Disputes affecting the financial performance of a contract may be submitted to arbitration during contract execution if they materially impact the ability to complete work, as ruled under Section 11(6) of the Arbitration and Conciliation Act, 1996.

JUDGMENT :

Tashi Rabstan, C.J.

1. The petitioner has filed this arbitration petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking for appointment of an arbitrator for resolution of disputes between the petitioner and respondents herein in view of arbitration clause 70 of the Contract Agreement.

2. The facts-in-brief, as gathered from the arbitration petition, are that in response to NIT for construction of 3x Twin Hangers at Air Force Station Thoise, the bid submitted by the petitioner-company was accepted by respondent No.2 for a lump sum amount of Rs.71,00,00,000/- (Rupees Seventy One Crore only). The date of handing over/commencement of work was scheduled as on 09.10.2015 and the work was required to be completed within 36 months with scheduled date of completion being 08.10.2018. It is contended that though the work remains suspended from October to April-May due to extreme cold conditions, even then the petitioner-company was able to complete around 70% of the contract work by October, 2018 and was expected to complete the work by the next working season in 2019, but the respondents, in a dramatic turn of events, took a decision to change the entire design of the Central Heating System by opting to go for a new technology by providing Radiant Floor Heating in the Hanger Portion in lieu of Fan Coil Units as provided under Schedule ‘A’ Part-XII of the Contract Agreement. Thus, it resulted in change of the design of flooring of the Hanger portion as the PE-RT Pipes as per the new scope of work were to be embedded in the PQC Layer. Since the MES Department introduced this new technology and changed the nature as well as scope of the contract, it was their responsibility to provide the new design and details to the petitioner-company for execution of the work. However, the MES department did not provide the new design for about 2 ½ years and, thereafter, decided to delete the entire work for Central Air Heating System from the scope of the contract including providing PE-RT Pipes. It is submitted that during this period the respondents issued as many as 11 extensions for completion of the work and the last extension was granted on 24.02.2024 upto 13.09.2024, and, all these extensions were granted by the department for reasons not attributable to the petitioner-company. Since the petitioner-company was suffering huge losses, besides the costs of materials increased manifolds in the last nine years and that serious disputes had arisen between the parties to the contract, the petitioner company vide communication dated 19.03.2024, while invoking Clause 70 of the Contract Agreement, issued notice to the respondents for appointment of an Arbitrator for resolution of disputes between the parties during the currency of the contract. However, the respondents neither responded to the notice nor appointed the Arbitrator; hence the petitioner-company has approached this Court under Section 11(6) of the Arbitration and Conciliation Act for appointment of an independent Arbitrator for resolution of disputes between the parties.

3. Objections have been filed on behalf of respondents averring therein that in terms of Clause 70 of the Contract Agreement, the alleged disputes cannot be referred for arbitration until after the completion or alleged completion of the works or termination or determination of the contract under Conditions No.55, 56 and 57 thereof. It is further averred that 11 extensions have already been granted to complete the contract, but the work is yet to be completed. The petitioner has sought further extension of time; the same is under consideration and is likely to be grante