Madhya Pradesh High Court
M/S Arss Damoh Hirapur Tolls Pvt. Ltd. vs Central Bank Of India on 25 April, 2016
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Arbitration Case No.14/2015
25.4.2016.
Shri Atulanand Awasthy, learned counsel for applicant.
Shri Arvind Kumar Pandey, learned counsel for
respondent No.1.
Shri Aditya Khandekar, learned counsel for respondent No.2.
Applicant invokes clause 8.1.1 of the Substitution Agreement dated 8.11.2011 and seeks appointment of an Arbitrator for resolving the dispute said to have arisen in respect of construction of Damoh-Batiyagarh-Hirapur Road section (0 km to 69.90 km) of State Highway No.37.
It is the contention of the applicant that Government of State of Madhya Pradesh entrusted certain works to respondent No.2-M.P. Road Development Corporation for the purpose of construction of Damoh-Batiyagarh-Hirapur Road within the State Highway No.37. That, respondent No.2 engaged present applicant for the purpose of its construction, development, maintenance and management on the basis of Built Operate and Transfer (BOT). An agreement was entered into between the applicant, respondent No.2-MPRDC and respondent No.1- Financier Bank. For the purpose of indemnify, certain terms and :: 2 ::
Arbitration Case No.14/2015
conditions were settled between the applicant, respondent No.2 and Central Bank. Later on, substitution agreement was entered into on 8.11.2011. Some disputes having arisen in respect of carrying out the said contract that the applicant has approached this Court vide present application.
Pertinent it is to mention at this stage that in respect of dispute arisen out of the concession agreement entered into between the applicant and respondent No.2 on 5.4.2011, the applicant approached this Court vide A.C. No.32/2014 for appointment of an Arbitrator. The said application was, however, disposed of on 22.9.2015 in view of Clause 44.3 of the Agreement and Rule 5 of the Rules of Arbitration of the Indian Council of Arbitration, on applicant's seeking liberty to approach International Central for Alternative Dispute Resolution, New Delhi.
It appears from the pleadings that along with concession agreement, the parties had entered into tripartite agreement on 8.11.2011 namely Substitution Agreement where under clause 2, the concessionaire assigns the rights, title and interest in Concession to and in favour of, the Lender Bank Bank pursuant to and in accordance with the provisions of Substitution :: 3 ::
Arbitration Case No.14/2015
Agreement and the Concession Agreement by way of security in respect of financing by the Lender Bank Bank under Financing Agreement. Clause 3.1.1 of the Substitution Agreement further provides that "pursuant to the rights, title and interest assigned under Clause 3.1, the Lender Bank Bank shall be entitled to substitute Concessionaire by a Nominated Company under and in accordance with the provisions of Substitution Agreement and Concession Agreement.
These Clauses 2 and 3 of the Substitution Agreement are the bedrock of the objection raised on behalf of respondents No.1 and 2 as to locus of the applicant to invoke clause 8.1.1 of the Substitution Agreement.
It is contended on behalf of respondent No.2 that as per stipulation contained in Clause 8.1.1 of the Substitution Agreement, the applicant is under an obligation to approach the forum prescribed under the Rules of Arbitration of the Indian Council of Arbitration. It is contended that Rule 5(2)(a) of ICADR Arbitration Rules, 1996 stipulates that where the arbitration agreement provides that each party shall appoint arbitrator and the two appointed arbitrators shall appoint the presiding arbitrator and if a party fails to appoint an arbitrator :: 4 ::
Arbitration Case No.14/2015 within thirty days from the receipt of a request to do so from the other party, the appointment shall be made upon request of a party by the ICADR. It is urged that the applicant has a forum for redressal of grievance in regard to appointment of arbitrator, present application is not tenable. Respondent has further placed reliance on the order passed in A.C. No.32/2014 which was an application at the instance of applicant for appointment of an arbitrator, whereon by order-dated 22.9.2015, applicant was granted liberty to approach the International Centre for Alternative Dispute Resolution, New Delhi.
On behalf of respondent No.1, it is contended that that Substitution Agreement extends protection to the right of creditor-Bank for exercising its option for substituting the petitioner in the eventuality of termination of contract. It is contended that since the petitioner defaulted in performing the contractual obligation, the creditor-Bank decided not to exercise the option; therefore, it is urged that the respondent No.1, creditor-Bank cannot be compelled to exercise the option under Substitution Agreement.
When the contention raised on behalf of respondents No.1 and 2 are considered on the touchstone of various :: 5 ::
Arbitration Case No.14/2015 provisions of Substitution Agreement, there remains no iota of doubt that there is no accrual of cause of action in favour of the petitioner under Substitution Agreement, as would give him right to invoke Section 11(5) of the Arbitration and Conciliation Act, 1956.
Consequently, application fails and is dismissed. No costs.
(SANJAY YADAV)
vinod JUDGE