Karnataka High Court
M/S Gvr Infra Projects Pvt Ltd vs The Chief Engineer on 28 September, 2022
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 28TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR
CIVIL MISCELLANEOUS PETITION NO.496 OF 2021
BETWEEN:
M/S GVR INFRA PROJECTS PVT. LTD.
HAVING ITS OFFICE AT NO.476
TALA CAUVERY LAYOUT
AMRUTHA HALLI, BYATARAYANAPURA
NEW BENGALURU INTERNATIONAL AIRPORT ROAD,
BENGALURU-560092.
AND
HEAD OFFICE NOW SITUATED
AT PLOT NO.46A, VETTUVANKENI FIRST AVENUE
VETTUVANKENI
CHENNAI-600115.
...PETITIONER
(BY SRI. YASHODHAR HEGDE, ADVOCATE)
AND:
THE CHIEF ENGINEER
NATIONAL HIGHWAY ZONE
PUBLIC WORKS DEPARTMENT
GOVERNMENT OF KARNATAKA
HAVING ITS PRINCIPAL OFFICE AT K R CIRCLE
P.W.D. DEPT.
BENGALURU-560001.
....RESPONDENT
(BY SRI. S. RAMAKRISHNAN, ADVOCATE)
THIS C.M.P. IS FILED UNDER SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO
APPOINT THE SECOND ARBITRATOR ON BEHALF OF THE
RESPONDENT THEREBY ENABLING THE CONSTITUTION OF
THE ARBITRAL TRIBUNAL AS PER THE CONTRACT FOR THE
SPEEDY RESOLUTION OF THE DISPUTES THAT HAVE ARISEN
BETWEN THE PARTIES HEREIN IN FURTHERANCE OF CLAUSE
26 OF THE GENERAL CONDITIONS OF CONTRACT DATED
2
04.06.2014 (ANNEXURE-A), WITH A DIRECTION TO THE
ARBITRAL TRIBUNAL TO ADJUDICATE THE DISPUTES BETWEEN
THE PETITIONER AND RESPONDENT ARISING OUT OF THE
AGREEMENT DATED 04.06.2014 AND ETC.
THIS C.M.P. COMING ON FOR ADMISSION THIS DAY, THE
COURT MADE THE FOLLOWING:-
ORDER
The present petition under Section 11 of the Arbitration and Conciliation Act, 1996, has been filed by the petitioner-M/s. GVR Infra Projects Private Limited against the respondent-Chief Engineer, National Highway Zone, PWD, Karnataka seeking appointment of an Arbitrator in pursuance of Arbitration Clause of the Agreement dated 04.06.2014 vide Annexure-A.
2. Clause-26 of the said Agreement, which contains an Arbitration clause, reads as under:-
"26.1 Dispute Resolution 26.1.1 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 26.2.3
26.1.2 The Parties agree to use their best efforts for resolving all Dispute 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 hourse to all non-privileged records, information and data pertaining to any Dispute.
26.2 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 the 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 4 arbitration in accordance with the provisions of Clause 26.3.
26.3 Arbitration 26.3.1 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, Bangalore (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 (Bangalore), and the language of arbitration proceedings shall be English.
27.3.2 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 make 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 5 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 challenge 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.
26.4 Adjudication by Regulatory Authority, Tribunal or Commission In the event of constitution of a statutory regulatory authority, tribunal or commission, as the case may be, with powers to adjudicate upon disputes between the Contractor and the Authority, all 6 Disputes arising after such constitution shall, instead of reference to arbitration under Clause 26.3, be adjudicated upon by such regulatory authority, tribunal or commission in accordance with the Applicable Law and all references to Dispute Resolution Procedure shall be construed accordingly. For the avoidance of doubt, the Parties hereto agree that the adjudication hereunder shall not be final and binding until an appeal against such adjudication has been decided by an appellate tribunal or court of competent jurisdiction, as the case may be, or no such appeal has been preferred within the time specified in the Applicable law."
3. The material on record discloses that since disputes arose between the parties in relation to the aforesaid Agreement containing the aforesaid arbitration agreement at Clause, on 08.10.2021, the petitioner invoked the aforesaid arbitration clause and issued a notice to the respondents putting forth various claims and contentions and nominating and appointing its nominee arbitrator and calling upon the respondent to give its concurrence/consent to refer the dispute to arbitration, subsequent to which there was a meeting held on 11.10.2021 between the parties. It is also seen that even earlier, there has been a 7 correspondence, meetings etc., between the parties, who have failed to resolve the dispute between themselves. Thereafter, the parties have not only failed to resolve their disputes but they have also not reached any consensus / agreement for appointment of an arbitrator and as such, petitioner is before this Court by way of the present petition.
4. Per contra, learned counsel for the respondent, in addition to reiterating the various contention urged in the Statement of Objections, submits that the petition is premature in as much as the dispute resolution clause 26.1 provides for a pre-arbitration mechanism, which has to be exhausted before the petitioner takes recourse to arbitration. My attention is also invited to Clause 27.1 of the Agreement in order to point out that it is only the Courts at Lucknow that would have jurisdiction over matters arising out of or relating to the agreement and on this ground, the present petition instituted before this Court is not maintainable. It is therefore submitted that there is no merit in the petition and that the same is liable to be dismissed. 8
5. The material on record discloses that it is an undisputed fact that Article 26 consisting of Clauses 26.1 to 26.4 provides for dispute resolution amongst which Clause 26.3 is the arbitration agreement entered into between the parties. The contention of the respondent that the petition is premature since the pre-arbitration procedure provided in Clause 26.1 has not been exhausted prior to seeking arbitration cannot be accepted in the facts of the instant case, which clearly establishes that before preferring the present petition, both the parties have attempted to resolve the dispute by way of conciliation as can be seen from the correspondence, meetings etc., between the parties. The facts of the instant case also demonstrate that all efforts for amicable resolution of the dispute between the parties by way of conciliation have been attempted by both sides and only upon failure of the same, petitioner has approached this Court by way of the present petition. In other words, in view of the efforts made by both sides for resolution of disputes to conciliation having not been successful as borne out from the material on record, directing the petitioners to exhaust the pre-arbitration mechanism of 9 resolution of disputes by way of conciliation is not warranted in the facts and circumstances of the instant case since conciliation has already been attempted and failed between the parties. Under these circumstances, in view of the peculiar/special facts and circumstances obtaining in the instant case, the said contention urged by the respondents cannot be accepted.
6. In so far as the contention of the respondents with regard to jurisdiction being vested only with the Courts at Lucknow is concerned, a perusal of Clause 26.3.1 clearly indicates that the seat/venue of arbitration has been agreed by both parties to be at Bengaluru. Under these undisputed circumstances, merely because Clause 27.1 provides for the Courts at Lucknow to have exclusive jurisdiction, the said Clause cannot be made the basis to come to the conclusion that the arbitration proceedings cannot be conducted at Bengaluru and the seat/venue of arbitration cannot be at Bengaluru, particularly when the parties have agreed that the same is to be at Bengaluru. 10 As such, even this contention of the respondent cannot be accepted.
7. The arbitration agreement contained in Clause 26.3 indicates that the Arbitral Tribunal shall comprise of three arbitrators, amongst whom one arbitrator each shall be appointed/nominated by the petitioner and respondent, respectively. Accordingly, both sides have suggested the names of their respective nominee arbitrators. Further, both sides have also agreed and given consent for appointment of Sri. V. Jagannathan, former Judge, High Court of Karnataka to be the third arbitrator.
8. In view of the aforesaid facts and circumstances, though several contentions have been urged by both sides in support of their respective claims, without expressing any opinion on the merits / demerits of the rival contentions, I deem it just and appropriate to allow this petition by referring the dispute between the parties to arbitration with the consent of both sides by appointing an Arbitral Tribunal comprising of the following three arbitrators to resolve the dispute between the parties under the provisions of the 11 Arbitration and Conciliation Act, 1996, as per the Rules governing the Arbitration and Conciliation Centre (Domestic & International) at Bengaluru.
Arbitral Tribunal
1. Justice V. Jagannathan, Former Judge, High Court of Karnataka, Bengaluru.
2. Mr. Ganesh Chandra Kabi Former, Chief Engineer, CPWD, Government of India, No.B-34, 1st Floor, Geethanjali Enclave, Malviya Nagar, New Delhi-100 017.
3. Mr. Kamlesh Kumar, Former Additional Director General North, House No.43, Road No.D-12, Exclusive Floors Complex, DLF Phase-5, Gurugram-122 009.
9. In the result, I pass the following ORDER
(i) Petition is hereby allowed.
(ii) A three members Arbitral Tribunal comprising of Justice V. Jagannathan, Mr. Ganesh Chandra Kabi and Mr. Kamlesh Kumar is hereby constituted to resolve the dispute between the parties as per the Rules governing the Arbitration and 12 Conciliation Centre (Domestic & International) at Bengaluru.
(iii) All rival claims, contentions, etc., of both parties including contentions relating to maintainability, arbitrability, jurisdiction, limitation, stamp duty, etc., are left/kept open to be decided by the Arbitral Tribunal and no opinion is expressed on the same.
(iv) A copy of this order be sent forthwith to the
Arbitration and Conciliation Centre
(Domestic & International), Khanija
Bhavan, Bengaluru, for proceeding further and also to the members of the Arbitral Tribunal mentioned above.
(v) Registry is directed to return all original documents produced by any of the parties after obtaining Photostat copies of the same.
Sd/-
JUDGE SV/Bmc