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2025 DIGILAW 1408 (RAJ)

Shree Ram & Co. (JV), Through Madan Lal Prajapat S/o Shri Shree Ram v. Chief Engineer, Public Works Department (National Highways PPP), Jaipur. (Raj. )

2025-07-11

ARUN MONGA

body2025
Order : ARUN MONGA, J. 1. Application herein is under Section 11 of the Arbitration & Conciliation Act, 1996 with the prayer to appoint a sole arbitrator to decide/adjudicate upon the dispute between the parties arising out of Agreement No.EED/14 of 2016-17. 2. Case set in the application is that the applicant (a joint venture firm) was awarded work by respondents/non-applicants for "Widening and Strengthening of 2-Lane of Nagaur-Salasar (SH-60) Road (Job No. CRF-833/RJ/2015-16)" for a contract value of Rs.35,29,48,291/-. The work was allotted under Agreement No. EED/14 of 2016-17. The commencement date was 16.04.2016, and the stipulated completion date was 15.10.2017. 2.1. The work began on time. However, certain changes had to be brought due to the execution of another part of SH-60 under PPP Annuity Mode (ADB Tranche-1, Package-03). The applicant was given additional work but was later asked to stop after completing the road from Km 187/0 to 193/0. This led to delays in execution. The respondents extended the completion date to 30.09.2018, but the work still could not be completed. 2.2. The applicant raised escalation bills due to the delay, which was attributable to the respondents. Vide letter dated 12.04.2019, respondent No.2 admitted that the delay was not on the part of the applicant and recommended escalation payments of Rs.1,22,44,226.64 and Rs.4,27,38,593/-, totaling Rs.5,49,82,819.64. 2.3. Vide letter dated 09.10.2019, respondent No.1 granted final extension, accepting 408 days of delay as attributable to the Government and only 3 days to the applicant—without assigning any reasons. However, in the earlier recommendation dated 12.04.2019 (Annex-3), no delay had been attributed to the applicant. 2.4. When the respondents did not release the full escalation amount and retained around Rs.2.00 crores, the applicant filed Form RPWA-90 on 11.11.2020, requesting reference of the dispute to the Standing Committee under Clause 25 of the contract. As the matter was not referred within the stipulated time of one month, the applicant submitted another application under Clause 3 of the Arbitration of Special Conditions of Contract on 14.12.2020, suggesting the name of an arbitrator. Respondent No.1 failed to respond within 30 days. 2.5. The applicant then approached this Court by filing S.B. Arbitration Application No.6/2021, which was disposed of by a Coordinate Bench vide following order dated 09.12.2022:- “Heard learned counsel for the parties. Respondent No.1 failed to respond within 30 days. 2.5. The applicant then approached this Court by filing S.B. Arbitration Application No.6/2021, which was disposed of by a Coordinate Bench vide following order dated 09.12.2022:- “Heard learned counsel for the parties. The petitioner is a contractor and has applied for appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The conditions of the contract provide for the procedure for redressal of the disputes. It inter alia provides that the disputes regarding the claim of Rs. 50,000/- or above or regarding whether the contract has been rightly terminated and the obligations of the parties as a result thereof, shall be referred for decision to the empowered Standing Committee consisting of the 5 persons specified therein. It further provides that the Engineer in-charge, on receipt of the application along with non refundable prescribed fee from the contractor, shall refer the dispute to the above Committee within a period of one month from the date of receipt of the application. The special conditions of the contract provide for the procedure for arbitration, which envisage that in the first instance, efforts shall be made to agree on a sole Arbitrator in accordance with the Act and if such an attempt fails, the matter would be referred to the Arbitral Tribunal consisting of three Arbitrators, one each to be appointed by the employer and the contractor and the third to be chosen by the two Arbitrators so appointed by the parties to act as a presiding Arbitrator. The petitioner contends that in accordance with the above procedure for the redressal of the dispute and appointment of Arbitrator, the petitioner has made an application to the Engineer in Chief along with the non refundable fee but he failed to refer the matter to the empowered Standing Committee. Once the procedure for settling the dispute by the empowered Standing Committee failed, the matter ought to have been referred to the sole Arbitrator or to a panel of three Arbitrators but despite the above, the disputes were neither referred to the empowered Standing Committee nor to the Arbitral Tribunal. Once the procedure for settling the dispute by the empowered Standing Committee failed, the matter ought to have been referred to the sole Arbitrator or to a panel of three Arbitrators but despite the above, the disputes were neither referred to the empowered Standing Committee nor to the Arbitral Tribunal. Learned counsel appearing for the respondents pointed out that in pursuance to the petitioner’s request for referring the disputes to the empowered Standing Committee, the matter was referred to the Committee on 25.01.2021 with the copy to the petitioner by speed post and the Committee in its meeting held on 28.01.2021, considered the claim of the petitioner and rejected the same. Therefore, there is no occasion for any further arbitration in the matter. A perusal of the letter dated 25.01.2021, by which the matter was referred to the Empowered Standing Committee reveals that though a copy of which is alleged to have been endorsed to the petitioner to be sent by speed post but there is no concrete material on record which could establish that the petitioner was actually informed and served with the aforesaid reference. It is on account of the above that the petitioner alleges that he never had the knowledge of the matter being referred to the empowered Standing Committee. The petitioner was not even informed of the date fixed for the meeting of the said Committee and as such he could not appear and press his claim before the Committee. The decision of the Committee is completely in violation of the principles of natural justice. Moreover, the reference to the empowered Standing Committee is beyond time as it was not done within one month/30 days of the demand for reference of the disputes to the empowered Standing Committee by the petitioner. Notwithstanding the above, as the petitioner is seeking reference of the disputes to the Arbitrator but without invoking the alleged arbitration clause by issuing any legal notice demanding reference of the disputes to the Arbitrator, I am afraid, the petitioner is not entitled for any relief by this Court. Notwithstanding the above, as the petitioner is seeking reference of the disputes to the Arbitrator but without invoking the alleged arbitration clause by issuing any legal notice demanding reference of the disputes to the Arbitrator, I am afraid, the petitioner is not entitled for any relief by this Court. Section 11 (4) of the Act provides for the procedure for appointment of Arbitrator and it has been specifically laid down therein that if a party fails to appoint an arbitrator within 30 days from the receipt of a request to do so from the other party, the appointment shall be made by the High Court or the Supreme Court, as the case may be. Sub-section (4) of Section 11 of the Act reads as under:- 11. Appointment of arbitrators. (4) If the appointment procedure in sub-section (3) applies and— (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, [the appointment shall be made, on an application of the party, by the arbitral institution designated by the Supreme Court, in case of international commercial arbitration, or by the High Court, in case of arbitrations other than international commercial arbitration, as the case may be]; A reading of the aforesaid provision would reveal that the Court can appoint Arbitrator only if the other party fails to appoint an Arbitrator within 30 days of the receiving request from the other party. Therefore, the request of the party is sine qua non for appointment of an Arbitrator, if it is not so appointed within 30 days. The petitioner admittedly has not made any request or sent a legal notice invoking the arbitration clause seeking appointment of arbitrator and therefore, he is not entitled for the same. In view of the aforesaid facts and circumstances, I am of the opinion that since the petitioner failed to comply with the necessary condition for appointment of an Arbitrator, no relief can be granted to it. The petition as such fails and is dismissed leaving it open for the petitioner to follow the proper prescribed procedure for invoking the arbitration clause before seeking appointment of an Arbitrator through the process of Court.” 2.6. The petition as such fails and is dismissed leaving it open for the petitioner to follow the proper prescribed procedure for invoking the arbitration clause before seeking appointment of an Arbitrator through the process of Court.” 2.6. This Court, vide order dated 09.12.2022, thus dismissed the earlier application on the ground that no request for the appointment of an arbitrator was made. However, the application dated 14.12.2020 (Annex.-7) was though already on record, but could not be considered on brought to notice of the Court inadvertently. 2.7. Aggrieved against the order dated 09.12.2022, the respondents preferred review petition before this Court, the same was disposed of vide order dated 06.11.2024 stating as below :- “1. The present review petition has been preferred on behalf of the State Department for review of the order dated 09.12.2022 passed in S.B. Arbitration Application No.06/2021 whereby while rejecting the application under Section 11 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as ‘the Act of 1996’) as preferred by the respondent applicant for appointment of an Arbitrator, the Court left it open for the applicant therein to follow the proper prescribed procedure for invoking the arbitration clause before seeking appointment of an Arbitrator through the process of Court. 2. Learned counsel for the review petitioners submits that it was the specific ground of the petitioners that there is no arbitration clause in terms of which the matter could have been referred for arbitration. Therefore, the Court, while rejecting the application could not have left it open for the respondent applicant to invoke the arbitration clause again. Counsel therefore prays that the order impugned dated 09.12.2022 be modified to that extent. 3. Per contra, learned counsel for the respondent-Contractor (applicant) submits that the ground of there being no arbitration clause was very well raised by the review petitioners in their reply to the application under Section 11 of the Act of 1996 which was even dealt with by the Court while rejecting the said application. Therefore, no prayer for modification of the order dated 09.12.2022 can be made by the review petitioners by way of a review petition. Counsel submits that the leave was rightly granted by the Court to the respondent-Contractor and the order dated 09.12.2022 deserves no modification. 4. Heard the counsel and perused the material available on record. 5. Therefore, no prayer for modification of the order dated 09.12.2022 can be made by the review petitioners by way of a review petition. Counsel submits that the leave was rightly granted by the Court to the respondent-Contractor and the order dated 09.12.2022 deserves no modification. 4. Heard the counsel and perused the material available on record. 5. A bare perusal of the reply to the application under Section 11 of the Act of 1996 as filed by the petitioners (respondents therein) makes it clear that a ground regarding the non-existence of arbitration clause was very well raised by them. However, as the application was rejected only on the ground of non-adoption of the procedure as required before filing of an application under Section 11 of the Act of 1996, the Court was not even required to go into the issue whether an arbitration clause exists or not and therefore, the leave as granted to the respondent applicant, cannot be said to be contrary to law. 6. So far as the ground raised by the review petitioners is concerned, as is admitted on record, in pursuance to the order dated 09.12.2022, the arbitration clause has already been invoked again by the contractor and even an application under Section 11 of the Act of 1996 for appointment of an Arbitrator has been preferred before this Court. 7. In view of the above facts, this Court does not find any ground to modify/review the order dated 09.12.2022. However, it would be open for the review petitioners (State Department) to raise the ground of non-existence of any arbitration clause in the agreement in question before the Arbitration Court while defending/contesting the application under Section 11 of the Act of 1996 as preferred by the respondent-Contractor. The order of granting leave by this Court shall not come in way of the review petitioner-Department to the extent of the ground of there being no arbitration clause in the agreement. 8. With the above observations, the review petition is disposed of.” 2.8. Pursuant to the liberty granted by the Court, the applicant submitted a fresh request for the appointment of an arbitrator on 14.12.2022. The respondents again did not respond within 30 days. Hence, the present arbitration application is being filed. 3. 8. With the above observations, the review petition is disposed of.” 2.8. Pursuant to the liberty granted by the Court, the applicant submitted a fresh request for the appointment of an arbitrator on 14.12.2022. The respondents again did not respond within 30 days. Hence, the present arbitration application is being filed. 3. Learned counsel for the applicant submits that despite repeated requests and the applicant's compliance with Clause 25 of the Conditions of Contract and Arbitration Clause 3 of the Special Conditions of Contract, including proposing the name of a sole arbitrator, the respondents failed to act within the stipulated period. Hence, the present application for appointment of an arbitrator. 4. Learned counsel for the respondents opposes the arbitration application on the ground that the arbitration clause stood deleted subsequently between the parties. 5. I have gone through the record and heard the learned counsel for the parties. 6. The arbitration Clause-3 as contained in the Special Conditions of Contract is reproduced herein below:- 3. Arbitration (GCC Clause 25.3) The procedure for arbitration will be as follows : 25.3 (a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The parties shall make efforts to agree on a sole arbitrator and only if such an attempt does not succeed and the Arbitral Tribunal consisting of 3 arbitrators one each to be appointed by the Employer and the Contractor and the third Arbitrator to be chosen by the two Arbitrators so appointed by the Parties to act as Presiding Arbitrator shall be considered. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the *Council, Indian Roads Congress. (b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties, and shall act a presiding arbitrator. (b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties, and shall act a presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding arbitrator shall be appointed by the *Council, Indian Roads Congress. (c) If one of the parties fails to appoint its arbitrator in pursuance of sub clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the *Council, Indian Roads Congress shall appoint the arbitrator. A certified copy of the order of the Council, Indian Roads Congress, making such an appointment shall be furnished to each of the parties. (d) Arbitration proceedings shall be held in India, and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English. (e) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration proceedings will be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by such party or on its behalf shall be borne by each party itself. (f) Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor by the owners shall not be withheld, unless they are the subject matter of the arbitration proceedings.” 7. The aforesaid arbitration clause is not disputed. Moreover, there is no quibble about the fact that there is an existing dispute between the parties, but there is a dispute as to which forum should adjudicate the same. However, on a court query qua the pre arbitration proceedings as per Clause-3 ibid, it transpires that nothing worthwhile has come forth after issuance of legal notice. The dispute can, therefore, only be resolved by way of arbitration as mutually agreed by executing the contract to the effect. Parties are bound by the covenant already executed by them on mutually agreeable terms. 8. The dispute can, therefore, only be resolved by way of arbitration as mutually agreed by executing the contract to the effect. Parties are bound by the covenant already executed by them on mutually agreeable terms. 8. Valuation of the claim as per the applicant is Rs.3,73,59,781/- plus interest. However, the same is disputed by the respondent and subject matter of adjudication through arbitration proceedings. It is not for this Court to make any observation qua the same. 9. Be that as it may, in view of the undisputed arbitration clause, owing to which the civil suit was held to be not maintainable, the instant application deserves to be allowed. 10. Accordingly, Ms. Akshiti Singhvi, Advocate, Mobile No.963040128, Resident of- 43, 3 rd lane, Paota ‘C’ Road, Opposite Income Tax Office, Jodhpur is appointed as the sole Arbitrator to adjudicate the dispute between the parties. 11. The intimation of aforesaid be given by the learned counsel for the parties as well as by the Registry to Hon'ble Arbitrator. The above appointment is subject to necessary disclosure being made under Section 12 of the Act of 1996. 12. The parties are at liberty to participate in the arbitration proceedings through video conferencing subject to the approval and convenience of the learned Arbitrator. 13. All the disputes as well as defence raised before this Court on merits and/or limitation is left open to be adjudicated by the learned Arbitrator. 14. Application stands disposed of.