M/S Nitya Nand And Sons Contractors PVT. LTD. vs. Union Of INDIA

Facts

The petitioner, M/s Nitya Nand and Sons Contractors Pvt. Ltd., filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The petitioner and the respondent, Union of India, entered into a contract in 2015-2016 for construction work. Disputes arose from January 2016 due to site issues, leading the petitioner to request work suspension. Despite efforts by the respondent, issues remained unresolved. The petitioner treated the work as abandoned/omitted by the Government. The petitioner completed 90% of the work, but the final bill, raised in November 2019, remained unpaid. The petitioner issued arbitration invocation notices in 2020 and 2023, to which the respondent failed to reply. The petitioner claimed losses including loss of profits, prolongation costs, escalation costs, and GST.

Held

The Court held that the petitioner had raised arbitrable disputes in accordance with Condition 70 of the I.A.F.W. (General Conditions of Contract). The Court found that the petitioner's submissions indicated the existence of disputes concerning unpaid bills, loss of profits, prolongation costs, escalation costs, and GST, which warranted adjudication. Since the respondent had not filed any reply and had failed to respond to the arbitration invocation notices, the Court found no impediment to allowing the petition. Consequently, the Court appointed Ms. Justice Mukta Gupta (Retd.) as the sole Arbitrator to adjudicate the disputes between the parties. The parties were granted liberty to raise their respective objections before the Arbitrator, and the arbitration proceedings were to be conducted under the aegis of the Delhi International Arbitration Centre.

Key Issues

1. Whether the disputes arising from the contract are arbitrable under Condition 70 of the I.A.F.W. (General Conditions of Contract)? 2. Whether the petitioner is entitled to the appointment of an arbitrator for the adjudication of claims including loss of profits, prolongation costs, escalation costs, and GST? Petitioner's Arguments: The petitioner argued that disputes had arisen due to the respondent's failure to provide conducive working conditions, leading to the inability to complete the work and significant financial losses. They contended that Condition 70 of the General Conditions of Contract provided for arbitration and that their repeated notices invoking arbitration had been ignored. The petitioner sought the appointment of an arbitrator to resolve claims for loss of profits, prolongation costs, escalation costs, and GST, which they alleged were not paid by the respondent. Respondent's Arguments: The respondent did not file any formal reply or present arguments.