Bhupinder Pal Mahajan vs. State Of Hp And Another

Held

The Court held that an arbitrator can be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, when there is an admitted arbitration clause and a dispute between the parties. The Court noted that the existence of a dispute is evident from the pleadings of both parties, and the petitioner had issued a notice invoking arbitration. Crucially, the respondents, in their reply, did not raise any objection to the appointment of an arbitrator, despite contesting the GST claim on merits. Therefore, the Court found no impediment to appointing an arbitrator. The Court allowed the application and appointed Mr. L.N. Sharma, District & Sessions Judge (retired), as the arbitrator to adjudicate the dispute between the parties concerning the GST claim. The arbitrator is to enter into the reference and pass an award in accordance with law. The arbitrator's fee will be as per the Fourth Schedule to the Act.

Facts

The petitioner, Bhupinder Pal Mahajan, entered into an agreement with respondent no. 2 for the construction of a road for a value of Rs. 1,40,99,836/-. The stipulated execution time was twelve months. The petitioner claims delays not attributable to him, and the introduction of GST from July 1, 2017, hampered finances. He requested release of his final bill, GST, and royalty on May 19, 2021, without success. The work extended from June 11, 2015, to April 30, 2018, but the final bill remained unfinalized. After issuing a legal notice on December 9, 2021, invoking arbitration under Clause 25 of the agreement, some claims were settled, but the GST claim was rejected by respondent no. 2 on June 14, 2023. The petitioner filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to decide his GST entitlement.

Key Issues

1. Whether the Court has the power to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, when there is a dispute regarding the entitlement to GST amounts arising from a construction contract? Petitioner's Arguments: The petitioner argued that there is a clear dispute regarding his claim for GST, which was rejected by respondent no. 2. He contended that the agreement contains an arbitration clause (Clause 25), and he has duly invoked it through a legal notice. He further submitted that the respondents have not raised any objection to the appointment of an arbitrator in their reply, despite opposing the GST claim on merits. Respondents' Arguments: The respondents, in their reply, opposed the petitioner's entitlement to the GST amount on merits. However, they did not raise any specific pleading or objection against the appointment of an arbitrator.