The main legal point established is that disputes can be arbitrable despite fraud allegations, and the court has the authority to appoint a Sole Arbitrator to adjudicate disputes arising from a construction contract.

JUDGMENT

Vibhu Bakhru, J. - The petitioners have filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereafter the 'A&C Act'), inter alia, praying that a Sole Arbitrator be appointed to adjudicate disputes between the parties.

Factual Background

2. The respondent (hereafter 'GAIL') had issued a Request for Quotation (RFQ) for constructing a Raw Water Treatment Plant for GAIL Petrochemical Complex-II, Pata, Uttar Pradesh (hereafter 'the Project').

3. Petitioner no.1 submitted its bid in terms of the conditions as set out in the tender documents. Petitioner no. 1's bid was accepted and the contract for the Project (hereafter 'the Contract') was awarded to petitioner no.1 and on 01.06.2012, GAIL sent a facsimile (Fax of Acceptance - 'FoA') communicating the same to Petitioner no.1. Thereafter, on 18.07.2012, a Detailed Letter of Acceptance (DLoA) was issued by GAIL to petitioner no. 1. The Project was to be completed within a period of fourteen months effective from the date of issuance of FoA, that is, from 01.06.2012.

4. Petitioner no.1 claims that the execution of the work was delayed for reasons not attributable to it and was beyond its control. Resultantly, it incurred losses to the extent of approximately Rs.15 crores. Despite the above, Petitioner no. 1 took steps to ensure that the Project was completed to the satisfaction of GAIL and for the aforesaid purpose, it engaged four sub-contractors, namely, petitioner nos.2 to 4 (hereafter collectively referred to as 'the Sub-Contractors') and M/s Oriental Automation System Pvt. Ltd.

5. The petitioners claim that petitioner nos.2 to 4 were appointed as Sub-Contractors for executing certain works in relation to the Project with the approval of GAIL and Engineers India Limited (EIL).

6. The Project was completed on 10.12.2016 and was handed over to GAIL. On 29.03.2017, EIL also issued a Completion Certificate in favour of petitioner no.1 and certified that the work had been completed as per the drawings, specification and instructions of the Engineer-inCharge.

7. Petitioner no.1 requested GAIL to encash its Performance Bank Guarantee (Bank Guarantee bearing No. 12303801BGP00306) for clearing the dues of the Sub-Contractors (petitioner nos. 2 to 4) and to pay the balance to petitioner no. 1. It is stated that although GAIL did invoke the said Bank Guarantee, it did not discharge the amounts payable to the Sub-Contractors in its entirety and did not refund the remaining amount available with it.

8. The petitioners claim that petitioner no.1 had also furnished an affidavit to GAIL requesting that payments be made directly to the SubContractors.

9. The petitioners claim that certain amounts are still outstanding and payable by GAIL in respect of the Project executed by them.

10. It is averred in the petition that the petitioners attempted to resolve the disputes, but were unable to resolve the same.

11. On 03.12.2019, the petitioners issued a notice invoking the Arbitration Clause calling upon GAIL to release the following amounts along with interest at the rate of 18% per annum from the date of submission of the Final Bill till the date of actual payment:

12. The petitioners stated that in the alternative, the above amounts may be paid to petitioner no.1 so that it could release the said amounts to the Sub-Contractors.

13. The petitioners also suggested the names of three Advocates/Senior Advocates, one of whom could be appointed as the Sole A