The main legal point established in the judgment is that the court has jurisdiction to entertain a petition for the appointment of an arbitrator on behalf of the respondent, and the appointment of the arbitrator and the conduct of the arbitral proceedings would be in accordance with the provisions of the 1996 Act.

JUDGMENT (Oral)

(Video-Conferencing)

1. This petition, at the instance of the petitioner M/s. Larsen and Toubro Limited, calls on this Court, to appoint an arbitrator on behalf of the respondent Punatsangchhu-1 Hydroelectric Project Authority, so that the arbitrator appointed by the petitioner, and the arbitrator thus appointed by this Court on behalf of the respondent, could appoint a presiding arbitrator, and the Arbitral Tribunal, so constituted, could proceed to arbitrate on the dispute between the parties.

2. Mr. Bharat Singh, learned counsel for the respondent, very fairly states that his client does not question the existence of an arbitrable dispute between the parties, or the necessity to refer the dispute to arbitration. He, however, submits that the petition is not maintainable before this Court, under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act"), but that the petitioner would have to approach the High Court of Thimpu, Bhutan.

3. A fasciculus of the dispute. A contract was executed between the petitioner and the respondent on 14th April, 2009. The respondent was required by the contract, to execute work relating to the construction of diversion tunnel, dam, intake and de-silting arrangement, including hydro-mechanical works of the Punatsangchhu-I Hydroelectric Project, located in the Wangdue Phodrang District of Bhutan. The averments in the petition, setting out the dispute with the respondent, may, without prejudice to the right of the respondent to question the correctness thereof, be reproduced thus:

"(i) The Respondent invited bids for the Construction of Diversion Tunnel, Dam, Intake and Desilting Arrangement, including Hydro-Mechanical works of the Punatsangchhu-I Hydroelectric Project (1200 MW), located in Wangdue Phodrang District of Bhutan ("Project Works").

(ii) The Petitioner submitted its bid. Upon evaluation of the techno-commercial and the price bids submitted by various bidders, the Respondent found the Petitioner's bid to be the most qualified. Accordingly, by way of a Letter of Award dated 27.03.2009 ("LoA"), the Petitioner was awarded the Project Works by the Respondent.

(iii) Subsequently, the parties entered into the Contract.

(iv) Under the Contract, the Petitioner was required to carry out the Project Works on an item rate basis. The agreed contract price was INR 1245,51,73,905/- (Rupees Twelve Hundred Forty-Five Crore Fifty-One Lakh Seventy-Three Thousand Nine Hundred and Five only).

(v) In terms of Clause 43 of the Contract, the Petitioner was required to complete the Project Works within a period of 66 months from the 30th date of issue of the LoA. The commencement date of the Project works was 26.04.2009 and the scheduled completion date was 26.10.2014.

(vi) In addition to the overall completion date, the Contract stipulated certain Intermediate Milestones ("Intermediate Milestones"), which were agreed to in the construction programme in terms of Clause 14(i) of the Contract ("Work Programme").

(vii) Upon issuance of the LoA, Petitioner duly mobilized the required resources for completion of the work within the agreed timelines. However, right from inception, the Project Works were delayed on account of multiple variation orders issued by the Respondent. These variation orders resulted in an increased scope of work, substantially beyond what was originally agreed by the parties.

(viii) As a consequence, the timeline for achievement of the intermediate milestones was also impacted. Acknowledging the effect of the variation orders, the Respondent revised the duration for achievement of Milestone-l and the completion date for the said milestone was extended from October 2010 to November 2011. The Petitioner achieved Milestone-l, in terms of the revised schedule.

(ix) In terms of the requirements of the Contract, Petitioner also mobilized resources and carried out the various preparatory works required for dam concreting (forming part of