Dismissed

M/s a.s.advertisers v. Municipal Corporation, Raipur And Anr.

Chhattisgarh HC2 Dec 2014ARBA/21/2014

Case brief

AI extract

What is this about?

The Chhattisgarh High Court rejected an application for the appointment of an arbitrator under Section 11(6) of the Arbitration Act, 1996. The Court held that the applicant failed to exhaust the mandatory dispute resolution procedure outlined in the contract's Clause 6 before approaching the Court.

What did the court decide?

The arbitration application was rejected; parties are at liberty to approach concerned authorities for redressal per the agreement.

M/s a.s.advertisers Vs Municipal Corporation, Raipur And Anr. — Arbitration | Chhattisgarh HC (2014)

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IN HIGH COURT OF CHHATfISGARH AT BILASPUR R ARBITRATION APPLICATION NO. m‘KL OF 2014

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APPLICANT:

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M/s A.S. Advertisers, partnership firm duly registered under the relevant provisions of the lndian Partnership Act, 1932 acting in the premises through its Partner Ashish‘ Agrawai, son of Shri Satyanarayan Agrawat, aged about 35 years, resident of. Gurunanak Chowk, Raipur. Civil & Revenue District Raipur.

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RESPONDENTS:

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RESPONDENTS: 1. Municipal Corporation, Raipur, New Headquarters Building, White House, Gandhi Chowk,‘Raipur (CG)

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1. The Commissioner, Municipal Corporation, Raipur, New Headquarters g Building, White House, Gandhi Chowwipur (CG)

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APPLICATION UNDER SECTION 11 16!^OFTHE ARBITRATION AND CONCILIATIION ACT, 1996

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T h e_s.[tactnocttjcnaiowmrgeu

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L!!—IGI-I COURT^{OFCHHATTISGARHATBILASPUR} Hon'ble^{ShriJusticeP.SamKoshyl} (Single^Bench:

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Arbitration^{ApplicationNo.21of 2014}

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Applicant

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M/ s A. S.^Advertisers

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VERSUS

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Respondents

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Municipal Corporation, Raipur and^another

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Present: Shri B.^{P.Sharma,counselfortheapplicant.} Shri Kashif^{Shakeel,counsel}fortherespondents.}

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ORRDE (03.12.2014)

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........ hrough this under Sec rbitration^andC o 1996 (hereinaftefreferred^as “the Act of 1996”) t is an arbitrator^soast o grievance^{withtherespondents} hhattisgarh^HighCourtasa by appointing^areti sole arbitrator. Wear?“ 2. The case^{oftheapplicant,} in brief, is that^theapplicant company had participated in a notice inviting tender in. connection^{withinstallationandmaintenanceofunipolesat10} places^{inthemunicipalareaofthecityofRaipur.} The applicant being the successful^{bidderwasawardedthecontractandan} agreement^{wasexecutedon'24.09.2008betweentheapplicant} According^tb the^{applicant,theperiod} and the^{respondentNo.1.} of contract^{wasinitiallyforfiveyearswhichmayberenewedfor} After^thework another^five years^{basedontheperformance.} ‘unipoles was awarded to the applicant, they installed 8 at

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'2'

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different locations provided by^{respondentNo.1Corporation.} As regards the remaining two places, there was some confusion regarding the site as the area provided by the Municipal Corporation was falling under the^{NationalHighwayAuthorities} and therefore the applicant^{didnotinstallthetwounipolesand} for the 8 poles they had paid^therequisite premium^fixedatthe time of awarding the contract. According to the applicant,^since they had made huge investment^{intheinstallationofthe8} poles e part^{oftheapplicantin} for the past five five years. wever, the Corpor’ caring; for the 1n nt and the hardships that had faced in the course of installation of the un dl 11aterally decided to cancel the 2 contract awarded^to and vide advertisement^dated 19.05.2014 called^fo r- 1sement for execution^offresh Want? contract.

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According to the counsel for the applicant, there were various issues^{whichhadtoberesolvedbetweenapplicantfirm} and respondent^No.1 Corporation like the refusal^for grant of renewal and the non—granting of permission to install two unipoles out of^{10unipolesawardedas} per^{thecontractwhen} the unipoles^{wereinstalledbythe} present^{applicantforafixed} l premium paid. That as per the agreembnt,^{clause6deals‘with} the settlement of the dispute^between the parties. For ready reference, Clause-6 of the contract agreement is reproduced herein as under:

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”‘3'-

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SETTLEMENT OF DISPUTES

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SETTLEMENT OF DISPUTES Under no circumstances whatever^{shalltheSecondParty} be entitled to submit any claim for consideration of the Corporation on any account unless^{theSecondPartyshallhave} given sufficient prior intimation and shall have submitted^the details in writing to the First Party within one month of the cause of such claim.

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i) Except where otherwise specified in the contract ' documen and u ectr-to the powers delegated^to Municipal flnal conclu contract upon ons relating to the^meaningof ‘ the specifica o s , drawings and instructions herein befor and as to the quality or Wane workmanship or materials^usedon the work or as to any other question,^{claimrightmatterorthingwhatever} if in way arising out of or relating to the contract designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the :execution or failure to execute the same,^{whateverarisingduringthe} progress of the work or after the completion or abandonment thereof during^{operationormaintenance.} ii) The Second^{Partymaywithinthirtydaysofreceiptby} him of any order^{bytheFirstPartyasaforesaid,appeal}

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.—q—

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against it to the Municipal Commissioner with the work/project the Municipal Commissioner^shall give^his decisions in writing within a period of 3O^days.

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iii)

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Arbitration: Where any dispute is not resolved as above, the following provisions shall^apply

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The dispute shall be submitted to arbitration^atthe (a) request of either party upon^notice to that effect to the other party (a^noticeof reference) in accordance ndian Arbitration and endments if any,

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(C)

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Municipal ner, Municipal Corporation, Raipur. The Arb 1 take place before a panel^of three arbltr uch lesser number^asmaybe ‘ mutually agreed by the parties.

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(d) The parties shall agree upon identify of the Arbitrator (s) Within 15^{workingdaysofthenoticeof} reference by the relevant party. If the parties are unable to so agree upon^{theidentifyoftheArbitrator} (s)^then:

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(i) The parties shall use their best endeavor to agree on to an appoiriting^{authorityWithin25} working days of the receipt of the Notice of reference by the^relevant party^and, i

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(ii)

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In the event that^the parties^{areunabletoagree}

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.—_b‘’

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as aforesaid upon^{anappointingauthority,the} Arbitrator (s) shall be appointed on the application of either party by the Municipal Commissioner, Municipal Corporation, Raipur Whose decision as to the identify of the arbitrator shall^befinal 8r, binding^onboththe parties.

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The Arbitration^{Boardmayifromtimetotimewith} (e) e rparties extend the time far t)^{Exceptwhereotherwiseprovided} i ontract, the e beinig in force,^shallapplyto dings uhder^thisclause. L te if any, the same shall be

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According^{totheapplicant,hehasmaderepeatedattempts} before respondent No.2 for appointment of an arbitrator and since respondent^{No.2didnotaccedetotheapplicationsmade} by the present applicant, he was compelled to move an application^{underSection9oftheActof1996beforetheDistrict} Judge, Raipur^{seekingforanmterlmprotectionagainstthefresh} advertisement issued on 19 05 2014i for execution of new contract^{forthesubsequent} period i.e. after culmination^ofthe The learned^District contract period^ofthe present^applicant. Judge, Raipur after hearing the parties vide its order dated

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19.06.2014 granted an interim protection to the applicant restraining the^further proceedings^{withthefreshadvertisement} issued on 19.05.2014^{andmeanwhiledirectedtheapplicantto} initiate appropriate proceedings^for getting^{thedisputebetween} applicant and respondent No.1 resolved in accordance with Clause 6 of the agreement entered into between the partie. Thereafter the applicant started making correspondence with respondent No.1 requesting the authprity to take steps for b n directed by^theDistrict

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24.06.2014 (Anne^xu d letter dated A—9) alo a1 notice dated 02.07.2014 (Annexure the respondents^h a any^{stepforappointmentofan} under Section¹¹ (6)^of arbitrator^andtherefoW mlication the Act of 1996 deserves to be allowed and this Court may appoint an^{arbitratorforredressaloftheclaimsputforthbythe} ‘- applicant. According^{tothecounselfortheapplicant,itisacase} where the contract^{executedbetween} the parties itself^is not properly^{wordedandonaccountoftheambiguityinthevarious} clauses of^{theagreement,the'onlyreconrsewhichisleftforthe} applicant is the proceeding under iSection 11 (6) of the Arbitration Act. Counsel for the applicant tried to draw the attention^{ofthisCourtinrespectoftheprovisionsofClause6} (i) of the agreement^{statingthatasperclause6(i)therehastobe}

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an Offlcer duly authorized by respondent No.2 to take a decision on a representation for redressal of the grievance of the applicant and since such an authority has not been^nominated, the said clause becomes redundant. Since clause 6 (i) itself is redundant, the next clause i.e. clause 6 (ii)^{canbeinvokedonly} in the event if on a representation made by the applicant^thereis is a sort of an order passed under Clause 6 (i)^asClause6 (ii) appellate power to be exercised by the respondent^No.2. In view of the same, ac ( the applicant, since the agreemen not specify auLhority who could present licant was seeki Court under Section 6.x In support of h1, ion counsel for the applicant relied upon the decis' on’ble Supreme Court^inthe ..... case of ACEI Pipeline tsi>'(P) Ltd. v. Bharat^Petroleum ma?! Tm 61 Corpn. Ltd. reported in (2007) 5 SCC^304. According to the counsel for the applicant, in the^said judgment,^the party^which has to appoint an arbitrator fails^to make^{anappointmentwithin} 3O days from the date^{ofreceiptoftherequestfromtheother} party and therefore the Supreme Court has held that the application under Section 11_(6) of the Act of 1996 can be entertained by the High^{Courtforappointmentofanarbitrator.} l y. In addition, counsel for the applicant also relied upon’ the decision of Indian Oil^{CorporationLimitedandothersv.Raja} Transport Private Limited reported in (2009) 8 SCC 520 wherein in paragraph 21 one of the ratios laid down while

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,go

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discussing the scope of Section 1 1 (6)^{oftheActof1996Hon’ble} Supreme Court has held that on failure of one of the parties to act within 3O days on an application seeking^{foranappointment} of an arbitrator Will enable the aggrieved party to file an application under Section 11 (6) of^{theActof1996.}

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Per contra, Shri Kashif Shakeel, counsel for the respondents opposing the instant application pointed^outthat since the agreement between the parities envisages specific provisions^{forsettlpnientofdi} s the parties fail to act aS red under the agreed procedur provision of ' on 11 (6)^ofthe cannot be invo the first tance itself. Acc counsel for the respondents, once when a procedur n prescribed,^the parties^tothe agreement are duty—b‘ to avail the recourse available first and only on the failure on^the other side in either . e dispute or in referring the matter to an arbitration, can the party move^{totheHighCourt} for appointment of an arbitrator^underSection 11 (6)^oftheAct of 1996. Counsel for the respondents^{opposingthesubmissions} made by the counsel for the applicant submits that a bare of the entire record submitted by the applicant in perusal respect of his application under^Section 1 1 (6)^{oftheActof1996} would reveal that at no point^{oftimetheiapplicanthasmovedan} appropriate application^{totherespondentsforappointmentofan} arbitrator or for referring the^{mattertoanarbitratoras} per^the agreed terms^{andconditionswherein} specific procedures^have

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been prescribed pertaining to the^{redressalofthe} grievance of the applicant. He submits that in fact, the entire action^onthe part^{oftheapplicantisnothingbutamisuseoftheprocessof} law whereby the applicant without^{complyingtherequirements} which the applicant is supposed to do^as per^{thetermsofthe} contract straight way has tried^toinvoke the powers of the High Court under Section 1 1 (6) of the Act of 1996. 8. Counsel for the respondents further submits that the documents attac t, pplication itself would show th :entlre action 1n1t1ated‘ e p licant is only to the decision of respondent No.1 ..... with fresh m aintenance of th He submits that whe o d of^‘flve years has already expired long back, t ant does not have any right whatsoever in his 2 ntinuing with the business beyond the .period of ~ Counsel for the respondents Emma specifically pointed^{outthattheagreementintheinstantcase} was executed on 24.09.2008^{afteraspecificconsentletterwas} issued on 22.09.2008^{infavouroftheapplicantandassuchthe} period^of5 years^{comestoanendon24.09.2013.} Since the I applicant had been granted^{fivemonthstimeforinstallationand} even if that period is excluded for the purpose of count, the l period of 5 years for the applicant ha;s crossed and already therefore there is no legal right whatsoever in favour of the applicant seeking^forthe stalling of the tender proceeding^for awarding fresh contract. Counsel for the respondents relied upon the decisions^{ofSupremeCourtinthemattel:ofiNiational}

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’ID’

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Highways Authority^{ofIndiaandanotherv.BumihiwayDDB} Ltd. (JV)^{andothersreportedin(2006)} 10 SCC 763^wherein the Supreme Court^{inverycategoricaltermin} paragraph^30has held that the Court^has jurisdiction^underSection 11 (6)^ofthe Act of 1996 to make an appointment only when the person including an institution, fails to comply with the principle According^to conditions entrusted^to it under that procedure. the counsel for the respondents, in ithe instant case, the applicant havin scribed procedure^tobe 't ‘ ' i ~r b tion Act the nitiated by 9. Considering^the i of either^sideifwe p ep greement it^{wouldclearlyreflect} that clause 6 of th eeiri nt stipulates^thatunderno circumstances^{theseWWwhichasperthecontractisthe} applicant is entitle to raise a claim unless it has given “sufficient prior intimation” in writing to the first party^which 5. as per the^{contractistherespondentNo.1.} In addition, if we see clause⁶ (i) it shows^{thatintheeventofanygrievance,the} second party should approach the officer so appointed for ; . - . i . . redressal of his grlevance so far as 1tire1ates to spec1f1cat10ns designs^{andinstructionshereinbeforementionedandalsoasto} the quality^{orworlqnanshipormaterialsusedontheworkoras} to any other question^{orthingwhateverifinwayarising} out of or relating^{tothecontractawarded.} In the event, if the second

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kn,

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party^{isdissatisfiedwiththedecision,thesecondpartymayflle} an appeal within 30 days^{totheMunicipalCorporationwhoshall} give^{hisdecisionsinwritingwithinaperiodof3Odays.} In the instant case, on perusal of^therecord it would reflect that^the second party i.e. the present applicant^{hasnevertriedtofind} out whether there is an authority^{appointedbyrespondentNo.2} for considering the representation^{oftheapplicantCompanynor} has he at any point of time approached^respondent No.2 for redressal of hi se‘ 6 (ii) of the agreement 0 05.2014. If we ntents of the lertte^dated 20.5.20-0I4 ,ould reflect in connection^W1 the nonrenewal of the contr the applicant^andtherewas practically^no claim ’ other dispute With re p0 Corporation. 10. In addition counW gagsapplicant^{alsobroughtonrecord} certain documents i.e. letter dated 09.05.2013, 13.05.2014, 20.05.2014 and^22.05.2014. On perusal^{oftheseletterswould;} also show that the same are not seeking for invocation of an arbitration clause or appointment^{ofanarbitratorforredressalof} the grievance^{butareonlyasortofrepresentationtorespondent} No.1 for issuing fresh advertisement dated 19.05.2014 for awarding fresh^{contractfornewcontract?} period. The letters dated 23.06.2014 and 02.07.2014 and also the legal notice dated 02.07.2014 are in fact correspondences^madewith respondent No. 1 Corporation^{afterthedecisionrenderedbytheDistrictJudge}

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., m;_

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; 3)

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on the application^{underSection9oftheActof'1996.}

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Further, Sub clause iii of clause⁶ of the contract also enumerated certain^{conditionswhichhavetobeadoptedbythe} moving an^{applicationforappointmentof} second party^before an arbitrator^{bytheCourtandas} per^{thecontractagreement,} the parties themselves have been granted ample powers for redressal of^the grievance^{byapplyinganarbitrator.} On perusal of the documents^{attachedwiththepresentapplicationwould} he_rapp1icant^{i.e.thesecond} party Arbitration Act for nterim relief or also before approaching^thisCou rt ection 11 (6)^{oftheActof1996.} If we peruse the co ‘ es which have been enclosed js along^with this^app 1c, w , o the^{documentsadducedby} m i W . additional^{documentsonrecord,} 1t way of an^{applicationtaking} would clearly reflect that the applicant somehow wanted ap renewal^{ofthecontractforananotherperiodoffiveyearsand} the respondents^{havethoughtofgoingforafreshtenderafter} the period^{forwhichtheapplicantwasentitledfor,hadexpired.} 12. The judgment^{whichhasbeenrdlieduponbythecounsel} for the applicant i.e. in the case of} ACE Pipeline Contracts the Hon'ble^{SupremeCourtinparagraph-20hasheld} (Supra), as under:

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“20. It may^{alsonotbeoutofplacetomention}

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«13"

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that we are aware of the departmental lethargy in making appointment of arbitrators in terms of the arbitration clause. Therefore, mandamus can be issued by the courts in exercise of powers^under Section 1 1 (6)^{oftheActbutthedemandshould} be in the event of failure by the authorities^to appoint arbitrators within the reasonable^time. Courts are no powerless to issue mandamus^tothe authorities to appoint arbitrators^asfaras possible as per the arbitration clause. But in large number of cases if it is found that! it would not be appropriate adhered t appoint the except in ex cases for reasons to be recorded or W parties^{agreeforcommon} name .”

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From the observatio Hon'ble Supreme Court^inthe n W We aforesaid judgment itself it is evidently clear that in case, the parties^{haveagreedresolvingthedisputeinaparticularmanner,} the parties are duty bound firstly to accede the preconditions agreed in^{thecontractagreementandonlyintheeventoffailure,} the provisions^ofSection 1 1 (6)^{canbeinvokedforappointmentof} an arbitrator. 13. In the instant case,^{neitherthedbcumentsattachedtothe} application for appointment^{ofanarbitratornor} the documents subsequently^{broughtonrecordshowthatanyeffortwasmade} by the applicant^{forredressalofhis} grievance in accordance^with the agreement entered into between the parties. Most of the

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documents referred to by the applicant have been made subsequent to the application^{underSection9oftheArbitration} Act preferred by^{theapplicantbeforetheDistrictJudgefor} gant of interim relief^{andthesubsequentdocumentsalsowouldshow} that the same have been initiated in compliance to the order passed^{bytheDistrictJudgeintheproceedingsunderSection9} of the Arbitration^Act.

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As regards the judgment^{oftheSupremeCourtinthecase} ia (Supra), the Supreme 5 in the agreement^andonlyon with the preconditio the failure of the med r the procedure provided in the ' ’ " agreement, the par ach the Court^underSection 1 1 9 ..... Court in the^said judgment^has (6)^oftheActof19 pp also held that^{unlessthemechanism/procedureforappointment} of an arbitrator fails or the mechanism/procedure is not exhaused, the^{Courtcannotassume} jurisdiction^{underSection11;} The Apex Court^{furtherwentoninholding} (6)^{oftheActof1996.} that the parties^{arerequiredtocomplywiththeprocedureofthe} agreement^{andthedefaulting} party^{canhotbeallowedtotakethe} advantage of^itsownwrong. i

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In View of the^{abovedecisionsof} the^{Hon'bleSupreme’Court,} this Court^{isoftheopinionthatintheinstantcasealsofromthe} record it clearly^{reflectsthattheapplicanthasnotexhaustedthe} mechanism provided^{intheagreement/contractandtherefore} the

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z L5"’

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instant arbitration application deserves to be and is rejected. However, the parties are^{setatlibertytoapproachtheconcerned} authorities for^{redressaloftheir} grievance^{inaccordancewiththe} agreement entered^{intobetweenthe} parties.

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Accordingly, the instant arbitration application stands rejected.

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Sd/— P.Sam^Koshy §udge /

M/s a.s.advertisers v. Municipal Corporation, Raipur And Anr.

Case brief

What is this about?

What did the court decide?

M/s a.s.advertisers v. Municipal Corporation, Raipur And Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

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