M/S Capital Construction Company Vs Headquarters Chief Engineer — Arbitration | Karnataka HC (2025)

M/S Capital Construction Company Vs Headquarters Chief Engineer — Arbitration | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Appointment of Shri. Raghunath Prasad Tripathi, Additional Directorate General, Military Engineer Service (MES), as Arbitrator to resolve the dispute between the parties as per the Arbitration and Conciliation Act, 1996 and the Rules; Office directed to communicate the order to the learned Arbitrator and the Arbitration and Conciliation Centre, Bengaluru; pending IAs, if any, disposed of.

Issue for consideration

Whether the petitioner has made out a ground to refer the arbitral dispute between the parties to the Arbitrator in terms of Condition No.37 of the Manual (IAFW-1815Z) as per the provisions of the Arbitration and Conciliation Act, 1996 and the Rules.

Court's answer

An arbitration clause exists in the Manual (Condition No. 37) and the arbitral dispute that has arisen between the petitioner and the respondents must be resolved through arbitration.

Ratio / Principle

The point for consideration is answered in the affirmative: the petitioner has made out grounds to refer the arbitral dispute between the parties to the Arbitrator in terms of Condition No.37 of the Manual under the Arbitration and Conciliation Act, 1996 and the Rules.

Key takeaways

The Civil Miscellaneous Petition is allowed, and Shri. Raghunath Prasad Tripathi, Additional Directorate General, Military Engineer Service (MES), is nominated as Arbitrator to resolve the dispute between the parties in accordance with the Arbitration and Conciliation Act, 1996 and the Rules.ratio¶88-90

Detailed headnote1 paragraphs

Arbitration and Conciliation Act, 1996 - S.11(6) - Appointment of Arbitrator - Supply contract bearing CA No. CEZ/BAN/06 of 2016-17 executed under IAFW-1815Z (Manual), awarded through competitive tender initiated by the Military Engineering Services for supply of branded furniture to Respondent No.2 at Bengaluru - Work completed in three phases; respondents delayed payment of the final bill despite submission of invoices - Petitioner claimed under Condition No.37 of the IAFW-1815Z Manual for delay of payments and damages - Arbitration notice issued on 04.10.2022 vide Annexure-B proposing an arbitrator's name; respondents replied untenably vide Annexure-C dated 28.10.2022; petitioner's letter dated 29.11.2022 vide Annexure-D; neither party came forward for appointment - Earlier CMP.No.61/2023 withdrawn with liberty to file a fresh petition - Respondents raised no objection, and petitioner filed a memo, for nominating Shri. Raghunath Prasad Tripathi, Additional Directorate General, MES, as Arbitrator - Held: an arbitration clause exists in the Manual and the arbitral dispute must be resolved through arbitration; point answered in the affirmative; petition allowed; Shri. Raghunath Prasad Tripathi nominated as Arbitrator; Office directed to communicate the order to the Arbitrator and the Arbitration and Conciliation Centre, Bengaluru.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 16^TH DAY OF JULY, 2025

BEFORE

THE HON'BLE MR. JUSTICE ASHOK S.KINAGI

CIVIL MISC. PETITION NO. 508 OF 2024

BETWEEN:

M/S CAPITAL CONSTRUCTION COMPANY A PROPRIETORSHIP CONCERN HAVING OFFICE ADDRESS AT A-3/257 JANAKPURI NEW DELHI-110058 REPRESENTED BY ITS SOLE PROPRIETOR, MR AJAY GUPTA

EMAIL: [email protected]

…PETITIONER

(BY SRI. PIYUSH KUMAR JAIN. D.,ADVOCATE)

AND:

Digitally signed by SHILPABAI S Location: HIGH COURT OF KARNATAKA

HEADQUARTERS CHIEF ENGINEER THROUGH CHIEF ENGINEER CHENNAI ZONE, ISLAND GROUNDS CHENNAI-600 009

GARRISON ENGINEER (CENTRAL) MILITARY ENGINEER SERVICES, THROUGH GARRISON ENGINEER AGRAM POST BANGALORE-560007

HEADQUARTERS COMMANDER WORKS ENGINEER (ARMY) MILITARY ENGINEER SERVICES THROUGH COMMANDER WORKS ENGINEER AGRAM POST

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BANGALORE-560007

UNION OF INDIA THROUGH ENGINEER IN CHIEF DIRECTORATE CONTRACT MANAGEMENT ENGINEER IN CHIEF BRANCH INTEGRATED HQ OF MOD (ARMY) KASHMIR HOUSE RAJAJI MARG DELHI-110011

…RESPONDENTS

(BY SRI. DODWAD SHARASCHANDRA RAMESH.,ADVOCATE)

This Civil Misc. Petition Under Sec.11(6) of the Arbitration and Conciliation Act, 1996. Praying that this Honble Court may be pleased to(a)Appoint such person as this Honble Court may deem fit, as the Sole Arbitrator and refer the disputes raised by the petitioner under condition 37 of the Manual for adjudication(b)Call for the records of the original contract bearing CA No. CEZ/BAN/06 of 2016-17 singed between the parties (c)Award costs of the proceedings and (d)Grant such other relief or reliefs as this Honble Court may deem fit, in the interest of justice and equity.

THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI

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ORAL ORDER

This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking for the appointment of an Arbitrator to resolve the arbitral dispute arisen between the parties to the petition in terms of condition 37 of the General Conditions of

contract in IAFW-1815Z (Manual).

Brief facts, leading rise to the filing of this petition are as follows:

The petitioner secured a contract through a competitive tender process initiated by the Military Engineering Services for the supply of branded furniture to respondent No.2 in Bengaluru. The contract was divided into 3 phases, after completion of all the phases by the petitioner, respondents delayed in making payment of final bill. Delay attributed by the respondents in making payment under the contract caused a significant financial dispute to the petitioner, despite the completion of work. The respondents failed to release the amount within the

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agreed upon time. Despite the delay and financial difficulty, the petitioner completed the contractual work and submitted the invoices. The efforts to resolve the issue prompted the petitioner to claim under Condition No.37 of IAFW-1815Z Manual for delay of payments and damages. The petitioner requested the respondents to clear the dues. Despite the request made by the petitioner, the respondents did not pay the amount. The petitioner invoked an arbitral clause by issuing the notice vide Annexure B. Respondent No.4 gave an untenable reply to the notice vide Annexure C. Thereafter, the petitioner filed a CMP.No.61/2023, and the petitioner has withdrawn the petition with a liberty to file a fresh petition. Hence, the petitioner filed this petition.

Heard the learned counsel for the petitioners and the respondents.

Learned counsel for the petitioner submits that the petitioner and respondents entered into a contract. The Arbitral dispute arose between the parties. The petitioner

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issued an arbitration notice invoking the arbitration clause.

The arbitral dispute must be resolved through the sole arbitrator. Accordingly, prays to allow the petition.

Learned counsel for the respondents submits no objections to allow the petition nominating Shri. Raghunath Prasad Tripathi, Additional Directorate General, Military Engineer Service, (MES), as an Arbitrator.

Perused the records, and considered the submissions of the learned counsel for the petitioner.

The point that arises for my consideration is:

" Whether the petitioner has made out a ground to refer the arbitral dispute between the parties to the petition to the Arbitrator in terms of Condition No.37 of the Manual as per the provisions of the Arbitration and Conciliation Act, 1996, and the Rules?"

There is no dispute regarding the execution of a contract between the parties to the petition, and further,

there is no dispute that petitioner, has already complied with the work in terms of the contract. The petitioner has submitted the bills. The respondent did not clear the bills.

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The petitioner issued a legal notice calling upon the respondents to pay the dues. The respondents did not pay the dues. There is an Arbitral clause in the Manual as per the Arbitral notice, as per the condition No. 37, which

reads as under:

"37. ARBITRATION

All disputes between the parties to the Contract, (other than those for which the decision of the CWE or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the contract to the other of them, be referred to the sole arbitration of a serving officer having degree in engineering or equivalent or having passed final/direct final examination of sub-division II of Institution of Surveyor (India) recognised by the Govt. of India to be appointed by the authority mentioned in the tender documents.

Unless both parties agree in writing, such reference shall not take place until after the completion or alleged completion of the Supplies or termination or deter-mination of the Contract under Condition Nos. 29, 30 and 30A hereof.

Provided that in the event of abandonment of the Supplies or cancellation of the Contract under Condition Nos 26, 27 or 28 hereof, such reference shall not take place until alternative arrangements have been finalised by the Government to get the Supplies completed by or through any other Contractor or Contractors or Agency or Agencies.

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[Provided always that commencement or continuance of any arbitration proceedings hereunder-or otherwise shall not in any manner militate against the Government's right of recovery from the Contractor as provided in Condition 34 thereof.)

If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place

The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of case and pleadings in defence.

[The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings.]

The Arbitrator may, from time to time with the consent of the parties, enlarge the time for making and publishing the award.

The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with the sums awarded, separately on each individual item of dispute. The arbitrator shall give reason for the award in each and every case irrespective of the value of claims or counter claims.

The value of arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion.

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The Award of the Arbitrator shall be final and binding on both parties to the Contract."

As per the tender notification, if any dispute that

arises between the parties regarding the invoices, the same shall be referred to the sole Arbitrator in terms of the condition No.37. The petitioner invoked the Arbitration Clause, issued the Arbitration notice on 04.10.2022 vide annexure 'B' proposing the name of the Arbitrator.

The respondents untenably replied to the Arbitral

notice vide Annexure 'C' dated 28.10.2022. Thereafter the petitioner issued a letter dated 29.11.2022 vide Annexure 'D' informing the respondents that the arbitration notice

has been sent to various respondents offices. Thereafter, neither the petitioner nor respondents came forward for appointment of an arbitrator.

As an arbitration clause exists in the manual, the arbitral dispute that has arisen between the petitioner and

the respondents must be resolved through an Arbitration. Furthermore, learned counsel for the respondents submits

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no objection to nominate Shri. Raghunath Prasad Tripathi, Additional Directorate General, Military Engineer Service, (MES), as an Arbitrator and the petitioner, has also filed a memo stating that Shri. Raghunath Prasad Tripathi,

Additional Directorate General, Military Engineer Service, (MES), may be nominated as an Arbitrator to adjudicate the arbitral dispute between the parties to the petition. In view of the above discussions, I answer the point for consideration in the affirmative.

ORDER

The Civil Miscellaneous petition is allowed.

Shri. Raghunath Prasad Tripathi, Additional

Directorate General, Military Engineer Service, (MES), is nominated as an arbitrator, to resolve the dispute between

the parties to the petition as per the provisions of the Arbitration and Conciliation Act, 1996 and the Rules.

The office is directed to communicate this order to the learned Arbitrator, and the Arbitration and Conciliation Centre, Bengaluru.

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In view of the disposal of the petition, pending IA's, if any, stand disposed of.

Sd/(ASHOK S.KINAGI) JUDGE

RCK,List No.: 1 Sl No.: 24