Tractebel Engineering Private Limited vs Ranchi Smart City Corporation Limited (RSCCL)

Sujit Narayan Prasad, J

This application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking direction for appointment of sole Arbitrator in view of the Arbitration Clause stipulated under Clause 9.4 of the agreement dated 31.05.2017.

The brief facts of the case, as has been enumerated in the instant arbitration application, read hereunder as:

The petitioner/applicant is a company engaged in business of providing consultancy and engineering services in various sectors such as power, nuclear, gas, infrastructure etc. The respondent is a Government of Jharkhand undertaking under Urban Development and Housing Department for execution of Smart City projects of Ranchi.

On 31.05.2017, the respondent entered into an agreement with the petitioner whereby the petitioner was appointed as the Project Management Consultant (PMC) for assisting Ranchi Smart City Corporation Limited to Design, Develop, Manage and Implement Smart City Projects under Smart City Mission (SCM) in Ranchi.

Pursuant to the aforesaid agreement, the petitioner deployed the required resources so as to discharge its obligations under the Agreement and performed its obligations as per the terms and conditions of agreement.

As the period of agreement was going to expire on 31.05.2020 i.e., three years from the effective date of agreement, the petitioner vide letter dated 24.04.2020 requested the respondent to extent the period of agreement by another year i.e., till May, 2021 with a further request to release the unpaid amount due and payable to the petitioner under the agreement as the same was long overdue and non-release of outstanding amounts has put a tremendous burden on the cash flow of the petitioner. But the respondent did not respond as such it is stated that the petitioner sent several reminders to this effect.

It is the case of the petitioner that as the respondent did not pay any heed to the requests made by the petitioner the period of agreement was lapsed as such the petitioner, in absence of any valid contract, withdrew its team from the site with immediate effect and thereafter made repeated request to release the legitimate dues but no payment was made as such dispute arose between the parties.

Accordingly, the petitioner with a view to resort to conciliation in terms of Clause 9.3 of the agreement requested the respondent to provide time for amicable settlement of disputes but it failed and as no conciliation for amicable settlement could take place within the stipulated period of time, the petitioner invoked Clause 9.4 for arbitration and proposed the name of the arbitrator for adjudication of dispute but the respondent did not respond as such the petitioner left with no option has approached this Court for appointment of arbitrator.

Counter affidavit has been filed by the respondent wherein it has been stipulated that agreement came into effect from the effective date of agreement i.e., 31.05.2017 and agreement expired after completion of three years on 31.05.2020. It has further been submitted that the performance of the petitioner was negligent towards respondent-Ranchi Smart City since the inception and even it did not deploy the required resources to discharge its contractual obligation as per agreement and did not fulfill the terms and conditions of the agreement. It has further been submitted that there was delay on the part of the petitioner to submit DPR (Detailed Project Report) due to which the respondent has to incur loss and entire project got delayed. Further, while executing the Master Plan, it came to the notice of the Opp. Party that the Master Plan was prepared without any physical/spot verification because of which the Master Plan and Physical Area available at the field did not match causing delay in execution of the work. For such casual, negligent and unprofessional approach of the petitioner-PMC, the respondent-Opp. Party issued show cause notice dated 30.03.2021 as to why penalty be not imposed upon them for delay caused in completion of project.

Learned counsel for the petitioner/applicant has submitted that since the claim which has been raised have not been settled, therefore, the dispute arose and when the dispute has not been settled amicably, request was made for appointment of Arbitrator as per the condition stipulated under Arbitration Clause 9.4 of the contract.

Learned counsel appearing for the respondent disputing the claim raised by the petitioner has submitted that the matter may be referred before the independent Arbitrator in view of the arbitration clause as contained in the agreement dated 31.05.2017.

This Court has heard learned counsel for the parties and perused the pleading made in the instant application as also the arbitration clause as under Clause 9.4 of the contract.

It is evident from the arbitration clause stipulated under Clause 9.4 that the Arbitrator is required to be appointed, which reads hereunder as:

9.4.Arbitration

9.4.1.Any Dispute which is not resolved amicably by conciliation, as provided in Clause 9.3 shall be finally decided by reference to arbitration by the an Arbitral Tribunal appointed in accordance with Clause 9.4.2. Such arbitration shall be held in accordance with Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (the “Rules”) or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration and Conciliation Act, 1996. The place of such arbitration shall be Ranchi, Jharkhand where the Authority has its headquarters and the language of arbitration proceedings shall be English.

9.4.2.There shall be [a sole arbitrator whose appointment]/an Arbitral Tribunal of three arbitrators, of whom each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected, and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules.

9.4.3.The arbitrators shall make a reasoned award (the “Award”). Any Award made in any arbitration held pursuant to this Clause 9 shall be final and binding on the Parties as from the date it is made, and the Consultant and the Authority agree and undertake to carry out such Award without delay.

9.4.4.The Consultant and the Authority agree that an Award may be enforced against the Consultant and/or the Authority, as the case may be, and their respective assets wherever situated.

9.4.5.This Agreement and the rights and obligations of the Parties shall remain in full force and effect, pending the Award in any arbitration proceedings hereunder.”

It is evident from the aforesaid Arbitration Clause that in case of any dispute, which is not resolved amicably by conciliation, as provided in Clause 9.3, shall be finally decided by reference to arbitration by the an Arbitral Tribunal appointed as per Clause 9.4.2. of the agreement in accordance with Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (the “Rules”) or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration and Conciliation Act, 1996.

It appears from the record that the petitioner has made a request for resolution of the dispute invoking the arbitration clause, but even thereafter, the Arbitrator has not been appointed, therefore, left with no other remedy, has filed the instant application.

This Court, having heard learned counsel for the parties, going through the records and taking into consideration the consensus of the learned counsel for the respondent, is of the view that the instant application is required to be allowed.

Accordingly, the instant arbitration application is allowed.

In view thereof and with the consent of the learned counsel for the parties, Hon’ble Mrs. Justice Jaya Roy, Former Judge of this Court, presently residing at Roy Compound, Dr. Fatullah Road, Near Lower Bazar Thana, Ranchi is appointed as sole Arbitrator for resolution of the dispute between the parties.

Learned Arbitrator would be free to lay down fees and other expenses towards conduct of the arbitration proceedings, however, keeping into account the ceiling prescribed under Schedule IV of the Act of 1996 as amended.

Learned Registrar General of this Court is directed to send a copy of the entire records of this case along with entire order sheet with this order to the learned Arbitrator forthwith.

Needless to say that the parties will be at liberty to raise all the legal issues for its consideration by the Arbitrator, in accordance with law.