Sanjeev Kumar vs. Union Of INDIA And Another

Facts

The petitioner, Sanjeev Kumar, filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. This arose from a comprehensive parking contract awarded to him by respondent No. 2 (Union of India/Railway Administration) on March 19, 2018, for Ludhiana Railway Station (Main side and Civil Lines side) for three years. The petitioner alleged that despite completing formalities and paying a significant amount, the work site was not handed over by the respondent until June 19, 2018, causing financial loss. The petitioner made several representations, but the respondent terminated the contract on September 10, 2018, citing non-deposit of the second quarter's license fee and forfeiting the security amount and performance guarantee. The petitioner had previously deposited Rs. 1.03 crore with the respondent, which remains unrefunded with interest. The petitioner sent a notice dated January 15, 2019, to appoint an arbitrator, which was not replied to.

Held

The Court held that a bona fide dispute exists between the parties and the matter must be referred to a sole arbitrator for adjudication. Regarding the first issue, the Court found that the recital of the 'subject of dispute' in the notice of invocation was sufficient to meet the requirements of Clause 27.1(c) of the contract agreement, especially as the respondent had not filed a reply to the notice. The Court noted that the word 'or' in the clause provided options, and the petitioner's elaboration of the dispute was adequate. Concerning the second issue, the Court observed that Annexure R-1, relied upon by the respondent to claim waiver under Clause 12(5), was largely blank, not signed by the respondent authority, and lacked specific details pertaining to the petitioner, rendering it debatable and likely invalid. The Court also noted that the respondent's reply was conspicuously silent regarding the grounds for termination under Clause 15 of the agreement, despite the petitioner's allegations of non-handover of the site and financial loss. The tentative value of the claim was noted as Rs. 1.03 crore plus interest and compensation. Consequently, the Court appointed Hon'ble Mr. Justice Rameshwar Singh Malik (Retd.) as the sole Arbitrator to resolve the dispute, with proceedings to be completed within the specified time under Section 29-A of the Act. The venue was fixed at Ludhiana, subject to the Arbitrator's convenience.

Key Issues

1. Whether the petitioner's notice dated January 15, 2019, for the appointment of an arbitrator sufficiently complied with Clause 27.1(c) of the contract agreement, which requires specifying the matters in question, subject of dispute, and item-wise claims, if any, to be referred to arbitration. 2. Whether the respondent could rely on Clause 12(5) of the agreement, which pertains to waiver, given that the document (Annexure R-1) presented by the respondent was allegedly blank in essential columns and lacked proper signatures and details. 3. Whether the termination of the contract by respondent No. 2 was justified, particularly in light of the respondent's reply being silent on the grounds for termination as potentially stipulated in Clause 15 of the agreement, which allows for suo moto termination with one month's notice. Petitioner's arguments: The petitioner contended that the notice of invocation sufficiently elaborated the 'subject of dispute' as required by Clause 27.1(c), and the respondent's failure to reply indicated acceptance. Regarding Annexure R-1, the petitioner argued it was not a valid waiver document as it was incomplete and not properly executed. The petitioner also highlighted the respondent's silence on termination grounds in their reply. Respondent's arguments: The respondent raised two objections: first, that the arbitration demand did not specify the matters in dispute and claim amounts as per Clause 27.1(c); second, that the petitioner had waived certain rights under Clause 12(5) of the agreement, evidenced by Annexure R-1. The respondent also orally submitted that Clause 15 of the agreement allowed for termination.