M/S Sri. Giriraju.P. vs. The State Project Director

Facts

The petitioner, M/s Sirirajup. Engineers and Contractors, entered into a construction agreement dated June 5, 2013, with the respondent, The State Project Director, Rashtriya Madhyamika Shikshana Abhina (RMSA), for the construction of Adarsha Vidyalaya at Kollegal and Yelandur Blocks. Disputes arose concerning site handover delays, non-payment of running account bills, non-supply of drawings, and non-payment of the final bill amounting to Rs. 89,86,365/-. The petitioner had previously approached the High Court in W.P.No.16235/2022, which was disposed of with a direction to the respondent to assess and make payment. Subsequent contempt proceedings (CCC No.716/2023) saw the respondent dispute the petitioner's entitlement, stating only Rs. 7,96,732/- was payable. The contempt petition was closed, reserving liberty for the petitioner to pursue other remedies. The petitioner then issued a notice dated March 5, 2026, invoking the arbitration clause.

Held

The Court held that the petition for the appointment of an arbitrator is maintainable. Regarding the respondent's preliminary objections concerning limitation and delay in raising the claim, the Court, citing the Supreme Court judgment in Sri General Insurance Company Limited v. Krish Spinning, held that these are matters that can be raised and adjudicated before the arbitrator. The Court noted that the respondent's affidavit in the contempt proceedings itself indicated a dispute over the remaining amount claimed by the petitioner, thus establishing the existence of a dispute. The Court found that the petitioner's prior writ petition was confined to the admitted amount, and the subsequent dispute arose when the respondent disputed the remaining claim. The Court also observed the discrepancy in the claimed amounts and the inclusion of interest and GST, stating these are matters requiring factual and legal examination, appropriately left for the arbitrator. The Court reiterated that it would not undertake a detailed adjudication of monetary claims, limitation, or other disputed components at the Section 11(6) stage. Consequently, the Court allowed the petition and appointed Hon’ble Mr. Justice Ajit J. Gunjal, Former Judge, High Court of Karnataka, as the Sole Arbitrator. All claims and contentions of the parties, including those relating to limitation, delay, maintainability, the amount claimed, interest, and GST, were left open to be urged and decided by the arbitrator.

Key Issues

1. Whether the petition for the appointment of an arbitrator is maintainable, considering the respondent's preliminary objections regarding the delay in raising the claim and the applicability of Clause 35 of the General Conditions of Contract, as argued by the respondent, who relied on the Supreme Court judgment in BSNL vs. Nortel Networks India Private Limited? 2. Whether the petitioner, having previously approached the High Court via a writ petition concerning the same subject matter, is precluded from filing a subsequent petition for the appointment of an arbitrator? 3. Whether the dispute between the parties stood settled pursuant to the directions issued by the High Court in W.P.No.16235/2022, thereby rendering the current arbitration proceedings unnecessary? 4. Whether the discrepancy in the claimed amounts (Rs. 89,86,365/- in earlier proceedings versus Rs. 22,17,05,299/- in the arbitration notice) and the inclusion of GST and interest render the claim exaggerated and non-maintainable, as contended by the respondent, citing NTPC Limited vs. SPML Infra Limited? Petitioner's Contention: The petitioner argued that the earlier writ petition was confined to the admitted amount, and the subsequent dispute arose when the respondent disputed the remaining claim. They also contended that the contempt petition was closed with liberty to avail remedies, and the arbitration notice was issued thereafter. The petitioner did not expressly address the specific Supreme Court judgments cited by the respondent but relied on the existence of a dispute and the arbitration clause. Respondent's Contention: The respondent raised preliminary objections regarding the maintainability of the petition, citing delay in claim submission as per Clause 35 of the GCC and reliance on BSNL vs. Nortel Networks India Private Limited. They also argued that a prior writ petition on the same subject barred this petition, that the dispute was settled by the earlier writ court order, and that the current claim was exaggerated and not maintainable, referencing NTPC Limited vs. SPML Infra Limited.