2012 Supreme(Raj) 2065
RAJASTHAN HIGH COURT AT JAIPUR BENCH
Prem Shanker Asopa, J.
Simpark Infrastructure Pvt. Ltd. - Appellant
Versus
Jaipur Municipal Corporation - Respondent
S.B. Arbitration Application No. 26 of 2011.
Decided On : 12-09-2012
For the Applicant:Mahendra Singh, Advocate.
For the Non-Applicant:Vinod Singhal on behalf of Naina Saraf, Advocates.
Headnote:
(a) Arbitration and Conciliation Act, 1996 – S. 11(6) – the clause specifically provides that the disputes shall be first tried to be solved by conciliation and amicably and if no result accrues then arbitration has to be invoked – following the decision reported in 2005 (8) SCC 618 the court held that this course of action should be followed and directly invoking the arbitration clause is not maintainable.
(b) Arbitration and Conciliation Act, 1996 – S. 11(4) – the court has held that right to arbitration and appointment of arbitrator accrues only when the condition precedent to the invoking the clause has been fulfilled.
(c) Arbitration and Conciliation Act, 1996 – S. 62(3) – condition precedent for invoking arbitration clause is to try and settle the disputes by conciliation – both parties are incapable to solve disputes amicably and reject the invitation for conciliation – the court held that the parties are obligated to accept notice for conciliation and only upon failure invoke arbitration.
JUDGMENT
1. - This is an arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 (in short 'the Act of 1996') for appointment of the Arbitral Tribunal consisting of three Arbitrators to resolve the dispute, arising out of the Agreement dated 17.2.2010 (Anx.A).
2. Briefly stated, the facts of the case, are that in order to regulate the traffic position in Jaipur, the Jaipur Municipal Corporation (in short 'JMC') after following the procedure, entered into the development agreement dated 17.2.2010 (Anx.A) with the Applicant - a Company incorporated under the Companies Act, 1956 - for Design, Built, Finance, Operate and Transfer (i.e. DBFOT Basis) of multi-level parking spaces along with commercial development at Ramleela Maidan - Rangmanch, M.I. Road, Jaipur which contained Dispute Resolution Article 16 and further, Clause 16.3 provided for Arbitration. In the said Agreement, reference to the 'Developer' is the Applicant and the 'authority' means JMC. After fulfilling certain obligations, as referred to in Clause 4.1.1 and 4.1.2, the JMC shall have to procure for the Applicant, peaceful possession of the site, free from all encumbrances along with permission for commencement of the construction. It is further stated in the arbitration application that subsequent to the execution of the Agreement, the Applicant deposited the following amount:
Performance Security - Rs. 10,00,00,000/- (Rupees Ten Crores Only)
1st instalment of premium paid as upfront: Rs. 12,75,00,000/- (Rupees Twelve Crores Seventy Five Lacs Only)
3. The Applicant requested for the project site, free from all encumbrances and a letter to this effect was sent on 14.4.2010 (Anx.B) which was replied to by the JMC alleging wilful default on the part of the Applicant to comply with the provisions of the development agreement. The Applicant again requested the JMC to hand over the project site, free from all encumbrances, within the working area so that the Applicant may commence the work at the earliest. It was further stated that on 30.12.2010 (Anx.C) in case appropriate orders in this respect with requisite statutory compliance are not made within another 2 weeks, the Applicant shall be constrained to presume that the Government and its instrumentalities are disinclined to abide by and adhere to the assurances given to the Applicant.
4. The Applicant vide its letter dated 1.2.2011 (Anx.D),brought to the notice of the JMC that the peaceful possession of the site for construction of the proposed multi-level parking and commercial complex project at Ramleela Maidan and Rangmanch has not been handed over to the Applicant, free from all encumbrances and specifically referred the encumbrances - (i) the temple and the houses; (ii) vocational training institute by the name of Shri Chand Shilp Shala on 99 years' lease from the State Government and (iii) Rangmanch project site covering almost 823 Sq.Meters of the proposed commercial area and the vacant area at the Rangmanch site is completely occupied by 'Phoolwall as' and 'Chudiwallas' who were earlier evicted by the JMC. The Applicant in the said letter dated 1.2.2011 (Anx.D) requested the JMC to appoint the Arbitrator as per the Development Agreement on account of the disputes and differences arisen between the parties - the Applicant and the JMC - with regard to the fact of not handing over of project site, free from all encumbrances.
5. Subsequently, the Applicant filed an application u/s 9 of the Act of 1996 for seeking interim measure which was decided by the Court vide order dated 2.2.2011 with the direction that the Applicant shall extend the bank guarantee for a period of six months unless the peaceful possession of the land in question was handed over to the Applicant free from all encumbrances and further, no coercive action shall be taken by the JMC. The Court also observed that the parties are free to resolve their dispute through arbitration/conciliation.
6. On 3.2.2011 (Anx.E), the Appl
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