M/s. Vaishnav Constructions vs Mr. Abdul Hameed Verkumb, Mrs. Naseema Abdul Hameed, Mrs. Safeenath Sajida Beevi and Mr. Harshavardana H.N., Chief Architect

H. Billappa, J.—The petitioner has filed this petition u/s 11(6) of the Arbitration and Conciliation Act, 1996, praying to appoint an arbitrator to adjudicate the dispute between the petitioner and the respondents 1 to 3. It is stated, the petitioner and the respondents 1 to 3 entered into an agreement dated 30.5.2008 for construction of Multi-storied building, at Site No. 23, 6th Main Road, Gandhinagar, Bangalore-560 009 measuring 3150 sq. ft. The petitioner after completing the work, demanded payments. The respondents did not settled the claim. Therefore, the petitioner sent legal notice dated 2.7.2011 to arbitrate and settle the claim. Thereafter, the petitioner filed A.A. No. 235/2011 u/s 9 of the Arbitration and Conciliation Act, to restrain the respondents 1 to 3 from dispossessing the petitioner from the property during the pendency of the Arbitration proceedings. Therefore, the petitioner has prayed for appointment of an Arbitrator to adjudicate the dispute between the petitioner and the respondents 1 to 3.

The respondents 1 to 3 have filed statement of objections contending that the petition is not maintainable. The clause in the agreement relied upon by the petitioner is not an arbitration clause. It is a clause agreed by the parties to refer any issue that may arise to the architect Sri. Harshavardhana for his expert opinion. There was no intention to refer the matter for arbitration. The reference to an architect in the agreement was only to rely upon his expert advice to avoid any difference or dispute between the parties.

It is stated that a settlement was reached on 19.8.2010 on all outstanding issues. Sri. Harshavardhana through his deputy Mr. Rao made an evaluation of the work completed, work deleted, and the work which was pending as per Annexure-A. Consequently, the original contract came to be substituted and there was no need to seek recourse to the original contract as the parties had agreed to be bound by the settlement dated 19.8.2010.

It is stated, the assumption that Sri. Harshavardhana is an arbitrator and the clause in the original contract was an arbitration clause are completely misconceived. Sri. Harshavardhana was only a project architect to resolve issues with a view to avoid disputes. In fact, settlement dated 19.8.2010 has been reached.

The averments made in the petition have been denied. It is contended that Sri. Harshavardhana is a consultant architect and not an arbitrator and there is no arbitration clause and therefore, the petition is liable to be dismissed.

The learned counsel for the petitioner contended that the parties have entered into an agreement dated 30.5.2008 for construction of Multi-storied building and the petitioner has completed the work and the respondents have not settled the claim. Therefore, the petitioner has sent legal notice invoking arbitration clause. The respondents have given evasive reply. Therefore, an arbitrator may be appointed. Inviting my attention to a clause in the agreement, the counsel for the petitioner submitted that the parties have agreed to refer the dispute to Sri. Harshavardhana and his certificate or award shall be binding on the parties. There is an arbitration clause in the agreement and inspite of notice, the respondents 1 to 3 have not agreed for arbitration. Therefore, an arbitrator may be appointed. Further he submitted that a senior engineer appointed by Sri. Harshavardhana has evaluated the work and no award has been passed. He also submitted that in the statement filed in A.A. No. 235/2011, the respondents have admitted that there is arbitration clause and therefore, they cannot contend that there is no arbitration clause.

The learned counsel for the respondents 1 to 3 requested for a pass over. Thereafter, submitted that he has no file. Thereafter, he submitted that Sri. Harshavardhana has evaluated the work and determined the amount due and it has been paid and therefore, there is no dispute which can be referred to arbitration. He also submitted that there is no arbitration clause in the agreement and therefore, the arbitrator cannot be appointed.

I have carefully considered the submissions made by the learned counsel for the parties.

The point that arises for my consideration is:

Whether an arbitrator needs to be appointed?

It is relevant to note, the existence of construction agreement dated 30.5.2008 between the parties is not in dispute. One of the clauses in the agreement dated 30.5.2008 reads as follows:

In case any dispute or difference shall arise between the parties during the progress of or after construction or abandonment of the work as to the meaning of construction of this contractor touching or relating either to the said buildings or works, or ''to any other matter or thing arising event the same shall be referred to the consultant Mr. Harsha Vardhana H.N. and his certificate or award shall be binding and conclusive upon to the said parties.

It is clear, the parties have agreed to refer the dispute or difference to Sri. Harshavardhana, the consultant and his award or certificate shall be binding on the parties. Apart from this, in A.A. No. 235/2011 the respondents 1 to 3 have filed statement of objections contending that there is an arbitration clause and the matter has been settled. Therefore, it is not open for the respondents 1 to 3 to contend that there is no arbitration clause. Accordingly, it is rejected. The agreement provides for arbitration. The question is whether there is a dispute which can be referred to arbitration. The petitioner contends that he has completed the work and demanded payments. The respondents have not settled the claim. Therefore, the petitioner has sent notice dated 2.7.2011 as per Annexure-D. The respondents have replied the notice on 28.7.2011 denying the claim and making counter claim. The respondents contend that the dispute has been settled The matter was referred to Harshavardhana for evaluation of the work and he evaluated the work and the issues have been resolved. Pursuant to that, payments have been made to the petitioner. Therefore, there is no dispute which can be referred to arbitration. Except Annexure-A, the respondents have not produced anything to show that the dispute was resolved and the amount has been paid to the petitioner. In the absence of that, it is difficult to believe that the dispute has been resolved. Therefore, the dispute exists. It is proper to appoint an arbitrator to adjudicate the dispute between the petitioner and the respondents 1 to 3.

Accordingly, the petition is allowed and Sri. H.N. Bharatesh, Retired District Judge, No. 1044, 10th Main, Judicial Layout, GKVK Post, Bangalore 560 065, is appointed as an arbitrator to adjudicate the dispute between the petitioner and the respondents 1 to 3 arising out of the agreement dated 30.5.2008. The parties shall be governed by the rules of Arbitration Centre, Bangalore, Arbitration and Conciliation Act, 1996 and relevant rules.

The Registry is directed to communicate the order to Sri. H.N. Bharatesh, Retired District Judge and also Arbitration Centre, Bangalore, for further action.

The parties shall appear before the Arbitration Centre, Bangalore, on the date to be fixed.