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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SUJIT NARAYAN PRASAD, J.
M/s. Valecha Engineering Limited, a company incorporated in India – Appellant
Versus
State Highways Authority of Jharkhand, established under the State Highways Authority of Jharkhand Act, 2007 – Respondent
Arbitration Application No.04 of 2020
Decided on : 28-04-2022
Arbitration - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Clause 26.2 and 26.3 of the contract
Fact of the Case:
The petitioner filed an application for the appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, due to a dispute arising from a contract for road construction. The respondent contested, arguing that the conditions for invoking arbitration were not met.
Finding of the Court:
The court found that the petitioner had invoked the conciliation clause as per Clause 26.2 of the contract by making correspondence to the Chief Executive Officer, and the respondent failed to respond. The court held that the respondent's objection about non-invoking the condition under Clause 26.2 was rejected, and the petitioner had the right to invoke the jurisdiction of the court for the appointment of an Arbitrator.
Issues: The main issue was whether the petitioner had fulfilled the conditions for invoking arbitration under the contract.
Ratio Decidendi: The court determined that the petitioner's correspondence to the Chief Executive Officer constituted invoking the conciliation clause as per Clause 26.2, and the respondent's failure to respond allowed the petitioner to seek the appointment of an Arbitrator under Section 11(6) of the Act.
Final Decision: The court allowed the application and appointed an Arbitrator, Hon’ble Mr. Justice D.K. Sinha (Retd.), as the second Arbitrator.
JUDGMENT :
The instant application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator, in view of the Arbitration Clause as contained under Clause 26.3 of the contract.
2. The grievance of the petitioner is that the contract has been entered in between the parties on 30.03.2015 for execution of the work i.e., for strengthening, widening and reconstruction of Ghaghra-Netarhat (SH-9) road, allotted in favour of the petitioner in terms of advertisement ref. No.RFQ-RFP/SHAJ/01/2014 dated 30.09.2014.
3. According to the petitioner, after completion of the work, some dispute pertaining to money claim has arisen, therefore, the petitioner has invoked the Arbitration Clause as stipulated under Clause 26.3 of the contract, which is appended as Annexure-1 to the application.
According to the petitioner, even though, the petitioner has resorted to the conciliation process as per the condition stipulated under Clause 26.2, which contains a condition that before invoking the arbitration clause as per the condition stipulated under Clause 26.3, the matter will be tried to be resolved through conciliation but even though, efforts have been taken by the petitioner for resolution of the dispute through conciliation as per the condition stipulated under Clause 26.2 but the respondent has not made any correspondence to such efforts and therefore, the instant application has been filed for invoking the jurisdiction conferred to this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator for resolution of dispute.
4. The respondent State had appeared and has contested the case by making the submission that the ground which has been taken on behalf of the petitioner in resorting to the condition stipulated under Clause 26.2 of the contract has never been availed, since, no such application has been submitted before the concerned Engineer, wherein, as per the condition stipulated under Clause 26.2, the application for conciliation was to be filed before the concerned Engineer.
According to the respondent, the said application was filed before the Chief Executive Officer as also the Chairman, as would appear from Annexure-3 dated 30.11.2019 to the application.
5. Learned counsel for the respondent, in the backdrop of the aforesaid fact, has submitted that it is not a fit case where the Arbitrator is to be appointed by invoking the jurisdiction conferred to this Court under Section 11(6)(C) of the Arbitration and Conciliation Act.
6. This Court has heard the learned counsel for the parties and considered the documents appended to the application as also the agreement.
7. The factual aspect is not in dispute so far as it relates to the allotment of work in favour of the petitioner in pursuant to the advertisement dated 30.09.2014.
8. According to the petitioner, the work has been concluded and thereafter, the bill was submitted for releasing of the amount which has incurred in execution of the work, but, the amount has not been disbursed, therefore, the petitioner has made an application by invoking the conciliation clause as stipulated under Clause 26.2 of the contract, as would appear from Annexure-3 dated 30.11.2019. But according to the petitioner, no correspondence has ever been made in response to the application in terms of Clause 26.2 of the contract, therefore, the instant application has been filed.
9. The respondent has made opposition to the prayer made in the instant application by taking the plea that under the condition as contained under Clause 26.2, an appropriate application for conciliation was required to be filed before the concerned Engineer but having not done so, therefore, it is not a fit case for appointment of Arbitrator by invoking the condition stipulated under Clause 26.3 of the contract.
According to the respondent, since the condition stipulated under Clause 26.3 can only be allowed to be raised, if the condition stipulated und
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