The High Court
Case Details
Order No. 03. IN THE HIGH COURT OF ORISSA AT CUTTACK ARBP No.9 of 2025 S.M. Consultants, Bhubaneswar …. Petitioner Represented by Adv.– Mr. Budha Binaya, Advocate -Versus- State of Odisha Opposite Party Represented by Adv.– Mrs. Suman Pattanayak, Addl. Govt. Advocate …. CORAM: HON’BLE THE CHIEF JUSTICE
Decision
ORDER 02.05.2025 1. The application under Section 11 of the Arbitration and Conciliation Act, 1996 filed by the petitioner is taken out for appointment of arbitrator in terms of an arbitration agreement entered into by and between the parties in relation to a contract dated 20th December, 2018 for providing “Consultancy services for Authority’s Engineer for Construction of HL Bridge over river Mahanadi at Gopinathpur connecting to Singhanath Pitha and Baideswar in the District of Cuttack under the NABARD Assistance through an Engineering Procurement and Construction (EPC) Mode”. The said work was in terms of the World Bank Projects and the petitioner was awarded with the contract after following all the procedures required in this regard. The said Page 1 of 6 agreement postulates not only the commencement of the work from 20th December, 2018 but its completion by 19th December, 2021. It further postulates that the total assignment period of the work was 84 calendar months, which was divided into two components i.e. 36 months for construction period and 48 months for maintenance including settlement of contractor’s bill. Though the period for completion was indicated but the same was extended by the opposite party and after the completion thereof, the monthly invoices were submitted for payment but the opposite party has illegally and wrongfully withheld the sum of Rs.24,48,995/-. Immediately, the petitioner raised a dispute by causing a letter in terms of clause 8.2.1 which is duly replied by the opposite party. The specific stand taken by the State is that the said amount is not payable to the petitioner for the reasons stated therein. The sum and substance of the stand taken by the opposite party-State is that because of certain grounds the petitioner is not entitled to the aforesaid amount and, therefore, they disputed the entitlement of the petitioner to the amount so claimed. 2. Mrs. Pattanayak, learned Additional Government Advocate appearing for the State-opposite party submits that Page 2 of 6 clause 8 of the General Conditions of Contract imposed a pre- condition of the amicable settlement before the petitioner could invoke the arbitration clause. According to her, the petitioner ought to have approached the authority to settle the disputes amicably and the moment the efforts for amicable settlement fails, the arbitration clause can only be activated. 3. We would have appreciated the aforesaid contention had there been no demand raised by the petitioner and duly replied by the opposite party. The demand was raised by the petitioner and the opposite party conveyed and communicated their stand on the said demand that the claim is not tenable, therefore, a dispute is raised by the opposite party on the claim of the petitioner. The moment one of the parties has conveyed the stand taken in course of a claim having made, the laudable intention is manifested that there is no possibility of any amicable settlement. Once the recourse to an amicable settlement would result in futility evidencing the stand of one of the parties, it would be an ideal exercise to relegate the parties to explore such possibility. The clause 8.2.1 of the Special conditions of contract contains the arbitration clause and the dispute should be resolved by the sole Page 3 of 6 arbitrator or panel of arbitrators composed of three arbitrators in accordance with the provisions of the said clause, which is reproduced as under: “8.2.1 Selection of Arbitrators Each dispute submitted by a Party to arbitration shall be heard by a sole arbitrator or an arbitration panel composed of three arbitrators, in accordance with the following provisions: (a) Where the Parties agree that the dispute concerns a technical matter, they may agree to appoint a sole arbitrator or, falling agreement on the identity of such sole arbitrator or within thirty (30) days after receipt by the other Party of the proposal of a name for such an appointment by the Party who initiated the proceedings, either Party may apply to the President, Indian Roads Congress, New Delhi, for a list of not fewer than five nominees and, on receipt of such list, the Parties shall alternately strike names thereform, and the last remaining nominee on the list shall be the sole arbitrator for the matter in dispute. If the last remaining nominee has not been determined in this manner within sixty (60) days of the date of the list, the President, Indian Roads Congress, New Delhi, shall appoint, upon the request of either Party and from such list or otherwise: a sole arbitrator for the matter in dispute. (b) Where the Parties do not agree that the dispute concerns a technical matter, the Client and the Consultants shall each appoint one arbitrator, and these two arbitrators shall Jointly appoint a third arbitrator, who shall chair the arbitration panel. If the arbitrators named by the Parties do not succeed in appointing a third arbitrator within thirty (30) days after the latter of the two arbitrators named by the Parties has been appointed, the third arbitrator shall at the request of either Party, be appointed by Page 4 of 6 Secretary, the Indian Council of Arbitration, New Delhi. (c) If, in a dispute subject to Clause SC 8.2.1 (b), one Party fails to appoint its arbitrator within thirty(30) days after the other Party has appointed its arbitrator, the Party which has named an arbitrator may apply to the Secretary, Indian Council of Arbitration, New Delhi to appoint a sole arbitrator for the matter in dispute, and the arbitrator appointed pursuant to such application shall be the sole arbitrator for that dispute.” 4. The said arbitration agreement postulates the modalities of appointing the arbitrator and in the event the parties do not agree within the time indicated therein, the authorities may be approached to appoint such arbitrator. Section 7 of the Act defines the arbitration agreement which can also be in the form of an arbitration clause contained in the contract or in the form of a separate agreement. Section 11(6) of the said Act provides that once the appointment procedure is agreed upon by the parties and if any of the parties fails to act as required under the procedure, the appointment shall be made by the High Court on an application of a party. The arbitration clause contains a time limit within which the party has to agree upon the arbitrator and it is undeniable that despite receipt of the notice, the parties have not communicated the decision of appointment of arbitrator and, therefore, the provisions Page 5 of 6 contained under Section 11 of the said Act gets activated. Since the dispute has arisen in relation to payment of bill, such dispute comes within the ambit of the arbitration agreement to be determined by the arbitrator. 5. The application under Section 11 of the said Act is hereby allowed. 6. Mr. Durga Prasad Nanda, Senior Advocate of this Court is appointed as Arbitrator. He is directed to complete the arbitral proceedings within the time indicated in Section 29A of the said Act. The remuneration of the Arbitrator shall be paid in accordance with schedule appended to the said Act. The arbitration shall take place under the aegis of the High Court of Orissa, Arbitration Centre. 7. The arbitration petition is disposed of accordingly. A copy of this order be communicated to the learned Arbitrator forthwith. Chief Justice ( Harish Tandon ) SK Jena/Secy. Signature Not Verified Digitally Signed Signed by: SANJAY KUMAR JENA Designation: SECRETARY Reason: Authentication Location: High Court of Orissa, Cuttack. Date: 06-May-2025 16:33:12 Page 6 of 6