M/S Sharma Construction Company Th Mangu Ram Sharma vs. Union Of INDIA Th Ministry Of Defence And Others.

Held

The Court held that the contract contained an arbitration clause which had been invoked by the petitioner. Therefore, the alleged disputes were referable to arbitration. The Court found no opposition to the appointment of an arbitrator, other than the formal objection raised by the Revenue concerning the GST liability. The Court reasoned that all grounds of objection available to the parties, including those related to GST liability, could be raised before the arbitrator. Accordingly, the Court appointed Mr. Satish Chander, Retd. Additional Director General Contracts, as the sole arbitrator. The arbitrator was directed to proceed in the matter in accordance with the provisions of the Act and make an award within the stipulated time, with the prescribed fee and incidental expenses to be shared by the parties. The petition was disposed of.

Facts

M/s Sharma Construction Company (Petitioner) filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to resolve disputes arising from a work order dated September 11, 2017, and the subsequent contract. The contract was awarded by the Chief Engineer, Udhampur Zone (Respondent No. 3). Disputes arose concerning the non-provision of the complete site, other contractual issues, and a dispute regarding the liability for an additional 6% GST, allegedly due to a reduction in the GST rate from 18% to 12%. The petitioner invoked the arbitration clause in the contract and, upon receiving no response, filed the present petition.

Key Issues

1. Whether the disputes arising from the work order and contract are referable to arbitration, as contemplated by the arbitration clause in the contract and Section 11(6) of the Arbitration and Conciliation Act, 1996? 2. Whether the liability for the additional 6% GST, arising from a reduction in the GST rate, is a matter that can be adjudicated by an arbitrator? The Petitioner argued that a dispute had arisen concerning the contract and that the arbitration clause had been invoked. The Petitioner contended that the respondents had failed to act on the request for arbitration, necessitating the present petition. The Revenue (represented by the Union of India and others) did not oppose the appointment of an arbitrator but raised a formal objection regarding the GST liability, arguing that it was a statutory liability resting upon the petitioner. The Revenue contended that the dispute primarily centered around the liability to pay GST.