M/S M Venkata Rao Infra Projects Pvt. Ltd. Vs Bruhat Bengaluru Mahanagara Palike

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 14^TH DAY OF MARCH, 2025

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BEFORE

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THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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C.M.P NO. 528 OF 2024

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BETWEEN:

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M/S M. VENKATA RAO INFRA PROJECTS PVT. LTD A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT OFFICE AT NO. 48-19-6, 2^ND FLOOR MVR COMPLEX, DWARAKANAGAR OPP. RTC COMPLEX VISAKHAPATNAM-530 003. REP. BY ITS AUTHORIZED SIGNATORY MR. SAMBASIVA RAO .G

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...PETITIONER

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(BY SRI. NISHANTH .A.V, ADVOCATE)

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AND:

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BRUHAT BENGALURU MAHANAGARA PALIKE REPRESENTED BY ITS EXECUTIVE ENGINEER (PROJECTS CENTRAL-2) NO.301, 3^RD FLOOR ANNEXURE-2 BUILDING N.R.SQUARE BENGALURU-560 002.

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THE COMMISSIONER BRUHAT BENGALURU MAHANAGARA PALIKE GROUND FLOOR, ANNEX-2 BUILDING BBMP HEAD OFFICE

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N.R.SQUARE BENGALURU-560 002.

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…RESPONDENTS

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(BY SRI. SATYANAND .B.S, ADVOCATE FOR R1 AND R2)

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THIS CMP IS FILED UNDER SECTIONS 11(5) AND 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 FOR APPOINTMENT OF A SOLE ARBITRATOR, PRAYING TO APPOINT ANY PERSON AS THE SOLE ARBITRATOR FOR ADJUDICATION OF THE DISPUTE/S THAT HAS ARISED BETWEEN THE PETITIONER AND THE RESPONDENTS, IN TERMS OF CLAUSE 24 OF THE CONDITIONS OF CONTRACT AND CLAUSE 10 OF THE SPECIAL CONDITIONS OF CONTRACT OF THE AGREEMENT DATED 28.08.2015, VIDE ANNEXURE-B.

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THIS CMP HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 28.02.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN, AS UNDER:

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CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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C.A.V. ORDER

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The captioned civil miscellaneous petition is filed under Section 11(5) and 11(6) of the Arbitration and Conciliation Act, 1966 seeking appointment of a sole arbitrator to resolve the dispute between petitioner and respondents in terms of Clause 24 of Conditions of Contract and clause 10 of Special conditions of contract.

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Petitioner who was declared to be the successful

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bidder was awarded the constructions work for a contract value of Rs.1,53,42,00,000/-. Petitioner asserts that respondent entered into an agreement vide agreement dated 28.8.2015 and construction work was awarded vide work order dated 1.9.2015. Petitioner specifically claims that he has suffered loss due to reasons attributed to respondents. Petitioner also alleges that he has incurred losses in the form of delay in payment of recurring account bills, additional cost of expenditure, shortfall in revenue, loss of profit, additional overhead charges and other costs. Petitioner therefore invoking arbitration clause issued a legal notice nominating an arbitrator vide notice dated 22.6.2023. Respondents replied and objected the arbitrator suggested by the petitioner. However, conceded that any retired Judge of this Court may be appointed as an arbitrator. Petitioner vide notice dated 13.9.2023 again

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suggested a fresh name and this was accepted by the respondents vide reply notice dated 3.10.2023.

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Petitioner sent a notice on 19.04.2024 to the respondent to execute a 'Joint Memorandum of the Parties to the Arbitration' in terms of the Arbitration and Conciliation Center Rules, 2012. Petitioner alleges that respondents have shown reluctance to come forward to act in terms of the Rules in spite of agreeing for appointment of arbitrator. Petitioner therefore contends that before filing the present petition, it was brought to the notice of the petitioner that the arbitrator nominated and agreed to by the parties cannot act as an arbitrator. Hence, this petition is filed.

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Respondents contend that once the arbitrator nominated is unable to act as an arbitrator, the petitioner has to freshly invoke arbitration clause strictly aligning with the procedure provided in clause 10.1 of Special Conditions

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of Contract. In terms of clause 10.1, it is argued that petitioner has to seek appointment through any one of the organization as per list enclosed in Annexure-A.

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This Court deems it fit to cull out clause 10.1 of Special Conditions of Contract, which reads is as under:

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"10.1. The Procedure for Arbitration shall be as follows.

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a. In case of Dispute or Difference arising between the Employer and the Contractor relating to any Matter arising out of or connected with this Agreement it shall be settled in accordance with the Arbitration and Conciliation Act 1996. The Disputes or Differences shall be referred to a Sole Arbitrator. The Sole Arbitrator shall be appointed by Agreement between the Parties: failing such Agreement, by the Appointing Authority (any one of the Organizations as per list enclosed in Annexure A).

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b. Arbitration Proceedings shall be held at Bangalore, Karnataka, India.

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c. The Cost and Expenses of Arbitration Proceedings will be paid as determined by the Arbitrator. However, the Expenses incurred by each Party in connection with the Preparation, Presentation, etc. shall be borne by each Party itself.

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d. Performance under the Contract shall continue during the Arbitration Proceedings and Payments due to the Contractor by the Employer shall not be withheld, unless they are the Subject Matter of the Arbitration Proceedings."

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Upon careful examination of the records, it is evident that while the respondents initially accepted the arbitrator proposed by the petitioner, the arbitral proceedings never commenced due to the appointed arbitrator subsequently assuming the position of a judicial member of Lokpal. Given this factual scenario, the Court finds that the petitioner is bound by Clause 10.1 of the Special Conditions of Contract, which explicitly stipulates that in the absence of mutual agreement between the parties regarding the appointment of an arbitrator, the petitioner must seek the appointment of a sole arbitrator through one of the organizations specified in the list enclosed as Annexure-A. Since the petitioner has not adhered to the prescribed procedure, this Court is of the considered view that the present petition under Section

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11(6) of the Arbitration and Conciliation Act, 1996, is not maintainable. The petitioner is, therefore, required to comply with the procedure outlined in Clause 10.1 of the Special Conditions of Contract and seek the appointment of an arbitrator through any of the designated organizations mentioned in Annexure-A.

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Furthermore, although the respondents had initially waived any objection to the arbitrator proposed by the petitioner, such waiver does not, in itself, confer upon the petitioner the right to bypass the agreed contractual procedure. Since the arbitral proceedings did not commence, the petitioner cannot unilaterally deviate from the mechanism prescribed in the contract. The Court emphasizes that, notwithstanding the initial waiver by the respondents, the petitioner remains obligated to adhere to Clause 10.1 of the Special Conditions of Contract, which mandates seeking the appointment of a sole arbitrator through one of the organizations listed in Annexure-A.

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In light of the above observations, this Court

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concludes that the present petition is not maintainable. The petitioner is required to first exhaust the contractual remedy available under Clause 10.1(a) of the Special Conditions of Contract before approaching this Court. As the contractual mechanism provides a clear procedure for the appointment of an arbitrator, the petitioner must necessarily follow the stipulated process and approach any one of the organizations listed in Annexure-A for the appointment of a sole arbitrator.

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Accordingly, the civil miscellaneous petition stands dismissed. However, this order does not preclude the petitioner from exercising its right to seek the appointment of an arbitrator through any of the organizations specified in Annexure-A. The petitioner is at liberty to pursue the appropriate course of action in

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accordance with Clause 10.1 of the Special Conditions of

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Contract.

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Sd/(SACHIN SHANKAR MAGADUM) JUDGE

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ALB

M/S M Venkata Rao Infra Projects Pvt. Ltd. v. Bruhat Bengaluru Mahanagara Palike

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M/S M Venkata Rao Infra Projects Pvt. Ltd. v. Bruhat Bengaluru Mahanagara Palike

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