Full Text
HIGH COURT OF DELHI
Date of order : 27th February, 2023
STARCON INFRA PROJECTS INDIA PRIVATE LIMITED..... Petitioner
Through: Mr. Pawan R. Upadhyay, Mr. Priya Soni and Mr. Gaurav Pathak, Advocates
Through: Mr. Puneet Taneja, Advocate (Through VC) with Ms. Laxmi Kumari and Mr. Manmohan Singh
Narula, Advocates
CHANDRA DHARI SINGH, J (Oral)
JUDGMENT
1. This is an application under Section 151 of the Code of Civil Procedure, 1908 seeking condonation of delay in re-filing the captioned petition.
2. For the reason stated in the application, the delay of 26 days in refiling the captioned petition is condoned.
3. The application is disposed of.
1. The instant petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Arbitration Act”) has been filed on behalf of petitioner seeking the following reliefs:- “ A. Appoint an independent and impartial sole arbitrator so as to adjudicate the disputes and differences arising between the parties;
2. Learned counsel for the petitioner submitted that pursuant to the agreement dated 15.10.2019, the Petitioner was awarded the work of Construction of Roads and Drain and other associated civil works by the Respondent for its Solapur STPP for a total value of Rs. 22,35,16,730/-. The completion date of the tendered work was stipulated to be 15 months. The Letter of Intent dated 15.10.2019 as awarded to the Petitioner/ Applicant was made subject to the Special Conditions of Contract, and General Conditions of Contract (hereinafter referred to as the “GCC”).
3. It is submitted that the Clause 7 of the GCC provides for a detailed mechanism for the Settlement of Disputes, specifically, mutual consultations, resolution of disputes through Expert Settlement Council, providing for Conciliation proceedings and failing which, through the mechanism of Arbitration as provided in Clause 7.3.
4. It is further submitted that during the pandemic, certain issues arose between the parties, due to which the petitioner issued termination notice to the respondent. It is stated that the petitioner in view of the contradictory stand having been adopted by the respondent called upon the respondent to refer the disputes to the Expert Settlement Council under clause 47.5.[3] in terms of the mechanism provided under the contract for the settlement of disputes. The respondent on 1.7.2022 disputed the termination of the contract by the petitioner under clause 47.5.1/47.5.[2] of the GCC and intimated the petitioner that in case the parties failed to reach an amicable settlement of disputes then the matter would be referred by the Respondent to the mechanism of dispute resolution/Expert Settlement Council under the contract.
5. It is submitted that vide letter dated 03.08.2022, the petitioner intimated the respondent about the correct factual situation and the circumstances under which and upon the failure on the part of the respondent to refer the dispute to the Expert Settlement Council, the petitioner having no other alternative had invoked the arbitration clause with a request to refer the matter to arbitration so that the disputes and differences including the validity of the termination notice issued by the petitioner under the provisions of clause 47.5.[1] and 47.5.[2] of the GCC may be adjudicated upon.
6. It is further submitted that Respondent vide letter dated 13.08.2022 disputed the termination of the contract carried on by the petitioner under the notice dated 10.06.2022 who further disputed the applicability of clause 47.5.[1] and further impressed upon the petitioner that since the contract still continues to be in force and has not been terminated the arbitration clause as contained in clause 7.[3] of the GCC cannot be invoked.
7. While buttressing his arguments, learned counsel placed reliance on the judgment of a Coordinate Bench of this Court in Ambey Mining Pvt. Ltd v. NTPC Ltd. (ARB.P. 878/2022, Neutral Citation No- 2023/DHC/000247) passed on 11.01.2023 wherein the Respondent was a party and had leveled similar objections against referring the dispute therein to arbitration, which were rejected and the matter was referred to arbitration.
8. It is thus submitted that in view of the fact that the Respondent has failed to appoint an arbitrator on one or the other pretext, the petitioner is left with no other alternative but to file the present petition and approach this Court praying for appointment of a sole arbitrator.
9. Per contra, learned counsel appearing on behalf of respondent vehemently opposed the instant petition. It is submitted that the instant petition has been pre-maturely filed and the pre-arbitral steps as provided for in terms of the mandate of Clause 7.[1] and 7.[2] of the GCC are yet to be exhausted.
10. It is submitted that the petitioner, without seeking mutual consultation under Clause 7.[1] of GCC, invoked Clause 7.[2] for resolution of disputes through Expert Settlement Council vide Letter dated 30.06.2022. The respondent vide letter dated 01.07.2022, informed the petitioner that the contract was still not terminated and the termination under clause 47.5.[1] and 47.5.[2] was invalid. The petitioner was also informed that the settlement of disputes could be discussed during meeting and in case of failure to reach an amicable settlement; the matter should be referred to the mechanism with the Dispute Resolution Cell (DRC)/Expert Settlement Council (ESC) detailed in the contract.
11. It is thus submitted that the petitioner cannot thwart the agreed Settlement of Disputes Clause at its own whims and fancies. Therefore, in the absence of compliance of pre-arbitral steps as provided under Clause 7.[1] and 7.2, the question of seeking appointment of Arbitrator under Section 11(6) under the Arbitration Act does not arise. In view of the aforesaid, it is submitted that the instant petition as being devoid of merits is liable to be dismissed. However, there is no objection regarding the dispute in question being arbitrable in nature.
12. Heard learned counsel for the parties and perused the record.
13. The main dispute between the parties at hand pertains to the applicability of Clauses 47.5.[1] and 47.5.[2] of the contract and the consequent termination carried out by the petitioner. The GCC provides for a 3-tier dispute resolution mechanism. Clause 7.[1] of the GCC provides for the parties to attempt resolution of their disputes through mutual consultation. Clause 7.[2] provides the resolution through Expert Settlement Council and Clause 7.[3] provides for arbitration.
14. It is a matter of record that attempts were made for amicable settlement of disputes in the joint meeting convened on 05.07.2022. It was also decided by the both the parties that in case of a failure to reach amicable settlement in the convened meeting of the parties, the matter shall be referred to the Expert Settlement Council as per the contractual provisions. However, the same could not take place.
15. It is evident that upon the failure of the parties to arrive at an amicable settlement through mutual consultation, a further forum has been created for exploring the possibility of an amicable settlement through a conciliation process to be undertaken through the ESC. The same, however, was at the discretion of the parties.
16. This is also evident from the reading of Clause 7.3.[1] of the GCC, which is the Arbitration Agreement between the parties. It provides that if the process of mutual consultation and/or the ESC fails to arrive at a settlement between the parties, the parties may invoke arbitration. The usage of the expression “and/or” itself indicates that the process of the ESC is not a mandatory pre-condition for invoking arbitration, however, where the process of conciliation through ESC is initiated with the consent of the parties, the invocation of the Arbitration Agreement shall be after the failure of such conciliation process. In view of the aforesaid, there is no impediment in referring the instant matter to arbitration.
17. This Court has also perused the judgment of a Coordinate Bench of this Court as relied upon by the petitioner, passed on 11.01.2023 wherein the Respondent herein was a party and had leveled similar objections while placing reliance on the provisions of the GCC against referring the dispute therein to arbitration, which were rejected and the matter was referred to arbitration. This Court, in the facts and circumstances of this case, is also of the same view.
18. As agreed on behalf of the parties, it is evident that the disputes between the parties are arbitrable in nature. It is also concluded that the petitioner has made out a case for appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the abovementioned Agreement.
19. In view of the same, this Court is inclined to refer the disputes between the parties for being resolved to arbitration, by appointing an arbitral tribunal. Hence, the following Order: ORDER
(i) Justice (Retd.) Vineet Saran, former Judge of the Supreme
(ii) The learned sole arbitrator, before entering the arbitration reference, shall ensure the compliance of Section 12(1) of the Arbitration and Conciliation Act, 1996;
(iii) The learned sole arbitrator shall be paid fees as prescribed under the he Delhi International Arbitration Centre (DIAC) (Administrative Cost and Arbitrators Fees) Rules, 2018 as amended vide notification dated 15th November, 2022;
(iv) At the first instance, the parties shall appear before the learned sole arbitrator within 10 days from today on a date which may be mutually fixed by the learned sole arbitrator; and
(v) All contentions of the parties are expressly kept open.
20. The petition is disposed of in the aforesaid terms along with pending applications, if any.
21. The order be uploaded on the website forthwith. A copy of the order be forwarded to the learned sole arbitrator on the following address: Justice Vineet Saran Former Judge, Supreme Court of India 65, Lodhi Estate, New Delhi Phone No. +91 - 789742020[9] CHANDRA DHARI SINGH, J FEBRUARY 27, 2023 Dy/@k Click here to check corrigendum, if any