M/S. J. C. Prakash Infrastructure Pvt. Ltd., Vs Mysore Urban Development Authority

M/S. J. C. PRAKASH INFRASTRUCTURE PVT. LTD., INCORPORATED UNDER THE COMPANIES ACT, OFFICE AT NO.8, MIG 2- STAGE, KHB COLONY, BASAWESHWARANAGARA, BANGALORE - 560079 REPRESENTED BY ITS AUTHORISED SIGNATORY, MR. GOPAL KRISHNA

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…PETITIONER

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(BY SRI. CHANDRA SHEKAR S., ADVOCATE FOR SMT. MAYA HOLLA., ADVOCATE)

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Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA

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AND:

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MYSORE URBAN DEVELOPMENT AUTHORITY OFFICE AT JHANSI LAKSHMI BHAI ROAD, MYSORE 570005 REPRESENTED BY ITS SUPERINTENDING ENGINEER

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…RESPONDENT

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(BY SMT. GEETHA DEVI M P., ADVOCATE)

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THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) AND (6) OF ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO NOMINATE ANY FORMER JUDGE OF THIS HON’BLE COURT AS THE SOLE ARBITRATOR IN TERMS OF CLAUSE 24 OF THE CONDITIONS OF CONTRACT READ WITH CLAUSE 4 OF THE SPECIAL CONDITIONS OF CONTRACT IN THE AGREEMENT

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HC-KAR

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DATED 23.06.2022 (ANNEXURE B) TO RESOLVE THE DISPUTES/ DIFFERENCES ARISEN BETWEEN THE PETITIONER AND RESPONDENT.

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

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

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ORAL ORDER

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The petitioner filed this civil miscellaneous petition

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under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (‘Act’ for short) to nominate any Former Judge of this Court as the Sole Arbitrator in terms of clause 24 of the Conditions of Contract read with clause 4 of the Special Conditions of Contract in the agreement dated 23.06.2022 vide Annexure-B to resolve the disputes/differences arising between the petitioner and the respondent.

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

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2.1. The respondent issued a tender notification calling for construction of storm water drains in various

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locations of Mysuru City. The petitioner, being a Class I Contractor, participated in the auction proceedings. and he was the successful bidder. Accepting the same, the respondent issued a letter of acceptance on 07.05.2022. Thereafter, the petitioner and the respondent entered into

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an agreement dated 23.06.2022 to complete the work within a period of 6 months at a contract price of ₹27,78,41,436.31/excluding applicable GST. The respondent issued a work order on 24.06.2022 and the project has to be completed within 6 months from 24.06.2022 i.e., on or before 23.12.2022. The petitioner promptly commenced the work as per the work order by mobilising requisite men and machineries/equipments. The petitioner completed the work in all work fronts the respondent could provide. The petitioner was constrained to stop the ongoing work in the middle of the execution as per the instructions of the respondent in October 2023. The respondent issued a completion report on 20.04.2023. According to the completion report, the total value of the

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woirk executed under the contract amounted to ₹24,79,44,089/- plus applicable GST. The petitioner has suffered financial loss under various heads and counts to the tune of ₹7,37,92,472/- with interest at the rate of 24%. There is an arbitration clause in the agreement. The petitioner invoked the arbitration clause by issuing a notice dated 07.10.2024 vide Annexure-G under Section 21 of the Arbitration and Conciliation Act. The respondent did not reply to the arbitration notice. Hence, a cause of action arose for the petitioner to file this petition. Accordingly, prays to nominate the Sole Arbitrator.

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Heard the arguments of learned counsel for the petitioner and learned counsel for the respondent.

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Learned counsel for the petitioner submits that, pursuant to the work order issued by the respondent, the petitioner has completed the work to the tune of ₹24,79,44,089/- and because of the delay on the part of the respondent, the petitioner has suffered a huge loss of ₹7,37,92,472/- and the petitioner is entitled for the said

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HC-KAR

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amount along with interest at the rate of 24%. He submits that, there is an arbitration clause in the agreement. The petitioner, by issuing a notice under Section 21 of the Act, invoked the arbitration clause by proposing the name of Sri. Basavaraj Koti, retired Chief Engineer (Civil), Mysuru

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as an Arbitrator to adjudicate the dispute between the petitioner and the respondent. He submits that, the respondent did not reply to the arbitration notice. Hence, on these grounds, he prays to allow the petition.

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Per contra, learned counsel for the respondent

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submits that, there is no arbitral dispute between the petitioner and the respondent. Hence, she prays to dismiss the petition.

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Perused the records and considered the

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submissions of the learned counsel for the parties.

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The point that would arise for consideration is

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as follows:

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HC-KAR

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Whether the petitioner has made out a ground

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to nominate the Arbitrator to resolve the dispute between the petitioner and the respondent in terms of clause 24 of the Conditions of Contract and Clause 4 of the Special Conditions of Contract?

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It is an undisputed fact that the respondent floated a tender for construction of storm water drains in various locations of Mysuru City. The petitioner had participated in the tender and the petitioner was the successful bidder. The respondent and the petitioner have entered into an agreement on 23.06.2022 and thereafter, the respondent issued a work order on 24.06.2022. As per the work order, the petitioner should complete the work within 6 months from 24.06.2022 i.e., on or before 23.12.2022. In terms of clause 24 of the Conditions of Contract in the agreement, it was the responsibility of the respondent to hand over the physical possession of the project site to carry out the work by the petitioner. Due to

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unresolved land disputes, the possession of the work front for 49% of the contract value was only provided on 18.11.2022 and failed to give dispute free land till the end. The petitioner has completed the project work amounting to ₹24,79,44,089/plus applicable GST and the respondent issued a completion report on 20.04.2023. The petitioner has suffered a loss to the tune of ₹7,37,92,472/-. There is an arbitration clause in the agreement which is inclusive of the conditions of contract and the special conditions of contract. The petitioner issued an arbitration notice dated 07.10.2024 to the respondent.

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I have perused the agreement and also conditions of contract. Clause 24 of the Conditions of Contract and Clause 4 of the Special Conditions of Contract reads as follows:

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Clause 24 of the Conditions of Contract:

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“24. Procedure for resolution of Disputes:

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24.1 If the Contractor is not satisfied with the decision taken by the Employer, the dispute shall be referred by either party to Arbitration within 30 days of the notification of the Employer's decision.

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24.2 If neither party refers the dispute to Arbitration within the above 30 days, the Employer's decision will be final and binding.

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24.3 The Arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of Contract.”

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Clause 4 of the Special Conditions of Contract:

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“4. Arbitration (Clause 24)

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4.1 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. The Arbitrator so agreed should be civil Engineer not below the Rank of the Chief Engineer of State Public Works Department or Central Public Works Department; failing such agreement, by the Appointing Authority

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the Principal Secretary of Urban Development Department of Government of Karnataka will appoint the sole arbitrator. Failing such appointment by the principal Secretary any one of the Organizations as per list enclosed in Annexure may appoint the sole arbitrator.

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(b) Arbitration proceedings shall be held at Mysore, Karnataka, India 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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(c) Performance under the contract shall continue during the arbitration proceedings and payments due the Contractor by the Employer shall not be withheld, unless they are the subject matter of the arbitration proceedings.”

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The petitioner, invoking the arbitration clause, issued a legal notice under Section 21 of the Act on 07.10.2024 vide Annexure-G. The respondents did not reply to the arbitration notice. Admittedly, there is an arbitration clause in the agreement, inclusive of the conditions of contract and special conditions of contract. The dispute

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arose between the petitioner and the respondent regarding the balance amount. The said dispute has to be resolved through an Arbitrator in terms of the provisions of the Act. The petitioner has made out a ground to nominate the Sole Arbitrator in terms of clause 24 of the Conditions of Contract read with clause 4 of the Special Conditions of Contract in the Agreement dated 23.06.2022.

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In view of the above discussion, I proceed to pass the following:

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ORDER

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i. The Civil Miscellaneous Petition is allowed ;

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ii. Hon’ble Sri. Justice V.Jagannathan , Former Judge of this Court is nominated as the Sole Arbitrator to resolve the dispute between the petitioner and the respondent as per the provisions of the Act and the Rules;

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

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iv. Learned counsel for the parties jointly submit that, the place of arbitration shall be Bengaluru. Submission is placed on record. The Arbitrator is requested to conduct the proceedings in Bengaluru;

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v. Pending IA(s), if any, shall stand disposed of accordingly.

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Sd/(ASHOK S.KINAGI) JUDGE

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PA

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CT:KHV List No.: 1 Sl No.: 18

M/S. J. C. Prakash Infrastructure Pvt. Ltd., v. Mysore Urban Development Authority

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M/S. J. C. Prakash Infrastructure Pvt. Ltd., v. Mysore Urban Development Authority

Case brief

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