M/S Reinforced Earth PVT LTD Reipl vs. Ms Amar Infrastructure LTD

Facts

M/s Reinforced Earth Pvt Ltd (REIPL), the applicant, is a technology provider for reinforced earth walls. M/s Amar Infrastructure Ltd., the respondent, is a construction company that issued a work order for Reinforced Earth Works on NH130CD OD1 for a total value of Rs. 3,67,54,900/-. The project was scheduled for completion within 8 months, by June 6, 2023. REIPL claims significant delays were caused by the respondent's slow progress, including delayed design input submission, approval, casting yard setup, and non-availability of work fronts. REIPL submitted 12 Running Account bills and Tax Invoices totaling Rs. 2,48,78,784/- (inclusive of GST), of which Rs. 2,00,22,422/- was paid, leaving an outstanding amount of Rs. 48,56,362/-. Further communications indicated an outstanding amount of approximately Rs. 1.39 Crores. REIPL issued a notice for invocation of arbitration on November 13, 2024, requesting the respondent to appoint an arbitrator within 30 days. The respondent failed to appoint an arbitrator, leading to the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Held

The Court held that it had the jurisdiction to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, due to the respondent's failure to appoint its nominee arbitrator within the stipulated period. The Court noted that the applicant had followed the prescribed procedure by issuing a notice for invocation of arbitration and that the respondent had failed to act upon it. The Court found that the respondent had neglected to act in accordance with the agreed procedure for appointing an arbitrator. Consequently, the Court decided to appoint arbitrators from both sides. Hon’ble Mr. Justice V.P. Vaish, a retired Judge of the Delhi High Court, was appointed as the arbitrator for the applicant, and Hon’ble Mr. Justice R.C.S. Samant, a retired Judge of the Chhattisgarh High Court, was appointed as the arbitrator for the respondent. These two appointed arbitrators are to subsequently appoint the third arbitrator and then adjudicate upon the disputes and differences between the parties. The Court directed the Registry to communicate the order to the appointed arbitrators and stated that the remuneration would be settled by mutual consent of the parties. The arbitration application was allowed.

Key Issues

1. Whether the Court has the jurisdiction to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, given the respondent's failure to appoint an arbitrator as per the arbitration agreement? Petitioner's arguments: The applicant contended that the respondent failed to nominate and appoint its nominee arbitrator within the stipulated 30 days from the receipt of the invocation notice dated November 13, 2024. They argued that despite multiple efforts to resolve the dispute amicably, the respondent remained unresponsive. The applicant relied on Section 11(4)(a) of the Arbitration and Conciliation Act, 1996, asserting that the respondent's inaction warranted the Court's intervention. Respondent's arguments: The respondent, through its counsel, proposed the name of Hon’ble Mr. Justice R.C.S. Samant, a retired Judge of the High Court, for appointment as an arbitrator on its behalf. The judgment does not record any further arguments or contentions from the respondent regarding the jurisdiction or the merits of the dispute.