Waris Buildcon Private Limited ... vs The Union Of India Through The ...
2023 Latest Caselaw 711 Jhar

       IN THE HIGH COURT OF JHARKHAND AT RANCHI
               Arbitration Application No. 35 of 2022
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Waris Buildcon Private Limited having its registered office at Waris Kutir, Lakhibag, PO & PS-Manpur, District-Gaya through its Director Ram Janam Sharma, aged about 50 years, son of Bhuneshwar Sharma, 15, Lakhibag, near Khadi Bhandar, Waris Kutir, Lakhibag, PO & PS-Manpur, District-Gaya, Bihar ... Applicant Versus

1. The Union of India through the Director General, Ministry of Road Transport & Highways, at Transport Bhawan, 1, Parliament Street, PO & PS-Parliament Street, New Delhi.

2. The Secretary, Road Development, Ministry of Road Transport & Highways at Transport Bhawan, 1, PO & PS-Parliament Street, New Delhi.

3. The State of Jharkhand, through the Secretary, Road Construction Department, Govt. of Jharkhand, Project Bhawan, PO & PS-Dhurwa, District-Ranchi, Jharkhand.

4. The Chief Engineer, National Highway Wing, Road Construction Department, Govt. of Jharkhand, Project Bhawan, PO & PS- Dhurwa, District-Ranchi, Jharkhand.

5. The Executive Engineer, National Highway Division, Deoghar, PO, PS & District-Deoghar, Jharkhand. ... Respondents

CORAM: HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR

For the Applicant : Mr. Rahul Kumar, Advocate For Resp.-State : Mr. Rajiv Ranjan, Advocate General Mr. Piyush Chitresh, AC to Advocate General For Union of India : Mr. Pratyush Kumar, CGC Mr. Prashant Kumar, Advocate

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Order No. 11/Dated: 10th February 2023 No counter-affidavit has been filed on behalf of the respondent nos. 1 and 2.

2. This is an application under section 11(6) of the Arbitration and Conciliation Act, 1996 (in short, AC Act) by Waris Buildcon Private Limited for appointment of an Arbitrator in terms of Clause 26.3 of the Engineering Procurement and Construction Agreement dated 16th December 2021 (in short, EPC Agreement).

3. The aforesaid agreement was executed for the work under Job No.-NH-114A-JHR-2020-21/291 for widening and strengthening of 2-Lane with Paved Shoulder and Geometric improvement of NH-114A for a distance between 65.500 Kilometer 2 Arbitration Application No. 35 of 2022

to 87.530 Kilometer between Tower Chowk, Dumka to Basukinath on EPC mode within the State of Jharkhand. This is the case pleaded by the applicant that it submitted 50% of performance security amounting to Rs.1,23,39,675/- on 2 nd December 2021 and after execution of the agreement it has further deposited the balance performance security amount. The applicant has made grievance in respect of obligations of the Ministry of Road Transport and Highways (in short, the employer) under EPC Agreement which has decided that 28th January 2022 shall be the appointed date. The applicant has also raised a grievance that 90% of the Right of Way was not handed over to it by the employer before the appointed date. The applicant has laid a foundation for raising a grievance against termination of the aforesaid EPC Agreement and forfeiture of the performance security on 30 th March 2022 referring to several instances of failure on the part of the employer. The applicant also moved O.M.P.(I) (COMM.) 109/2022 before the High Court of Delhi invoking the provisions under section 9 of the AC Act. However, on 8 th April 2022, this application was withdrawn presumably on an understanding that the Court at Delhi has no territorial jurisdiction. Thereafter the applicant moved the Commercial Court at Ranchi under section 9 of the AC Act wherein an ad-interim order dated 13th April 2022 has been passed restraining the employer from encashing the bank guarantees furnished by the applicant. The applicant has further pleaded that it has responded through the letters dated 21st and 22nd April 2022 to the termination order and has brought to the notice of the employer the instances of irregularities and illegalities committed in course of execution of EPC Agreement. There are references of invoking Clause 26.2 of EPC Agreement at different stages, and finally on 4 th June 2022 the invocation of Clause 26.3.

4. In the aforesaid circumstances, the applicant has moved this Court on 30th August 2022 invoking the provisions under section 11(6) of the AC Act pleading that the respondents have failed to follow the dispute resolution route and, therefore, 3 Arbitration Application No. 35 of 2022

the present application.

5. There is no dispute that there is a valid arbitration clause in EPC Agreement and the dispute raised by the applicant is covered under the scope of arbitration. There is also no dispute that the dispute raised by the applicant is arbitrable.

6. After filing of the present arbitration application, the Union of India has appointed Mr. Y. Balakrishna who was the Additional Director General (Retd.) MoRT&H to act as the Arbitral Tribunal vide Annexure-L to the counter-affidavit filed on behalf of the respondent nos. 3 to 5.

7. On 3rd February 2023 the following order has been passed by this Court:

"Having heard the learned counsels appearing for the parties, this Court has come to a conclusion that the decision in "M/s Durga Welding Works v. Chief Engineer, Railway Electrification, Allahabad & Anr." (2022) 3 SCC 98 is distinguishable on facts.

The law as existing today is found in the judgment in "Deep Trading Company v. Indian Oil Corporation & Ors." (2013) 4 SCC 35.

While so, this Court has indicated name of Hon'ble Sri Justice Prakash Tatia, a former Chief Justice of this High Court, to be the Arbitral Tribunal for conducting the arbitration and conciliation proceedings between the parties.

The learned Advocate General assisted by Mr. Piyush Chitresh, the learned AC to the learned Advocate General and Mr. Rahul Kumar, the learned counsel for the applicant have stated agreement of the parties for appointment of Hon'ble Sri Justice Prakash Tatia, a former Chief Justice of this High Court to be the Arbitral Tribunal.

Let an affidavit in this regard be filed by the parties, within one week.

Post this matter on 10th February 2023."

8. The issue which was contested by the respondents was with respect to appointment of Mr. Y. Balakrishna as the Arbitral Tribunal. In "Deep Trading Company v. Indian Oil Corporation & Ors." (2013) 4 SCC 35 the Hon'ble Supreme Court has held that if the Arbitrator is not appointed as per agreed procedure within the stipulated time the right of the party concerned to appoint Arbitrator is forfeited and the powers under section 11(6) of the AC Act shall be exercised by the Chief Justice of the High Court or by the Court designated by the Chief Justice.

9. This issue was debated on 3rd February 2023 and there was unanimity amongst the learned counsels appearing for the parties that the judgment in "Durga Welding Works v. Chief 4 Arbitration Application No. 35 of 2022

Engineer, Railway Electrification, Allahabad & Anr." (2022) 3 SCC 98 has been rendered in the peculiar facts of that case and the judgment in "Deep Trading Company" still holds the field and is binding on all Courts under Article 141 of the Constitution of India.

10. An affidavit in terms of the order dated 3 rd February 2023 has been filed by the applicant stating as under :

"That it is submitted that the parties had proposed the names of Retired Judges of the Hon'ble High Court and the Applicant agrees to the proposal for appointment of Hon'ble Mr. Justice (Retd.) Prakash Tatia as the Arbitrator to settle the disputes in terms of the Dispute Resolution/Arbitration clause in the Agreement, which shall be subject to the Declaration and provision as stipulated under Section 12(5) of the Arbitration and Conciliation Act."

11. However, an affidavit in compliance of the order dated 3rd February 2023 by the State of Jharkhand through the Secretary, Road Construction Department, Government of Jharkhand has not been filed.

12. The learned Advocate General who is assisted by Mr. Piyush Chitresh, the learned AC to the learned Advocate General has indicated the procedural difficulty which takes too much time why an affidavit in compliance could not be filed by the respondent no.2. However, the learned Advocate General has stated that consent of the respondent nos. 2 and 3 through him may be recorded.

13. While so, this Court requests Hon'ble Sri Justice Prakash Tatia, a former Chief Justice of this High Court to accept the request of the Court to act as the Arbitral Tribunal.

14. The Hon'ble Arbitral Tribunal shall fix its own fee as agreed upon between the parties or as per Fourth Schedule of the AC Act.

15. Arbitration Application No. 35 of 2022 is allowed in the aforesaid terms.

16. Let a copy of this order be transmitted to Hon'ble Sri Justice Prakash Tatia, a former Chief Justice of this High Court and be given to the learned counsels for the parties.

(Shree Chandrashekhar, J.) Amit/