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Gauhati High Court
Indira Shah, J.
Karnataka State Electronics Development Corporation Ltd. - Appellant
Versus
State of Arunachal Pradesh & Ors. - Respondent
Arb. Petition No. 01(AP) of 2013
Decided On : 20-06-2014
Arbitration and Conciliation Act, 1996 – Section 11 – Appointment Of An Arbitrator – By filing this application under section 11 of Arbitration and Conciliation Act, 1996 petitioner has prayed for appointment of an arbitrator for adjudicating the dispute between the petitioner and the respondents, in terms of agreement entered into by the petitioner and the respondent No. 3 for the work of “Setting up State Date Centre” for the State of Arunachal Pradesh – Held, Section 16(l)(a) of the Arbitration and Conciliation Act, 1996 provides that an Arbitration Clause which forms part of the contract shall be treated as an agreement independently of other terms of the contract – Respondent taking into consideration that the petitioners company being experienced one, invited the petitioners company for execution of the project – They encashed the Bank Guarantee and then termed the agreement as void – It was held that irrespective of whether MoU is now existence or not, the arbitration clause could survive – In this case, the petitioner received the notice of cancellation of the contract and he replied the notice – His Bank Guarantee has been enchased and since then there dispute between the parties, which is yet to be resolved and there is an arbitration clause in the contract – Patter, therefore, needs to be referred to arbitration, therefore, both the parties are directed to mutually appoint an arbitrator preferably within 3 months to conduct the arbitration at Itanagar in accordance with the provisions of Arbitration and Conciliation Act, 1996 – Order Accordingly
2. The State counsel for IT a E-Governance (respondent No. 3) was entrusted to implement “setting up of State Data Centre” for the State of Arunachal Pradesh under National E-Governance Programme (NEGP), a scheme designed implemented and funded by the Government of India through Department of Information and Technology, Ministry of Communication and Information Technology, New Delhi.
3. There was delay in execution of the work which according to petitioner was attributable to the respondents, as the respondent could not provide the site for work in question. The dispute also arose between the parties with regard to encashment of the bank guarantee furnished by the petitioner for an amount of Rs. 9,20,40,074 only. The matter went up to the hon’ble Supreme Court and hon’ble Supreme Court in SLP (Civil No. 33604/12 vide order dated 9.11.2012 observed that However, as we are informed that petitioner has already resorted to arbitration, let the encashment of bank guarantee by the respondent State be abide by the decision of the Arbitration”.
4. Mr. Biswas, learned counsel for the petitioner submits that in the contract agreement, clause 26, is a arbitral clause and as the dispute arose between the parties, the petitioner, initially sent a notice to refer the dispute to arbitration vide letter dated 4.5.2012 and then again on dated 6.8.2013. The petitioner mentioned the name of the arbitrator as proposed by him but the respondent failed to communicate their consent. Instead of resolving the dispute through arbitration, the respondent sent a notice dated 1.8.2013 alleging breach and termination of contract. According to the petitioner, the dispute is arbitral dispute which could be settled through arbitration. There is a valid arbitration clause but the respondents are not inclined to resolve the dispute and, thus, depriving the petitioner of his chance to agitate his grievance before the agreed adjudicatory body. For implementation of said scheme, the petitioner was invited and after finding the technical and commercial proposal satisfactory, an agreement dated 19th August, 2011 was entered into by the petitioner and the respondent No. 3, for execution of the aforesaid work.
5. Respondent Nos. 3 and 4 in their affidavit-in-opposition have averred that M/s. Price Water House Coopers Ltd. was appointed as the consultant, for the State data centre project, by the Department of Information and Technology, Government of India vide letter dated 3.4.2008 for preparation of DPR bid management and complete handholding. Based on this request for proposal was also made. The petitioner submitted a proposal (technical and commerce) to the Government of Arunachal Pradesh to forgo the RFP process, which apparently was in violation of CVC guidelines and also against national E-Governance plan. The RFP was created and subsequently RFP meeting of the said E-Governance Advisory Council was held on 20.8.2009 and it was decided to entrust the work in favour of M/s. Keonics without any tender process. In«pursuance to said decision, deed of agreement dated 19.8.2011 was executed, the petitioner also furnished the Bank Guarantee. The fact remains that no transparent bidding process was adopted preceding execution of the agreement dated 19.8.2011. Department of Information and Technology questioned the aforesaid process and advised the State to issue its RFP following a transparent bidding process with a due Price discovery Mechanism. Again vide letter dated 31.7.2012, the State was advised to cancel the work order. Thus, the contract agreement between the p
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