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2025 DIGILAW 518 (AP)

Okinawa Autotech International Private Limited v. Tirupati Smart City Corporation Limited

2025-03-21

DHIRAJ SINGH THAKUR

body2025
JUDGMENT : DHIRAJ SINGH THAKUR, C.J. This is an application filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 , (for short, “the Act of 1996”) seeking appointment of an arbitrator to adjudicate upon the disputes arising out of and in connection with Agreement, dated 18.01.2019. 2. It is stated that the applicant is engaged in the manufacture of electric vehicles. In response to the notice inviting proposals for procurement and maintenance of e-scooters with GPS tracking, the applicant submitted its bid which was accepted and subsequently, a letter of acceptance was issued in its favor, leading, finally to the execution of an Agreement, dated 18.01.2019, between the parties. 3. It is stated that an amount of Rs.1,23,70,824/- is due and payable by the respondent in favor of the applicant, but was not paid on account of lack of funds. Reference in this regard was made by learned counsel for the applicant to a communication, dated 10.05.2022. 4. The amount having not been received by the applicant, a notice, invoking the arbitration Clause was served upon the respondent, dated 19.02.2024, which did not elicit any response. The fact that no reply was sent to the said notice, dated 19.02.2024, is admitted by the learned counsel for the respondent. 5. As per the Agreement, disputes are to be resolved through the mechanism of arbitration as contained in General Conditions of Contract (GCC), Clause 24.2, which is reproduced hereunder: “GCC 24.2 Disputes shall be settled by arbitration in accordance with the following provisions: 1. Selection of Arbitrators. 5. As per the Agreement, disputes are to be resolved through the mechanism of arbitration as contained in General Conditions of Contract (GCC), Clause 24.2, which is reproduced hereunder: “GCC 24.2 Disputes shall be settled by arbitration in accordance with the following provisions: 1. Selection of Arbitrators. (a) Each dispute submitted by a Party to arbitration shall be heard by a sole arbitrator or an arbitration panel composed of three (3) arbitrators, in accordance with the following provisions: (b) Where the Parties agree that the dispute concerns a technical matter, they may agree to appoint a sole arbitrator 'or, failing' agreement on the identity of such sole arbitrator within thirty (30) days after receipt by the other Party of the proposal of a name for such an appointment by the Party who initiated the proceedings, either Party may apply to [Chairman (Delhi State Centre), The Institution of Engineers (India), New Delhi for a list of not fewer than five (5) nominees and, on receipt of such list, the Parties shall alternately strike names therefrom, and the last remaining nominee on the list shall be the sole arbitrator for the matter in dispute. If the last remaining nominee has not been determined in this manner within sixty (60) days of the date of the list, Chairman (Delhi State) Centre], The Institution of Engineers (India), New Delhi shall appoint, upon the request of either Party and from such list or otherwise, a sole arbitrator for the matter in dispute. (c) Where the Parties do not agree that the dispute concerns a technical matter, the Client and the Consultant shall each appoint one (1) arbitrator, and these two arbitrators shall jointly appoint a third arbitrator, who shall chair the arbitration panel. If the arbitrators named by the Parties do not succeed in-appointing a third arbitrator within thirty (30) days after the latter of the two (2) arbitrators named by the Parties has been appointed, the third arbitrator shall, at the request of either Party, be appointed by Registrar, The Indian Council of Arbitration, New Delhi. If the arbitrators named by the Parties do not succeed in-appointing a third arbitrator within thirty (30) days after the latter of the two (2) arbitrators named by the Parties has been appointed, the third arbitrator shall, at the request of either Party, be appointed by Registrar, The Indian Council of Arbitration, New Delhi. (d) If, in a dispute subject to paragraph (b) above, one Party fails to appoint its arbitrator within thirty (30) days after the other Party has appointed its arbitrator, the Party which has named an arbitrator may apply to the Registrar, The Indian Council of Arbitration, New Delhi, to appoint a sole arbitrator for the matter in dispute, and the arbitrator appointed pursuant to such application shall be the sole arbitrator for that dispute.” 6. Learned counsel for the applicant would submit that although in the notice invoking the arbitration clause, the applicant had informed the respondent that it had nominated Ms. Misha Rohatgi Mohta, Advocate on Record, as an arbitrator and requested the respondent to nominate their arbitrator as a part of the three-member arbitral tribunal, and since the respondent did not respond, not only was the present application maintainable, but also the reference as prayed for, justified. 7. It is, however, further stated that notwithstanding the fact that the arbitration Clause contains a three-member arbitral tribunal, yet, considering the quantum of dispute, the reference be made to a sole arbitrator and preferably a retired Judge of the High Court be nominated as an arbitrator. 8. The objection, which has been raised by the counsel for the respondent to the present application is that since the dispute is one which pertains to a “technical matter”, in terms of clause 24.2.1(d), the applicant would have to apply to the Registrar, the Indian Council of Arbitration, New Delhi, to appoint a sole arbitrator. 9. Learned counsel for the applicant, on the other hand, states that there is nothing technical about the dispute in the present case, as it is a simple case of non-payment by the respondent, which was denied only on account of lack of funds. 10. Learned counsel for the applicant reiterated its reference to the communication, dated 10.05.2022, which reads as under: “Anent to the reference 2 nd cited, wherein you have submitted request for payment of 1 st Tranche to 5 th Tranche under Operation and Maintenance. 10. Learned counsel for the applicant reiterated its reference to the communication, dated 10.05.2022, which reads as under: “Anent to the reference 2 nd cited, wherein you have submitted request for payment of 1 st Tranche to 5 th Tranche under Operation and Maintenance. In this connection, it is to inform that the bill for payment of 1 st Tranche under Operation & Maintenance period from April-2019 to September-2019 and 2 nd Tranche under Operation & Maintenance period from October-2019 to March-2020 has been processed and pass order for payment was completed. Due to paucity of funds, Cheque is not issued. The Cheque will be issued soon after receipt of funds.” 11. Heard learned counsel for the parties. 12. There is no doubt that there is an arbitration clause, which requires the resolution of the disputes between the parties to the Agreement through the mechanism of arbitration. 13. The objection raised by the learned counsel for the respondent is that the dispute being technical in nature, requires an arbitrator to be appointed through the Indian Council of Arbitration, New Delhi, in my opinion, is an argument which is untenable, for the simple reason that Clause GCC 24.2.1(b) clearly envisages that the parties have to agree that the disputes are one which concerns a technical matter. 14. In the present case, the applicant certainly does not agree to the assertion of the respondent that the dispute concerns a technical matter and unless there is a consensus ad idem among the parties, the Indian Council of Arbitration, New Delhi, would have certainly no role in the appointment of an arbitrator to resolve the disputes. Even otherwise, there is nothing placed on record in the shape of communications that the respondent ever considered the dispute as one having some technical character. Such an objection has also not been taken in the response filed by the respondent. 15. Be that as it may, since disputes have arisen between the parties, the same are required to be adjudicated through the mechanism of arbitration as per the agreed terms. 16. Accordingly, the present arbitration application is allowed. Justice R. Kantha Rao, former Judge of the erstwhile High Court of Andhra Pradesh, is appointed as an Arbitrator, who shall enter upon the reference and adjudicate upon the disputes arising out of and in connection with the Agreement, dated 18.01.2019, and render the Award within the statutory period. 16. Accordingly, the present arbitration application is allowed. Justice R. Kantha Rao, former Judge of the erstwhile High Court of Andhra Pradesh, is appointed as an Arbitrator, who shall enter upon the reference and adjudicate upon the disputes arising out of and in connection with the Agreement, dated 18.01.2019, and render the Award within the statutory period. The parties shall be free to file detailed claims and counterclaims, before the learned Arbitrator. The learned Arbitrator shall also be entitled to claim the fee in consultation with the parties keeping in view the provisions of the Fourth Schedule of the Arbitration and Conciliation Act, 1996 . No order as to costs. Pending miscellaneous applications, if any, in this petition, shall stand closed. A copy of this order be communicated to the learned Arbitrator on the address mentioned herein below: