M/S Arun Kumar Pushpdeep Infrastructure (Jv) vs. Union Of INDIA & Anr.

Facts

The petitioner, M/s Arun Kumar Pushpdeep Infrastructure (JV), filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator. The disputes arose from a contract dated January 25, 2017, for construction works with a contract price of Rs. 17,97,08,339.21. The work was to be completed within 18 months but was delayed by 62 months and 12 days, completing on April 15, 2023. The petitioner alleges the delay was due to the respondent's failure to clear the site and provide necessary drawings. The petitioner claims the respondent failed to pay for GST, use of teak wood instead of Sal wood, overhead expenses, and loss of profit during final payment. A legal notice was issued on April 23, 2024, followed by an arbitration invocation notice on June 11, 2024, to which the respondent did not respond.

Held

The Court held that the existence of an arbitration clause in the contract was evident, and there was no impediment to constituting an arbitral tribunal. The Court relied on Supreme Court judgments in SBI General Insurance Co. Ltd. v. Krish Spinning and Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, to support the appointment of an arbitral tribunal. Furthermore, citing Perkins Eastman Architects DPC v. HSCC (India) Ltd, TRF Limited v. Energo Engineering Projects Ltd, Bharat Broadband Network Limited v. United Telecoms Limited, and Central Organisation for Railway Electrification Vs. ECI SPIC SMO MCML (JV) A Joint Venture Company, the Court found it incumbent upon itself to appoint an independent arbitrator. The appointment of a sole arbitrator was also deemed in consonance with this Court's judgments in M/S Twenty-Four Secure Services Pvt. Ltd. v. M/S Competent Automobiles Company Limited, Jhajharia Nirman Ltd. v. South Western Railways, and Palghar Road Project Pvt. Ltd. vs State of Maharashtra. Accordingly, Mr. Justice (Retd.) D.K. Jain was appointed as the Sole Arbitrator. The arbitrator is to furnish disclosures under Section 12 of the A&C Act, and parties are to share the arbitrator's fee and costs equally. All contentions of the parties are kept open for the arbitrator to decide on merits.

Key Issues

1. Whether the Court has the power to appoint a sole arbitrator in light of the arbitration clause in the contract and the respondent's failure to respond to the arbitration invocation notice, as per Section 11(6) of the Arbitration and Conciliation Act, 1996. Petitioner's Arguments: The petitioner contended that disputes have arisen concerning payments for GST, use of teak wood, overhead expenses, and loss of profit. Despite issuing a legal notice and an arbitration invocation notice, the respondent failed to respond. Therefore, the petitioner sought the appointment of a sole arbitrator to adjudicate these disputes. Respondent's Arguments: The learned counsel for the respondent did not dispute the existence of the arbitration agreement and acceded to the appointment of an independent Sole Arbitrator by the Court to adjudicate the disputes.