M/s. Jagdish Prasad Agrawal V. Union of India & Ors.

ARBAP/6/2014

AI Insights

The case involves M/s. Jagdish Prasad Agrawal, the petitioner, who sought the appointment of an arbitrator due to disputes arising from a contract with the North Western Railway, the respondent, concerning the construction of RCC Box Subways at various level crossings. The dispute centered on the applicability of the Price Verification Clause (PVC) in the contract, which the petitioner argued was applicable as the contract value exceeded fifty lakhs, contrary to the respondent's claim. The respondent had issued a completion certificate but contested the applicability of PVC and the initiation of arbitration before the completion of work. The court found that the disputes were arbitrable under the contract's arbitration clauses and the Arbitration and Conciliation Act, 1996.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 701204 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 24-07-2015
• Assessment Year: misc
• Laws Referred To: Arbitration and Conciliation Act, 1996
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: INTZAR ALI
• Assessee Lawyers: DEVIDUTT SHARMA; JAI GUPTA
• Keywords: Appointment of arbitrator; Arbitration; Contract Dispute; PVC applicability
• Section: 64; 11; 63

Judgement Text

"S.B. Arbitration Application No.6/2014 1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR S.B. Arbitration Application No.6/2014 M/s. Jagdish Prasad Agrawal-petitioner Versus Union of India & Ors.-Respondents. Date of Order :: 24/7/2015 Hon'ble Ms. Justice Bela M. Trivedi Mr. Devidutt Sharma & Mr. Jai Prakash Gupta, for the petitioner. Mr. Intzar Ali, for the respondent. ORDER BY THE COURT : 1. The petitioner has filed the present arbitration application seeking appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act') in respect of the disputes having arisen out of the contract for execution of the work being No.Jaipur/2010-11/147 for ADEN Sikar Sub Division-Elimination of Level Crossing No.254 (Dundlod-Mukandgarh-Nua), LC No.282 (Ratanshahar-Chirawa), LC No.309(Surajgarh-Loharu) LC No.37 (Laxmangarh-Fatehpur Shekhawati) LC No.49 (Fatehpur-Shekhawati-Kayamsar), LC No.50 (Kayamsar-Ramgarh- Shekhawati) and LC No. 56 (Ramgarh-Shekhawati-Bissua) by construction of RCC Box for limited use Subway (By cut and cover method). 2. The short facts giving rise to the present application are that the respondent-North Western Railway had invited the tenders vide tender No.2011-11/147 for the execution of the work stated here-in-above, estimating the cost of project to the tune of Rs.4,39,65,018/-. The petitioner had also submitted the tender for the said work and the respondent had awarded the contract to the petitioner vide their acceptance letter dated 15/2/2011. The S.B. Arbitration Application No.6/2014 2 petitioner thereafter appears to have submitted the bank guarantee, performance guarantee and also submitted the letter dated 23/2/2011. It appears that thereafter an agreement was entered into between the parties- Annexure-4, wherein the concerned officer of the respondent had put an endorsement that as per LOA Price Verification Clause (hereinafter referred to as 'PVC') will not be applicable, however the petitioner had made further endorsement below the said endorsement on the said agreement that as per the General terms of the tender, the PVC was applicable, if the contract was for more than fifty lakhs, and since the petitioner's contract was for more than Rs.50 lakhs, the respondents shall have to apply PVC. It appears that thereafter both the parties had proceeded further with the contract agreement and according to the petitioner, it had completed the work also. Since the disputes had arisen with regard to the applicability of PVC, the petitioner called upon the respondent to appoint the arbitrator vide the letter dated 25/9/2013 (Annex.10). However, the respondent replied vide letter dated 19/9/2013 (Annex.12) that the PVC was not applicable and therefore the request for appointment of arbitrator cannot be accepted. The petitioner therefore has filed the present application seeking appointment of arbitrator in view of Clause 64 of the agreement in question. The petition has been resisted by the respondent by filing the reply to which the petitioner has filed the rejoinder. 3. After hearing heard the learned counsels for the parties, and perusing the documents on record, it appears that the respondent has objected to the appointment of the arbitrator on the ground that the petitioner had not completed the work in question and that as per the General Conditions of S.B. Arbitration Application No.6/2014 3 Tender, the dispute cannot be referred to the arbitrator before the completion of the work. It is also contended by the respondent that there being specific hand written condition in the agreement-Annexure-4 that the PVC shall not be applicable, such condition would be an excepted matters under Section 64 and therefore the arbitration clause would not be applicable to the petitioner. 4. Though it is true that there was condition in the tender document that the arbitration clause could be invoked only on the completion of the work under the contract, it is pertinent to note that the respondent had issued the completion certificate dated 9/11/2013 to the petitioner stating that the petitioner had completed the work satisfactorily and its bank guarantee be refunded (Annex.11). It is not disputed that the Clauses 63 and 64 of the agreement in question pertained to the settlement of disputes through arbitration in the event of any dispute or difference between the parties as to the construction or operation of the contract. Whether the PVC was applicable to the petitioner or not in view of the hand written endorsements made by the parties at the end of the agreement (Annex.4), would be a dispute arising out of or in connection with the contract, and therefore such dispute was required to be settled through arbitration, in the manner provided under Clause 63 and 64 of the tender document. The petitioner vide various correspondence had demanded to refer the said dispute to the arbitrator, however the respondent refused to do so as per the letter dated 19/9/2013(Annex.12). Under the circumstances, the petitioner would be entitled to the appointment of the arbitrator under Section 11 of the said Act. 5. In that view of the matter, the petitioner having followed the procedure under Sections 63 and 64 of the General conditions of the contract, and the S.B. Arbitration Application No.6/2014 4 respondent having failed to appoint the arbitrator though called upon by the petitioner, the Court is of the opinion that this is a fit case to appoint the arbitrator to resolve the disputes between the parties. Under the facts and circumstances of the case, the application deserves to be allowed and is accordingly allowed. 6. Hon'ble Mr. Justice Mahesh Bhagwati (Retired)R/o L-44, Sukh Shanti, Income Tax Colony, Durgapura,Jaipur is hereby appointed as the arbitrator to resolve the disputes between the parties. The cost of arbitration proceedings and the arbitration fees shall be as per the Rajasthan High Court Arbitration Manual. A copy of this order be sent to Hon'ble Mr. Justice Mahesh Bhagwati. (Bela M. Trivedi) J. Sanjay Solanki PA118 All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.”Sanjay Solanki Personal Assistant "