Karnataka High Court
M/S Rk Infra (India) Pvt Ltd vs Davanagere Smart City Ltd (Dscl) on 29 April, 2025
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NC: 2025:KHC:17752
CMP No. 558 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF APRIL, 2025
BEFORE
THE HON'BLE MR JUSTICE ASHOK S.KINAGI
CIVIL MISC. PETITION NO. 558 OF 2024
BETWEEN:
M/S RK INFRA (INDIA) PVT LTD.,
LAKSHMI NIVASA
NEAR OM SRI SCHOOL
MV EXTENSION, HOSKOTE
BENGALURU-562118
REPRESENTED BY ITS MANAGING DIRECTOR
SRI G MOHAN KUMAR
...PETITIONER
(BY SMT. MEENAKSHI K.D., ADVOCATE FOR
SRI. SANJAYA R., ADVOCATE)
AND:
Digitally
signed by
SUNITHA K S DAVANAGERE SMART CITY LTD (DSCL)
1776, A85/A 86
Location:
HIGH COURT SIDDAVEERAPPA LAYOUT
OF SHAMANUR ROAD
KARNATAKA DAVANAGERE-577004
REPRESENTED BY ITS MANAGING DIRECTOR
SRI VEERESH KUMAR
...RESPONDENT
(BY SRI. ATUL KRISHNA RAO ALUR., ADVOCATE)
THIS CMP IS FILED UNDER SECTION 11(5) OF THE
ARBITRATION AND CONCILIATION ACT, 1996 AND R/W RULE 2
OF SCHEME FOR APPOINTMENT OF ARBITRATOR
BY KARNATAKA HIGH COURT. PRAYING TO (a) APPOINT
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NC: 2025:KHC:17752
CMP No. 558 of 2024
SRI. H.M. VERUPAKSHAIAH RETD., DISTRICT JUDGE
(COMMERCIAL COURT) AS SOLE ARBITRATOR FOR
ADJUDICATION OF DISPUTES BETWEEN THE PETITIONER AND
RESPONDENTS IN RESPECT OF DISPUTES AND OUTSTANDING
BETWEEN THE PARTIES IN ACCORDANCE WITH THE
PROVISIONS OF AGREEMENT (ANNEXURE-A), DATED
18.01.2019 (b) PETITIONER SHALL BE PERMITTED TO FILE
THE STATEMENT OF CLAIMS AND STATEMENT OF DEFENCE
BEFORE THE ARBITRATOR, DURING THE PROCEEDINGS OF
ARBITRATION (c) AWARD COSTS OF THE PROCEEDINGS
(d) PASS SUCH OTHER OR FURTHER RELIEFS AS THIS HON'BLE
COURT MAY DEEM FIT.
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 filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act, 1996 for short) for the appointment of an Arbitrator to resolve the dispute between the parties in accordance with the Act, 1996 arising in terms of Clause 24 of the General Conditions and Clause 4 of the Special Conditions of the Contract dated 18.01.2019.
2. Brief facts leading rise to the filing of this civil miscellaneous petition are as follows: -3-
NC: 2025:KHC:17752 CMP No. 558 of 2024 The respondent invited tenders on 10.10.2018 for construction of the Command and Control Centre (CCC) building at Davanagere with an estimated cost of Rs.12,60,27,102.19. The petitioner was a successful bidder. An agreement came to be signed between the parties to the petition on 18.01.2019 and followed by the letter of acceptance sent to the petitioner requesting to furnish security deposit of Rs.6,30,200/-. The petitioner has complied with it. The work order was issued to proceed with the work and the period of work completion was 9 months. After handing over of the site, the petitioner carried out the work deliberately.
3. The work could not be completed in time due to various hurdles. The petitioner has sought an extension of time and the same was extended by the respondents which is subject to contractor paying liquidated damages of Rs.1,06,81,563/-. Even after the first extension, the work could not be completed for various reasons. The petitioner requested the respondents to waive the -4- NC: 2025:KHC:17752 CMP No. 558 of 2024 liquidated damages amount. Subsequently, the contract period was extended by 3 more time on various dates. It is stated that even after obtaining the expert's opinion and the Board's opinion, the liquidated damages are levied on the extension of time. The petitioner, aggrieved by the levy of liquidated damages, issued a legal notice to the respondents by invoking a Clause 24 of the General Conditions read with Clause 4 of the Special Conditions of Contract dated 18.01.2019 on 12.09.2024. The respondent did not respond to the arbitration notice. Hence, the petitioner is constrained to file this petition.
4. The respondent failed to file a statement of objections.
5. Heard the arguments of the learned counsel for the petitioner and the respondent.
6. Learned counsel for the petitioner submits that the dispute arose between the petitioner and the respondent is with regard to the levy of liquidated -5- NC: 2025:KHC:17752 CMP No. 558 of 2024 damages while extending the time for completion of the construction. The petitioner issued a legal notice to waive levy of liquidated damages of Rs.1,06,81,563/- vide notice dated 16.07.2024. Further, the petitioner issued the arbitration notice dated 12.09.2024 for the appointment of an arbitrator and to resolve the dispute regarding the levy of liquidated damages. The respondent did not reply to the arbitration notice. He submits that there is an arbitration Clause in the General Conditions read with Special Conditions of Contract. Hence, he prays to allow the petition.
7. Learned counsel for the respondent submits no objection to allow the petition. Both petitioner and the respondent, jointly propose the name of Sri. D. Vishweshwara Bhat, retired District Judge as an Sole Arbitrator and prays to dispose of the petition.
8. Perused the records and considered the submissions of the learned counsel for the parties. -6-
NC: 2025:KHC:17752 CMP No. 558 of 2024
9. The point that arises for consideration is:
"Whether the petitioner has made out a ground to refer the dispute to the arbitration in terms of Clause 24 of the General Conditions of Contract vide Annexure -A and Clause 24 of Special Conditions of Contract as per the provisions of Arbitration and Conciliation Act, 1996 and the Arbitration and Conciliation Centre (Rules), 2012?"
10. There is no dispute that the respondent has notified a tender on 10.10.2018 for the construction of the Command and Control Centre building at Davanagere. The agreement was entered into between the petitioner and the respondent on 18.01.2019. Pursuant to the execution of the construction agreement, the respondent issued a work order. As per the terms and conditions of the construction agreement, the petitioner should complete the work within 9 months. The petitioner did not carry out the work within the stipulated period mentioned in the tender notification. The respondent extended the time frame. The respondent while extending the time for the first time, imposed a condition that the petitioner must pay the liquidated damages of Rs.1,06,81,563/-. The -7- NC: 2025:KHC:17752 CMP No. 558 of 2024 petitioner made a representation to the respondent to waive the levy of liquidated damages of Rs.1,06,81,563/-. The State Level Committee upheld the levy of liquidated damages. The petitioner, aggrieved by the decision taken by the State Level Committee, issued an arbitration notice invoking the arbitration Clause and proposed the name of the arbitrator. The respondent did not reply to the arbitration notice.
11. I have perused Clause 4 of Special Conditions of Contract read with Clause 24 of the General Conditions of Contract which provides the arbitration clause which reads as follows:
"(a) In case of dispute or difference arising between the employer and the contractor relating to any matter arising out of or connected with this agreement it shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The disputes or differences shall be referred to a Sole Arbitrator. The Sole Arbitrator shall be appointed by agreement between the parties failing the agreement by the appointing authority."-8-
NC: 2025:KHC:17752 CMP No. 558 of 2024
12. Clause 4 of Special Conditions of Contract read with Clause 24 of the General Conditions of Contract provides that, in case a dispute or difference arises between the employer and the contractor relating to any matter out of or connected with this agreement, shall be settled in accordance with the Act, 1996 and the dispute shall be referred to a Sole Arbitrator. There is an arbitration Clause in the General Conditions read with the Special Conditions of Contract. As the dispute has arisen between the parties to the petition, the said dispute has to be resolved through the arbitration.
13. The learned counsel for the respondent submits no objection to nominate the Arbitrator.
14. Hence, in view of the above discussion, the point for consideration is answered in the affirmative.
15. Accordingly, I proceed to pass the following:
ORDER The Civil Miscellaneous Petition is allowed. -9-
NC: 2025:KHC:17752 CMP No. 558 of 2024 Sri. D. Vishweshwara Bhat, retired District Judge, is nominated as the Sole Arbitrator to resolve the dispute between the petitioner and the respondent as per the provisions of the Arbitration and Conciliation Act, 1996 and the Arbitration and Conciliation Centre Rules, 2012.
The office is directed to communicate this order to the learned Sole Arbitrator and the Arbitration Centre, Bengaluru.
Sd/-
(ASHOK S.KINAGI) JUDGE BVK