Karnataka High Court
M/S East Coast Constructions And ... vs M/S The Commissioner on 27 June, 2025
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NC: 2025:KHC:22752
CMP No. 482 of 2023
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF JUNE, 2025
BEFORE
THE HON'BLE MR JUSTICE ASHOK S.KINAGI
CIVIL MISC. PETITION NO. 482 OF 2023
BETWEEN:
M/S EAST COAST CONSTRUCTIONS AND
INDUSTRIES LIMITED
REGISTERED OFFICE AT BUKARIA BUILDINGS,
NO.4, MOORES ROAD,
CHENNAI-600006
REPRESENTED BY ITS
AUTHORIZED SIGNATORY MR. K.T.M AHAMED
MUSTAFA
...PETITIONER
(BY SRI. VIVEKANANDA S., ADVOCATE)
AND:
Digitally
signed by M/S THE COMMISSIONER
SUNITHA K S BRUHAT BENGALURU MAHANAGARA PALIKE,
Location: NR SQUARE,
HIGH COURT BENGALURU-560002.
OF ...RESPONDENT
KARNATAKA
(BY SRI. SATYANAND B S., ADVOCATE)
THIS CIVIL MISC. PETITION IS FILED UNDER SECTION
11(5) AND (6) OF THE ARBITRATION AND CONCILIATION ACT,
1996, PRAYING TO 1) TO APPOINT HON'BLE MR. JUSTICE N.
JAGANATHAN, RETIRED JUDGE, HIGH COURT OF KARNATAKA,
BENGALURU AS A SOLE ARBITRATOR TO ADJUDICATE THE
DISPUTE ARISING OUT OF THE AGREEMENT DATED
20.03.2006 (ANNEXURE A) AS PER ARTICLE 17.1.
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CMP No. 482 of 2023
HC-KAR
2) GRANT SUCH OTHER AND FURTHER RELIEF/S AS THIS
HON'BLE COURT DEEMS FIT TO PASS UNDER THE FACTS AND
CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTICE
AND EQUITY.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI
ORAL ORDER
This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act,1996 (for short, the 'Act') seeking the appointment of a sole arbitrator to resolve the dispute and difference between the parties to the petition in terms of the Contract agreement dated 20.03.2006 evidenced at Annexure-A.
2. After receipt of a notice, respondents have tendered appearance through learned counsel.
3. The petitioner asserts that despite being declared the successful bidder and entering into a formal agreement with the respondent on 20.03.2006, the respondent failed to hand over the project sites within the -3- NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR stipulated timeframe. This delay in site handover resulted in significant setbacks in issuing the necessary drawings and fulfilling further contractual obligations. As a consequence of these delays, the respondent unilaterally decided to foreclose the contract on 12.09.2013. Aggrieved by this action, the petitioner filed W.P. No. 42088/2014 before this Hon'ble Court, challenging the foreclosure order. While disposing of the said writ petition on 30.05.2022, the Court, while refraining from granting immediate relief, reserved liberty to the petitioner to challenge the Government Order dated 12.09.2013, in the event the respondents initiated any demand pursuant to the said order.
4. Subsequently, on 05.09.2023, the petitioner issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996, invoking the arbitration clause as specified in Clause 17 of the agreement. The petitioner reiterated that the primary cause of delay was attributable to the respondents, particularly their failure to hand over -4- NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR the project site in a timely manner, which consequently prevented the petitioner from commencing work as per the contractual schedule. As per the terms of the agreement, the project was to be completed within 18 months from the date of site handover, however, due to the respondent's inaction, the stipulated period could not be adhered to. The petitioner contends that despite having executed work valued at over Rs.18 Crores, the abrupt and unlawful termination of the contract deprived them of rightful compensation and entitlements. Accordingly, the petitioner asserts that they are entitled to a refund of the earnest money deposit and additional security deposit, amounting to a total sum of Rs.56,47,28,351/-.
5. In support of the claim, the petitioner's counsel has relied upon various judicial precedents, which substantiate their contention regarding arbitration and contractual obligations. The cited judgments include:
a) Smt. Rukmanibai Gupta v. Collector, Jabalpur & Ors., (1980) 4 SCC 556.-5-
NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR
b) Lachmanna B. Horamani v. State of Karnataka & Ors., ILR 1998 KAR 2385.
c) Harbajan Sarabjeet & Associates v. Maharashtra Krishna Valley Development Corporation, 2010 SCC OnLine 1513.
d) Sarkar and Sarkar v. State of West Bengal and Anr., 2006 SCC OnLine Cal 265.
e) Mohan Singh v. HP State Forest Corporation, 1998 SCC OnLine HP 22.
f) Bhagwan Devi v. Chairman, Delhi Agricultural Marketing Board, 2006 (90) DRJ 86.
6. The petitioner particularly relies on the judgment of the Hon'ble Supreme Court in Smt. Rukmanibai Gupta v. Collector, Jabalpur & Ors reported in (1980) 4 SCC 556 to assert that an arbitration clause does not necessarily need to explicitly mention the term "arbitration." If it is evident from the agreement's terms that disputes were intended to be decided through a quasi-judicial mechanism, such a provision must be construed as an arbitration clause. The petitioner contends that the agreement in question -6- NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR satisfies this requirement, thereby making Clause 17 an arbitration clause by implication.
7. Further, relying on the judgment of the Coordinate Bench in Lachmanna B. Horamani v. State of Karnataka & Ors., reported in ILR 1998 KAR 2385 the petitioner emphasizes that even if a contract stipulates that disputes shall be referred to a specific authority, such a provision can be construed as an arbitration clause, provided it establishes a dispute resolution mechanism akin to arbitration.
8. The petitioner's counsel also places reliance on the decision of the Punjab and Haryana High Court in Mohan Singh v. HP State Forest Corporation, reported in 1998 SCC OnLine HP 22 wherein it was held that for a clause to be recognized as an arbitration clause, it is not mandatory for it to contain the words "reference" or "arbitration." The statute merely requires a written -7- NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR agreement to submit disputes to arbitration, which the petitioner contends is satisfied in the present case.
9. Conversely, the respondent's counsel argues that the agreement executed between the parties does not include an arbitration clause. It is contended that Clause 17 of the agreement only requires the parties engage in discussions to amicably resolve disputes. If such discussions fail, the disputes must be referred to the Commissioner, BMP, for adjudication. According to the respondent, Clause 17 does not contain any provision expressly referring disputes to arbitration and, therefore, cannot be considered an arbitration clause. However, the referral Court, under Section 11(6) of the Arbitration and Conciliation Act, cannot examine or adjudicate these contentions at this stage.
10. The respondent further counters the petitioner's reliance on the judgment in Smt. Rukmanibai Gupta v. Collector, Jabalpur & Ors. (supra), asserting that the -8- NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR said judgment is not applicable in the present case since Clause 17 lacks the essential elements required to constitute an arbitration agreement. Nevertheless, the referral court under Section 11(6) of the Act is precluded from delving into the merits of such arguments at this stage.
11. The second primary contention raised by the respondent is that the present application under Section 11(6) of the Arbitration and Conciliation Act is barred by limitation. The respondent argues that since the contract was foreclosed in 2013 and the petitioner filed a writ petition in 2014, the present attempt to seek the appointment of an arbitrator after a lapse of more than a decade is untenable and legally unsustainable. However, the referral Court under Section 11(6) of the Act is not required to examine the question of limitation at this stage, as it falls within the domain of the arbitral tribunal. -9-
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12. Upon a careful reading of Clause 17 of the agreement, it is evident that the clause explicitly provides for a mechanism to resolve disputes between the parties. Clause 17.1 states that if a dispute is not resolved amicably, it shall be finally settled by the Commissioner of BBMP. While the clause does not expressly use the terms "reference" or "arbitration," the overall language and intent of the clause indicate that it constitutes an arbitration agreement within the meaning of Section 2 of the Arbitration and Conciliation Act, 1996. This interpretation aligns with the principles laid down by the High Court of Jammu and Kashmir in Dewan Chand v. State of Jammu and Kashmir, reported in AIR 1967 J&K 58 wherein it was held that an agreement can amount to an arbitration agreement even if specific terminologies are absent, as long as it provides a final and binding resolution mechanism.
13. In light of the 2015 amendment to the Arbitration and Conciliation Act, particularly Section 12(3)
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NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR of the Act, read with Schedule 7, the Commissioner of BBMP is legally disqualified from acting as an arbitrator. Section 12(5) of the Act categorically states that a person who is a manager, director, or part of the management or who exercises similar control over one of the parties is ineligible to act as an arbitrator. Since the Commissioner of BBMP holds an administrative position and has managerial control over BBMP, he is clearly incapacitated from serving as an arbitrator under the agreement.
14. Recognizing this legal bar, the petitioner has correctly invoked the arbitration clause by issuing a notice under Section 21 of the Act and has sought recourse under Section 11(6) for the appointment of an independent arbitrator. Given the statutory prohibition against the appointment of the Commissioner, the arbitration process must proceed with an impartial adjudicator to ensure compliance with the principles of fairness and neutrality as enshrined in the Arbitration and Conciliation Act, 1996.
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15. After thoroughly examining the petition, its annexures, and the supporting documents, this Court finds that the petitioner has complied with the procedural requirements prescribed under Section 11(5) of the Act for invoking the arbitration clause. The Court is satisfied that the dispute, as presented, warrants adjudication through arbitration as provided for in the terms of the agreement.
16. In view of the foregoing discussions, this Court deems it appropriate to consider the present petition for the appointment of an arbitrator to resolve the disputes between the parties.
17. In the light of the aforesaid clause of arbitration and the contentions advanced by the petitioner and respondent, this Court proceeds to pass the following:
ORDER
(i) This civil miscellaneous petition is allowed appointing Sri. Mohan S. Sankolli, Retired District Judge as the sole Arbitrator to enter
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NC: 2025:KHC:22752 CMP No. 482 of 2023 HC-KAR reference of the disputes between the petitioner and the respondents and conduct proceedings at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru, according to the Rules governing the said Arbitration Centre;
(ii) All contentions inter se parties are kept open for adjudication in the arbitration proceedings;
(iii) The Office is directed to communicate this order to the Arbitration and Conciliation Centre and Sri. Mohan S. Sankolli, Retired District Judge as required under the Arbitration and Conciliation Centre Rules, 2012.
(iv) All contentions raised by the respondent in the R.P.159/2025 can be raised before the Arbitral Tribunal.
(v) All the contentions raised by the respondent in R.P.No.159/2025 can be raised before the Arbitral Tribunal.
Sd/-
(ASHOK S.KINAGI) JUDGE BVK