Simpark Infrastructure Pvt. Ltd. v. Jaipur Municipal Corporation Pandit Deendayal Upadhyaya Bhawan
2017-05-26
MOHAMMAD RAFIQ
body2017
DigiLaw.ai
ORDER : Mr. Mohammad Rafiq, J. 1. This application under Section 11(6) of the Arbitration and Conciliation Act, 1996 has been filed by M/s. Simpark Infrastructure Pvt. Ltd., a 100% subsidiary of M/s. Simplex Project Ltd. (a company incorporated under the Companies Act, 1956) having its registered office at Kolkata, praying for appointment of impartial Arbitrator including third arbitrator in terms of clause 16.3 of the agreement in accordance with law for adjudication of the disputes between the parties and/or sole arbitrator. 2. According to the applicant, it is pioneer in the field of developing and establishing the ‘Multi-Level Automatic Car Parking’ (hereinafer referred to as ‘MACAP’), which it introduced in Kolkata City for the first time in the year 1997. The applicant has been consultant to the various government bodies for the projects relating to MACAP. New Delhi Municipal Corporation is one of its premier clients for the consultancy of such projects. The respondent-Jaipur Municipal Corporation intended to establish multilevel parking facility at Ram Leela Maidan and Rang Manch, Jaipur for the benefit of the general public. It, therefore, on 30.10.2009 invited Request for Proposal (RFP) for designing, construction, operation and maintenance of aforesaid MACAP in a sealed tenders from the reputed developers for the said project. The applicant having rich experience in the field submitted the bid for aforesaid project by depositing earnest money of Rs.1,95,00,000/-. The respondent after scrutiny of the bid-documents vide letter dated 2.2.2010 sent a Letter of Acceptance to the applicant informing that its bid has been accepted and selected and it has been decided to award the said contract to him. The applicant therefore as per clause 5.13.2 and 5.26 of RFP (Volume-I) was to pay a sum of Rs.12,75,00,000/- being 25% of the total premium and Rs.10,00,00,000 towards performance security respectively to the respondent-authority within 15 days of the said letter. The applicant as per the said letter of acceptance had to acknowledge the same within 7 days where after the execution of the agreement could proceed. The agreement was executed on 17.2.2002, article 16 of which contains the arbitration clause. 3.
The applicant as per the said letter of acceptance had to acknowledge the same within 7 days where after the execution of the agreement could proceed. The agreement was executed on 17.2.2002, article 16 of which contains the arbitration clause. 3. Shri Pradeep Kumar Singh, learned counsel for the applicant argued that as per clause 7.1.4 of the agreement, the applicant was to develop the said project on its own cost and expenses and as such, it was required to obtain due permission, necessary approval, clearance and sanctions from the competent authorities for building plans and infrastructure of the said project. The respondent-authority was obliged under clause 4.1.2 to provide the peaceful possession of the site/land to the applicant for commencement of the project immediately. The respondent-authority miserably failed to provide the same to the applicant which resulted in delay in commencement of the project and ultimately entire project got frustrated. Despite various meetings between the representatives of the parties, the respondent failed to handover the site free from encumbrances. The respondent by letter dated 9.3.2010 with reference to the meeting dated 3.3.2010, assured the applicant to provide possession of the site and to declare the area within the 1 km radius of the site as “The No Parking Zone”. The applicant waited to commence the erection of the project in view of the assurance. The respondent by letter dated 22.4.2010 without any reason and without any reference to its previous assurance sent a letter dated 22.4.2010, vaguely asking the applicant to take the possession of the site within 3 days. But the respondent failed to comply with its contractual obligations, though the applicant was always ready and wiling to perform its contractual obligations by taking the possession of the site as per the agreement. However, the respondent failed to provide the land and, therefore, the execution could not commence. The respondent also failed to ensure that there should not be any other parking within the radius of 1 km from the site. The applicant then received another vague and misconceived letter dated 13.12.2010 from the respondent. The applicant sent reply on 30.12.2010 to the respondent refuting all the allegations. The respondent, however, overlooked the reply sent by the applicant and failed to take any action.
The applicant then received another vague and misconceived letter dated 13.12.2010 from the respondent. The applicant sent reply on 30.12.2010 to the respondent refuting all the allegations. The respondent, however, overlooked the reply sent by the applicant and failed to take any action. The respondent then further sent a communication cum pre-termination notice dated 17.1.2011 to applicant wherein it made reference to the earlier communication, however, overlooked the reply of the applicant dated 30.12.2010 and their failure to perform their contractual obligations. 4. It is contended that the respondent threatened the applicant that if the applicant failed to start the work within 15 days from the receipt of the said communication, they would under clause 15.2, 15.3 and 15.6 have encashed the bank guarantee submitted by the applicant and would also forfeit the earnest money deposit. The applicant sent a communication dated 1.2.2011 to the respondent against the illegal action and calling upon them to appoint panel of arbitrators and refer the dispute to them as contained in clause 16.3 of the agreement. The applicant then filed an application under Section 9 of the Arbitration and Conciliation Act in the Court of District Judge, Jaipur against invocation of bank guarantee and encashment thereof. The learned District Judge by order dated 2.2.2011 granted interim protection to the applicant, but at the same time, required the applicant to keep the bank guarantee alive. The applicant sent a communication to the respondent on 3.2.2011 informing about the aforesaid order. The applicant then by order dated 17.2.2011 again required the respondent to refer the dispute to the Arbitral Tribunal as per clause 16.3 of the agreement. When the respondent failed to do so, the applicant filed an arbitration application no.26/2011 under Section 11 before this Court. The said application was dismissed by this Court by order dated 12.9.2012 being premature, however with liberty to the applicant to file a fresh application after following the procedure mentioned in the arbitration clause. It was thereafter that a meeting was held between the representatives of the applicant and the officials of the respondents on 9.10.2012. In that meeting, the representatives of respondent informed the applicant that since the respondent has failed to get the possession of the site, therefore, the said project has now been transferred to Jaipur Development Authority.
It was thereafter that a meeting was held between the representatives of the applicant and the officials of the respondents on 9.10.2012. In that meeting, the representatives of respondent informed the applicant that since the respondent has failed to get the possession of the site, therefore, the said project has now been transferred to Jaipur Development Authority. This information came as a shock to the applicant as this amounted to abandonment of the project by the respondent. The applicant, therefore, again sent letter dated 11.10.2012 to the respondent contending that since the project has been abandoned by State Government due to non-availability of the land upon failure of the respondent to do so, the respondent ought to return the bank guarantee and the amount of earnest amount deposited by the applicant. Since the respondent did not file reply to the said letter, the applicant was constrained to send reminders dated 17.11.2012 and 20.11.2012. The applicant then sent further notification dated 26.11.2012, 1.3.2013 and 25.4.2013. The applicant in their letter dated 10.1.2013 reminded the respondent to take appropriate steps in view of para no.2 of the minutes of the meeting for returning the bank guarantee and release of the cash amount deposited with the respondent by the applicant. The respondent sent communication dated 16.1.2013 to the applicant calling upon them to furnish an affidavit in the form of undertaking that they would not claim the interest. The applicant in response thereof sent a letter dated 23.1.2013 and made declaration that various communications were sent with respect of the insistence of the department to give the affidavit as required by the department for processing the issues, releasing the bank guarantee and earnest money deposited. The respondent thereafter to score its ulterior motive sent a communication dated 16.1.2013 to the applicant. Perusal of that communication would make it clear that respondent would take undue advantage of their dominant position asked the applicant to give an affidavit to the respondent to get the bank guarantee and earnest money deposit amount released. The respondent was adamant in procuring the affidavit and they were not ready to release the bank guarantee and earnest money deposit amount without furnishing the affidavit. The applicant merely needed his money back though it never agreed to give such claim, he under the duress pressure and coercion of the respondents, submitted the required affidavit on 22.1.2013 to that effect.
The applicant merely needed his money back though it never agreed to give such claim, he under the duress pressure and coercion of the respondents, submitted the required affidavit on 22.1.2013 to that effect. The respondent after a long delay had repaid the earnest money deposit amount of Rs.12,75,00,000 and released the bank guarantee for a sum of Rs.10,00,00,000 on 23.5.2013. The amount of bank guarantee and the earnest money deposited was returned to the applicant with delay of 10 months, therefore, the applicant was entitled to interest and also asked for other claims arising out of breach of contract on the part of the respondents. The applicant vide communication dated 21.8.2013 submitted its claim to the respondent with respect to the loss and damage which occurred due to failure of respondent to perform its contractual obligations. Therein, the applicant claimed an amount of Rs.24,19,37,412. However, the same was not replied by the respondent. The applicant as per the procedure contemplated under clause 16.2 of the agreement dated 25.2.2010 for resolving the disputes on arising of any disputes between the parties sent a letter dated 12.8.2014 to the respondent authority whereby the applicant apprising the respondent with the disputes requested the respondent authority to hold meeting for amicable settlement between the parties. This letter was sent by speed post on the correct address of the respondent on 13.8.2014. The respondent was called upon to take appropriate steps within the stipulated period as contemplated under clause 16.2 for holding the meeting for amicable settlement of the disputes which arose between the parties as notified vide letter dated 21.8.2013. The said letter was duly served upon the respondent on 19.8.2014. The respondent was therefore required to fix up the meeting for discussion and amicable settlement of the disputes within 15 days from the date of receipt of said communication. However, the respondent failed to take any step whatsoever. Accordingly, the clause no.16.3 of the agreement came into play after 4.9.2014 on the expiry of 15 days from 19.8.2014. The respondent thereupon under obligation to fix up the date for meeting for amicable settlement. The applicant was always keen, ready and willing to hold the meeting as indicated in the letter dated 12.8.2014. Such meeting could not be held due to the failure of the respondent.
The respondent thereupon under obligation to fix up the date for meeting for amicable settlement. The applicant was always keen, ready and willing to hold the meeting as indicated in the letter dated 12.8.2014. Such meeting could not be held due to the failure of the respondent. The applicant then sent a notice dated 27.9.2014 by speed post on 30.9.2014 as per the clause 16.3 of the agreement, which was served on 7.10.2014. The respondent was called upon to suggest the names of the Arbitrators as required under clause 16.3 of the agreement by sending a panel of five possible arbitrators. However, the respondent miserably failed to take any step whatsoever even after receipt of notice dated 27.9.2014 on 7.10.2014. Since the respondent failed to act within 30 days from 7.10.2014 i.e. after 7.11.2014, they have forfeited right to appoint the Arbitrator and therefore this Court ought to appoint the Arbitrator to resolve the dispute. 5. Dr. P.C. Jain learned counsel for the respondent opposed the application and submitted that earlier application of the applicant was dismissed by this Court as premature since the applicant failed to follow the procedure contained in the agreement. It is contended that the provisions of Article 16.1.1, Article 16.1.2 and 16.2 regarding the conciliation between the parties, has still not been fulfilled, therefore, the present application is also not maintainable. 6. It is contended that since the applicant has without any protest has taken back the whole of the amount of bank guarantee of Rs.10 crores and the security deposit amount of Rs.12.75 crores on the basis of affidavit submitted by Deputy General Manager through Gautam Das on 5.2.2013 and another affidavit of Shri S.D. Moondra, its Director on 25.4.2013, it is precluded from filing the present application to re-agitate the same claim, which it has waived. It is argued that despite repeated letters written vide reply dated 22.4.2010, 10.5.2010, 9.12.2010 and 13.12.2010 by respondent, the applicant failed to take necessary steps to start the execution of the work. No assurance was ever given by the respondent to applicant that there would be no parking zone within the radius of 1 km. It is contended that neither there was a condition in the contract, nor was practically possible to declare No Parking Zone till the completion of the project itself. It is thus prayed that the application be dismissed. 7.
It is contended that neither there was a condition in the contract, nor was practically possible to declare No Parking Zone till the completion of the project itself. It is thus prayed that the application be dismissed. 7. On perusal of the rival submissions and material on record, this Court is not inclined to uphold the contention of the respondent that merely because the earlier application of the respondent was dismissed as premature, the present application should also be dismissed as premature as the applicant has yet not complied with the requisite condition of exploring the possibility of amicable settlement of dispute through conciliation between the parties. It cannot be accepted that the applicant has not taken any steps after withdrawing the earlier application. The application has given details of various communications which he has sent subsequent to the decision of this Court on his earlier application. In that very order, the Court had given opportunity to the applicant to again file fresh application after making compliance of the condition contained in clause 16.3 of the agreement. This court is satisfied that the applicant has made substantial compliance of that condition. The respondent, rather failed to avail the opportunity of conciliation and allowed the time to lapse. The applicant therefore cannot be deprived of the remedy of arbitration. 8. Dr. P.C. Jain, learned counsel for the respondent at this stage suggests the name of Hon’ble Mr. Justice Mahesh Chandra Sharma who is going to demit the office as Judge of this court on 31st May, 2017, which suggestion has not been opposed to by learned counsel for the applicant. 9. The present application deserves to be allowed and is accordingly allowed. Hon’ble Mr. Justice Mahesh Chandra Sharma, Plot No.62 “Neelkanth”, Neelkanth Colony, Behind Old Chungi Chowki, Ajmer Road, Jaipur (Telephone Nos.0141-2359326) is hereby appointed as an independent Arbitrator to resolve the disputes between the parties. Payment of costs of arbitration proceedings and the arbitration fees shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009, of this Court, as amended from time to time. 10. A copy of this order be sent to Hon’ble Mr. Justice Mahesh Chandra Sharma, Plot No.62 “Neelkanth”, Neelkanth Colony, Behind Old Chungi Chowki, Ajmer Road, Jaipur (Telephone Nos.0141-2359326).