Allowed

M/S Siddharth Infotech Pvt. Ltd. v. Commisioner of Public Instructions

Karnataka HC10 Jun 2021CMP/9/2021

Case brief

AI extract

What is this about?

The Court allowed a civil miscellaneous petition for appointment of a sole arbitrator under Section 11(5). Holding that the petitioner stepped into the shoes of the original contractors, the Court determined the dispute required factual adjudication, is barred from writ jurisdiction, and awarded appointment of the nominated arbitrator.

What did the court decide?

Appointment of Mr. Justice Anand Byrareddy as the Sole Arbitrator is made; Office directed to communicate the order.

M/S Siddharth Infotech Pvt. Ltd. Vs Commisioner of Public… — Arbitration | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 10^TH DAY OF JUNE 2021

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BEFORE

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THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD

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CIVIL MISCELLANEOUS PETITION NO. 9/2021

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BETWEEN :

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M/S SIDDHARTH INFOTECH PVT LTD NO. 83/1, 2^ND FLOOR, SRI DURGA ENCLAVE J BLOCK, PIPELINE, 1^ST MAIN ROAD, SHESHADRIPURAM BENGALURU - 560 020 REPRESENTED BY ITS AUTHORIZED SIGNATORY MR. B.G. KUMARASWAMY.

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... PETITIONER

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(By SRI. CHINTAN CHINNAPPA. M., ADVOCATE)

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AND :

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COMMISSIONER OF PUBLIC INSTRUCTIONS PRIMARY AND SECONDARY EDUCATION, GOVERNMENT OF KARNATAKA K.R.CIRCLE, BENGALURU - 560 001.

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... RESPONDENT

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(By SRI.R. SRINIVAS GOWDA., AGA)

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THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PLEASED TO APPOINT AN

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ARBITRATOR IN TERMS OF CLAUSE 37(4) OF THE AGREEMENT DATED 22.07.2011 (ANNEXURE-B) TO RESOLVE THE DISPUTES THAT HAVE ARISEN BETWEEN THE PARTIES, AND ALSO PASS SUCH OTHER DIRECTIONS OR ORDERS AS THIS COURT MAY DEEM FIT AND NECESSARY IN THE CIRCUMSTANCES OF THE CASE.

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THIS PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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O R D E R

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The petitioner has filed this application under section 11 (5) of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator to enter reference of the difference/dispute between itself and the respondent asserting inter alia that it has issued legal notices (including the legal notice dated 02.12.2019) nominating Mr. Justice Anand Byrareddy, a Former Judge of this Court but the respondent has responded by the Reply Notice dated 10.02.2020 denying privity of contract.

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The petitioner’s case is that the respondent entered into arrangement with M/s Keonics for supply and installation of Computer Hardware, Software and Accessories and Computer Educational Services as also Site Preparation for implementation of the State Government’s project known as "Information and Communication Technologies at Schools" (Project). M/s Keonics, in terms of such arrangement, could enter into sub-contracts and invite bids for implementation of the Project. M/s Keonics invited competitive bids, and a consortium led by M/s Everonn successfully participated in such competitive bid. After the Agreement dated 27.07.2011 was entered into between the respondent and M/s Keonics, and with the approval of the Cabinet of the State Government, a back-to-back agreement was concluded between M/s Keonics and M/s Everonn. The petitioner also asserts that because of the respondent’s delay in performing its obligations, some of the consortium partners exited, and the

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petitioner and another entity replaced the exiting consortium partners. M/s Keonics was informed about the same, and the respondent acknowledged the same in accepting the bank guarantee furnished by one of incoming consortium partners.

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It is seen from the records that the State Government terminated the Project by the order dated 05.07.2016 but with a direction to return the bank guarantees furnished. There are also some differences between the petitioner and the respondent about the return of the amounts received under the Bank Guarantees. As a result of such differences as regards the termination of the Agreement dated 27.07.2011 and consequences of such termination, including the return of the amounts for which Bank Guarantee/s were furnished, the petitioner and M/s Everonn have commenced writ petitions in WP No. 56088/2016 and WP No. 1982/2018 for quashing of the termination

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Order dated 05.07.2016 and the consequential

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cancellation of the contract by M/s Keonics.

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This Court has disposed of these writ petitions by Order dated 11.09.2019 holding, amongst others, that the questions raised by the petitioner fall in the realm of disputed questions of fact which cannot be adjudicated in exercise of powers of judicial review under Article 226 of the Constitution of India; as regards the contention that the petitioner cannot avail the remedy of arbitration as contemplated under the Agreement dated 27.07.2011, this Court has opined as follows:

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……… In the instant case, admittedly the agreement was executed between the State Government and KEONICS. Under the terms and conditions of the agreement, the KEONICS had the authority to nominate subcontractors to execute the project as well as to permit a consortium to participate in the process of tender. Admittedly, the previous consortium partners left the project and Siddharth Infotech Ltd was inducted as consortium

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partner which was notified to the KEONICS vide communication dated 25.06.2015. Admittedly, EVERONN Education Ltd was a subcontractor of KEONICS. Thus the petitioners, in other words, have stepped into the shoes of the subcontractors and in reality, a party to the contract although not named in it. The rights of the named party have devolved on the petitioners by operation of law and therefore, the petitioners have the authority to invoke the arbitration clause. In the fact situation of the case, since the matter requires adjudication of questions of fact and in the absence of any element of public law, the doctrine of legitimate expectation, reasonableness and fairness to not apply to the fact situation of the case. The matter requires adjudication of factual dispute which cannot be gone into in the writ petitions. However, liberty is granted to the petitioners to take recourse to the remedy of arbitration or such of the remedy as may be available to them and law.

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5. The petitioner has, after the disposal of the

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aforesaid writ petitions and in terms of the liberty to invoke arbitration clause as contemplated under the Agreement dated 27.07.2011, has caused the legal notice dated 02.12.2019 nominating Mr Justice Anand

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Byrareddy, a Former Judge of this Court as the sole arbitrator after initial communication with the Ministry of Human Resources Development, Department of School Education and Literacy, Government of India New Delhi, the different officials of the State Government and others raising a claim for a sum of Rs.252 crores and an independent claim for Rs. 36 crores (with rests and penalty). The petitioner has invoked clause 37(4) of the Agreement dated 27.07.2011 which stipulates that if the parties fail to resolve the disputes/ differences by mutual consultation, notice of intention to commence arbitration shall be given to the other party, and no arbitration shall be commenced unless such notice is given. This Clause further stipulates that every difference/dispute in respect of which a notice of intention to commence arbitration is given shall be settled finally by arbitration.

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These circumstances establish not only the differences/disputes as to the performance of the terms under the Agreement dated 27.07.2011, the termination of the Agreement and the consequences there but also the petitioner’s right to commence arbitration for resolution of these differences/disputes. The petitioner has caused notice of intention to commence arbitration nominating Mr Justice Anand Byrareddy as the sole arbitrator, a condition stipulated under the arbitration clause. The respondent, by its reply dated 10.02.2020, has only stated that the concerned are instructed to file necessary appeal calling in question the order dated 11.09.2019 in the writ petitions in WP No. 56088/2016 and WP No. 1982/2018 while denying privity of contract with the respondent. The learned Additional Government Advocate, who is granted adjournments to secure instructions, is unable to place on record the details of the writ appeal/s filed place or circumstances that would impede the appointment of Mr Justice

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Anand Byrareddy as the sole arbitrator in the circumstances discussed. As such, the following:

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ORDER

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The petition is allowed, and Mr Justice Anand Byrareddy, a Former Judge of this Court, Row House No.3, LGCL, Luminaire, 39, BDA Main Road, Nanjareddy Colony, Jeevanbhimanagar, Bengaluru - 560 075 [Mobile No.9448289007], is appointed as the Sole Arbitrator to enter reference of the dispute between the petitioner and the respondent and conduct proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the

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Rules governing the said Arbitration Centre. The Office is directed to communicate this order to the Arbitration and Conciliation Centre and Justice Shri Anand Byrareddy,

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former Judge, as required under the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996.

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SD/JUDGE

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M/S Siddharth Infotech Pvt. Ltd. v. Commisioner of Public Instructions

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M/S Siddharth Infotech Pvt. Ltd. v. Commisioner of Public Instructions

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