IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE CIVIL MISCELLANEOUS PETITION No.153 OF 2015 BETWEEN:
M/s.Diggers (India) No.4-2-222(1), Bharathi Nagar Cross Road, Bejai, Mangaluru – 575 004.
A proprietary concern rep by its Proprietor Sri.N.Jairaj Shetty.
… Petitioner (By Sri.K.Shashi Kiran Shetty, Senior Advocate a/w Sri.Sampath Bapat, Advocate) AND:
Union of India, Rep by 1. The Chief Administrative Officer (Const) South Western Railway, 18, Millers Road, Bengaluru – 46.
2. The Chief Engineer (Const-East) South Western Railway, 18, Millers Road, Bengaluru – 46.
3. The Deputy Chief Engineer (West) South Western Railway, 18, Millers Road, Bengaluru – 46.
4. The General Manager, South Western Railway, Club Road, Keshwapur, Hubballi – 23.
(By Sri.Abhinay Y.T., 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 issues between the parties in accordance with the provisions of Agreement bearing NO.CAO/CN/BNC/72644/A in the interest of justice.
This Civil Miscellaneous Petition coming on for Admission, this day, the Court made the following:-
ORDER Sri.K.Shashi Kiran Shetty, learned Senior counsel for Sri.Sampath Bapat, learned counsel for the petitioner.
Sri.Abhinay.Y.T, learned counsel for respondents.
The petition is admitted for hearing. With the consent of learned counsel for both parties, the same is heard finally.
2. By means of this petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as ‘the Act’, for short), the petitioner inter alia seeks appointment of a sole arbitrator to resolve the disputes and outstanding issues between the parties in accordance with law with the provisions of agreement bearing No.CAO/CN/BNC/72644/A.
3. Facts giving rise to the filing of this petition briefly stated are that on 30.07.2007, a letter of acceptance was issued in favour of the petitioner for the work, namely, ‘Bangalore-Hassan via Shravanabelagola New line – BNGR – Shravanabelagola Section – Earthwork, minor bridges and miscellaneous works in Ch.103000 to 110000 including Hirisave yard between B.G.Nagar and Shravanabelagola’. Clause 63 and 64 of the general conditions of the contract admittedly contains an arbitration clause. It is also not in dispute that the petitioner made request of the referral of the dispute to the arbitrator. Acting upon the request made by the petitioner, the respondents constituted the Arbitration Tribunal on 19.09.2014. Thereafter, the provisions of the Act were amended by amendment Act No.3 of 2016, which came into effect from 23.10.2015. In view of the amendment made in the Act, the petitioner has approached this Court seeking appointment of an independent person as an arbitrator to adjudicate the dispute as part of its claims, namely, Nos.1 and 6 which were not referred to the Arbitration Tribunal, which was constituted by the respondents in pursuance of the order dated 18.07.2014 passed in CMP No.84/2012. In the aforesaid factual background, this petition has been filed.
4. Learned Senior Counsel for the petitioner while placing reliance on the judgment of Delhi High Court dated 11.04.2017 in the case of ‘RATNA INFRATRUCTURE PROJECTS PVT. LTD. VS. MEJA URJA NIGAM PRIVATE LIMITED.’, submitted that in the aforesaid case, Delhi High Court dealing with similar clause held that the same constitutes an agreement between the parties to make the amended provisions of the Act applicable to the dispute between the parties and therefore, in view of the decision referred by Delhi High Court stated supra, which has been upheld by the Hon’ble Supreme Court as SLP preferred against the aforesaid order has been dismissed in limine by order dated 21.04.2017 passed by the Hon’ble Supreme Court in SLP(C) No.10545/2017, the sole arbitrator be appointed to adjudicate the dispute, namely, the claims/dispute Nos.1 and 6 in view of Section 12(5) of the Act, as amended by amendment Act 3 of 2016.
5. On the other hand, learned counsel for respondents submitted that in pursuance of the order dated 18.07.2014 passed in CMP No.84/2012, the Arbitration Tribunal has already been constituted by the respondents and therefore, two arbitral Tribunals cannot be constituted in respect of the same claims/disputes. It is further submitted that the amended provision of the Act does not have application to the fact situation of the case.
6. I have considered the submissions made by learned counsel for the parties and have perused the records.
7. In the instant case, the relevant extract of the arbitration clause i.e., 64.3(3)(7), reads as under:
“(7) Subject to the provisions of the aforesaid, Arbitration & Conciliation Act, 1996 and the rules thereunder and any statutory modification thereof shall apply to the arbitration proceedings under this clause.”
8. A two Judge Bench of the Hon’ble Supreme Court in the case of ‘SP SINGLA CONTRUCTIONS PVT. LTD. VS. STATE OF HIMACHAL PRADESH AND ANOTHER’, vide judgment dated 04.12.2018 passed in Civil Appeal Nos.11824-825/2018 dealt with the following clause, which is reproduced below for ready reference:
“Subject as aforesaid the provision of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being shall apply to the arbitration proceeding under this clause.”
9. Thus, from perusal of clause 7 of the agreement arrived at between the parties in the instant case and Clause 65 of the Provisions with which the Hon’ble Supreme Court dealt with in the case of SP Singla supra, it is evident that both the aforesaid clauses are in pari materia. The Hon’ble Supreme Court after considering the aforesaid clause, which is pari materia with the arbitration clause in the instant case, in paragraph No.15 of the said judgment held as under:
“15. Considering the facts and circumstances of the present case, we are not inclined to go into the merits of this contention of the appellant nor examine the correctness or otherwise of the above view taken by the Delhi High Court in Ratna Infrastructure Projects case; suffice it to note that as per Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 the provisions of the Amended Act, 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the Principal Act before the commencement of the Amendment Act unless the parties otherwise agree. In the facts and circumstances of the present case, the proviso in clause (65) of the general conditions of the contract cannot be taken to be the agreement between the parties so as to apply the provisions of the amended Act. As per Section 26 of the Act, the provisions of the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act, 2015 (w.e.f. 23.10.2015). In the present case, arbitration proceedings commenced way back in 2013, much prior to coming into force of the amended Act and therefore, provisions of the Amended Act cannot be invoked.”
10. Thus, it is evident that parimateria provision has been interpreted by a two Judge Bench of Hon’ble Supreme Court and it has been held that the aforesaid clause does not constitute an agreement between the parties to apply the provisions of the Amended Act. In view of Article 141 of the Constitution of India, the decision rendered by a two Judge Bench of the Hon’ble Supreme Court in the case of SP Singla supra binds this Court. It is not in dispute that on the date when the amended provisions of the Act came into force i.e., on 23.10.2015, the arbitration proceedings were pending as the arbitrator was already appointed on 19.09.2014 and in view of Section 21 of the Act, the arbitral proceedings had already commenced. Therefore, this Court is unable to agree with the submissions made by learned Senior counsel for the petitioner that the decision referred by Delhi High Court in the case of Ratna Infrastructure Project Pvt. Ltd. supra would govern the result of this case. The issue involved in this petition is squarely covered by a decision referred by a two Judge Bench of Hon’ble Supreme Court in the case of SP Singla supra. Since the arbitral proceedings had already commenced prior to coming into force of the amended provisions of the Act i.e., before 23.10.2015, the provisions of the Amended Act in view of clause 7 of the agreement would not apply to the fact situation of the case and the petitioner cannot seek appointment of independent arbitrator as admittedly the arbitrator has been appointed in terms of the agreement executed between the parties.
11. At this stage, learned Senior counsel for the petitioner pointed out that the arbitrator had sent a notice dated 09.02.2017 seeking waiver of application of Section 12(5) of the Act as well as amendment Act, 2015, which shows that the provision of the amended Act apply to the fact situation of the case. The aforesaid communication is of no assistance in the fact situation of the case as it is trite law that an erroneous concession on question of law does not bind a party. The Arbitration Tribunal is therefore, directed to proceed with the arbitration proceedings pending before it and to decide the claim of the petitioner including claim Nos.1 and 6 and conclude the same expeditiously in accordance with law.
12. Needless to state that it will be open for the respondents to contend before the Arbitration Tribunal that aforesaid claims are outside the purview of arbitration clause.
Accordingly, the petition is disposed of.
Sd/- JUDGE dn/-