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2015 Supreme(Kar) 323
High Court of Karnataka
ARAVIND KUMAR, J.
B.R. Ganesh & Others - Appellants
Versus
The Commissioner, the Bruhat Bangalore Mahanagara, Palike, N.R. Square, Bengaluru & Others - Respondents
C.M.P. No. 14 of 2012 C/W C.M.P. Nos. 102 to 108 of 2014, 128, 85 to 91 & 135 to 145 of 2014
Decided On : 17-03-2015
Uday Holla, V. Lakshminarayana, Senior Counsels for Prakash M. Patil, T. Mohandas Shetty, Vikram Balaji B.L., S.N. Prashanth Chandra, Advocates.
Headnote:ARBITRATION AND CONCILIATION ACT, 1996 - Sections 7, 2(b): [Aravind Kumar, J] Arbitration agreement - Parties under agreement agreed that disputes which they would be unable to amicably settle amongst themselves by meeting would only be finally settled by Commissioner, whose decision shall be final and binding on parties - Held, Said clause has all trappings of arbitration agreement. Mere non use of word "arbitration", "arbitral tribunal" or "arbitrator" would be of no consequence.
ARBITRATION AND CONCILIATION ACT, 1996 - Section 11: [Aravind Kumar, J] Appointment of arbitrator - Apprehension of petitioners about named arbitrator not being impartial, was reasonable apprehension - Order of High Court directing Municipal Commissioner, named arbitrator to expedite consideration of dispute raised by the petitioners, contractors and to decide on their claim as well as counter claim, not implemented - Conduct of parties clearly indicate that there exists arbitration agreement between parties and they had agreed to resolve their dispute by arbitration - Held, Notice by named arbitrator to contractors, petitioners to appear before him for adjudicating claims does not bar petitioners from seeking appointment of arbitrator. High Court appointed independent arbitrator to arbitrate upon disputes.
1. Short but contentious issue which arises for consideration in these petitions relates to the existence of ‘Arbitration Agreement’ or otherwise between the parties namely whether there exists an agreement between the parties for referring the dispute between them for being adjudicated by an Arbitral Tribunal.
BACKGROUND OF THE CASE:
2. Petitioners are all claiming to be licensed contractors of Bangalore Mahanagara Palike (for short ‘BMP’) who were given contract for cleaning, sweeping and transportation of municipal solid waste pursuant to the tender notification dated 12.12.2005. Initially the contract was entered into between the parties for a period of three years from 15.03.2007 and was extended from time to time. Petitioners have contended during the subsistence of the contract dispute arose between them and the respondent relating to payment of ‘Lead charges’ and on account of deductions being made in respect of bills raised by the petitioners and from out of the running bills, which the respondent was not entitled to deduct, they raised a claim for compensatory payments. It is stated that petitioners had approached this court in W.P.33663-33691/2009 and connected matters for various reliefs against BMP and by order dated 08.06.2010 Annexure-C said writ petitions came to be disposed whereunder the Commissioner of BMP was directed to decide the claims of the petitioners and as such petitioners submitted their claim petitions on 23.06.2010 vide Annexure-F to BMP which was in furtherance of the claim already submitted on 24.12.2008 and 01.12.2009 Annexure-D and E respectively.
3. Petitioners contended that on account of certain amounts having been deducted by the respondent and on account of 5% agreed escalation charges not being paid to them by the BMP some of the petitioners had approached this court in W.P.4250-4278/2010 and said writ petition came to be disposed by order dated 30.06.2010 Annexure-G directing BMP to adjudicate the claim of petitioners in terms of clause 10 of agreement. Hence, petitioners contended that fresh claim petitions came to be submitted by them before Commissioner, BMP on 20.09.2010 as per Annexure-H and despite this court having directed BMP that within a specified time claims of the petitioners should be decided as provided under clause 10 of the agreement dated 15.03.2007, Commissioner did not take any action pursuant to said direction and thereby petitioners were perforced to issue final notice dated 07.07.2011 Annexure-J seeking for an independent Arbitrator being appointed since the named Arbitrator i.e., Commissioner, BMP in terms of clause 10 of the agreement had refused to exercise his power. Petitioners further contend that Commissioner, BMP instead of adjudicating the claims of petitioners had referred the matter for criminal investigation by Bangalore Metropolitan Task Force and on account of such step having been taken by him he had become disqualified to act as an Arbitrator for deciding the claims of the petitioners/contractors. In these circumstances petitioners contend that an independent sole Arbitrator be appointed since the named Arbitrator had not exercised his power under clause 10 of the Agreement and he having taken steps to order for criminal investigation being conducted against petitioners/contractors which is relating to the subject matter of agreement dated 15.03.2007, named Arbitrator cannot act as an Arbitrator and for these reasons, petitioners have contended that respondent has no jurisdiction to proceed to adjudicate the claims of petitioners in terms of clause 10 of the agreement and have prayed for an independent Arbitrator being appointed in terms of section 11(6) of the Arbitration and Conciliation Act, 1996 [for short ‘Act’].
4. On service of notice, respondent has appeared and filed the statement of objections in CMP 85/2014 contending interalia that agreement when read as a whole does not indicate that parties intended to subject themselves to arbit
