M/S Rakesh Kumar Jain vs. Union Of Lndia
Held
The Court held that the dispute raised by the applicant is arbitrable and governed by Clause 25 of the GCC, and therefore, it is required to be referred to an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The Court found that the respondent's contention regarding the 'no claim' certificate was misconceived. The Court noted that the final settlement of bills occurred in October 2023, and subsequently, when the applicant requested the release of disputed payment, they were asked to waive Section 12(5) and the matter was declared an 'excepted matter'. The Court emphasized that the proviso to Section 12(5) uses the word 'may', indicating that waiver is discretionary. Relying on the Supreme Court's decisions in Central Organisation For Railway Electrification Vs. ECI SPIC SMO MCML (JV) and SBI General Insurance Co. Ltd. Vs. Krish Spinning, the Court concluded that all debatable issues should be arbitrable and that the respondent had a fair opportunity to raise all legal grounds. Consequently, the application was allowed, and an arbitrator was appointed.
Facts
M/s Rakesh Kumar Jain (the applicant) filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The dispute arose from a contract for the construction of a Road Over Bridge, executed on November 7, 2019, following the applicant's successful bid. The applicant claimed disputes related to non-payment of running bills, reimbursement of GST hike, delayed payments, and interest on FDR. The applicant invoked arbitration on June 1, 2024. The respondent, Union of India (Railways), responded by seeking a waiver of Section 12(5) of the Act, asserting that the matter was an 'excepted matter' under the General Conditions of Contract (GCC) due to the applicant's refusal to waive this provision. The Railways also disputed the reimbursement of GST based on a Board letter.
Key Issues
1. Whether the dispute concerning the reimbursement of the GST hike and other ancillary claims is arbitrable, considering the respondent's contention that it falls under 'excepted matters' as per Clause 43.2 and 25.5 of the GCC, and the applicant's refusal to waive Section 12(5) of the Arbitration and Conciliation Act, 1996? Petitioner's arguments: The applicant argued that the dispute is arbitrable and governed by Clause 25 of the GCC. They contended that the respondent's refusal to appoint an arbitrator based on the non-waiver of Section 12(5) was unjustified, as the proviso to Section 12(5) clearly states that waiver is discretionary. The applicant also argued that the respondent's contention regarding 'no claim' certificates was misplaced, as the dispute arose in continuation of the final bill settlement process when the waiver was demanded. Respondent's arguments: The respondent argued that the dispute was not arbitrable as it fell under 'excepted matters' as defined in the GCC. They further contended that the reimbursement of GST was disputed based on a Board letter. The respondent also sought a waiver of Section 12(5) of the Arbitration and Conciliation Act, 1996, from the applicant.
Sections Cited
Section 11(6), Section 12(5), Clause 43.2, Clause 25.5, Clause 25.8
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER The present application has been filed by the applicant under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for brevity, 'the Act of 1996') for appointment of Arbitrator for resolution of dispute arose between the parties pursuant to the agreement dated 19.03.2019 (Annexure-A/1). 2 . It has been submitted by the learned counsel for the applicant that in response to the tender notice dated 25.01.2019 for Construction of Road Over Bridge and LHS including other ancillaries work in lieu of level crossing No.276 at Kms.904/3-4 between Narsinghpur-Kareli stations of Itarsi-Jabalpur section in Jabalpur Division, the bid has been submitted by the applicant. The applicant found to be the lowest bidder had been selected and his bid was accepted vide letter dated 19.03.2019 and accordingly, the work order and agreement was executed on 07
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