M/S Heritage Conservators Through Its Proprietor Mr. Gurpreet Singh vs. Espire Resorts Private Limited (Formerly Known As Cosmos Buildwell Private Limited

Held

The Court held that the respondent could not appoint an arbitrator in contravention of Section 12(5) of the Arbitration and Conciliation Act, 1996, and the Supreme Court's ruling in Perkins Eastman Architects DPC v. HSCC (India) Ltd. The respondent's counsel fairly conceded that they did not wish to contest this aspect, acknowledging the petitioner's reliance on the JMC Projects (India) Ltd. case, which emphasized the requirement of an express waiver under the proviso to Section 12(5). Consequently, the disputes were referred to arbitration by a sole arbitrator appointed by the Court, Hon'ble Mr. Justice Kailash Gambhir, a retired Judge of the Delhi High Court. The respondent's right to raise counter-claims was reserved. The Court also directed that OMP(I)(COMM) 326/2020 be treated as an application under Section 17 of the 1996 Act and decided by the appointed arbitrator.

Facts

The petitioner, M/s Heritage Conservators, filed three petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking reference of disputes to arbitration. The disputes arose from a contract for repair/conservation work at a hotel, with an initial offer value of ₹4,64,08,300 excluding service tax, and subsequent work orders. The petitioner claimed outstanding payments of ₹2,04,71,067 (exclusive of GST) and other amounts, alleging the respondent, Espire Resorts Private Limited, defaulted in payments and changed the scope of work. Clause 44 of the Letter of Intent stipulated arbitration by a sole arbitrator appointed by the respondent. The petitioner invoked arbitration on July 29, 2020. The respondent, on August 24, 2020, stated they had appointed an arbitrator on August 18, 2020. The petitioner challenged this appointment, citing Section 12(5) of the 1996 Act and the Supreme Court judgment in Perkins Eastman Architects DPC v. HSCC (India) Ltd.

Key Issues

1. Whether the respondent, by appointing an arbitrator to adjudicate disputes where the petitioner had invoked arbitration, acted in contravention of Section 12(5) of the Arbitration and Conciliation Act, 1996, and the principle laid down in Perkins Eastman Architects DPC v. HSCC (India) Ltd.? Petitioner's arguments: The petitioner argued that Section 12(5) of the 1996 Act, read with the proviso, mandates an express waiver of its applicability. Merely requesting the respondent to appoint an arbitrator, as done in the invocation letter, does not constitute an express waiver. They relied on the Delhi High Court's decision in JMC Projects (India) Ltd. v. Indure Private Ltd. Respondent's arguments: The respondent contended that by writing on July 29, 2020, requesting the respondent to appoint an arbitrator, the petitioner had effectively waived its right under Section 12(5) of the 1996 Act. However, the respondent later conceded this point.