Amazing India Contractors Private Limited v. Indian Railway Stations Development Corporation Limited

1. Allowed subject to all just exceptions.

2. Application is disposed of. ARB.P. 923/2021 & I.A.12234/2021

3. The present petition has been filed by petitioner seeking appointment of a Sole Arbitrator under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996.

4. Petitioner, a private limited company registered under the Companies 2021:DHC:2930 Act, 1956, claims to be involved in the business of Facilities Management and Infrastructure Management Projects throughout India. Respondent is said to be a Special Purpose vehicle and a Joint Venture company of IRCON International Limited, a Government of India Undertaking, under the Ministry of Railways and Rail Land Development Authority incorporated under the Companies Act, 1956.

5. According to petitioner, on 09.09.2019 the respondent issued Notice Inviting Tender No. IRSD/HQ/TENDER/2019/21/ SC/ Parking issued by the Indian Railway Station Development Corporation for the project "Management of Parking Area at Secunderabad Railway Station Along with Access Control for a period of 3 (Three) years" and petitioner submitted a bid thereto on 30.09.2019. Pursuant thereto, respondent invited petitioner to attend negotiation meeting on 30.10.2019 and after successful negotiations, respondent issued a Letter of Award bearing IRSDC/HQ/TENDER/ 2019/21/SC/Parking dated 08.11.2019 in favour of petitioner for the said project, to which petitioner gave its Letter of Acceptance on 16.11.2019.

6. It is further averred on behalf of petitioner that in terms of aforesaid Letter of Award, petitioner is required to pay annual license fee of Rs.1,70,00,000/- which was duly deposited and also respondent was duly sent “Letter of Acceptance dated 16.11.2019” by the petitioner. Petitioner vide its letter dated 06.12.2019 also communicated the respondent about payment of first quarter of license fee and security deposit and acceptance of the project for period of three years. Further pleaded by petitioner that it sent an e-mail to the respondent informing that petitioner was ready to execute its part of obligation from 17.12.2019. However, despite visit by Director of petitioner from Hyderabad to New Delhi office of respondent on 05.12.2019 and 19.12.2019 for signing the Agreement, however, the agreement could not be signed on the plea of respondent that the format of Agreement was not ready. Once again, Director of the Petitioner visit the respondent’s office but he had to return empty hand back to Hyderabad, as authorized representative of respondent was said to be unavailable and the Agreement for the work could not be signed.

7. The respondent vide its communication dated 18.03.2020 asked for present of Director of petitioner for the purpose of signing the Contract Agreement, however, due to Covid 19 pandemic and declaration of Janta Curfew by the Hon’ble Prime Minister from 22.03.2020, none on behalf of petitioner could reach the respondent to sign the Contract Agreement. It is averred on behalf of petitioner that due to Covid pandemic and phrased lockdown, it became difficult for petitioner’s representative/Director to reach Delhi to sign the Agreement.

8. Further, it is averred that since petitioner did not hear anything from respondent regarding reopening after the lockdown period was over, the Director of petitioner sent an email dated 25.05.2020 to the respondent and thereafter, re-opened the parking services at Secunderabad Railway Station on 01.06.2020. Petitioner’s Director thereafter sent another mail dated 01.06.2020 to the respondent intimating that some illegal persons have been running parking and issuing receipts in the name of petitioner and petitioner is not responsible for such activities. After further communications dated 02 and 03 of June, 2020 gave authorization in favour of Mr.Rupesh Kumar and restarted operations at the parking from 06.06.2020 with a pro-rata licensee fee of 10% in terms with directions contained in Reference No. IRSDC/SC/F.M/Static Catering Units/05/09 dated 28.05.2020. Thereafter, on 29.06.2020, petitioner informed the respondent that since the main gate on Terminal-2 side was closed by the local authorities, two wheelers were not allowed to park their vehicles at the parking area and so collection of petitioner was nil and therefore, petitioner was unable to provide service at 10% increase in the license fee while bearing staff salary and other expenses and requested respondent to stop the services including the stop period in the 3- year contract tenure, till normalcy resumes after Covid pandemic. Similar request was reiterated by the petitioner to the respondent vide email dated 18.09.2020.

9. However, thereafter, respondent issued a Show Cause Notice dated 19.11.2020, bearing No. IRSDC/HQ/TENDER/2019/21/SC/Parking/148 stating that in terms of clause 1.12.[3] of “Instruction to Bidders” with the Letter of Award dated 14.11.2019 petitioner was required to enter into the Contract within thirty (30) days and has thereby, violated the terms of clause 1.12.4. and also alleged that the Directors of the petitioner had been disqualified by the Registrar of Companies Patna from 01.12.2017 to 30.11.2022 under Section164(2) of the Companies Act, 2013 resulting in their offices becoming vacant under Section 167 of the Companies Act and since the bid was submitted by Mr. Kalyan Kumar Singh, Director, his position as Director in AICPL stood void ab-initio and that the bid was won under fraudulent practices as defined under Clause 2(c) of' Instructions to Bidders'. Again on 14.12.2020, the respondent issued a Termination Notice Bearing IRSDC/HQ/T/ENDER/2019/21/SC/Parking/1529 ("Termination Notice”) to petitioner under Clause 5.[2] of the General Condition of Contract Schedule II of the Contract and Terminated the contract in question.

10. According to petitioner, acting in an arbitrary and fraudulent manner, the total security deposit and bank guarantee of Rs.86,88,750.00 along with unexpired period of license fee was forfeited by the respondent. Further, claimed that petitioner vide its letter dated 19.12.2020, sent its reply to aforesaid Show Cause Notice as well as Termination Notice to the respondent. However, respondent has forfeited the security deposit amount as well as amount of unexpired period of license fee and also has illegally and unlawfully invoked the bank guarantees despite pendency of OMP (I) 441 of 2020 filed on behalf of petitioner.

11. To resolve the aforesaid disputes, petitioner vide its legal notice dated 8.4.2021 called upon the respondent to appoint an Arbitrator, who vide communication dated 26.04.2021 informed the petitioner that due to Covid pandemic that the matter shall be looked into in due course of time. However, vide email dated 15.7.2021, the Managing Director of the respondent informed the petitioner about appointment of Arbitrator.

12. During the course of hearing learned counsel for petitioner submitted that unilateral appointment of Arbitrator by the respondent is contrary to the law laid down by the Hon’ble Supreme Court in Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd. 2019 SCC Online SC 1517. Reliance is also placed upon decisions of Hon’ble Supreme Court in Bhara tBroadband network Ltd. Vs. United Telecom Limited 2019 5 SCC 755 and TRF Ltd. Vs. Energo Engineering Projects Ltd. (2017) 8 SCC 377 in support of above submissions.

13. Thus, a prayer is made to allow the present petition and appoint an Arbitrator to resolve the disputes between the parties.

14. On the other hand, Mr. Rakesh Bhalla, Advocate, appearing on behalf of respondent has disputed the contentions raised in the present petition and submits that in terms of Clause 10.4(d) of the Agreement, it was mutually agreed that the disputes shall be referred to the sole Arbitrator, who shall be appointed from the panel of Arbitrators/Arbitration Tribunal appointed by Managing Director & CEO of IRSDC and thereby, the present petition seeking appointment of an Arbitrator is not maintainable.

15. This Court has heard learned counsel for the parties and has gone through the petition as well as decisions relied upon. Pertinently, invocation of arbitrator vide legal notice dated 8.4.2021 by the petitioner as well as appointment of Arbitrator under the General Condition of Contract Schedule II is not disputed by counsel for the parties. The submission of learned counsel appearing on behalf of respondent that the respondent has a right to appoint the Arbitrator does not stand, as the Hon’ble Supreme Court in Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd. 2019 SCC Online SC 1517 has categorically stated that “in cases where one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator.”