Punjab-Haryana High Court

Ramtech Software Solutions Private ... vs Haryana Space Application Centre ... on 22 October, 2024

Author: Suvir Sehgal

Bench: Suvir Sehgal

                                  Neutral Citation No:=2024:PHHC:140698




CR-723-2021
       2021 &
CR-724-2021
       2021                                  --1-




      IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                     CHANDIGARH

105-2 cases

1.                                                  CR-723-2021
                                                    Date of decision:22.10.2024
                                                                          .2024


M/S RAMTECH SOFTWARE SOLUTIONS PRIVATE LIMITED
                                    ...PETITIONER

                            VERSUS


HARYANA SPACE APPLICATION CENTRE (HARSAC) AND
ANOTHER                             ...RESPONDENTS


2.                                                  CR-724-2021


M/S RAMTECH SOFTWARE SOLUTIONS PRIVATE LIMITED
                                    ...PETITIONER

                            VERSUS


HARYANA SPACE APPLICATION CENTRE (HARSAC) AND
ANOTHER                             ...RESPONDENTS


CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL

Present:      Mr. Anand Chibbar, Sr. Advocate,
              Mr. Amit Jhanji, Sr. Advocate with
              Mr. Vaibhav Sahni, Advocate &
              Ms. Eliza Gupta, Advocate for the petitioner.

              Mr. Sumit Gupta, Addl. A.G.,
              for respondent No.1.

              Mr. Sharad Aggarwal, DAG, Haryana,
              for respondent No.2.

                     ****

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Neutral Citation No:=2024:PHHC:140698

CR-723-2021 2021 & CR-724-2021 2021 --2-

SUVIR SEHGAL, SEHGAL J.

1. This order shall dispose of both the above-noted noted petitions as

they involve common questions of law and facts.

2. For the sake of convenience, factual position is being taken

from CR--723-2021.

3. Aggrieved by order dated 25.07.2019, Annexure P P-1, 1, passed by

Special Commercial Court, Gurugram, petitioner has moved this Court by

way of instant revision petition filed under Article 227 of the Constitution of

India.

4. Factual background leading to the filing of the petition is that

the petitioner was awarded two contracts for modernization of land records

and an agreement dated 31.03.2011, Annexure P P-2, 2, was entered into. Some

disputes arose arose between the parties and the respondent respondents invoked the bank

guarantee furnished by the petitioner, petitioner, who filed a petition under Section 9 of

the Arbitration and Conciliation Act, 1996, (for short "the Arbitration Act"),

which was dismissed. Petitioner filed d an appeal before this Court, which was

disposed off of vide order dated 12.12.2016 12.12.2016, Annexure P-3, granting liberty to

the parties to nominate their Arbitrators. Petitioner nominated a former judge

of this Court vide letter dated 05.04.2017, Annexure P P-4, under er Arbitration

Clause No.6.11.

No.6.11 Respondent espondent had already nominated Sh. Anurag Rastogi,

IAS, Principal Secretary to Government of Haryana as an Arbitrator during

the pendency of the appeal.

appeal Both oth the nominated Arbitrators held joint

proceeding on 08.09.2017, Annexure proceedings nnexure P P-9. Arbitral rbitral proceedings could not

conclude within the statutory time limit and on 25.12.2018, respondents respondent

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refused to give consent to the extension of time time. The Arbitral Tribunal ribunal

terminated the proceedings vide order dated 21.12.2018, Annexure P--21.

Petitioner filed an application under Section 29 29-A A of the Arbitration Act

before the Special Commercial Court at Gurugram for extension of time,

which after contest, has been dismissed vide order impugned herein.

5. While making a reference to the oorders passed by the Arbitral

Tribunal, learned senior counsel for the petitioner has contended that the

delay in the conclusion of the arbitral proceedings is on account of the non-

non

cooperative attitude of the respondents.

respondent . He asserts that the delay occurred on

account of pendency of miscellaneous applications and on some hearings, hearings

one of the Arbitrators Arbitrator was not available, which necessitated in the

adjournments. It is also his argument that composition of an Arbitral rbitral

Tribunal ribunal comprising of two members is violative of Section 10 of the

Arbitration Act. Placing reliance upon the judgment of the Supreme Court in

Haryana Space Application Centre (HARSAC) and another Vs. Pan India

Consultants Private Limited (2021) 3 SCC 103 103,, he asserts that the nominee

of the respondent was a Principal Secretary to the Government of Haryana

and was ineligible to be appointed as an Arbitrator in view of Section 12(5)

read with Item No.5 of the Seventh Schedule of the Arbitration Act. He has

also prayed that the nominee of the re respondents be replaced and in the

alternative has requested that a sole Arbitrator be appointed to adjudicate the

dispute between the parties in order to save time and expense.

6. While supporting the order under challenge, counsel for the

respondent submits submits that the work was to be completed by 31.12.2011 and

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despite grant of extensions, petitioner failed to complete the work. He

submits that the penalty clause was invoked and the petitioner approached

the Court challenging the encashment of the bank guaran guarantee.

tee. It is his case

that the delay in the conclusion of the arbitral proceedings is attributable

solely to the petitioner as despite lapse of more than 15 months, petitioner

failed to submit its statement of claim and there is no sufficient cause for

extension sion of time for passing of the arbitral award.

7. I have heard counsel for the parties and considered their

respective submissions besides examining the documents placed on the

record.

8. In a recent judgment, Supreme Court in Rohan Builders

(India) Private Pr Limited Vs. Berger Paints India Limited 2024 SCC Online

SC 2494 has held that while adjudicating an application for extension of

time under Section 29-A 29 A of the Arbitration Act, Court has to be guided by

the principle of sufficient cause. The observations of the Supreme Court in

Paras 15 and 16 of the judgment deserve to be noticed and are reproduced

hereunder:

hereunder:-

"15. Rohan Builders (India) Pvt. Ltd. (supra) highlights that an interpretation allowing an extension application post the expiry period would encourage rogue litigant sand render the timeline for making the award inconsequential. However, it is apposite to note that under Section 29A (5), the power of the court to extend the time is to be exercised only in cases where there is sufficient cause for such extension. Such extension is not granted mechanically on filing of the application. The judicial discretion of the court in terms of the enactment acts as adeterrent against any party 4 of 8

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abusing the process of law orespousing a frivolous or vexatious application. Further, the court can impose terms and conditions while granting an extension. Delay, even on the part of the arbitral tribunal, is not countenanced. The first proviso to Section29A (4) permits a fee reduction of up to five percent for each month of delay attributable to the arbitral tribunal.

16. Lastly, Section 29A (6) does not support the narrow interpretation of the expression "terminate". It states that the court - while deciding an extension application under Section 29A (4) - may substitute one or all the arbitrators. Section 29A (7) states that if a new arbitrator(s) is appointed, the reconstituted arbitral tribunal shall be deemed to be in continuation of the previously appointed arbitral tribunal. This obliterates the need to file a fresh application under Section 11 of the A & C Act for the appoi appointment ntment of an arbitrator. In the event of substitution of arbitrator(s), the arbitral proceedings will commence from the stage already reached. Evidence or material already on record is deemed to be received by the newly constituted tribunal. The aforesaid deeming provisions underscore the legislative intent to effectuate efficiency and expediency in the arbitral process. This intent is also demonstrated in Sections 29A (8) and 29A (9). The court in terms of Section 29A (8) has the power to impose actual or exemplary costs upon the parties. Lastly, Section 29A (9) stipulates that an application for extension under sub sub-section(5) section(5) must be disposed of expeditiously, with the endeavour of doing so within sixty days from the date of filing."

9. The facts of the case have to be examined in the light of the

observations reproduced above. A perusal of the orders passed by the

Arbitral Tribunal show that the Arbitrators entered upon the reference on

08.09.2017, Annexure P-9, P 9, and tentative arbitral fe feee was fixed. On 5 of 8

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22.09.2017, Annexure P-10, P 10, half of the arbitral fee amount was paid by way

of a cheque and counsel for the petitioner sought an adjournment to file the

statement of claim. On 24.10.2017, 017, Annexure P P-11, the Government

nominee, Sh. Anurag Rastogi, togi, was not available as he was busy in the

Haryana Vidhan Sabha session. An application for amendment of the orders

passed by the tribunal qua the arbitral fee was filed by the respondent respondentss to

which the petitioner filed his reply, Annexure P P-13, on the next date te of

hearing.. On 30.11.2017, Annexure P-

P-14, 14, petitioner requested for an

adjournment and on 21.12.2017, Annexure P P-15, 15, the Arbitral Tribunal was

of the opinion that the parties should sit together and resolve the dispute. On

01.03.2018, .2018, Annexure P-16, P Arbitral T Tribunal ribunal directed the petitioner to

complete the work in three villages as per the contract before 21.03.2018.

Petitioner filed an application, Annexure P P-17, 17, for modification of order, order

Annexure P-16, P to which response was filed by the responden respondentt during the

course of proceedings on 28.05.2018, Annexure P P-18.

18. On 10.07.2018,

Annexure P-19, P 19, proceedings were adjourned as the counsel for the

respondent was not available to address arguments on the application moved

by the petitioner and on 28.08.2018, Annexure P P-20, 20, proceedings were

adjourned as Mr. Rastogi, Rastogi the second arbitrator, was not available. In the

meantime, statutory time period for culmination of the proceedings expired

and respondents respondent refused to give a consent for extension of the time period, period

which resulted in the termination of the proceedings vide order dated

21.12.2018, Annexure P-21.

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10. An analysis of the orders passed by the Arbitral Tribunal ribunal show

that the delay in the conclusion of the proceedings cannot be attributed to the

petitioner titioner alone. No doubt, the petitioner did not file the statement of claim,

but most of the proceedings were adjourned due to the non non-availability availability of

the respondents' respondents nominee or on account of the deferment of the proceedings

for adjudicating the miscellaneous miscellaneous applications moved by both the sides.

This Court is, therefore, of the firm opinion that the petitioner has a

sufficient cause for extension of time for conclusion of the arbitral

proceedings and the judgment of the Supreme Court in Rohan Builders's

case (supra) is attracted to the facts of the present case. The order passed by

the learned Special Court, Gurugram, therefore therefore,, deserves, to be set aside to

this extent and the time line for conclusion of the arbitral proceedings

deserves to be extended.

extend

11. This Court will not deal with the second prayer of the

petitioner. Concededly, Mr. Arun Rastogi, IAS, is a Principal Secretary with

the Government of Haryana. HARSAC-respondent HARSAC respondent No.1 is the nodal agency

for Geographic Information System Application and Remote Sensing for the

Government of Haryana. It awarded both the contracts and had entered into

an agreement, Annexure P-1, P 1, with the petitioner. In Pan India Consultant's

case (supra), (supra), Supreme Court held that the appointment of the Principal

Secretary, Government of Haryana as a nominee of HARSAC-respondent respondent

No.1, which is a nodal agency of the Government of Haryana Haryana, is invalid

under Section 12(5) read with the Seventh schedule of the Arbitration Act as

he would have the controlling influence on the compa company ny being a nodal

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agency of the State. Exercising power under Section 29 29-A A (6) of the

Arbitration Act, the Supreme Court appointed a substitute Arbitrator to

conduct the proceedings.

12. Following the dictum of the Supreme Court and in exercise of

the said power, this Court nominates Justice (Retd.) M.S. Sullar, a former

judge of this Court, as the sole Arbitrator to conduct the proceedings in

continuation from the stage arrived at before the Arbitral rbitral Tribunal and to

pass an award within a period of six mon months ths from the date of entering upon

the reference, subject to the compliance of the statutory provisions.

13. With the above directions, both the petitions are disposed of.

14. Liberty is granted to the parties to raise all claims, counter

claims, defences, pleas etc. before the learned Arbitrator.

15. Needless to mention that all the questions arising between the

parties shall remain open for determination in the arbitral pro proceedings ceedings and

any observation made hereinabove will not be binding on the learned

Arbitrator.

16. A request letter alongwith a copy of this order be sent to Mr.

Justice (Retd.) M.S. Sullar.

17. All pending application(s),, if any, are disposed of.




22.10.2024
      2024                                           (SUVIR SEHGAL)
sheetal                                                   JUDGE

          Whether Speaking/reasoned         Yes/No
          Whether Reportable                Yes/No




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