perusing papers/documents, learned Additional District Judge, 6th Court, Chittagong, appointed Mr Rezaul Karim an Advocate and former President of Chittagong District Bar Association as third arbitrator holding that:
" I hold that it will be proper to appoint a person who has not been proposed by either party and who has legal expertise to explain and decide legal term of the contract".
5. Being aggrieved by and dissatisfied with the order, the 2nd party-petitioner preferred an application before the High Court Division under Article 102(2) (a) (ii) of the Constitution of the People's Republic of Bangladesh and obtained the present rule nisi along with an order of stay.
6. Mr Arobinda Kumar Roy, learned advocate appearing for the petitioner submits that learned Additional District Judge committed an illegality in not considering that nature of construction work requires" technical person to resolve the dispute as such impugned order is liable to be declared illegal and without lawful authority. He also submits that the learned Additional District Judge committed illegality in passing the impugned order appointing an Advocate without considering that dispute between the parties arose out of a highly technical matter which can only be resolved by a person having knowledge about the work as such impugned order is liable to be declared illegal and thus, is of no legal effect. He again submits that impugned order passed by the learned Additional District Judge under Sub-Section 4 of Section 12 of the Arbitration Act attached finality as such the order is amendable in writ jurisdiction. Today at the time of delivering judgment, learned advocate raised the question of limitation regarding arbitration miscellaneous case filed by the 1st party-respondent No. 2 in the Court of learned District Judge and referred the case of Panchu Gopal Bose vs Board of Trustees for Port of Calcutta reported in (1993) 4 SCC 338.
7. On the other hand, Mr Kamal Ul Alam learned advocate appearing for the respondent No. 2 by filing affidavit-in-opposition and supplementary affidavit submits that Arbitration Act, 2001, has not prescribed any qualification for appointment of Arbitrator or Chairman and even the contract agreement executed by the parties does not attribute any qualification for appointment of Arbitrator/Chairman of the Tribunal rather power of the Court to appoint an arbitrator under Sub-Section 4 of Section 12 is unfettered which is not amenable in writ jurisdiction. In this regard learned advocate referred provisions of Section 32 of the Arbitration Act. He also submits that Sections 17, 19 and 43 provides opportunity to either of the party to raise objection in the given circumstances as such the rule is liable to be discharged. He again submits that this rule is not maintainable inasmuch as the petitioner accrued contractual right vide contact agreement executed by the parties regarding settlement of dispute and that right is not a legal right. In support of his submissions, learned advocate referred to the case of Union of India vs DP Singh, reported in AIR 1961 (Patna) 228; the case of You One Engineering and Construction Co. Ltd vs National Highways Authority of India, reported in AIR (2006) SC 3453; the case of Executive Engineer, Prachi Division, Bhubaneswar vs Gangarnm Chapolia, reported in AIR 1980 (Orissa) 51 and the case of Nagendra Nath Chakrabarty vs State of West Bengal, reported in AIR 1987 (Cal) 199.
8. We have perused the application and annexures appended thereof, affidavit in-opposition and supplementary affidavit-in-opposition filed by the respondent No. 2 along with the decisions cited by learned advocates.
9. Admittedly, a dispute arose between the parties regarding final bill submitted by the construction contractor, respondent No. 2 herein, after completion of work. It is also admitted that both the parties agreed to resolve the dispute through arbitration as per contract agreement and accordingly each party appoint one arbitrator but the appointed arbitrators failed to agree on the third arbitrator who shall be the chairman of the arbitral tribunal as per law. In the circumstances, respondent No. 2 herein as petitioner filed an application for appointment of third arbitrator under Section 12 (4) (b) of the Arbitration Act proposing names of three persons to be considered as third arbitrator. The petitioner herein as 2nd party filed written objection proposing names of another three persons to be considered as third arbitrator. Learned Additional District Judge after hearing the parties appointed an Advocate and former President of Chittagong District Bar Association as third arbitrator beyond the list of either parties holding that the appointed person being an advocate has legal expertise to explain and decide legal term of the contract. The petitioner invoked this jurisdiction against the order of learned Additional District Judge on the ground that nature of work is highly technical as such a person having knowledge in the area can resolve the dispute effectively. It is also their contention that since 1st party already appointed an advocate as their arbitrator there is no necessity to appoint another advocate as third arbitrator.
10. On perusal of clause 65 of the Contract agreement dated 18-3-1991 executed by the parties as quoted in the supplementary affidavit-in-opposition it appears that clause 65.1 provides provisions for settlement of dispute. Relevant portion from clause 65.1 is quoted herein under.
"Should the parties (owner and contractor) fail to appoint one Sole Arbitrator, each party shall appoint one Arbitrator and the two Arbitrators so appointed shall appoint a third arbitrator as agreed upon, who shall act as umpire".
11. In order to decide the issue, we may profitably quote Sub-Section 4 of Section 12 of the Arbitration Act, which runs as follows:
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12. Neither the law nor the contract agreement prescribes any qualification that the arbitrator has to be a different person depending on the nature of the dispute rather from the provision of law it appears that Court has unfettered discretion under Sub-Section (4) of Section 12 of the Arbitration Act in the matter of appointment of an arbitrator after hearing the parties. The petitioner raised objection regarding appointment of an advocate as third arbitrator who will act as Chairman of the tribunal since nature of the work demands an arbitrator having technical knowledge. In this regard, we like to quote observation of his lordship passed in the case of Executive Engineer, Prachi Division, Bhubaneswar vs Gangaram Chapolia, reported in AIR 1980 (Orissa) 51:
"If the arbitration work requires some technical knowledge, as urged by the petitioner, even then it cannot be said that the Advocate arbitrator cannot properly perform his job. Advocates, in course of their profession and because of the same, acquire knowledge about men and matters of various natures. Their profession calls upon them to deal with and tackle various types of complicated or technical matters, in many of which they may not have prior learning, knowledge or expertise.
They in such cases consult experts in the line and equip themselves to meet the requirements of the job entrusted to them. Therefore, merely because the claims are in respect of engineering work, or the assessment of the same may require some technical knowledge, it cannot be said that an Advocate' of standing cannot do that work. Moreover, nothing prevents the arbitrator to take the assistance of the services of an engineer or of a technical man of competence so that the arbitrator can take a proper view of the engineering or the technical aspects of the matter, enabling him to make proper assessment of the claims preferred before him. It cannot, therefore, be said that the advocate arbitrator is not qualified to arbitrate this matter."
13. Section 32 of the Arbitration Act, 2001, provides that the Arbitral Tribunal can take assistance from an expert to resolve the dispute in the manner as quoted hereinunder:
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14. Again, Sections 17, 19 and 43 provides opportunity to either of the parties to raise their objection before the arbitral tribunal. In the case of State of Orissa vs Gokulananda Jena, reported in AIR 2003 SC 4207, Indian Supreme Court held:
"However, we must notice that in view of Section 16 read with Sections 12 and 13 of the Act as interpreted by the Constitution Bench of this Court in the M/s Konkan Railway (supra) almost all disputes which could be presently contemplated can be raised and agitated before the Arbitrator appointed by the Designated Judge under section 11(6) of the Act. From the perusal of the said provisions of the Act it is clear that there is hardly any area of dispute which cannot be decided by the Arbitrator appointed by the Designated Judge. If that be so, since an alternative efficacious remedy is available before the Arbitrator, writ Court normally would not entertain a challenge to an order of the Designated Judge made under section 11(6) of the Act which includes considering the question of jurisdiction of the Arbitrator himself. Therefore, in our view even though a writ petition under Article 226 of the Constitution is available to an aggrieved party ground available for challenge in such a petition is limited because of the alternative remedy available under the Act itself".
15. As it is stated above, at the time of delivering judgment learned advocate for the petitioner submits that the arbitration miscellaneous case filed by respondent No. 2 in the Court of learned District Judge was barred by limitation and referred the decision cited above. It may be mentioned here that question of limitation is neither a subject matter of this rule nor agitated in the Court below.
16. We do not find any merit in the rule.
17. In the result, the rule is discharged without any order as to cost.
18. Order of stay granted at the time of issuance of rule is hereby vacated.