M/S Yojaka Comacoe Rds (Jv) vs. Government Of Karnataka

Facts

M/s. Yojaka Comacoe RDS (JV), the petitioner, filed a Civil Miscellaneous Petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator. The petitioner, a joint venture, entered into a contract agreement dated February 20, 2017, with the respondents, Government of Karnataka and the Project Director. The petitioner claims that GST provisions are applicable to the contract and that they are entitled to reimbursement of an additional tax benefit amounting to Rs. 1,37,43,738.00. Despite completing the work, the respondents allegedly failed to reimburse the GST. The petitioner issued a letter on October 24, 2019, seeking payment, and upon receiving no response, invoked the arbitration clause on May 4, 2023.

Held

The Court held that the petitioner had met the procedural requirements outlined under Section 11(4) of the Arbitration and Conciliation Act, 1996. The existence of an arbitration agreement was not in dispute. Regarding the appointment of a technical arbitrator, the Court ruled that this was a matter left to the discretion of the arbitrator to be decided during the course of the proceedings. The Court allowed the petition, appointing Shri Justice A.V. Chandrashekar, a former Judge of the High Court of Karnataka, as the sole arbitrator. All contentions between the parties were left open for adjudication in the arbitration proceedings. Liberty was granted to the respondent to seek the assistance of an expert during the arbitration.

Key Issues

1. Whether the petitioner has met the procedural requirements under Section 11(4) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator? 2. Whether the Court should appoint a technical arbitrator as insisted by the respondent? The petitioner argued that they have fulfilled all procedural requirements for invoking the arbitration clause and that the existence of an arbitration agreement is not in dispute. The petitioner contended that the applicability of GST and the entitlement to reimbursement are matters to be decided by the arbitrator. The respondent acknowledged the existence of the arbitration clause but expressed reservations about the arbitrator nominated by the petitioner, insisting on the appointment of a technical arbitrator. The respondent did not dispute the existence of the arbitration agreement but sought a specific type of arbitrator.