Himachal Pradesh High Court
M/S S.K.M. Enterprises vs State Of H.P & Another on 14 July, 2023
Author: M.S. Ramachandra Rao
Bench: M.S. Ramachandra Rao
IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA
Arbitration Case No. 165 of 2022
Decided on: 14th July, 2023
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M/S S.K.M. Enterprises ....Applicant.
Versus
State of H.P & another .....Respondents.
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Coram
Hon'ble Mr. Justice M.S. Ramachandra Rao, Chief Justice
Whether approved for reporting? 1
For the applicant: Mr. Sumeet Raj Sharma, Advocate.
For the respondents: Mr. Rakesh Dhaulta, Additional Advocate
General.
M.S Ramachandra Rao, Chief Justice (oral)
This application is filed seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
2. A work by name "Up-gradation of link road to village Thana from Km.0/0 to 8/210 under PMGSY-II, collaboration RRP-II World Bank, Batch-1, for the year 2019-2020 AF-G & CR Roads Pilot Projects Package No. HP-03-150" was awarded to the applicant by the respondents and agreement no. 1 for the year 2020-2021 was 1 Whether reporters of Local Papers may be allowed to see the judgment?
::: Downloaded on - 17/07/2023 20:33:16 :::CIS -2-executed between the parties.
3. After the award was made in favour of the applicant on 17.06.2020 for a contract price of Rs.5,98,40,591/-, the work was to .
be completed in 365 days.
4. According to the applicant, stipulated date for start of work was 06.07.2020 and date of completion of the work as per agreement was 05.07.2021; that site was handed over to the applicant on 10.07.2020; that certain problems were faced by the applicant which are mentioned in paragraph 8 of this application, but the Executive Engineer (second respondent) inspite of being informed of the same through communications dt. 20.05.2021 and 24.05.2021, did not redress those issues and without any notice or opportunity to the applicant, on 08.03.2021, the second respondent imposed liquidated damages @3% amounting to Rs.17,95,218/-.
5. It is contended that the second respondent kept on harassing the applicant and continued to threaten to levy more penalties on the applicant, though, the applicant disputed the penalties and sought extension of time and waiver of penalty.
6. It is stated that subsequently on 16.06.2021, further penalty @ 7% of the agreement amounting to Rs.41,88,841/- was imposed on the applicant by the second respondent, that though the ::: Downloaded on - 17/07/2023 20:33:16 :::CIS -3- extension of time for completion of work was sought by the applicant on 05.07.2021 till 30.11.2021, the second respondent granted extension only till 30.09.2021.
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7. It is stated that though the applicant wanted release of the amount withheld as liquidated damages, the respondents did not do so and ultimately the agreement with the applicant was terminated by the respondents on 29.03.2022.
8. It is contended that procedure for resolution of disputes is provided in Clauses 24 and 25 of the agreement and it contemplated initially appointment of an adjudicator and then a reference to the arbitration after the adjudicator renders a decision.
9. It is contended that vide Annexure P-4 dt. 08.06.2022, the applicant sought appointment of an adjudicator by the respondents, but there was no response of the respondents to the same; that applicant then issued notice on 05.08.2022 being Annexure P-5 invoking arbitration Clause in the agreement (Clause 25.5) and also another notice dt. 05.08.2022 addressed to the Chairman, Indian Road Congress in terms of Clause 25.5, since the dispute between the parties was less than Rupees Ten Crores; and when there was no reply, it filed this application for appointment of an arbitrator under Section 11 of the Act.
::: Downloaded on - 17/07/2023 20:33:16 :::CIS -4-10. Reply is filed by the respondents opposing this application stating that adjudicator was appointed by the respondents on 14.09.2022 and the applicant has to approach the adjudicator and .
submit his claim. The contentions raised by the applicant are all disputed, but no explanation is coming forth in the reply as to why the appointment of an adjudicator was made on 14.09.2022, when the applicant had sought for such appointment vide Annexure P-4 dt. 08.06.2022 and such appointment is to be made within 28 days of such request, and the adjudicator would have 56 days to decide the dispute, and thereafter the matter can be referred to arbitration.
11. Since in the facts and circumstances of the case, there is an agreement between the parties providing for arbitration, and since the applicant has followed the procedure in the agreement by issuing Annexures P-4, P-5 and P-6 notices, and since the adjudicator is not being appointed by respondents within a reasonable time of the request made by the applicant for the said purpose, and since admittedly there is a dispute between the parties which is of a value of Rupees less than Ten Crores, Mr. B.L Soni, District and Sessions Judge (Retd.), is appointed as an Arbitrator to adjudicate the dispute between the parties, after his disclosure in writing is obtained in terms of Section 11(8) of the Act and only after receipt thereof, shall his ::: Downloaded on - 17/07/2023 20:33:16 :::CIS -5- appointment, as an Arbitrator, come into force.
12. On his giving consent to arbitrate the dispute between the parties as an Arbitrator, Shri B.L Soni, District & Sessions Judge .
(Retd.), shall enter into reference, and shall pass an award in accordance with law.
13. Copy of this order be furnished to the learned counsel for the parties and also furnished to the learned Arbitrator. The learned Arbitrator so appointed shall be entitled to fee as per stipulation contained in 4th Schedule appended to the Arbitration and Conciliation Act, 1996.
14. The application is disposed of accordingly.
( M.S Ramachandra Rao ) Chief Justice 14th July, 2023 (priti) ::: Downloaded on - 17/07/2023 20:33:16 :::CIS