Allowed

Bhagwati Electronics v. Bharat Sanchar Nigam Limited

Rajasthan HC18 Aug 2023ARBAP/7/2021

Case brief

AI extract

What is this about?

The High Court of Rajasthan allowed applications seeking arbitration reference. Despite the respondent's argument that the applicant bypassed the Appointing Authority designated in the tender document, the Court invoked the agreement's arbitration clause and appointed a retired ADJ as the sole arbitrator under Section 11 of the Arbitration Act, 1996.

What did the court decide?

Applications allowed; Shri Jai Prakash Narayan Purohit appointed as sole arbitrator; fees payable per 4th Schedule of Act 1996.

Bhagwati Electronics Vs Bharat Sanchar Nigam Limited — Arbitration | Rajasthan HC (2023)

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(1 of 8) [ARBAP-8/2021]

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[2023:RJ-JD:26232]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Arbitration Application No. 8/2021

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Yogesh Somani, 62/26, Sheopur Road, Pratap Nagar, Jaipur

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----Petitioner

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Versus

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Cmd, Bharat Sanchar Bhawan Janpath, New Delhi -110001

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----Respondent

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Connected With

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S.B. Arbitration Application No. 7/2021

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Bhagwati Electronics, 86/113, Kumbha Marg, Pratap Nagar,jaipur 302033

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----Petitioner

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Versus

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Bharat Sanchar Nigam Limited, Bharat Sanchar Bhawan, Janpath New Delhi-110001

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Assistant General Manager, Jodhpur

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----Respondents

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For Petitioner(s) : Mr. Harish Tikoo on VC. For Respondent(s) : Mr. Rajesh Shah

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HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

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Order

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18/08/2023

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The instant arbitration applications have been preferred by the applicant-Firm under Section 11 of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as ‘Act of 1996’ ) claiming the following reliefs:-

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“Under the circumstances, the Petitioner humbly prays before this Hon’ble Court may kindly be pleased to issue directions:

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(c) Allow the present petition and refer the matter/ dispute between the parties to arbitration by appointing a sole arbitrator and decide issues within a time bound manner. (d) Pass any other order which this Hon’ble Court deems fit and proper in the interest of justice.”

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Since the controversy in both the arbitration applications is common, therefore, for the purpose of the present analogous adjudication, the facts are being taken from the above-numbered S.B. Arbitration Application No.8/2021, while treating the same as a lead case.

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The applicant is a Firm registered under the Micro, Small and Medium Enterprises Development Act, 2006 ( in short, ‘MSMED Act’ ). The respondent-BSNL issued an E-Tender notice for maintenance and provisioning of BSNL network in JDP North (Cluster 2) of Urban area of Jodhpur SSA. The applicant was declared as successful bidder and an agreement was entered into between the applicant and the respondent on 09.03.2020, whereupon, an advance work order was issued in favour of the applicant on 24.02.2020.

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3.1 Thereafter, the dispute arose between the parties in regard to the work in question. The applicant vide letter dated 18.09.2020 sent to the respondent, made a request to refer the dispute for arbitration and for appointment of an arbitrator, as per the Arbitration Clause 20 of the Agreement.

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The said Clause 20 is reproduced as hereunder:

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“ 20. ARBITRATION

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20.1 Except as otherwise provided elsewhere in the contract, if any dispute, difference, question or disagreement

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arises between the parties thereto or their respective representatives or assignees, in connection with construction, meaning, operation, effect, interpretation of the contract or breach there of which parties unable to settle mutually, the same shall be referred to Arbitration as provided here under.

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20.2 A part wishing to commence arbitration proceeding shall invoke Arbitration clause by giving 60 days notice to the designated officer of the other party. The notice invoking arbitration shall specify all the points of disputes with details of the amount claimed to be referred to arbitration at the time of invocation of arbitration and not thereafter, If the claim is in foreign currency, the claimant shall indicate its value in Indian Rupees for the purpose of constitution of the arbitral tribunal.

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20.3 The number of the arbitrators and the appointing authority will be as under:

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*Claim* *amount* *(excluding claim for* *counter claim, if any)*	*Number of Arbitrator*	*Appointing Authority*
Above Rs. 5 Lakhs to Rs. 5 Crores	Sole Arbitrator to be appointed from a panel of arbitrators of BSNL	BSNL (Note: BSNL will forward a list containing names of three empanelled arbitrators to the other party for selecting one from the list who will be appointed as sole arbitrator by BSNL)
Above Rs.5 Crores	3 Arbitrators	One arbitrator by each party and the 3^rd arbitrator, who shall be the presiding arbitrator, by the two arbitrators.

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20.4 Neither party shall appoint its serving employee as arbitrator.

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20.5 If any of the Arbitrators so appointed dies, resigns, becomes incapacitated or withdraws for any reason from the proceedings, it shall be lawful for the concerned party / arbitrators to appoint another person in his place in the same manner as aforesaid. Such person shall proceed with the

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reference from the stage where his predecessor had left it both parties consent for the same; otherwise he shall proceed de novo.

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20.6 Parties agree that neither party shall be entitled for any pre-reference or pendente lite interest on its claims. Parties agree that any claim for such interest made by any party shall be avoid.

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20.7 Unless otherwise decided by the parties, Fast Track procedure as prescribed in Section 29 B of the Arbitrator Conciliation Act, 1996 for resolution of all disputes shall be followed, where the claim amount is up to Rs.5 Crores.

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20.8 Fast Track Procedure -

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20.8.1 Notwithstanding anything contained in this ACT, the parties to an arbitration agreement, may, at any stage either before or at the time of appointment of the arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure specified in Sub Section (3).

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20.8.2 The parties to the arbitration agreement, while agreeing for resolution of dispute by fast track Procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who shall be chosen by the parties.

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20.8.3 The arbitral tribunal shall follow the following procedure while conducting arbitration proceedings Under Subsection (1):-

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(a) The arbitral tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without oral hearing;

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(b) The arbitral tribunal shall have power to call for any further information or clarification from the parties in addition to the pleadings and documents filed by them;

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(c) An oral hearing may be held only, if all the parties make a request or if the arbitral tribunal considers if necessary to have oral hearing for clarifying certain issues;

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(d) The arbitral tribunal may dispense with any technical formalities, if an oral hearing is held, and adopt such

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procedure as deemed appropriate for expeditious disposal of the case.

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20.8.4 The award under this section shall be made within a period of six months from the date the arbitral tribunal enters upon the reference.

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20.8.5 If the award is not made within the period specified in sub-section (4), the provisions of sub-sections (3) to (9) of section 29 A shall apply to the proceedings.

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20.8.6 The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties.

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20.8.7 The arbitral tribunal shall make and publish the award within time stipulated as under:

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*Amount of claims and*	*Period for making and publishing of the*
*Counter Claims*	*award (counted from the date the arbitral*
	*tribunal enters upon the reference)*
Up to Rs. 5 Crores	Within 6 months (Fast Track procedure)
Above Rs. 5 Crores	Within 12 months

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However, the above time limit can be extended by the Arbitrator for reasons to be recorded in writing with the consent of parties and in terms of provisions of the Act.

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20.8.8 In case arbitral tribunal of 3 arbitrators, each party shall be responsible to make arrangements for the travel and stay, etc. of the arbitrator appointed by it. Claimant shall also be responsible for making arrangements for travel / stay arrangements for the Presiding Arbitrator and the expenses incurred shall be shared equally by the parties.

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In case of sole arbitrator, BSNL shall make all necessary arrangements for his travel / stay and the expenses incurred shall be shared equally by the parties.

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20.8.9 The Arbitration proceeding shall be held at New Delhi or Circle or SSA Headquarter (as the case may be).

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20.8.10. Subject to the aforesaid conditions, provisions of the Arbitration and Conciliation Act, 1996 and any statutory modifications or re-enactment thereof shall apply to the arbitration proceedings under this Clause.”

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Learned counsel for the applicants submits that without taking into due consideration, the force majeure (Covid-19 Pandemic), the respondent on 31.08.2020, forfeited the performance security amounting to Rs. 4,05,740/- of the applicants, in violation of clause 17.01 of the Agreement in question.

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4.1. Learned counsel further submits that the parties are bound by Arbitration Clause, and thus, the dispute in question deserves to be referred for arbitration, while appointing an arbitrator to resolve the same.

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4.2. Learned counsel also submits that 60 days period from date of receipt of the legal notice dated 18.09.2020 was completed on 17.11.2020, but the respondent failed to fulfill its responsibility to appoint the arbitrator, and therefore, the present applications deserve to be allowed and the matter may be referred for arbitration and an independent and impartial arbitrator may be appointed, while invoking Section 11 of the Act of 1996.

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On the other hand, learned counsel for the respondent opposes the submissions made on behalf of the applicants and submits that the applicants did not approach the Appointing Authority (CGMT, Rajasthan) to appoint an arbitrator in the matter, and therefore, on that count alone, the present applications deserve dismissal.

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5.1. It was further submitted that as per Section 5-A Clause 8 of the tender document, the Appointing Authority pertaining to the issue of arbitration is the Chief General Manager, Rajasthan only, but the applicants did not adhere to such provision of the tender document.

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5.2. It was also submitted that the applicants have already intimated vide letter dated 17.06.2020 regarding non-availability of force majeure clause, but the applicants filed the instant applications, without approaching the competent authority with a request for referring the dispute for arbitration and appointment of the arbitrator.

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5.3. However, after making such submissions, the parties seek the appointment of an independent arbitrator as the sole Arbitrator to resolve the dispute between the parties.

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After hearing learned counsel for the parties, this Court finds that the limited issue in question falls within the ambit of Section 11 of the Act of 1996.

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This Court is conscious of the judgment rendered by the Hon’ble Apex Court in the case of Perkins Eastman Architects

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DPC v. HSCC (India) Ltd., (2020) 20 SCC 760.

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This Court is also conscious of the fact that any further issue(s) can be raised by either of the parties before the arbitrator, who in turn, shall deal with the same, strictly in accordance with law.

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Accordingly, this Court finds that the agreement clause, relating to appointment of the Arbitrator, is required to be invoked and thus, instant the applications filed by the applicants, are

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allowed , and while exercising the power conferred under Section 11 of the Act of 1996, Shri Jai Prakash Narayan Purohit, Retd. ADJ, District Cadre, (Mob. No. 8290118729), Address: Vandana, 17-E-626, Chopasani Hosing Board, Jodhpur , is appointed as the sole Arbitrator to adjudicate the dispute between the parties. The payment of cost of arbitration proceedings and arbitration fee shall be made as per the 4th Schedule appended to the Act of 1996.

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The intimation of appointment, as aforesaid, may be given by the learned counsel for the parties as well as by the Registry to Shri Jai Prakash Narayan Purohit . The appointment of the Arbitrator in the present case is subject to the necessary disclosure being made under Section 12 of the Act of 1996.

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(DR.PUSHPENDRA SINGH BHATI),J

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224-225-SKant/-

Bhagwati Electronics v. Bharat Sanchar Nigam Limited

Case brief

What is this about?

What did the court decide?

Bhagwati Electronics v. Bharat Sanchar Nigam Limited

Case brief

What is this about?

What did the court decide?

What the court decided

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