Pma Construction Co vs Ministry Of Road Transport And Highway on 7 December, 2023

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Delhi High Court - Orders

Pma Construction Co vs Ministry Of Road Transport And Highway on 7 December, 2023

1. The present petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 ("Act") seeks appointment of a Sole Arbitrator for adjudicating disputes arising from Agreement dated 4th December, 20201 ("Agreement") executed between parties.

2. Existence of the arbitration agreement, contained in Clause 26 of the Agreement, is not in dispute. Further, the Agreement has been terminated and according to the Respondent's counsel, another contractor has been appointed for the completion of balance unfinished work. Petitioner contends that the termination is unlawful and procedures stipulated in the Agreement have been breached, and therefore, they have claims arising out 1 Agreement for "Balance Work of Rehabilitation and upgradation of Existing carriageway to two lane with paved shoulder standard in Arvi to Talegaon Section of NH-347-A in the State of Maharashtra on ARB.P. 576/2023 Page 1 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/12/2023 at 03:51:28 of such termination, amongst other claims. Thus, disputes between the parties have indisputably arisen. Petitioner had invoked the arbitration clause vide notice dated 2nd March, 2023, however no response was received from the Respondent. Thus, in the opinion of the Court, requisites for appointment of the Arbitral Tribunal under Section 11 have been met.

3. However, prior to the appointment of an arbitrator, the Court must also deal with an objection raised by Respondent. Counsel for Respondent argued that the petition is not maintainable as the pre-arbitration mechanisms of conciliation/amicable resolution provided in Clause 26 of the Agreement have not been availed, and therefore, conditions for invoking arbitration have not been met. She submits that the language of Clause 26.1(i)2 uses the expression 'shall', which makes it obligatory on parties to resort to conciliation proceedings.

4. In the opinion of the Court, such an objection is devoid of merit for several reasons:

(a) While Respondent expresses a strong inclination for availing the conciliation procedure at this stage, they did not seize the opportunity to do so when the notice of invocation was served upon them.

(b) Further, counsel for Petitioner states, on instructions, that the Petitioner is not interested in conciliation. It must be emphasized that while conciliation as a dispute resolution mechanism must be encouraged and should be one of the first endeavour of the parties when a dispute arises, it is a voluntary process. Since Petitioner does not agree to opt for conciliation, Engineering, Procurement and Construction Mode"

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 ARB.P. 576/2023 Page 2 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/12/2023 at 03:51:28 they cannot be compelled to do so, especially under the present circumstances.

(c) Clause 26.2 provides for a multi-tier process for dispute resolution, with the second stage providing for reference of the dispute to the Chairman of Respondent and Chairman of Board of Directors of the Petitioner for amicable resolution of disputes. It must be noted here that the Respondent had already conducted a hearing prior to termination of the Agreement whereby the Petitioner was given an opportunity to make their representation. This representation was considered and disposed of by way of a fairly detailed communication labelled as an order dated 14th February, 2023. Thus, the Chairman of the Respondent, which had already decided upon the representation given by Petitioner regarding the dispute, could not have, in any manner, acted as a conciliator or a mediator. Thus, the resolution of disputes now would only be possible through the mechanism of arbitration.

5. Therefore, this Court is not inclined to entertain the objections raised by Respondent, and deems it fit to allow the present petition.

6. Accordingly, Hon'ble Mr. Justice (Retd.) S. Ravindra Bhat, former Judge of Supreme Court of India [Contact No.: +91 9818000160], is appointed as the Sole Arbitrator for adjudication of disputes between the parties in respect of the Agreement.

7. Parties are directed to appear before the Sole Arbitrator as and when notified, subject to necessary disclosure(s) by the Arbitrator under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act. The Arbitrator will be entitled to charge their fee in terms of the provisions of the accordance with the conciliation procedure set forth in Clause 26.2.

ARB.P. 576/2023 Page 3 of 4

This is a digitally signed order.

8. It is clarified that the Court has not examined any of the claims of the parties and all rights and contentions on merits are left open. Both parties shall be free to raise their claims/counter claims before the Arbitrator in accordance with law.

9. With the above directions, the present petition is disposed of.

SANJEEV NARULA, J DECEMBER 7, 2023 as ARB.P. 576/2023 Page 4 of 4 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/12/2023 at 03:51:29

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Delhi High Court - Orders