Allowed

M/S Shiv Puja Construction Pvt. Ltd. v. State of Rajasthan

Rajasthan HC20 Jan 2023ARBAP/89/2022

Case brief

AI extract

What is this about?

This High Court allowed an arbitration application filed under Sections 11(4) and (11)(6) of the Arbitration and Conciliation Act, 1996. The Court exercised its power to appoint a sole arbitrator (the retired Chief Justice of Rajasthan) to adjudicate a dispute between the petitioner-concessionaire and the Government respondents, rejecting the argument that the contractual mechanism for appointment

What did the court decide?

Appointment of Hon'ble Mr. Justice Mohammad Rafiq (Retd. Chief Justice) as the sole Arbitrator to adjudicate the dispute.

M/S Shiv Puja Construction Pvt. Ltd. Vs State of Rajasthan — Arbitration | Rajasthan HC (2023)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

¶2

S.B. Arbitration Application No.89/2022

¶3

M/s Shiv Puja Construction Pvt. Ltd, is having its Registered Office at Pooja House, 34/1, Vikas Apartments, East Punjabi Bagh, New Delhi-110026 and is being represented through its Director, Shri Vijay Garg.

¶4

----Petitioner/Applicant

¶5

Versus

¶6

State of Rajasthan, through the Chief Engineer (Roads), Public Works Department, Government of Rajasthan, P.W.D. Head Office, Jacob Road, Jaipur.

¶7

Superintending Engineer, P.W.D. Circle Sirohi, PWD Office, Bagikhana, Sirohi, Rajasthan-307001.

¶8

Executive Engineer, P.W.D. Division Sirohi, PWD Office, Bagikhana, Sirohi, Rajasthan-307001.

¶9

----Respondents

¶10

For Petitioner(s) : Mr.Amit Lubhaya, Adv. For Respondent(s) : Mr.Prakhar Gupta, Adv. and Ms.Charvi Patni, Adv. for Dr.V.B. Sharma, AAG.

¶11

HON'BLE MR. JUSTICE ASHOK KUMAR GAUR

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Order

¶13

20/01/2023

¶14

The instant arbitration application has been filed by the applicant under Section 11(4) and (6) of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act of 1996’) for appointment of Arbitrator to adjudicate the dispute between the petitioner and the respondents.

¶15

Learned counsel for the applicant-petitioner submitted that the petitioner is “AA” Class registered Contractor and he participated in a bid process and declared successful bidder.

¶16

(2 of 7) [ARBAP-89/2022]

¶17

Learned counsel for the applicant-petitioner submitted that a Concession agreement was signed between the petitioner and the respondent No.1 on 30.08.2008, containing the detailed terms and conditions, upon which the work was to be executed, maintained and operated by the applicant-petitioner.

¶18

Learned counsel for the applicant submitted that concession agreement created bilateral, reciprocal, mutual legal rights and obligations along-with different provisions regarding ‘Force Majeure’ Events, etc.

¶19

Learned counsel submitted that on account of certain developments which had taken place, the Commercial Operation of collecting toll had not taken place as per the concession agreement and it was not the petitioner-concessionaire but the respondents-Authorities, who did not resolve the dispute relating to suspension of toll collection and certain other difficulties faced by him.

¶20

Learned counsel submitted that different meetings took place before the Steering Group of the respondents and the petitioner and certain announcements were also made to inspect the toll collection by the Chief Collector during the COVID-19 period and as such, the petitioner-concessionaire highlighted the problems faced by him before the Steering Group.

¶21

Learned counsel submitted that the issue of extending Concession period was also taken up by the petitionerconcessionaire, however, the dispute between the petitioner and the respondent, could not be resolved despite several attempts.

¶22

Learned counsel submitted that the petitioner finally had to resort to the Dispute Resolution by invoking Clause 15 of the Concession Agreement and as per Clause 15.1(b), the

¶23

(3 of 7)

¶24

[ARBAP-89/2022]

¶25

petitioner decided to refer the matter to the Standing Empowered Committee and accordingly, the petitioner also issued a notice under Clause 15.1(b) dated 23.02.2022 referring certain claims from the respondents along-with complete details of contractual provisions.

¶26

Learned counsel submitted that the Standing Empowered Committee held its meeting on 26.05.2022 and rejected majority of the claims of the petitioner.

¶27

Learned counsel submitted that the petitioner feeling aggrieved by the impugned decision of the Standing Committee, issued a notice for nomination of the Arbitrator under Clause 15.2 of the Concession Agreement on 14.06.2022.

¶28

Learned counsel submitted that the petitioner found that Clause 15.2 of the agreement provided for nominating Sole Arbitrator by the respondents and as such, the petitioner finding such clause being declared illegal and void by the Apex Court, as such, requested the non-petitioners to provide a panel of Five Arbitrators of their choice.

¶29

Learned counsel submitted that the respondents did not pay any heed to the notice sent by the petitioner and on the contrary, they appointed one Retired Additional Chief Secretary (PWD), as a Sole Arbitrator.

¶30

Learned counsel submitted that the petitioner again requested the respondents by sending the reply dated 21.07.2022, for appointment of an independent Arbitrator, however, the respondents informed the petitioner that Sole Arbitrator has already been appointed.

¶31

Learned counsel submitted that Sole Arbitrator continued with the Arbitration proceedings and as such, the

¶32

(4 of 7)

¶33

[ARBAP-89/2022]

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petitioner-Company has been constrained to approach this Court for referring the dispute before the Arbitrator to be appointed by this Court by invoking power conferred under Sections 11 (4) and 11 (6) of the Act of 1996.

¶35

Learned counsel submitted that Clause 15.2 in the Concession Agreement is contrary to the judgment passed by the Apex Court in the case of Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Limited reported in [AIR 2020 SC 59] and as such, this Court has ample power to nominate the Arbitrator to resolve the dispute between the parties.

¶36

Per contra, learned counsel for the respondents-non applicants Mr.Prakhar Gupta submitted that the petitioner has wrongly approached this Court seeking appointment of an Arbitrator.

¶37

Learned counsel for the respondents Mr.Prakhar Gupta submitted that a concession agreement in Clause (15) contained a condition of dispute resolution.

¶38

Learned counsel for the respondents submitted that Clause 15.1 provided for amicable resolution in first instance by the Steering Group and if the Steering Group was not able to resolve, then the matter was required to be referred to the Standing Committee for settlement of dispute as per Clause 15.1(b) of a concession agreement.

¶39

Learned counsel for the respondents submitted that the petitioner appeared before the Standing Committee and as such, without waiting for an outcome of any findings of the Steering Committee, the petitioner issued a notice for nomination of the Sole Arbitrator.

¶40

(5 of 7)

¶41

[ARBAP-89/2022]

¶42

Learned counsel submitted that the outer timeline provided to the Standing Committee was of six months, however, the petitioner did not wait for such timeline and he started the process of getting nomination of an Arbitrator, first by sending a notice and then by filing the present arbitration application before this Court.

¶43

Learned counsel further submitted that the contract in the instant case was signed between the parties in the year 2008 and as such, the judgment which is relied upon by the counsel for the petitioner is not applicable as the Apex Court has considered the amendments which were made in the year 2015 in respect of appointment of an Arbitrator.

¶44

Learned counsel submitted that the Apex Court in the case of Union of India Vs. Parmar Construction Company reported in [(2019)15 SCC 682] has considered the issue with regard to appointment of Arbitrator under Section 11(6) of the Act of 1996 prior to amendment of 2015 and the Apex Court has approved the appointment of designated Arbitrator by the Authorities, who mutually agreed as per terms of the contract for appointment of an Arbitrator, and as such, prayer made by the present applicant-petitioner may not be accepted.

¶45

I have heard learned counsel for the parties and perused the material available on record.

¶46

This Court finds that though the dispute resolution, mechanism provided in the concession agreement contained a clause relating to amicable resolution, however, Clause 15.2 provided that if dispute was not able to be resolved by the Steering Committee or by the Standing Committee, then in such an eventuality, the matter was to be referred to the Arbitrator,

¶47

(6 of 7)

¶48

[ARBAP-89/2022]

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who was to be a retired Chief Secretary to the Government of Rajasthan to be nominated by the Govt. of Rajasthan.

¶50

This Court finds that the State Government’s exclusive right, given to the respondents to appoint an Arbitrator, has not been approved by the Apex Court in the case of Perkins Eastman Architects DPC (supra) and as such, objection raised by the learned counsel for the respondent is rejected.

¶51

This Court finds substance in the submission of counsel for the applicant-petitioner that present dispute required to be resolved, since was not resolved by the Standing Committee as such, the petitioner was left with no other option except to approach this Court for seeking appointment of Arbitrator as per the provisions of Act of 1996.

¶52

The submission of learned counsel for the petitioner is further supported from the fact that after decision of the Standing Committee, the respondents proceeded further in the matter and they appointed Sole Arbitrator, this Court finds that in view of subsequent decision taken by the respondents to appoint their Sole Arbitrator, the only option left with the petitioner was to approach this Court.

¶53

The submission of counsel for the respondents that the petitioner did not wait for outer timeline which was prescribed for giving decision by the Standing Committee, suffice it to say by this Court that after meeting held on 26.05.2022, the respondents thereafter appointed Sole Arbitrator and as such, the petitioner was left with no other option except to approach this Court.

¶54

This Court finds that dispute between the applicantpetitioner and the non-petitioners is required to be decided by an Arbitrator to be appointed by this Court.

¶55

(7 of 7) [ARBAP-89/2022]

¶56

This Court, accordingly allows the present arbitration application filed by the applicant-petitioner and while exercising the power conferred under Section 11 of the Act of 1996, appoints Hon’ble Mr. Justice Mohammad Rafiq (Retd. Chief Justice), R/o-7, Bhagat Vatika, Civil Lines, Jaipur as the sole Arbitrator to adjudicate the present dispute between the parties. The payment of cost of arbitration proceedings and arbitration fee shall be made as per the 4^th Schedule appended to the Act of 1996.

¶57

The intimation of appointment, as aforesaid, may be given by counsel for the parties as well as by the Registry to Hon’ble Mr. Justice Mohammad Rafiq (Retd. Chief Justice), R/o-7, Bhagat Vatika, Civil Lines, Jaipur.

¶58

(ASHOK KUMAR GAUR), J

¶59

Himanshu Soni/106

M/S Shiv Puja Construction Pvt. Ltd. v. State of Rajasthan

Case brief

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M/S Shiv Puja Construction Pvt. Ltd. v. State of Rajasthan

Case brief

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