Sherisha Rooftop Solar Spv Four Private vs. South East Central Railway Through Its General Manager

Facts

Sherisha Rooftop Solar SPV Four Private Limited (the applicant), a solar power company, entered into a Power Purchase Agreement (PPA) with South East Central Railway (the respondent) to develop a solar power plant. The project faced delays due to issues like land confirmation, encroachment removal, approvals, COVID-19 lockdowns, and changes in GST rates for solar components. The applicant claims the respondents' delays and changing requirements hindered project completion, leading to commissioning on April 22, 2023, beyond the original timeline. Negotiations regarding claims and adjustments for delays were unaddressed. The applicant issued a notice invoking arbitration on June 27, 2024, nominating Justice Alok Sharma. The respondent raised objections regarding the notice's formalities, which the applicant refuted. The respondent subsequently attempted to shift responsibility to REMCL, which the applicant argued was not an obligation under the PPA. The applicant filed an application under Sections 11(4) and 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator.

Held

The Court noted that the parties, through their learned counsel, agreed that an Arbitrator should be appointed to resolve the dispute. Specifically, both parties expressed no objection to the appointment of a retired Judge of the High Court as the Sole Arbitrator. They jointly proposed the name of Hon’ble Mr. Justice Satish K. Agnihotri, a retired Judge of the High Court, for this role. In light of this consensus, the Court appointed Hon’ble Mr. Justice Satish K. Agnihotri to act as the Sole Arbitrator to resolve the dispute between the parties. The Court directed the Registry to communicate this order to the appointed Arbitrator and stated that the remuneration of the Arbitrator shall be settled by mutual consent of the parties. The arbitration request petition was accordingly allowed. The Court did not explicitly decide on the validity of the arbitration notice itself, as the parties reached a consensus on appointing an arbitrator.

Key Issues

1. Whether the applicant's Notice Invoking Arbitration dated 27.06.2024 was legally sound and valid, despite the objections raised by the respondent regarding its form (letterhead, address, subject line) under Article 33.3 of the Power Purchase Agreement (PPA)? Petitioner's Arguments: The applicant argued that the Notice Invoking Arbitration was duly issued and legally sound. They contended that the respondent's objections were unfounded both factually and legally and did not affect the notice's validity. The applicant asserted that the respondent's persistent delays and lack of cooperation in constituting the Arbitral Tribunal amounted to acquiescence and forfeiture of their right to participate in the arbitration process, demonstrating a disregard for the arbitration agreement. Respondent's Arguments: The respondent opposed the arbitration request application but stated they would have no objection if an Arbitrator was appointed by the Court to resolve the dispute. The respondent's specific objections to the arbitration notice were raised in a letter dated 18.07.2024.