M/S Bharat Construction Company vs. M/S Bangalore-Malur Highways PVT LTD

Facts

M/s Bharat Construction Company (Petitioner) filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, against M/s Bangalore-Malur Highways Pvt Ltd (Respondent). The dispute pertains to outstanding amounts for royalty, GST on royalty, and other levies, totaling Rs. 1,04,41,061/-, along with interest. The Petitioner invoked Clause 9 of the renewed agreement dated 30/08/2022, effective from 01/09/2022, which contains an arbitration clause. The Petitioner issued a notice on 26.05.2023, nominating a sole arbitrator. The Respondent, by reply dated 26.06.2023, disputed the Petitioner's claims and did not concur with the nominated arbitrator. Despite attempts, parties failed to resolve disputes or agree on an arbitrator, leading the Petitioner to approach the High Court. The Respondent, in its statement of objections, denied the Petitioner's claims but did not dispute the existence of the arbitration agreement.

Held

The Court held that the petition is allowed. The existence of an arbitration agreement/clause in the contracts between the parties was undisputed. Therefore, the Court found it just and appropriate to refer the dispute to arbitration. The Court appointed Shri Anand Byra Reddy, former Judge of the High Court of Karnataka, as the sole Arbitrator to resolve the dispute between the parties. The Court explicitly stated that all rival claims, contentions, including those relating to maintainability, arbitrability, jurisdiction, limitation, and stamp duty, are left open to be decided by the Arbitral Tribunal, and no opinion was expressed on these merits. The Arbitrator is to act as per the Rules governing the Arbitration and Conciliation Centre (Domestic & International) at Bengaluru.

Key Issues

1. Whether the Court has the power to appoint a sole arbitrator under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, when the parties have failed to appoint one as per the arbitration agreement? 2. Whether the dispute concerning the payment of royalty, GST on royalty, and other levies is arbitrable? Petitioner's Arguments: The Petitioner contended that an arbitration agreement exists in the contract and that the parties have failed to appoint an arbitrator. Therefore, the Court should exercise its power under Section 11 to appoint an arbitrator to adjudicate the dispute regarding the outstanding amount of Rs. 1,04,41,061/- and interest. The Petitioner relied on the arbitration clause within the agreement. Respondent's Arguments: The Respondent disputed and denied the claims and contentions of the Petitioner regarding the outstanding amounts. They also informed the Petitioner that they did not concur with the nominee-arbitrator appointed by the Petitioner. However, the Respondent did not dispute the existence of the arbitration agreement/clause in the contracts. The Respondent filed a statement of objections denying the Petitioner's claims.