The main legal point established in the judgment is that the procedure for appointment of Arbitral Tribunal as prescribed in the General Conditions of Contract was void and contrary to the scheme of the Arbitration and Conciliation Act, 1996.

JUDGMENT

[VIA VIDEO CONFERENCING]

Sanjeev Narula, J. (Oral)

1. The file is taken up today, as Friday, the 20th August, 2021 was declared as a public holiday on account of `Muharram'.

2. The present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (in short `the Act') seeks appointment of Respondent's Arbitrator as well as the presiding Arbitrator to adjudicate disputes between the parties arising out of and in relation to the contract dated 30th March, 2015 which came into existence as a result of the tender for "Construction of Warm Shell structure for Office Blocks and Auditorium at Plot No.16, Sector-32, Gurgaon (Haryana)" (in short `the tender') issued by the Respondent.

Brief Facts

3. The relevant facts to be noted for disposing of the present petition, as set out in the petition are as follows:

3.1. The Respondent invited bids for the tender. The bid of the Petitioner was accepted on 19th February, 2015 and a contract dated 30th March, 2015 was executed.

3.2. The awarded work could not be completed within the stipulated period of 18 months. Disputes and differences arose between the Petitioner and the Respondent. The Petitioner attempted to settle disputes and conciliate in terms of Clause 73.2 of the General Conditions of Contract (`GCC').

3.3. The Respondent refused to hold mutual discussion or conciliation or grant any hearing to the Petitioner. The Respondent terminated the contract on 15th May, 2019. The Petitioner then invoked arbitration clause on 30th July, 2020 and nominated Shri Ashutosh Gupta as its arbitrator and requested Respondent to nominate their arbitrator. Respondent vide its reply dated 26th August, 2020 instead of appointing their nominee arbitrator, appointed a conciliator.

3.4. In this background, the Petitioner has filed the instant petition praying for appointment of Respondent's arbitrator as well as the Presiding Arbitrator.

3.5. During the pendency of the present petition, the Petitioner without prejudice to its rights and contentions agreed to participate in the conciliation proceedings initiated by the Respondent as recorded in the order of this Court, dated 11th January, 2021.

3.6. On 13th July, 2021, conciliation failed, and the conciliator formally terminated the proceedings.

Respondent's contentions

4. Mr. Debarshi Bhadra, counsel for the Respondent, does not dispute the existence of the arbitration agreement, but strongly opposes the present petition on the ground that it is premature as the pre-arbitration conciliation process has not been exhausted; claims of the Petitioner fall in the excepted category. His submissions are summarised as follows:

4.1. Under Clause 73.2.2 of the GCC, only after the efforts to resolve any or all disputes through conciliation fail, the Contractor (Petitioner herein) may refer to the CMD of the Respondent for settlement of disputes by way of arbitration. The appointment of the arbitrator is to take place in terms of Clause 73.4(a)(ii), which provides for a three-member tribunal and that the Contractor must select its nominee arbitrator out of names referred to it from Respondent's panel of arbitrators.

4.2. The order dated 11th January, 2021 records the consent of both parties to participate in the conciliation, which was initiated by the Respondent upon receipt of the notice invoking arbitration. The said conciliation has failed as on 13th July, 2021. Thus, the time for appointing the arbitral panel has arisen only post 13th July, 2021. Names under Clause 73.4(a)(ii) could not be proposed by the Respondent earlier, in view of the present application being sub-judice.

4.3. Clause 73.4(a)(ii) of the GCC, inter alia, stipulates that for the purpose of forming the Arbitral Tribunal, the Respondent will send a panel of more than 3 names to the Petitioner, who will be asked to suggest at least 2 names out of the panel for appointment as Petitioner's nominee arbitrator. The Managing Director of the Respondent shall then appoint at least o