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IN THE HIGH COURT OF DELHI AT NEW DELHI
SURESH KUMAR KAIT, J.
S.P. Singla Constructions Private Limited – Appellant
Versus
Construction And Design Services, Uttar Pradesh Jal Nigam - Respondent
ARB.P. 450 of 2021
Decided on : 23-09-2021
Arbitration and Conciliation Act, 1996 - Section 11(6) - Dispute Resolution - Contract and Agreement - Claims for value of Contract - Seeking appointment of Arbitrator - Seat of arbitration - Whether seat of arbitration shall be New Delhi in the light that the arbitration has to be conducted in accordance with Rules of Arbitration of International Centre for Alternative Dispute Resolution, New Delhi OR Lucknow, in light of agreement that venue of such arbitration shall be Lucknow?
Finding of the Court :
Mere expression of place of arbitration will not entail that the parties intended it to be the seat. The intention of the parties to the seat has to be determined from other clauses of the Agreement and the conduct of the parties - ICADR Rules clearly shows that the place of arbitration shall be New Delhi or any of its regional office “as the parties may agree”. No doubt the aforesaid Clause-26.3.1 of Article- 26 of the Agreement stipulates that the arbitration shall be held in accordance with the Rules of ICADR but soon thereafter it follows the condition that the venue of arbitration shall be “Lucknow”. Accordingly, in the considered opinion of this Court, the role of ICADR Rules shall come into play with regard to procedure to be followed, only after the arbitration commences before the appropriate jurisdiction of law, which in this case is “Lucknow”.
Result: Petition dismissed
JUDGMENT :
1. Petitioner- S.P. Singla Constructions Private Limited claims to be one of the most reputed construction company specialized in construction of bridges and other projects across the country. Respondent- Construction and Design Services, a 100% undertaking of Government of Uttar Pradesh, claims to be providing construction and design Services.
2. Respondent had invited proposals for Qualification cum Request for Proposal dated 06.04.2016 to undertake design, engineering, procurement and construction of a dedicated corridor (4 lane including extra-dosed bridge across River Ganga) for old and differently-abled persons during Kumbh and Magh Mela at Sangam, Allahabad, UP, India. Petitioner participated in the bidding process and was adjudged as the successful bidder with the lowest bid. Therefore, respondent had issued a Letter of Award dated 03.01.2017 in favour of the petitioner and a formal Contract dated 08.02.2017 was executed between the parties.
3. Petitioner claims that the value of the Contract was Rs.984,53,75,000/- (Rupees Nine Hundred Eighty-Four Crores, Fifty-Three Lacs Seventy-Five Thousand Only) and the project was to be concluded within a period of 30 months followed by a defect liability period of 48 months from the date of provisional certificate of completion. Further, petitioner was obligated to deposit Bank Guarantees towards performance security to the tune of 5% of the said Contract Value and so, vide letter dated 13.02.2017, thirteen bank guarantees to the tune of Rs.49,22,69,000/- were deposited by the petitioner, which also stood extended.
4. According to petitioner, to execute the Contract in question, petitioner had immediately taken steps like mobilisation of resources, appointment of various third-party Consultants i.e. proof check Consultant, safety Consultant and a Design Director, submission of general arrangement drawings for bridge and viaduct approaches, geotechnical reports, placing work orders etc. However, respondent utterly failed in fulfilling its part of obligations, as in terms of Clause- 4.1.3 of the said Contract, the "Right of Way" in respect to the said works was to be provided by the respondent to the petitioner within 15 days of the date of the agreement dated 03.01.2017, but even after expiry of entire period of 30 months, respondent did not do so, which is contrary to the Clauses - 4.1.3, 5.2(g) and 5.2(h) of the said Contract. Further pleaded by petitioner that despite communications dated 27.06.2017, 17.07.2017, 12.09.2019 and 03.03.2020, respondent has not even compensated the petitioner for the cost incurred by it towards fulfilling its part of obligations. Due to non-performance of obligations by the respondent, the petitioner claims to have incurred huge loss of productivity, turnover, overhead costs, Contractor's profits and earning capacity besides cost of construction under the Contract in question. The respondent vide its letter dated 09.06.2020, while referring to a letter dated 16.04.2020 by the Prayagraj Mela Board, intimated that the project as well as the contract ought to be considered as “terminated”.
5. Petitioner further claims that in response to the aforesaid letter dated 09.06.2020, respondent/petitioner sent a letter dated 24.06.2020 to the respondent acknowledging termination of the Contract at respondent’s convenience in terms of Clause-23.3 of the Contract and raised an invoice for Rs.174,36,50,777/- towards “Termination Payment” in accordance with Clause 23.6.2 of the Contract. According to petitioner, Clause 23.6.4 of the Contract provides that the ‘Termination Payment’ shall constitute a full and final payment and respondent shall make the payment within 30 days under Clause- 23.6.3 and shall discharge the bank guarantees.
6. Petitioner next claims that not only respondent failed to honour the payment of Rs.174,36,50,777/- towards “Termination Payment” but vide letter dated 27.07.2020 demanded extension of bank guarantees for a further period in
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