Punjab-Haryana High Court
B L Kashyap And Sons Ltd vs Ireo Grace Realtech Pvt Ltd on 30 September, 2024
Author: Suvir Sehgal
Bench: Suvir Sehgal
Neutral Citation No:=2024:PHHC:129760
ARB-409-2023 (O & M) -1-
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
244 ARB-409-2023 (O & M)
Date of decision:30.09.2024
B L KASHYAP AND SONS LTD ...PETITIONER
VS.
IREO GRACE REALTECH PVT LTD ...RESPONDENT
CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL
Present: Ms. Sukhmani T. Patwalia, Advocate &
Mr. Abhishek Masih, Advocate for the petitioner.
Mr. Shubham Daymar, Advocate through VC,
Ms. Charu Sangwan, Advocate and
Mr. Yogender Verma, Advocate
for the respondent (present in Court).
***
SUVIR SEHGAL J. (ORAL)
1. This petition has been filed under Section 11 of the Arbitration
and Conciliation Act, 1996, (for short 'the Arbitration Act'), for
appointment of an Arbitrator.
2. Counsel for the petitioner submits that the parties entered into
an agreement dated 30.12.2014, Annexure P-1, whereunder petitioner
was to undertake some construction, etc. of a Residential Group Housing
by the name of "The Corridors" in Sector 67-A, Gurugram. She submits
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that a work order dated 30.12.2014, Annexure P-2, was placed upon the
petitioner and Clauses 83.1 and 83.2 of the General Conditions of
Contract (GCC), Annexure P-3, contain provision for settlement of
disputes and appointment of an Arbitrator. She submits that the work
was duly completed but some dispute arose between the parties as the
respondent retained some payments due to the petitioner. She submits
that in terms of the arbitration clause, notice dated 23.03.2023, Annexure
P-9, was issued to the Engineer-in-charge, who was to give his decision
within a period of 28 days. She asserts that when no response was
received, petitioner served a notice dated 15.05.2023, Annexure P-10,
invoking the arbitration clause. It is her positive case that even this
notice remained unattended.
3. Petition has been contested by the respondent by filing a reply.
Counsel for the respondent has taken three objections in opposition.
Firstly, it is his objection that the petitioner has not adhered to the
conciliation proceedings, which were mandatory; that notice for
appointment of the Arbitrator is pre-mature; and thirdly that some of the
claims are ex-facie barred by time. Petitioner has filed replication to the
stand taken by the respondent in its reply.
4. I have heard counsel for the parties and considered their
respective submissions.
5. It is apposite to notice and reproduce the arbitration clause:-
"83.1 If any dispute or difference of any
kind whatsoever shall arise between the Owner and
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the Principal Contractor in connection with or
arising out of the Contract or the carrying out of the
Works including any dispute as to any decision,
instruction, order, direction, certificate or valuation
by the Engineer In-Charge whether during the
progress of the Works of after their completion and
whether before or after the termination,
abandonment or breach of the Contract, it shall be
referred to and settled by the Engineer-in-Charge
who shall state his decision in writing and give
notice of the same to the Owner and the Principal
Contractor. Unless the Contract shall have been
already terminated or abandoned, the Principal
Contractor shall in every case continue to proceed
with the Works with all due diligence and it shall
give effect forthwith to every such decision of the
Engineer-in-Charge unless and until the same shall
be revised in conciliation or arbitration as
hereinafter provided. Such decision shall be final
and binding upon the Principal Contractor and the
Owner unless either of them shall require that the
matter be referred by conciliation or arbitration, as
hereinafter provided. If the Engineer-in-Charge
shall fail to give such decision for a period of 28
days after being requested to do so or if either the
Owner or the Principal Contractor be dissatisfied
with any such decision of the Engineer-in-Charge
then either the Owner or the Principal Contractor
may within 28 days after receiving notice of such
decision, or within 28 days after the expiry of the
said decision period of 28 days, as the case may be
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request that the matter be referred to conciliation in
accordance with the (Indian) Arbitration and
Conciliation Act, 1996 or any modification thereof
being in force at the date of such request.
Conciliation between the parties shall be governed
by the Provisions of the [Indian] Arbitration and
Conciliation Act, 1996.
83.2 If the matter cannot be resolved by
conciliation, or if either the Owner or the Principal
Contractor do not wish the matter to be referred to
conciliation then either the Owner or the Principal
Contractor may within the time specified herein
require that the matter shall be referred to
arbitration, to a sole arbitrator to be appointed by
the Owner, in accordance with and subject to the
provisions of the [Indian] Arbitration and
Conciliation Act, 1996 or any statutory modification
thereof for the time being in force and any such
reference shall be deemed to be a submission to
arbitration within the meaning of such Act. Any
reference to arbitration shall be made within 90
days of:
a. the receipt of a request for conciliation
and subsequently the recipient of such request
having failed to respond, or
b. the refusal to conciliate, or
c. the failure of the conciliation
proceedings to produce a settlement acceptable to
the Owner and the Principal Contractor, or
d. the abandonment of the conciliation
proceedings, or
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e. the Engineer-in-Charge failing to make
a decision for a period of 28 days after being so
requested to do so and subsequently neither the
Owner nor the Principal Contractor having
requested conciliation, or
f. the receipt of a notice of a decision by
the Engineer-in-Charge and subsequently neither
the Owner nor the Principal Contractor having
requested conciliation." (emphasis added)
6. A perusal of the above reproduced clauses, particularly the
highlighted portion, shows that in case of failure of the Engineer-in-
charge to give a decision, option was available to the parties to either go
in for an arbitration or for conciliation. A conjoint reading of the two
clauses clearly shows the intention of the parties that conciliation was
only directory and not mandatory. Mere fact that the petitioner has not
chosen conciliation as a mode of resolution of disputes, would not bar
the petitioner from invoking the arbitration clause and for seeking
reference to an Arbitrator. Reliance in this regard can be placed upon the
judgment of the Delhi High Court in Oasis Projects Limited Versus
Managing Director, National Highway and Infrastructure
Development Corporation Limited 2023 SCC OnLine Delhi 645. The
observations of the High Court in Para 12 are reproduced hereunder:-
"12. The primary issue to be decided in
the present petition is, therefore, as to whether it
was mandatory for the petitioner to resort to the
conciliation process by the Committee before
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invoking arbitration. Though Article 26.2 clearly
states that before resorting to arbitration, the
parties agree to explore conciliation by the
Committee, in my opinion, the same cannot be held
to be mandatory in nature. It needs no emphasis that
conciliation as a dispute resolution mechanism must
be encouraged and should be one of the first
endeavours of the parties when a dispute arises
between them. However, having said that,
conciliation expresses a broad notion of a voluntary
process, controlled by the parties and conducted
with the assistance of a neutral third person or
persons. It can be terminated by the parties at any
time as per their free will. Therefore, while
interpreting Article 26.2, the basic concept of
Conciliation would have to be kept in mind."
7. In view of the above, the first objection raised by the
respondent, is rejected. Insofar as the second objection is concerned,
suffice is to notice that no time period could be fixed for invoking the
arbitration clause. Supreme Court in Grasim Industries Ltd. Versus
State of Kerala, (2018) 14 SCC 265 has held that any condition in the
arbitration clause, which restricts the time period for raising the claim, is
hit by the amended provisions of Section 28 of the Indian Contract Act,
1872. Coming to the third objection raised by the respondent that some
claims are time barred, this aspect would lie within the domain of the
Arbitrator. Accordingly, this Court does not have any hesitation in
accepting the prayer made in the petition.
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8. Petition is allowed. Mr. Chief Justice (Retd.) Ravi Shanker
Jha, H.No. 913, Old B-68, Pandit Lajja Shankar Jha Road, Wright Town,
Jabalpur, Mobile No.94251-53362, is nominated as a sole Arbitrator to
adjudicate the dispute between the parties.
9. Liberty is granted to the parties to raise all claims, counter
claims, defences, pleas etc. before the learned Arbitrator.
10. Needless to mention that all the questions arising between the
parties shall remain open for determination in the arbitral proceedings
and any observation made hereinabove will not be binding on the learned
Arbitrator.
11. A request letter alongwith a copy of this order be sent to
Mr. Chief Justice (Retd.) Ravi Shanker Jha.
30.09.2024 (SUVIR SEHGAL)
sheetal JUDGE
Whether Speaking/Reasoned Yes/No
Whether Reportable Yes/No
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