The court emphasized that arbitration agreements should be interpreted to uphold the parties' intentions, allowing for arbitration despite procedural objections.

ORDER :

1. Heard learned counsel for both parties and perused the record placed before this Court.

2. Instant application has been filed by and on behalf of applicant M/s Larsen and Toubro Limited (for short “L&T Company) under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short “A&C Act) for appointment of Arbitrators to adjudicate the dispute that has arisen with respondent- Rajasthan Urban Sector Development Project (for short “RUIDP”) in connection with claiming new rate of variation in terms of clause 13.3 of GCC for excess work carried out beyond the original BOQ (Bills of Quantity) agreed under the tender contract dated 24.09.2015, between applicant and respondent-RUIDP pursuant to tender bid dated 23.04.2015. For ready reference Clause 13.3, as reproduced in the letter of applicant dated 24.05.2023 (Ann-P3) is being extracted hereunder:

“In case of Variation, except as otherwise stated in the Contract, the Employer's representative shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine the Contract Price by evaluating each item of work, applying the measurement agreed or determined the appropriate rate or price for the item. For each item of work, the appropriate rate or price for the item shall be the rate or price specified for such item in the Contract. The RUIDP Schedule of Rates (SOR) of 2013 shall be part of the Contract Agreement.

Variation will be dealt as follows:

(i) for items having weightage of each item upto 0.1% of the Accepted Contract Amount, quantity variations will be paid on BOQ rate. No new rate will be given.

(ii) for items having weightage of each item more than 0.1% of the Accepted Contract Amount, quantity variation (plus or minus) upto 20% of the BOQ quantity will be paid on the BOQ rates. Quantity variation will generally be limited to 20% of BOQ quantity.

New rate for BOQ item for quantities more than 20% of BOQ quantity and non BOQ items and items of Major Maintenance:

*Each new rate or price shall be derived from any relevant rates or prices in the Contract, with reasonable adjustments. The adjustment in rates shall be based on RUIDP Schedule of Rates (SOR) 2013.

*No rates or prices are relevant for the derivation of a new rate or price from BOQ items, it shall be derived from the reasonable cost of executing the work (rate analysis on current market rate), together with profit of 20%. The rate analysis method will be based on RUIDP SOR analysis.

Until such time as an appropriate rate or price is agreed of determined, the Engineer shall determine a provisional rate or price for the purposes of Interim Payment Certificates as soon as the concerned work commences.”

3. The Arbitration Clause 20.8 contained in documents of tender contract dated 24.09.2015, arrived at between parties is being extracted hereunder:

“20.8(a) Arbitration to be administered by : For a contract with a local Contractor: In the case of a dispute between the Employer and the Contractor, the dispute shall be settled by arbitration in accordance with the rules of procedure for Indian arbitration act as in force on the date of the Contract.

Place of arbitration: Jaipur, State of Rajasthan India [....]

(b) Dispute shall be settled by sole or three Arbitrators. Dispute to be arbitrated upon shall be referred to a sole Arbitrator where the total value of claims does not exceed to Rs.10 millions. Beyond the claim limit of Rs. 10 Million, there shall be three arbitrators. For this purpose the Employer will make out a panel of Engineers with the requisite qualifications and professional experience relevant to the field to which the Contract relates. This panel, will be for serving or retired Engineers Departments of Government or of Public Sector. The Arbitrator/Arbitrators shall be appointed within a period of 30 days from the date of receipt of written notice/demand of appointment of Arbitrator by either party. In case of a single arbitrator, the will be of three Engineers, out of which the