Simplex Projects Limited vs. Jammu & Kashmir Economic Reconstruction Agency & Anr.

Held

The Court held that the existence of the Arbitration Agreement was not disputed by the Respondent, as no reply was filed. Regarding territorial jurisdiction, the Petitioner asserted that the contract was finalized in Delhi and communications occurred there, establishing a part cause of action in Delhi. The Court found that the Petitioner had made various claims and disputes concerning payments and other issues, as detailed in the petition. Since the Arbitration Agreement was not challenged and the Petitioner had invoked the arbitration clause after the non-constitution of the Dispute Board, the Court found it appropriate to appoint an Arbitrator. The Court appointed Hon'ble Mr. Justice Rajiv Sahai Endlaw (Retired) as the Sole Arbitrator. The Respondent was granted liberty to raise objections regarding territorial jurisdiction and any other objections before the Arbitrator. The Arbitrator was directed to make necessary disclosures and was entitled to charge fees as per the Fourth Schedule of the Act. The application was allowed.

Facts

Simplex Projects Limited (Petitioner) filed a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996, seeking the appointment of an Arbitrator. The Petitioner was awarded a contract by the Jammu & Kashmir Economic Reconstruction Agency (Respondent) for constructing a multi-storeyed mechanized parking facility in Srinagar. The contract, valued at Rs. 26,75,07,814/-, commenced on May 6, 2013, but the site was handed over on August 24, 2013, causing delays. The Petitioner claims the delay was not attributable to them, citing the absence of Liquidated Damages deductions. Disputes arose concerning various payments, including alleged excess GST deductions, price escalation claims, withheld amounts for damages and third-party inspection, and unrefunded mobilization advance. The Petitioner sought to invoke the arbitration clause after the Respondent failed to constitute a Dispute Board.

Key Issues

1. Whether the Delhi High Court has territorial jurisdiction to entertain the petition for the appointment of an Arbitrator, considering the project was in Srinagar and the governing law is of Jammu & Kashmir? 2. Whether an Arbitrator should be appointed in terms of Clause 20.6 of the Contract Agreement, given the existence of an arbitration clause and the Respondent's failure to constitute a Dispute Board? Petitioner's Arguments: The Petitioner contended that a part of the cause of action arose in Delhi as the contract was finalized there and significant communications with the Respondent took place in Delhi. They argued that the arbitration clause is valid and binding, and since the Respondent did not constitute a Dispute Board as per Clause 20.2, arbitration under Clause 20.6 is the appropriate recourse. The Petitioner highlighted various financial claims and disputes that necessitated arbitration. Respondent's Arguments: The Respondent, through its counsel, raised an objection regarding territorial jurisdiction. No formal reply was filed, and no other arguments were recorded.