CWP Nos. 2322 and 2371 of 2016. Case: P.K. Construction Co. and Ors. Vs The Shimla Municipal Corporation and Ors.. Himachal Pradesh High Court

Case NumberCWP Nos. 2322 and 2371 of 2016
CounselFor Appellant: Bharat Thakur, Advocate and For Respondents: Hamender Chandel, Advocate
JudgesMansoor Ahmad Mir, C.J. and Sandeep Sharma, J.
IssueArbitration and Conciliation (Amendment) Act, 2015 - Sections 1, 1(2), 2, 2(1)(e), 2(c), 26; Arbitration and Conciliation Act, 1996 - Sections 11, 11(5), 12(3), 13, 14, 14(2), 15, 15(2), 16, 21, 27, 28, 28(3), 29, 29A, 29A(3), 29A(4), 29A(5), 29A(6), 29B, 29B(3), 29B(4), 31(7), 32, 32(2), 32(3), 34, 37, 41, 9; Constitution of India - Articles 1...
Judgement DateApril 12, 2017
CourtHimachal Pradesh High Court


Sandeep Sharma, J.

  1. Since common questions of law and facts are involved, both the petitions were clubbed and are being disposed of by this common judgment.

  2. The writ petitions, though, have been filed by different entities but arise out of same and similar dispute and same reliefs have been sought. The main reliefs, common in both the petitions, are reproduced below:

    "1. Record may be called for from respondent No. 3.

  3. The petition be kindly heard finally & decided in the light of Section 28(3) read with S. 29B(3) of the Arbitration & Conciliation Act, the Ground para & the statement of claim including subsequent MAs on record.

  4. Exemplary/compensatory cost may be awarded to the petitioners qua respondent No. 1.

  5. Interest may be kindly allowed in terms of Section 31(7) of the Arbitration & Conciliation Act."

  6. Since dispute in both the petitions is same and similar, for the sake of brevity, facts of CWP No. 2322 of 2016 are being discussed.

  7. Respondents, i.e. Department of Urban Development and H.P. Infrastructure Development Board (in short, 'HPIDB') invited Expression of Interest (in short, 'EOI') from interested national/international independent legal entities/joint ventures/consortia for construction, operation/maintenance and running of parking complexes in Shimla city under Public Private Partnership mode (in short, 'PPP mode') vide Annexure P-1. Procedure was also laid down for submission of EOI therein. Petitioners in CWP No. 2322 of 2016 and CWP No. 2371 of 2016 submitted EOI for construction of parking complexes at Chotta Shimla and near Lift, respectively, as is evident from Annexure P-2 (in both the petitions). The EOI was accepted in both the cases, vide Annexure P-2 itself. Petitioners were required to pay Annual Concession Fee and further were asked to pay Development Fee and Construction Performance Security. Petitioners have also annexed abstract copy of Request for Proposal (in short, 'RFP')/agreement. Art 4, 'Conditions Precedent', whereof provides that, "Subject to the express terms to the contrary, limited aspects of the Construction Period (when commenced) and any legitimate rights arising in law, the rights and obligations under this Concession Agreement shall take effect only upon fulfillment of all the Conditions Precedent set out in Articles 4.1 and 4.2 on or before the expiry of a period of 90 (ninety) days from the Proposal Acceptance Date. However, the Concessioning Authority may at any time at its discretion and in writing, waive fully or partially any of the Conditions Precedent of the Concessionaire."

  8. In case of dispute, Art 27.3 of RFP, provides for arbitration or adjudication, which reads as under:

    "27.3 Arbitration or Adjudication

    1. In the event that the parties are unable to resolve the Dispute through Direct Discussion under Article 27.2, the parties shall submit the Dispute for arbitration in accordance with the Arbitration & Conciliation Act, 1996. The arbitration proceedings shall be conducted by the "Secretary, Law, GoHP" as the Sole Arbitrator (the "Sole Arbitrator").

    2. The Sole Arbitrator shall make a reasoned award and any award made pursuant to this Article 27.3 shall be final and binding on the Parties as from the date on which it is made and the Concessionaire and the Concessioning Authority agree to undertake to carry out the award without delay.

    3. The cost incurred on the process of Arbitration including inter alia the fees of the arbitral tribunal and the cost of the proceedings shall be borne by the Parties in equal proportions. Each Party shall bear its own legal fees incurred as a result of any Dispute under this Article 27."

  9. Sanction for the construction of parking complex was accorded by respondent No. 1, vide Annexure P-4, dated 9.12.2011, on various conditions, one of which was that the petitioners shall dump the debris with the permission of respondent No. 1. Respondent No. 1 also issued compliance certificate indicating fulfillment of conditions by the Concessioning Authority and Concessionaire. On 26.9.2014, issue regarding completion of parking complexes at various places, including one near Lift and another at Chhota Shimla was also taken up in a meeting under the chairmanship of Hon'ble the Chief Minister, wherein petitioners aired the problems being faced by them regarding handing over of site. On 7.10.2014, petitioners submitted drawings of revised proposals. Vide Annexure P-8 dated 28.10.2014, Er. Amar Singh Chauhan (Independent Engineer) was asked to examine the proposal, who submitted his recommendations on 29.10.2014. Vide Annexure P-10, letter dated 5.3.2015, respondent No. 1 intimated the petitioners that the construction period was over and petitioners were asked to make the parking operational. Thereafter, petitioners were asked to complete the construction work as per approved drawings and provisions of Concession Agreement dated 11.5.2015.

  10. On receipt of above communication, the petitioners invoked dispute redressal process, by sending legal notices to respondent No. 1 by alleging misrepresentation, fraud, undue influence, coercion and mistake of law etc. Petitioners raised issues regarding undue charge of fees, revision of project etc. and demanded that construction period be not deemed to have commenced as yet and other various issues were raised.

  11. On receipt of notice from the petitioners, respondent No. 1, referred the dispute to the Sole Arbitrator i.e. respondent No. 3 and requested him to conduct proceedings as per Article 27.3 of the Concession Agreement dated 15.7.2015. Petitioners filed petition before the Arbitrator, to which reply was filed by respondent No. 1. Petitioners filed rejoinder to the same. Petitioners also filed miscellaneous application for completing the arbitration process within specified time schedule.

  12. The petitioners approached this Court by way of present petitions, which were clubbed together and listed on various dates, for ascertaining the maintainability of the same and jurisdiction of this Court. Keeping in view the reliefs prayed for in the present petition, learned counsel representing the petitioners was repeatedly asked to justify the maintainability as well as jurisdiction of this Court. At the very outset, it may be noticed that since this Court was prima facie of the view that present petitions are not maintainable, in their present form, suggestion was made to the learned counsel representing the petitioners that in case petitioners agree, direction can be issued to the learned Arbitrator to conclude the arbitration proceedings within a stipulated time. However, the fact remains that the learned counsel representing the petitioners remained adamant on getting the matter decided on merits and insisted that the controversy at hand may be decided by this Court, on the basis of material already adduced on record by the respective parties before the Arbitrator, while exercising powers under Articles 226 and 227 of the Constitution of India. Apart from making oral submissions, which would be referred to herein below, petitioners also filed written arguments as well as response to the query of this Court, on the point of jurisdiction. But a bare perusal of written submissions, which have been taken on record, suggests that these are mere repetitions of oral submissions having been made by the learned counsel representing the petitioners.

  13. The petitioners filed written submissions reiterating that the matter be adjudicated by this Court, as arbitration proceedings have become infructuous since the same were not conducted by the sole Arbitrator within stipulated time, despite request of the petitioners. Learned counsel representing the petitioners, prays that the matter be decided on 'as-is-where-is' stage, since they have lost faith in the Sole Arbitrator.

  14. Learned counsel representing petitioners vehemently argued that respondent No. 3, i.e. Arbitrator has failed to make final awards pursuant to the references made to him, arbitration proceedings stand automatically terminated in terms of Section 29B(4) of the Arbitration & Conciliation Act, 1996 (hereafter, 'Act') and as such same is required to be decided by this Court in light of Section 28(3) read with Section 29B (3) of the Act.

  15. Learned counsel for the petitioners further contended that since pleadings as well as evidence in support thereof were submitted in due course of time, respondent No. 3 i.e. Arbitrator was required to make the requisite award within the period as provided under Section 29A. As per the petitioners, reference was made to the Arbitrator on 15.7.2015 and as such he was required to pass award on or before the expiry of twelve months i.e. 20.7.2016. Learned counsel for the petitioners specifically invited the attention of this Court to the communication dated 10.6.2015, whereby petitioners, in terms of Article 27 of the Agreement inter se parties, invoked dispute resolution process. Learned counsel for the petitioners further contended that vide Annexure P-13, i.e. communication dated 15.7.2015, Municipal Commissioner, Shimla, who happened to be second party, in terms of agreement inter se parties, sent a communication to Secretary (Law) to the Government of Himachal Pradesh, who is the named Arbitrator in the agreement as per Article 27.3 of the Agreement, to conduct arbitration proceedings. While referring to the aforesaid communication dated 15.7.2015, learned counsel representing the petitioners, stated that the Arbitrator is deemed to have entered upon reference on 15.7.2015, because, as per explanation provided under Section 29A of the Act, Arbitral Tribunal shall be deemed to have entered upon reference on the date, on which Arbitrator received notice, in writing, of his appointment. Learned counsel for the petitioners also invited attention of this Court to various documents annexed with the petition to demonstrate that the pleadings were filed within stipulated time...

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