Sivanssh Infrastructure ... vs Army Welfare Housing ...
2021 Latest Caselaw 2918 Del

$~8(2021)
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                           Date of decision: 26.10.2021
+     ARB.P. 830/2021
      SIVANSSH INFRASTRUCTURE DEVELOPMENT PVT. LTD.
                                                   ..... Petitioner
                   Through: Mr. Navin Kumar, Ms. Rashmeet
                            Kaur & Ms. Priya Goyal, Advocates

                         Versus

      ARMY WELFARE HOUSING ORGANIZATION
                                                          ..... Respondent
                         Through:     Mr. A.K.Tewari & Mr. Tushar Upreti,
                                      Advocates

      CORAM:
      HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                         J U D G M E N T (oral)

1. The present petition has been filed by petitioner seeking appointment

of Sole Arbitrator under the provisions of Sections 11(5) and 11(6) of the

Arbitration and Conciliation Act, 1996.

2. Petitioner-company registered under the provisions of Companies

Act, 1956 claims to be engaged in construction related activities including

construction of various industrial, institutional, commercial as well as

residential projects in India. Respondent is a Society registered under the

Societies Registration Act, 1860.

3. According to petitioner, in December, 2015, respondent invited bids

for development of a Residential Complex to be spread over an area of 3.57

acres (approx.) for construction of 220 dwelling units to be constructed in 5

Towers located at Sector-6A, Vrindavan Awas Yojna, Lucknow, to which

petitioner had submitted its bid, which was accepted by the respondent vide

Acceptance Letter dated 02.06.2016. The total value of the awarded

project/Contract Price according to petitioner was Rs.100,59,48,977.35.

4. Further, as per Work Order dated 28.06.2016 issued by the

respondent, petitioner was instructed to commence the work at the Site on

the even date with a Completion Period of 30 months expiring on

27.12.2018. However, since respondent failed to handover the site to the

petitioner, a Revised Work Order dated 19.06.2017 was issued by the

respondent, for petitioner to commence the project on 12.08.2016 with the

Completion Date as 11.02.2019.

5. During the course of hearing, learned counsel for petitioner has

averred that in view of the various delays and defaults on the part of the

respondent, the contract completion was delayed and consequently, the

petitioner had to seek extension of the project with Completion Period on

various occasions upto to 31.05.2019 and by then, petitioner completed the

work. However, thereafter, certain disputes arose between the parties with

regard to handing over of the dwelling units, issuance of completion

certificate, defects liability period, release of bank guarantees furnished by

the petitioner etc. It is submitted that since respondent had been unwilling to

release the longstanding dues of the Petitioner, Petitioner invoked arbitration

vide letter dated 22.06.2021 under Clause 174 of GCC and further, vide

letter dated 22.06.2021 suggested the names of three eminent persons for the

Respondent to choose one person to act as the Sole Arbitrator for

adjudicating the disputes between the parties. In response thereto, vide letter

dated 06.07.2021 Respondent instead of choosing one therefrom, called

upon the Petitioner to choose from its own list of four people. However, vide

letter dated 13.07.2021, petitioner conveyed its unacceptance to the

respondent's proposal. The Chairman of the respondent in complete neglect

of petitioner's letter dated 13.07.2021, unilaterally appointed Mr. S.S.

Bansal, ADG (Arbitration Cell), Military Engineering Service (MES) as the

Sole Arbitrator. Thereafter, petitioner received a letter dated 03.08.2021

from the Mr. S.S. Bansal calling upon the parties to submit to his

jurisdiction as the Sole Arbitrator.

6. Learned counsel for petitioner submitted that appointment of Mr. S.S.

Bansal as Arbitrator is in violation of dictum of Hon'ble Supreme Court in

Perkins Eastman Architects DPC &Anr. vs. HSCC (India) Ltd. 2019 SCC

Online SC 1517.

7. Notice issued.

8. Mr. A.K.Tewari, Advocate, appearing on behalf of petitioner accepts

notice and submits that upon being informed about filing of the present

petition, the learned Arbitrator has stayed the proceedings. Learned counsel

has disputed the claims raised in the present petition, however, existence of

arbitration clause is not disputed.

9. Pertinently, the arbitration agreement between the parties and

invocation of arbitration are not disputed by the parties. However, unilateral

appointment of Arbitrator by the respondent is rejected, as no party can be

permitted to unilaterally appoint an Arbitrator, as the same would defeat the

purpose of unbiased adjudication of dispute between the parties.

10. The Hon'ble Supreme Court in Perkins Eastman Architects DPC

&Anr. vs. HSCC (India) Ltd. 2019 SCC Online SC 1517 has categorically

stated that "in cases where one party has a right to appoint a sole

arbitrator, its choice will always have an element of exclusivity in

determining or charting the course for dispute resolution. Naturally, the

person who has an interest in the outcome or decision of the dispute must

not have the power to appoint a sole arbitrator."

11. The afore-noted dictum of Hon'ble Supreme Court in Perkins

Eastman (Supra), has been followed by Coordinate Benches of this Court in

Proddatur Cable Tv Digi Services Vs. Siti Cable Network Limited2020

SCC OnLine Del 350 and VSK Technologies Private Limited and Others

Vs. Delhi Jal Board 2021 SCC OnLine Del 3525 in unequivocal terms.

12. In view of the above, the present petition is allowed. Accordingly,

Mr. Justice (Retd.) B.D.Ahmed (Mobile: 7042205786) is appointed sole

Arbitrator to adjudicate the dispute between the parties. The arbitration shall

be conducted under the Delhi International Arbitration Centre (DIAC).

13. The fee of the Arbitrator shall be in accordance with the Schedule of

Fees prescribed under the Delhi International Arbitration Centre (DIAC)

(Administrative Cost and Arbitrators Fees) Rules, 2018.

14. The learned Arbitrator shall ensure compliance of Section 12 of

Arbitration and Conciliation Act, 1996 before commencing the arbitration.

15. With aforesaid directions, the present petition is accordingly disposed

of.

16. A copy of this order be sent to the learned Arbitrator as well as Delhi

International Arbitration Centre (DIAC) for information.

(SURESH KUMAR KAIT) JUDGE OCTOTBER 26, 2021 r