IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF AUGUST 2019 BEFORE THE HON’BLE MR.JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION No.184/2017 BETWEEN:
JOG HOLIDAY RESORTS PVT. LTD., A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT 14, AVENUE-4, BANJARA HILLS, HYDERABAD-500034 REP BY ITS AUTHORIZED SIGNATORY Mr. MADHAV RAO PATRI ...PETITIONER (BY SRI SHANMUKHAPPA, ADV. FOR M/s KESVY & CO., ADVS.) AND:
JOG MANAGEMENT AUTHORITY GOVERNMENT OF KARNATAKA, BY THE DEPUTY COMMISSIONER & CEO HAVING HIS OFFICE AT TOURISM DEPARTMENT, ‘A’ BLOCK, 3RD CROSS, GOPALAGOWDA LAYOUT, SHIMOGA - 577201. …RESPONDENT (BY SRI S.CHANDRASHEKHARAIAH, HCGP.) THIS C.M.P. IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT AN ARBITRATOR FOR ADJUDICATION OF DISPUTES RAISED BY THE PARTIES IN THE ARBITRATION PROCEEDINGS; CONCESSION AGREEMENT DATED 16.02.2009 VIDE ANNEXURE-C.
THIS C.M.P. COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner has filed this Civil Miscellaneous Petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint a sole arbitrator to adjudicate the dispute in terms of Clause 11.2 of the Concession Agreement dated 16.02.2009 entered into between the parties.
2. It is the case of the petitioner that the petitioner entered into a Concession Agreement dated 16.02.2009 with the respondent for development of 2 acres of land near Jog Falls, Shimoga District into a three Star Holiday Resort with the facilities as listed out in the said Concession Agreement. Accordingly, tender was called for the implementation of the said resort project and after a competitive bidding process, the respondent had accepted the proposal of the petitioner. Accordingly, the project was awarded to the petitioner vide Letter of Approval dated 12.11.2008 and the same was acknowledged by the petitioner vide letter dated 22.12.2008. Pursuant to the aforesaid Concession Agreement, the petitioner commenced the development activities by submitting drawing and obtained approval for the same and finally the construction was commenced on 16.12.2009 and the floor plans and blue print of the project was also submitted to the respondent. Thereafter, the petitioner was carrying out the works at the project site demarcated by the respondent for the project. The officials from the Forest Department visited the site and obstructed the construction works on the ground that a portion of the project site approximately 8 guntas of land did not belong to the respondent and the same belonged to the Forest Department. The petitioner intimated the same to the respondent vide letter dated 26.02.2010 regarding the claim made by the Forest Department and also requested the respondent to ensure the entire 2 acres of land is encumbrance free for the smooth implementation of the project and further brought to its notice that the area claimed by the Forest Department was demarcated for the construction of Spa and Suites block as per the plan and the same are the main highlights of the project and the entire business plan will be affected if the said area is not granted.
3. It is further contended that the respondent requested the Forest Department and even addressed a letter dated 25.06.2014 to the Department of Forest, Government of India requesting approval for diversion of forest land for the project. However, the Government of India intimated the respondent that the diversion of forest land for the project cannot be approved vide its letter dated 19.12.2014. After number of correspondences with the respondent regarding non- availability of land, the petitioner issued preliminary termination notice dated 27.04.2015 in terms of clause 9.2(b)(ii) of the Concession Agreement in view of the default on the part of the respondent in providing encumbrance free land for construction of the holiday resort in terms of the Concession Agreement. As there was no response to the preliminary termination notice by the respondent, the petitioner issued the termination notice dated 01.07.2015 with details of the termination payment required to be paid by the respondent to the petitioner in terms of the Concession Agreement.
4. It is further contended that the respondent failed to respond to the termination notice despite further notice issued by the petitioner dated 05.03.2016. In view of the same, the petitioner addressed another letter dated 23.11.2016 to the respondent invoking the dispute resolution as per Clause 11.1 of the Concession Agreement. However, the respondent neither came forward to settle the dispute nor sent any reply to the letter of the petitioner. Hence, the petitioner issued notice dated 28.04.2017 invoking the arbitration in terms of Clause 11.2 of the Concession Agreement and further proposed the arbitrator from its side. The respondent neither proposed any arbitrator for constitution of the Arbitral Tribunal nor came forward to settle the matter.
5. It is further contended that the petitioner is ready and willing to have the dispute adjudicated upon by the arbitrator appointed under the arbitration clause. However, for the reasons best known to it, the respondent failed to make the termination payments due and payable by it in terms of the Concession Agreement nor came forward to appoint an arbitrator from its side for constitution of the Arbitral Tribunal in terms of the Agreement to adjudicate the dispute between the parties. Therefore, the petitioner is before this Court for the relief sought for.
6. The respondent has not filed any statement of objections to the present Civil Miscellaneous Petition.
7. I have heard the learned counsel appearing for the parties to the lis.
8. Sri. Shanmukhappa, learned counsel for the petitioner contended that inspite of the fact that the petitioner is ready and willing to perform its part of agreement in terms of the Concession Agreement dated 16.02.2009, the respondent has not cleared the obstructions raised by the Forest Department and the Forest Department is not permitting the petitioner to proceed with the project. It is for the respondent to clear the obstructions raised by the Forest Department enabling the petitioner to proceed with the project in terms of the Concession Agreement. Inspite of the repeated requests made, the respondent has not replied nor came forward to settle the matter between the parties in terms of the Concession Agreement.
9. He further contended that inspite of the legal notice issued as contemplated under the provisions of Section 7(5) of the Arbitration and Conciliation Act, 1996, no reply is sent by the respondent. In view of the admitted facts that the Concession Agreement entered into between the parties and existence of arbitration clause in the agreement, he sought to allow the Civil Miscellaneous Petition.
10. Per contra, Sri. S. Chandrashekharaiah, learned High Court Government Pleader contended that the petitioner has not discharged its obligation in terms of the Concession Agreement dated 16.02.2009 and it has not completed the work within the time. Therefore, he sought to dismiss the Civil Miscellaneous Petition.
11. Having heard the learned counsel for the parties, it is undisputed fact that the petitioner and the respondent entered into the Concession Agreement dated 16.02.2009 for development of 2 acres of land near Jog Falls, Shimoga District into a three Star Holiday Resort with the facilities as listed out in the Concession Agreement entered into between the parties. The proposal made by the petitioner was approved by the respondent on 12.11.2008 and subsequently, the agreement came to be executed between the parties. The petitioner was carrying out the work at the project site demarcated by the respondent for the project. It is the case of the petitioner that the officials of the Forest Department have obstructed for the construction work on the ground that a portion of the project site approximately 8 guntas of land did not belong to the respondent and the same belonged to the Forest Department. Inspite of requests made, the respondent has not discharged its duty and cleared the obstructions made by the officials of the Forest Department. It is also not in dispute that on the request made by the respondent to the Forest Department, the Government of India intimated the respondent vide its letter dated 19.12.2014 that the diversion of forest land for the project cannot be approved.
12. The material on record clearly depicts that in view of the obstructions made by the officials of the Forest Department and the letter issued by the Government of India that diversion of Forest land cannot be approved, the petitioner issued preliminary termination notice on 27.04.2015 in view of the default on the part of the respondent in providing encumbrance free land for construction of the holiday resorts in terms of the Concession Agreement. The respondent has not issued reply to the termination notice, nor replied to the legal notice issued by the petitioner in terms of Section 7(5) of the Arbitration and Conciliation Act, 1996 dated 28.04.2017 invoking the terms of arbitration in terms of clause 11.2 of the Concession Agreement. Admittedly, inspite of the assertions made by the petitioner in the present Civil Miscellaneous Petition, the respondent has not filed objections even after lapse of more than one year.
13. The existence of Concession Agreement between the parties dated 16.02.2009 is not in dispute. Clause 11.2 of the said agreement is also not in dispute which reads thus:-
“11.2 Arbitration (a) Procedure Subject to the provisions of Article 11.1, any Dispute which is not resolved amicably shall be finally settled by binding arbitration under the Arbitration Act. The arbitration shall be by a panel of three arbitrators, one to be appointed by each Party and the third to be appointed by the two arbitrators appointed by the Parties. The Party requiring arbitration shall appoint an arbitrator in writing, inform the other Party about such appointment and call upon the other Party to appoint its arbitrator. If within 15 days of receipt of such intimation the other Party fails to appoint its arbitrator, the Party seeking appointment of arbitrator may take further steps in accordance with Arbitration Act.
(b) Place of Arbitration The place of arbitration shall ordinarily be Shimoga but by agreement of the Parties, the arbitration hearings, if required, may be held elsewhere.
(c) English Language The request for arbitration, the answer to the request, the terms of reference, any written submissions, any orders and awards shall be in English and, if oral hearings take place, English shall be the language to be used in the hearings.
(d) Enforcement of Award The Parties agree that the decision or award resulting from arbitration shall be final and binding upon the Parties and shall be enforceable in accordance with the Provision of the Arbitration Act subject to the rights of the aggrieved parties to secure relief from any higher forum.
(e) Performance during Arbitration Pending the submission of and/or decision on a Dispute and until the arbitral award is published; the Parties shall continue to perform their respective obligations under this Agreement without prejudice to a final adjustment in accordance with such award.”
14. It is also not in dispute that the petitioner has complied with the provisions of Section 7(5) of the Arbitration and Conciliation Act, 1996 by issuing legal notice before filing the present Civil Miscellaneous Petition. Admittedly, the respondent has not responded to legal demand made by the petitioner nor filed any objections to the present Civil Miscellaneous Petition. In view of the aforesaid admitted facts, there is no impediment for this Court to appoint the sole arbitrator to adjudicate the dispute between the parties.
15. For the aforesaid reasons, this Civil Miscellaneous Petition is allowed. Hon’ble Shri. Justice T.S. Thakur, former Chief Justice of India, is appointed as sole arbitrator to adjudicate the dispute in terms of Clause 11.2 of the Concession Agreement dated 16.02.2009 entered into between the parties.
16. The Registry is directed to send the copy of this order to Hon’ble Shri. Justice T.S. Thakur, former Chief Justice of India and the Arbitration Centre for reference forthwith.
PMR Sd/- JUDGE