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Consolidated Construction Consortium Limited v/s Blue Horizon Hotels Private Limited

    Civil Miscellaneous Petition No. 4 of 2018

    Decided On, 08 March 2019

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE ALOK ARADHE

    For the Appearing Parties: P.S. Rajagopal, H.S. Dwarakanath, Advocates.



Judgment Text

1. Sri P.S.Rajagopal, learned Senior counsel for Sri Mujtaba.H., learned counsel for the petitioner.

Sri H.S.Dwarakanath, learned counsel for the respondent.

2. This petition is admitted for hearing. With the consent of the parties, the matter is heard finally.

3. In this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short), the petitioner inter-alia seeks appointment of a sole Arbitrator to adjudicate the disputes and differences arisen between the parties in relation to the Work of Contract and the Agreements dated 13.04.2009 and 07.06.2011.

4. The facts giving rise to the filing of this petition briefly stated are that the respondent invited tenders for the work of Civil Contract. In response to the aforesaid notice inviting tender, the petitioner submitted a bid for a sum of Rs.48,38,65,155/-. Thereafter, the parties entered into an agreement on 13.04.2009 in relation to the aforesaid work. Subsequently, the petitioner was also awarded the contract for execution of the work of Super Structure for proposed Mixed Use Development Project at Bannerghatta road at the contract value of Rs.24,37,26,255/- and in relation to the aforesaid work of Super Structure, a separate agreement was executed on 07.06.2011. It is pleaded in the petition that the petitioner completed the entire work put to tender. However, the total amount of Rs.11,00,11,987/- which according to the petitioner is due and payable to him and the same was not paid to him. Admittedly, Clause 48 of the General Conditions of the Contract provides for arbitration and the disputes between the parties have to resolve by taking recourse to the arbitration. The petitioner issued notice dated 27.11.2017 by which, Sri. Justice G.Partri Basavan Goud, former judge of this Court was appointed as an Arbitrator and the respondent was called upon to nominate and appoint an arbitrator within a period of 30 days from the date of receipt of the aforesaid notice. However, the respondent instead of appointing the arbitrator, sent a reply dated 23.12.2017 in which, objections were raised with regard to appointment of the Arbitrator. In this factual background, the petitioner has approached this Court.

5. Learned Senior counsel for the petitioner submits that the agreement executed between the parties contains the arbitration clause and the petitioner in pursuance to the arbitration clause has sent a notice on 27.11.2017 invoking arbitration clause. However, the respondent has raised objections which could be raised before the Arbitrator under Section 16 of the Act. It is further submitted that the agreements are duly stamped.

6. In support of the aforesaid submission, learned Senior counsel for the petitioner has placed reliance on the decision rendered by the Hon'ble Supreme Court in the case of 'DURO FELGUERA, S.A. VS. GANGAVARAM PORT LIMITED, (2017) 9 SCC 729'.

7. On the other hand, learned counsel for the respondent submits that the agreements in question are not duly stamped as required under Article 5 (id) of the Karnataka Stamp Act,1957 and therefore, such agreements cannot be acted upon the parties. Therefore, no cognizance could be taken on such agreements for the purpose of Section 11(6) of the Act. It is further submitted that the dispute raised by the petitioner are beyond the scope of the Arbitration Clause. It is further submitted that the Arbitration Clause does not require the parties to take recourse to the arbitration mandatorily as the arbitration clause, merely an enabling provision. Therefore, dispute cannot be referred for arbitration. In support of the aforesaid submission, learned counsel for the respondent has referred to the decisions of the Hon'ble Supreme Court in the case of 'WELLINGTON ASSOCIATES LTD. VS. KIRIT MEHTA, (2000) 4 SCC 272' and 'SMS TEA ESTATES PRIVATE LIMITED VS. CHANDMARI TEA COMPANY PRIVATE LIMITED, (2011) 14 SCC 66'.

8. I have considered the submissions made on both sides and have perused the records.

9. Admittedly, in the instant case, dispute between the parties have raised after the provisions of the Act was amended and the Arbitration and Conciliation Amendment Act, 2015 came into force w.e.f. 23.10.2015. The petitioner has sent a notice for appointment of the Arbitrator on 27.11.2017. Therefore, the provisions of the amendment Act would apply to the fact situation of the case.

10. Section 11(6-A) of the Act provides that the Supreme Court or, as the case may be, the High Court while considering any application under sub-section (4) or subsection (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.

11. The Supreme Court after taking note of Section 11(6-A) of the Act has taken a similar view in the case of DURO FELGUERA stated supra.

12. Admittedly, the agreement between the parties contains the arbitration clause. The relevant extraction of the arbitration clause reads as under:

"48. Arbitration:

This Agreement shall be governed and construed in accordance with the laws of India. Any disputes arising out of or in connection with the interpretation or performance of the Agreement, which the Parties are unable to settle, within a period of 30 days, by amicable discussion, shall be finally settled by Legal arbitration. This Agreement shall be governed by and construed and enforced in accordance with the laws of India.

In case of non-acceptance either by the Contractor or by the Client, the affected party may ask for Arbitration if both could not settle the dispute between themselves.

All disputes and difference arising out or in connection with the Contract whether during the progress of work or after completion shall be referred to and settled by arbitration by two Arbitrators, one to be nominated by the Contractor and one to be nominated by the Client. The two Arbitrators shall, in turn appoint a neutral third party who shall also be an Arbitrator. The decision of the Umpire shall, however, be final and binding on both the parties. For the purpose of this clause, the provisions of the Arbitration and Conciliation Act, 1996, with the relevant amendments and latest revisions shall be applicable.

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Nothing contained in this Article shall prevent BHH from applying to any appropriate court for any injunction or other like remedy to restrain the contractor from committing any breach or anticipated breach of this agreement and for damages resulting there from. The disputes, if any, between the parties, shall be subject to the exclusive jurisdiction of the courts, in the Bangalore Urban District alone."

13. From perusal of the aforesaid relevant extract of the arbitration clause conjointly, it is evident that the aforesaid clause permit the petitioner accept 'BHH' to apply to the appropriate Court for any injunction or remedy to restrain the contractor from committing any breach or anticipated breach of this agreement.

14. Admittedly, the petitioner is required to take recourse to the remedy available under the arbitration clause to adjudicate his grievance. Thus, admittedly, agreements executed between the parties contains Arbitration Clause and under the aforesaid clause, the only remedy available to the petitioner is to seek arbitration.

15. At this stage, it is opposed to deal with the objections raised on behalf of the respondent that the agreements in question are not properly stamped. It is pertinent to mention here that the agreements in question were executed on 13.04.2009 and 07.06.2011 whereas, the amendment in the Karnataka Stamp Act,1957 which provides for payment of stamp duty on the work contract came into existence on 01.04.2012. Thus, from perusal of the relevant provisions of the law, it is evident that on the agreements, sufficient stamp duty has been paid as per the law prevailing at the time of execution of the agreements and the amended provisions of the Karnataka Stamp Act which came into force w.e.f. 01.04.2012 does not apply to the fact situation of the case. Thus, the contention of the respondent that the agreements in question are not duly stamped does not deserves acceptance.

16. In the facts and circumstances of the case and taking into account the provisions of Section 11(6-A) of the Act, I deem it appropriate to appoint Mr. Justice Ashok B.Hin

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chigeri, a Former Judge of this Court as sole Arbitrator to adjudicate the dispute between the parties. 17. In view of preceding analysis the petition filed by the petitioner under Section 11(6) of the Act succeeds and is hereby allowed. In view of the aforesaid submissions and as prayed by learned counsel for the parties, Mr. Justice Ashok B.Hinchigeri, a Former Judge of this Court is appointed as sole Arbitrator to adjudicate the dispute between the parties. 18. A copy of this order be dispatched to the Arbitration Centre, Khanija Bhavan, Bengaluru for necessary action in that regard. Learned counsel for the petitioner to also approach the Arbitration Centre with the relevant papers to be filed therein. The learned Arbitrator appointed herein shall thereupon enter reference and proceed with the matter in accordance with law and the Rules governing the Arbitration Centre. Accordingly, the petition is disposed of.
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