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IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT JAMMU
N. KOTISWAR SINGH, J.
Babu Ram – Petitioner
Versus
Tata Project Ltd. and Others – Respondents
Arbitration Petition No. 47 of 2019
Decided On : 24-01-2024
Arbitration - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - 17(0) Other Facilities/Requirements - [Section 11(6) of the Arbitration and Conciliation Act, 1996] - The judgment discusses the application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator to settle the dispute between the petitioner and the respondents. The court analyzed the arbitration clause in the contract, specifically Clause 17, which stipulated the venue of arbitration to be Hyderabad, Andhra Pradesh, India. The court referred to various decisions to establish that once the contracting parties have chosen a particular place as the venue of arbitration, only that venue chosen will be the seat for the purpose of arbitration. Consequently, only such a court having jurisdiction over the venue of arbitration will have jurisdiction to entertain an application for the appointment of an arbitrator under the agreement. As the court did not have jurisdiction over Hyderabad, the venue of the arbitration, it did not have jurisdiction over matters pertaining to the said arbitration agreement including the appointment of the arbitrator.
Fact of the Case:
The petitioner filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator to settle the dispute between the petitioner and the respondents. The petitioner contended that the respondent no. 1 failed to make the payment for the work executed by the petitioner, and despite legal notices, the respondents did not respond.
Finding of the Court:
The court found that the application filed under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator was not maintainable as the court did not have jurisdiction over the venue of arbitration, which was stipulated to be Hyderabad, Andhra Pradesh, India.
Issues: The main issue was whether the court had jurisdiction to entertain the application for the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, considering the stipulated venue of arbitration in the contract.
Ratio Decidendi: The court's decision was based on the interpretation of the arbitration clause in the contract, specifically Clause 17, and the established legal principle that once the contracting parties have chosen a particular place as the venue of arbitration, only that venue chosen will be the seat for the purpose of arbitration. Consequently, only such a court having jurisdiction over the venue of arbitration will have jurisdiction to entertain an application for the appointment of an arbitrator under the agreement.
Final Decision: The court dismissed the application filed under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator, with liberty to the petitioner to approach the court of competent jurisdiction.
ORDER :
1. The present application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short the ‘Act of 1996’) for appointment of an arbitrator to settle the dispute between the petitioner and the respondents.
2. The case of the petitioner, in brief, is that the respondent No. l (Tata Project Ltd. Company) was allotted a work for the construction of a transmission line by the respondents no. 2 to 4 (Power Grid Corporation of India). Thereafter, the respondent no. 1 executed a subcontract in favour of the petitioner for the construction of revetment work LOC No. 167 and 168 vide work order No. 14998 dated 26.10.2017 for an amount of Rs. 24,72,750/- (Rupees twenty-four lacs seventy-two thousand seven hundred and fifty only).
3. According to the petitioner, the petitioner duly executed and completed the said contract to the satisfaction of the respondents. Thereafter, the transmission tower was also erected over the said revetment and now the said transmission line has been commissionedand is functioning.
4. The petitioner contends that after completing the work the petitioner submitted his bills amounting to Rs. 24,72,750/- (Rupees twenty-four lacs seventy-two thousand seven hundred and fifty only). As the respondent no. 1 failed to make the payment in favour of the petitioner, the petitioner served a legal notice on 10.03.2019 requesting for release of the payment. However, despite such notice, the respondents have not made the payment to the petitioner.
5. It is contended by the petitioner that as per Clause 17 of the work order issued by the respondent no. 1 in favour of the petitioner on 26.10.2017, the respondent no. 1 and the petitioner shall make every effort to resolve amicably by direct informal negotiation any disagreement or dispute arising between them either under or in connection with the contract and the arbitration shall be carried out in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any other statutory modification or re-enactment thereof for the time being in the force, and the decision of the arbitrator/umpire shall be final and binding upon both the parties. It has been further provided that the venue of arbitration shall be Hyderabad, Andhra Pradesh, India.
6. According to the petitioner, though the petitioner approached the respondents and requested them to settle his claim for which the petitioner sent legal notice to the respondents on 10.03.2019, the respondents failed to accede to the request and hence, his attempt to settle the dispute amicably failed. Consequently, the petitioner was left with no alternative but to issue a legal notice to the respondents on 29.05.2019 for invoking Para 17 of the work order which provides that in case of any dispute between the parties, on the failure of any amicable settlement, the dispute is to be resolved by arbitration. However, despite this legal notice, the respondents did not respond. Accordingly, the present application has been filed for the appointment of an arbitrator by this Court in terms of Clause 17 of the contract agreement between the petitioner and respondent no. 1.
7. The respondents no. 2 to 4 (Power Grid Corporation of India) have rightly objected to their impleadment in this application as they contend that there is no privity of contract between the respondents no. 2 to 4 with the petitioner in as much as the contract was between the petitioner and the respondent no. 1, to which the respondents no. 2 to 4 had no direct role to play. It was submitted that in terms of Clause 15 of General Conditions of Contract executed between the respondents 2 to 4 and respondent no. 1, the respondent no. 1 was required to select and employ subcontractors from the “list of Approved Sub Contractors” issued by Power Grid Corporation of India and in case any other Sub Contractor was required to be engaged, then a permission for the same was required to be obtained in advance from the Power
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