Full Text
HIGH COURT OF DELHI
Date of order : 6th December, 2022
HIMALAYA CONSTRUCTION COMPANY PVT. LTD..... Petitioner
Through: Mr. Mamashney Jha, Advocate
Through: Ms. Radhika Bishwajit Dubey and Ms. Akanksha V. Ingole, Advocates
CHANDRA DHARI SINGH, J (Oral)
ORDER
1. The instant petition has been filed by the Petitioner seeking appointment of Sole Arbitrator in accordance with Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) inter-alia praying for the following reliefs: “a) Appoint an Arbitrator on behalf of the Respondent and direct the two nominated Arbitrators to appoint the Presiding Arbitrator; And/or In the alternative, appoint a Sole Arbitrator for adjudicating the disputes between the parties arising out of the three Supplementary Agreements dated 09.08.2017; b) A ward the costs of the proceedings;”
2. The Respondent is a Private Limited Company incorporated under the Companies Act, 1956 and is engaged in the business of Construction and Development of Hydro Electric Projects in the State of Himachal Pradesh. Petitioner is also a Private Limited Company incorporated under the Companies Act, 1956 and is engaged in the business of Construction of Civil Engineering works. The Respondent awarded three civil construction works to the Petitioner by way of 3 separate agreements (hereinafter referred to as 'the Packages').
3. The works specified in the Packages could not be completed within a set period of time and accordingly, to extend the time period within which the work as per the Packages may be concluded, the parties entered into multiple supplementary agreements. Disputes arose between the parties as the work could not be concluded even within the extended time period and also because the Respondent encashed various Bank Guarantees submitted against the Packages.
4. Due to the shadow of dispute looming large, the Petitioner invoked arbitration clause 3.1.24.0 & 3.2.5.0 in all the packages vide notice dated 11th September 2015. The Petitioner on 18th April 2016 filed separate Arbitration Petitions in respect of each of the agreements being AA 233 of 2016, AA 234 of 2016 and AA 240 of 2016 before the Delhi High Court.
5. These applications were disposed of by a Coordinate bench of this Court vide common order dated 9th January 2017 in terms of which an arbitral tribunal was duly constituted. Amid the arbitration proceedings, as a result of meeting held on 18th July 2017, the parties decided to settle all the disputes amicably among themselves and consequently, three Supplementary Agreements were executed between the parties on 9th August 2017 for the completion of work.
6. These Supplementary Agreements contained a payment schedule as per which the Respondent was required to pay a sum of Rs.150.00 Lacs to restart the work in all the three packages which tantamounted as a part payment against outstanding dues of all three packages. Out of the sum of Rs.150.00 Lacs, a sum of Rs.55.60 Lacs was to be paid on signing of Supplementary Agreements and balance in a phased manner. The Respondent made payment of only a sum of Rs. 50.60 lacs and failed to release the balance amount of payment which was a pre-requisite to restart the work to be executed as per the Supplementary Agreements.
7. In the year 2019, the Punjab National Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Respondent wherein by order dated 22nd October 2019 an Interim Resolution Professional was appointed. The National Company Law Tribunal vide order dated 16th March 2021 terminated the proceedings and revoked the appointment of Interim Resolution Professional.
8. Pursuant to termination of the Insolvency proceedings, the Petitioner requested the Respondent to release all the pending dues. Having received no response to the afore-mentioned requests from the Respondent, the Petitioner issued a notice under Section 11 of the Act to which the Respondent replied by denying all the averments so made in the Section 11 notice.
9. Being aggrieved, as the Respondent failed to nominate a coarbitrator within 30 days, the Petitioner has filed the instant petition seeking appointment of an arbitrator.
10. Mr. Mamashney Jha, learned counsel appearing on behalf of the Petitioner submitted that it is due to deliberate impediments and hindrances being created by the Respondent, the work required to be executed as per the Packages and multiple supplementary agreements could not be completed within stipulated contractual period.
11. Learned Counsel for Petitioner has further posited that while the Petitioner was engaged in the said project, the Respondent has illegally encashed the Bank Guarantee submitted by the Petitioner against the Packages.
12. Per Contra, Ms. Radhika Bishwajit Dubey, learned counsel for the Respondent has denied all the averments made in the instant petition by way of which an arbitral tribunal is sought to be appointed.
13. It has further been submitted by Ms. Dubey that the present petition is pre-mature since the Petitioner has deliberately failed to adhere with the pre-arbitration dispute resolution mechanism as stipulated under the Dispute Resolution Clause read with the Special Conditions of the Contract for the Agreements regarding the Packages. It is submitted that according to the said clause, the dispute had to first be attempted to be settled by reference to the Chairman or an Adjudicator; or the dispute should have been first amicably resolved by mutual discussions between Representatives of both the Parties respectively.
14. Learned Counsel for the Respondent has seriously objected to a composite petition having been filed by the Petitioner despite the fact that the instant dispute arises out of three different agreement which have different dispute resolution mechanisms in operation. Accordingly, it is submitted that the instant petition is bad in law and is not permissible.
15. Ms. Dubey has further submitted that the Supplementary Agreement dated 9th August 2017 relied upon by Petitioner during the course of his arguments cannot come to his rescue as the same has not come into effect. For this she has placed reliance on Clause 8 of the Supplementary Agreement which envisages that Agreement shall only come into force once the cumulative amount of Rs. 150 Lacs has been paid by the Respondent to the Petitioner. It is therefore submitted that the present petition is not maintainable as well is premature.
16. Learned Counsel has further placed reliance on a judgment of the Hon’ble Supreme Court titled as DLF Home Developers Ltd. v. Rajapura Homes Pvt. Ltd. & Anr; 2021 SCC OnLine SC 781 to argue that this Court is not precluded to deny the prayer to refer the dispute arising between the parties for adjudication before an Arbitrator.
17. Ms. Dubey has further contended that the present petition is bereft of correct facts as it is explicitly stated in the Supplementary Agreement that any further amount was to be paid to the Petitioner on receipt of further funding from Punjab National Bank and the Petitioner is well aware of the fact that the Respondent is yet to receive further funding from the Petitioner. It is further argued that the claims of the Petitioner are barred by limitation and the Petitioner has illegally sought to recover dues from the Respondent which are not due to it.
18. This Court has heard learned counsel for the parties and has gone through the petition as well as the reply to the instant petition filed by the Respondent and judicial pronouncements relied upon.
19. Keeping in view the fact that the learned counsel appearing on behalf of Respondent has not disputed existence of arbitration agreements as mentioned in clause 3.1.24.[3] and 3.2.5.[1] of the General Conditions of Contract entered into between the parties with regard to work to be executed as per the Supplementary Agreements signed on 9th August 2017, the said disputes and differences arising between the parties are referred to arbitration under the aegis of Delhi International Arbitration Centre.
20. At this stage, it is submitted by Ms. Dubey that the Arbitrator in the arbitration proceedings may be directed to first adjudicate the preliminary objections raised by the Respondent, before proceeding on the merits of the dispute. This submission has been vehemently objected to by the learned counsel for the Petitioner. Be that as it may, this Court is not inclined to make any observation in respect of this prayer made by the learned counsel for the Respondent, as the Arbitrator will be independent to proceed with the arbitration proceedings in accordance with the law.
21. Hence, the following Order: ORDER a) Since, both the parties have consented for the appointment of a Sole Arbitrator, the Delhi International Arbitration Centre is directed to appoint a Sole Arbitrator from their panel of Arbitrators to conduct arbitration under the aegis of the Delhi International Arbitration Centre. b) The arbitration shall be conducted under the Delhi International Arbitration Centre. The Sole Arbitrator shall ensure compliance of necessary disclosure under Section 12 (1) of the Act and not being ineligible under Section 12(5) of the Act before commencing the arbitration. c) The fee of the Sole Arbitrator shall be in accordance with the schedule of fees prescribed under the Delhi International Arbitration Centre (Internal Management) Rules, 2012 and Delhi International Arbitration Centre (Administrative Cost and Arbitrators’ Fees) Rules, 2012. d) All contentions of the parties are expressly kept open including any preliminary objections which may be raised by the parties before the Sole Arbitrator. e) The parties shall appear before the Coordinator, Delhi International Arbitration Centre, New Delhi on 16th December 2022 at 11:00 A.M. f) A copy of this order be sent to the Delhi International Arbitration Centre (DIAC) for information and necessary compliance. g) With aforesaid directions, the present petition is accordingly disposed of in the abovesaid terms along with pending applications, if any.
JUDGE DECEMBER 6, 2022 sv/ug