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M/s. Swarna Techno Constructions Pvt. Ltd., Rep. by its Managing Director, Hubballi v/s Hubli-Dharwad BRTS Company Ltd., Rep. by its Managing Director & Another

    CMP. Nos. 100007, 100008 of 2019

    Decided On, 14 September 2020

    At, High Court of Karnataka Circuit Bench At Dharwad

    By, THE HONOURABLE MR. JUSTICE SURAJ GOVINDARAJ

    For the Petitioner: S. Vasudeva Naidu, Advocate. For the Respondents: C.V. Angadi, Advocate.



Judgment Text

(Prayer: This CMP is filed u/S.11(6) of the Arbitration and Conciliation Act, 1996, praying to appoint a sole arbitrator to resolve the disputes and outstanding issues between the parties in accordance with the provisions of agreement at Anneuxre-B dated 17.10.2015 inconsonance with Arbitration and Conciliation (Amendment) Act, 2015, in the event of justice and equity.)

1. The petitioner is before this Court seeking for appointment of an arbitrator to resolve the disputes, which have arisen between the petitioner and the respondents.

2. It is the case of the petitioner that the petitioner and respondents had entered into an agreement with each other on 17th October 2015 for the purposes of implementation of a portion of the Bus Rapid Transport System (BRTS) in Hubli-Dharwad. The said agreement is covered by arbitration clause (5), which is reproduced hereunder:

"5. ARBITRATION (GCC Clause 25.3) The procedure for arbitration will be as follows:

25.3 (a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996, The arbitral tribunal shall consist of 3 arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties and shall act as Presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the Indian Council of Arbitration/President of the Institution of Engineers (India)/The International Centre for Alternative Dispute Resolution (India).

(b) In the case of dispute with a Foreign contractor the dispute shall be settled in accordance with provisions of UNCITRAL Arbitration Rules. The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties, and shall act a presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding arbitrator shall be appointed by the Indian Council of Arbitration/President of the Institution of Engineers (India)/The International Centre for Alternative Dispute Resolution (India).

(c) If one of the parties fails to appoint its arbitrator in pursuance of sub- clause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the * Indian Council of Arbitration/President of the Institution of. Engineers (India)/The International Centre for Alternative Dispute Resolution (India), both in cases of the Foreign Contractor as well as Indian Contractor, shall appoint the arbitrator. A certified copy of the order of the *Indian Council of Arbitration/President of the Institution of Engineers (India)/The International Centre for Alternative Disputes Resolution (India), making such an appointment shall be furnished to each of the parties.

(d) Arbitration proceedings shall be held at Hubli, India, and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.

(e) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration proceedings will be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by such party or on its behalf be borned by each party itself.

(f) Where the value of the Contract is Rs.50 millions and below, the disputes or differences arising shall be referred to the Sole Arbitrator. The Sole Arbitrator should be appointed by agreement between the parties; failing such agreement, by the appointing authority, namely the "Indian Council of Arbitration/ President of the Institution of Engineers (India)/The International Centre for Alternative Disputes Resolution (India).

(g) Performance under the Contract shall continue during the arbitration proceedings and payments due to the contractor by the owners shall not be withheld, unless they are the subject matter of the arbitration proceedings.

3. In terms of the said clause, each of the parties were required to appoint an Arbitrator and both the Arbitrators are required to appoint Presiding Arbitrator. The arbitration to be held at Hubballi, India. On dispute arising between the parties, the petitioner had issued a notice on 10.04.2018 invoking the arbitration clause requesting the respondents to appoint an Arbitrator. However, no response was received from the respondents.

4. Shri S.Vasudeva Naidu, learned counsel for the petitioner would submit that a suitable person be appointed as an Arbitrator to adjudicate the dispute between the parties.

5. Shri C.V. Angadi, learned counsel for the respondents would submit that the adjudicator had already been appointed in terms of clause (36), which is reproduced herein below:

"36. Adjudicator

36.1. The Employer proposes that Mr.Ashok Pujar, retired District and Session Judge be appointed as Adjudicator under the Contract, at a daily fee of Rs.5,000/- plus reimbursable expenses total not exceeding Rs.15,000/-. If the Bidder disagrees with this proposal, the Bidder should so state in the Bid. If in the Letter of Acceptance, the Employer has not agreed on the appointment of the Adjudicator, the Adjudicator shall be appointed by Commissioner, Directorate of Urban Land Transport at the request of either party."

6. In pursuance thereto, the very same adjudicator could be appointed as an Arbitrator.

7. Having perused the said clause (36), it is seen that the adjudicator was appointed at the time of finalization of tender awardal of the Contract. Thus, I am of the considered opinion that appointing the same person as an Arbitrator now would amount to a conflict of interest and/or c

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ause embarrassment to the said adjudicator. 8. Both the counsels submit that this Court may appoint a sole arbitrator to adjudicate the disputes between them, giving a go-bye to the procedure for appointment of Arbitrator as detailed above. Hence, with consent of both the parties, I hereby appoint Hon'ble Sri Justice A.V.Chandrashekara, Former Judge, High Court of Karnataka, having his office at "Flat No.406, 3rd Floor, Ram Sreedhar Apartments, 2nd Cross, 9th Main, BTM Layout, 2nd Stage, Bengaluru," to arbitrate the dispute between the parties. 9. The Registry is directed to forward a copy of this order to Hon'ble Sri Justice A.V.Chandrashekara, Former Judge, High Court of Karnataka.
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