Delhi High Court
Amazing India Contractors ... vs Indian Railway Stations ... on 20 September, 2021
$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 20.09.2021
+ ARB.P. 923/2021
AMAZING INDIA CONTRACTORS PRIVATE LIMITED
..... Petitioner
Through: Mr. Rajat Bhalla, Advocate
Versus
INDIAN RAILWAY STATIONS DEVELOPMENT
CORPORATION LIMITED ..... Respondent
Through: Mr. Rakesh Bhalla, Advocate
CORAM:
HON'BLE MR. JUSTICE SURESH KUMAR KAIT
J U D G M E N T (oral)
The hearing has been conducted through video conferencing.
I.A. 12235/2021 (exemption)
1. Allowed subject to all just exceptions.
2. Application is disposed of.
ARB.P. 923/2021 & I.A.12234/2021
3. The present petition has been filed by petitioner seeking appointment
of a Sole Arbitrator under the provisions of Section 11(6) of the Arbitration
and Conciliation Act, 1996.
4. Petitioner, a private limited company registered under the Companies
Act, 1956, claims to be involved in the business of Facilities Management
and Infrastructure Management Projects throughout India. Respondent is
said to be a Special Purpose vehicle and a Joint Venture company of IRCON
International Limited, a Government of India Undertaking, under the
Ministry of Railways and Rail Land Development Authority incorporated
under the Companies Act, 1956.
5. According to petitioner, on 09.09.2019 the respondent issued Notice
Inviting Tender No. IRSD/HQ/TENDER/2019/21/ SC/ Parking issued by
the Indian Railway Station Development Corporation for the project
"Management of Parking Area at Secunderabad Railway Station Along with
Access Control for a period of 3 (Three) years" and petitioner submitted a
bid thereto on 30.09.2019. Pursuant thereto, respondent invited petitioner to
attend negotiation meeting on 30.10.2019 and after successful negotiations,
respondent issued a Letter of Award bearing IRSDC/HQ/TENDER/
2019/21/SC/Parking dated 08.11.2019 in favour of petitioner for the said
project, to which petitioner gave its Letter of Acceptance on 16.11.2019.
6. It is further averred on behalf of petitioner that in terms of aforesaid
Letter of Award, petitioner is required to pay annual license fee of
Rs.1,70,00,000/- which was duly deposited and also respondent was duly
sent "Letter of Acceptance dated 16.11.2019" by the petitioner. Petitioner
vide its letter dated 06.12.2019 also communicated the respondent about
payment of first quarter of license fee and security deposit and acceptance of
the project for period of three years. Further pleaded by petitioner that it
sent an e-mail to the respondent informing that petitioner was ready to
execute its part of obligation from 17.12.2019. However, despite visit by
Director of petitioner from Hyderabad to New Delhi office of respondent on
05.12.2019 and 19.12.2019 for signing the Agreement, however, the
agreement could not be signed on the plea of respondent that the format of
Agreement was not ready. Once again, Director of the Petitioner visit the
respondent's office but he had to return empty hand back to Hyderabad, as
authorized representative of respondent was said to be unavailable and the
Agreement for the work could not be signed.
7. The respondent vide its communication dated 18.03.2020 asked for
present of Director of petitioner for the purpose of signing the Contract
Agreement, however, due to Covid 19 pandemic and declaration of Janta
Curfew by the Hon'ble Prime Minister from 22.03.2020, none on behalf of
petitioner could reach the respondent to sign the Contract Agreement. It is
averred on behalf of petitioner that due to Covid pandemic and phrased
lockdown, it became difficult for petitioner's representative/Director to
reach Delhi to sign the Agreement.
8. Further, it is averred that since petitioner did not hear anything from
respondent regarding reopening after the lockdown period was over, the
Director of petitioner sent an email dated 25.05.2020 to the respondent and
thereafter, re-opened the parking services at Secunderabad Railway Station on
01.06.2020. Petitioner's Director thereafter sent another mail dated 01.06.2020
to the respondent intimating that some illegal persons have been running
parking and issuing receipts in the name of petitioner and petitioner is not
responsible for such activities. After further communications dated 02 and 03
of June, 2020 gave authorization in favour of Mr.Rupesh Kumar and restarted
operations at the parking from 06.06.2020 with a pro-rata licensee fee of 10%
in terms with directions contained in Reference No. IRSDC/SC/F.M/Static
Catering Units/05/09 dated 28.05.2020. Thereafter, on 29.06.2020, petitioner
informed the respondent that since the main gate on Terminal-2 side was closed
by the local authorities, two wheelers were not allowed to park their vehicles at
the parking area and so collection of petitioner was nil and therefore, petitioner
was unable to provide service at 10% increase in the license fee while bearing
staff salary and other expenses and requested respondent to stop the services
including the stop period in the 3- year contract tenure, till normalcy resumes
after Covid pandemic. Similar request was reiterated by the petitioner to the
respondent vide email dated 18.09.2020.
9. However, thereafter, respondent issued a Show Cause Notice dated
19.11.2020, bearing No. IRSDC/HQ/TENDER/2019/21/SC/Parking/148
stating that in terms of clause 1.12.3 of "Instruction to Bidders" with the
Letter of Award dated 14.11.2019 petitioner was required to enter into the
Contract within thirty (30) days and has thereby, violated the terms of clause
1.12.4. and also alleged that the Directors of the petitioner had been
disqualified by the Registrar of Companies Patna from 01.12.2017 to
30.11.2022 under Section164(2) of the Companies Act, 2013 resulting in
their offices becoming vacant under Section 167 of the Companies Act and
since the bid was submitted by Mr. Kalyan Kumar Singh, Director, his
position as Director in AICPL stood void ab-initio and that the bid was won
under fraudulent practices as defined under Clause 2(c) of' Instructions to
Bidders'. Again on 14.12.2020, the respondent issued a Termination Notice
Bearing IRSDC/HQ/T/ENDER/2019/21/SC/Parking/1529 ("Termination
Notice") to petitioner under Clause 5.2 of the General Condition of Contract
Schedule II of the Contract and Terminated the contract in question.
10. According to petitioner, acting in an arbitrary and fraudulent manner,
the total security deposit and bank guarantee of Rs.86,88,750.00 along with
unexpired period of license fee was forfeited by the respondent. Further,
claimed that petitioner vide its letter dated 19.12.2020, sent its reply to
aforesaid Show Cause Notice as well as Termination Notice to the
respondent. However, respondent has forfeited the security deposit amount
as well as amount of unexpired period of license fee and also has illegally
and unlawfully invoked the bank guarantees despite pendency of OMP (I)
441 of 2020 filed on behalf of petitioner.
11. To resolve the aforesaid disputes, petitioner vide its legal notice dated
8.4.2021 called upon the respondent to appoint an Arbitrator, who vide
communication dated 26.04.2021 informed the petitioner that due to Covid
pandemic that the matter shall be looked into in due course of time.
However, vide email dated 15.7.2021, the Managing Director of the
respondent informed the petitioner about appointment of Arbitrator.
12. During the course of hearing learned counsel for petitioner submitted
that unilateral appointment of Arbitrator by the respondent is contrary to the
law laid down by the Hon'ble Supreme Court in Perkins Eastman
Architects DPC & Anr. Vs. HSCC (India) Ltd. 2019 SCC Online SC 1517.
Reliance is also placed upon decisions of Hon'ble Supreme Court in
Bhara tBroadband network Ltd. Vs. United Telecom Limited 2019 5 SCC
755 and TRF Ltd. Vs. Energo Engineering Projects Ltd. (2017) 8 SCC 377
in support of above submissions.
13. Thus, a prayer is made to allow the present petition and appoint an
Arbitrator to resolve the disputes between the parties.
14. On the other hand, Mr. Rakesh Bhalla, Advocate, appearing on behalf
of respondent has disputed the contentions raised in the present petition and
submits that in terms of Clause 10.4(d) of the Agreement, it was mutually
agreed that the disputes shall be referred to the sole Arbitrator, who shall be
appointed from the panel of Arbitrators/Arbitration Tribunal appointed by
Managing Director & CEO of IRSDC and thereby, the present petition
seeking appointment of an Arbitrator is not maintainable.
15. This Court has heard learned counsel for the parties and has gone
through the petition as well as decisions relied upon. Pertinently, invocation
of arbitrator vide legal notice dated 8.4.2021 by the petitioner as well as
appointment of Arbitrator under the General Condition of Contract Schedule
II is not disputed by counsel for the parties. The submission of learned
counsel appearing on behalf of respondent that the respondent has a right to
appoint the Arbitrator does not stand, as 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."
16. 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 Limited 2020
SCC OnLine Del 350 and VSK Technologies Private Limited and Others
Vs. Delhi Jal Board 2021 SCC OnLine Del 3525 in unequivocal terms.
17. Concurring with the decisions as noted above, the present petition is
allowed.
18. Accordingly, Mr. Justice (Retd) I.S.Mehta, former Judge of Delhi
High Court (Mobile: 9910384616) is appointed sole Arbitrator to
adjudicate the dispute between the parties. The arbitration shall be
conducted under the Delhi International Arbitration Centre (DIAC).
19. 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.
20. The learned Arbitrator shall ensure compliance of Section 12 of
Arbitration and Conciliation Act, 1996 before commencing the arbitration.
21. A copy of this order be sent to the learned Arbitrator as well as Delhi
International Arbitration Centre (DIAC) for information.
22. With aforesaid directions, the present petition is accordingly disposed
of. I.A.12234/2021 is disposed of as infructuous.
(SURESH KUMAR KAIT)
JUDGE
SEPTEMBER 20, 2021
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