IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF MARCH 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE CIVIL MISCELLANEOUS PETITION NO.152 OF 2018 BETWEEN:
M/s. Balaji Builders, No.21, 4th Cross, 5th Block, BSK 3rd Stage, 3rd Phase, Bengaluru – 560 085.
A Partnership firm represented by its Managing Partner Sri. N. Kumar, (By Sri. Vasudeva Naidu S., Advocate) AND:
The Karnataka State Warehousing Corporation, represented by 1. The Managing Director, Karnataka State Warehousing Corporation, Beeja Bhavan, 4th & 5th Floor, Bellary Road, Hebbal, Bengaluru – 560 024.
2. The Executive Engineer, Karnataka State Warehousing Corporation, Beeja Bhavan, 4th & 5th Floor, … Petitioner Bellary Road, Hebbal, Bengaluru – 560 024.
(By Sri. Jagadeesh B. N., Advocate) … Respondents This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act 1996, praying to appoint a sole arbitrator to resolve the disputes and outstanding issue between the parties in accordance with the provisions of agreement bearing No.18/2012-13 dated 05/12/2012 marked as Annexure–C and in consonance with Arbitration and Conciliation (Amendment) Act, 1996 in the interest of justice and equity.
This Petition coming on for Admission, this day, the Court made the following:-
ORDER Sri. Vasudeva Naidu S., learned counsel for the petitioner.
Sri. Jagadeesh B.N., learned counsel for the respondents.
Petition is admitted for hearing. With the consent of learned counsel for the parties, the same is heard finally.
2. By means of this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short), the petitioner seeks appointment of a Sole Arbitrator to resolve the dispute between the parties.
3. The facts giving rise to filing of this petition briefly stated are that admittedly, the parties had entered into an agreement on 05.12.2012. The value of the contract was `6,01,68,991/- and the stipulated time for completion of the contract was Nine (9) months from the date of issue of Work Indent (exclusive of monsoon period). Thus, stipulated time for completion of contract was 04.12.2013. It is the case of the petitioner that the respondents did not provide certain construction drawings, as a result of which the work could not be completed within a period stipulated in the agreement. Thereupon, the petitioner vide notice dated 31.03.2018, invoked the arbitration clause and petition was filed on 30.05.2018 before this Court seeking constitution of the Arbitral Tribunal.
4. Learned counsel for the petitioner submitted that the arbitration proceeding has commenced after the Amendment Act, 2015 had come into force i.e., after 23.10.2015. It is further submitted that the agreement executed between the parties contains the arbitration clause. Therefore, an independent Arbitrator in view of the requirement laid under Section 12(5) of the Act read with Seventh Schedule appended to the Act, be appointed.
5. On the other hand, learned counsel for the respondents submitted that the petitioner has not approached this Court with clean hands. Therefore, he is not entitled to claim any relief. It is pointed out that the petitioner had executed a consent letter on 21.10.2017. However, the aforesaid fact was not brought to the notice of this Court. In support of his submission, learned counsel for the respondent has placed reliance on ‘OSWAL FATS AND OILS LIMITED VS. ADDITIONAL COMMISSIONER (ADMINISTRATION), BAREILLY DIVISION, BAREILLY AND OTHERS’, 2010 (4) SCC 728.
6. I have considered the submissions made by learned counsel for the parties. Admittedly, the arbitration proceeding in the instant case have commenced after the Amendment Act had come into force with effect from 23.10.2015. Therefore, any proceeding under Section 11 of the Act is only required to examine the existence of the agreement and the arbitration clause. Admittedly, the agreement has been executed between the parties, which contains the arbitration clause. So far as the submission made by the learned counsel for the respondents that since the petitioner had not mentioned about consent letter dated 21.10.2017 is concerned, at this stage, it is relevant to take note of the consent letter allegedly executed by the petitioner, which reads as under:
“With respect to RIDF-XVII/PEG/ RKVY / RIDF–XVII / RIDF–XV / RIDF-XIV project, of Karnataka state warehousing corporation, `71,00,600/-penalty was imposed in the board meeting held on 13.09.2017. I have received balance amount, of `97,12,978/-. In future, after revisal if any penalty be paid I hereby undertake to pay the same in accordance with law.”
Thus, from perusal of the consent letter, it is evident that the aforesaid consent letter by no stretch of imagination can be treated as no due certificate to the petitioner. In the aforesaid consent letter, the petitioner has not received any amount on account of full and final settlement of his dues. Therefore, the execution of the aforesaid consent letter in any case is not a relevant fact which ought to have been disclosed by the petitioner in this petition. Therefore, the contention of the learned counsel for the respondents that the petitioner has not approached this Court with clean hands cannot be accepted.
7. In view of preceding analysis the petition filed by the petitioner under Section 11(6) of the Act succeeds and is hereby allowed. In view of the aforesaid submissions and as prayed by learned counsel for the parties, Hon’ble Sri. Justice L. Sreenivasa Reddy, former Judge of this Court is appointed as Sole Arbitrator to adjudicate the dispute between the parties.
8. A copy of this order be dispatched to the Arbitration Centre, Khanija Bhavan, Bengaluru for necessary action in that regard. Learned counsel for the petitioner to also approach the Arbitration Centre with the relevant papers to be filed therein.
The learned Arbitrator appointed herein shall thereupon enter reference and proceed with the matter in accordance with law and the Rules governing the Arbitration Centre.
Accordingly, petition is disposed of.
Sd/- JUDGE Mds/-