High Court of KeralaSingle Judge2021-10-04Arbitration request allowed; Arbitrator appointed

Union of India v. M/S Vardhaman Precisions Profiles and Tubes (Pvt) Ltd.

Case / Petition Number:AR No. 104 of 2018

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Devan Ramachandran
Judgment Date: 2021-10-04
Court Decision / Holding: The Arbitration Request is allowed. The Court disregards Clause 70 of the GCC and appoints Justice P. R. Raman Dikshit as the sole Arbitrator. The Registry is directed to communicate the order and obtain a Disclosure Statement under Section 11(8) read with Section 12(1). The arbitrator’s fees will be governed by the Fourth Schedule of the Act, and the parties will share arbitration costs equally. Appearance is fixed for 08.11.2021, with the respondent to be notified, and the certified copy of the order issued with the disclosure appended.
Final Disposition: Arbitration request allowed; Arbitrator appointed

Parties to the Case

Appellants / Petitioners

Union of India (represented by Chief Engineer (NW), Military Engineer Service, Kochi)

Respondents

M/S Vardhaman Precisions Profiles and Tubes (Pvt) Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• Sri K. Shri Hari Rao, CGC

Case Synopsis & Summary

This is an arbitration petition under AR No. 104 of 2018 before the High Court of Kerala (Ernakulam) filed by the Union of India, represented by the Chief Engineer (NW), Military Engineer Service, Naval Base, Kochi, seeking to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The dispute stems from Annexure A3 contract for constructing a pre-engineered hanger at INS Garuda, Kochi, including pile foundation and related services. The petitioner alleges non-performance and issued multiple communications to compel completion as per the agreement. Upon invoking the arbitration clause, Annexures A39–A41 show attempts to appoint an arbitrator and seek waiver under Section 12(5); however, no waiver was granted and the respondent reportedly did not respond. Notices to the respondent were returned as “building sealed,” leading the court to proceed ex parte. The GCC’s arbitration clause—Clause 70—provides that disputes be resolved through arbitration with the Government of India nominating the arbitrator. Relying on Supreme Court authority in TRF Limited v. Energo Engineering Projects Limited (2019) 8 SCC 377, and its own follow-up in Tulsi Developers India Pvt. Ltd. v. Dr. Appu Benny Thomas (2021 (5) KHC 404), the court held that a party to an agreement cannot arbitrate or nominate an arbitrator. Consequently, Clause 70 is to be disregarded and a neutral arbitrator appointed: Justice P.R. Raman Dikshit, with procedural directions for disclosure and costs.

Provisions of Law Cited

Section 11 of the Arbitration and Conciliation Act, 1996Section 12(5) of the Arbitration and Conciliation Act, 1996Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996Fourth Schedule of the Arbitration and Conciliation Act, 1996Clause 70 of the General Conditions of Contract (GCC)

Legal Doctrines & Maxims

A party to an agreement cannot arbitrate or nominate an Arbitrator (TRF Limited v. Energo Engineering Projects Limited, 2019)
Tulsi Developers India Private Ltd. v. Dr. Appu Benny Thomas (followed TRF)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that Annexure A3 contract binds the parties to arbitration under Clause 70, but this clause contemplates Government nomination, which is prohibited by Section 12(5) of the Act. Following TRF Limited v. Energo Engineering Projects Limited (2019) and Tulsi Developers (2021) the court is urged to disregard Clause 70 as invalid under statutory constraints and appoint a neutral arbitrator under Section 11(6). The Government purported to waive the Section 12(5) mandate in Annexure A40, but no waiver was granted; therefore, the arbitration should proceed with a court-appointed arbitrator (Justice P.R. Raman Dikshit) to avoid delay and ensure a fair process. The petitioner seeks a cost-sharing order and appearance dates to commence proceedings.

Contentions of Respondents

Not recorded; notices issued to respondents were returned as building sealed; no substantive respondents’ arguments were presented; proceedings were conducted ex parte.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
TRF Limited v. Energo Engineering Projects Limited	(2019) 8 SCC 377	Positive	Cited to support the proposition that a party to an agreement cannot arbitrate or nominate an arbitrator, rendering Clause 70 invalid under Section 12(5).
Tulsi Developers India Pvt.Ltd. v. Dr.Appu Benny Thomas	2021 (5) KHC 404	Positive	Cited as follow-on authority confirming the TRF principle in the Kerala High Court context, reinforcing the invalidity of government nomination of arbitrators.

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Extracted Judgment Text

Exact text extracted from official judgment records.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **MONDAY, THE 4[TH] DAY OF OCTOBER 2021 / 12TH ASWINA, 1943** ## **AR NO. 104 OF 2018** ## **PETITIONER:** **UNION OF INDIA, REPRESENTED BY CHIEF ENGINEER (NW), KOCHI, MILITARY ENGINEER SERVICE, NAVAL BASE, KOCHI - 682 004.** **BY ADV SRI.K.SHRI HARI RAO, CGC** ## **RESPONDENTS:** **M/S.VARDHAMAN PRECISIONS PROFILES AND TUBES (PVT) LTD., D-11/208, SAVITRI NAGAR, NEW DELHI - 110 017, REPRESENTED BY ITS MANAGING DIRECTOR.** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 04.10.2021,** **THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **AR NO. 104 OF 2018** **2** ## **O R D E R** The Union of India, which is the petitioner in this case, invokes Section 11 of the Arbitration Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short), asserting that they had entered into Annexure A3 agreement with the respondent for the construction of a hanger (pre-engineered building), including pile foundation and connected services, at INS Garuda, Naval Base, Kochi; but that they have not been able to complete the work satisfactorily, thus giving rise to various disputes, touching upon and relating to the terms of the said agreement. 2. The petitioner says that they had issued several communications to the respondent to complete the work as per their contractual obligations under Annexure A3 agreement and they have produced on record various such. They say that however, inspite of this, since the respondent did not take adequate steps and measures to complete the work as contracted, they issued Annexure A35 proceedings canceling the Agreement, followed by Annexure A37 - directing them to remit the amounts quantified against them; but that since no response was obtained to it, Annexure A39 letter **AR NO. 104 OF 2018** **3** was issued on 23.03.2016, informing them that the Arbitration Clause of the agreement was being invoked. They say that, thereafter, Annexure A40 letter was issued to the respondent, suggesting the name of a person to be appointed as Arbitrator; followed by Annexure 41 letter asking them whether they are willing to waive the statutory bar under Section 12(5) of the Act, so as to appoint the said person. They say that the respondent did not submit their consent for waiver as afore and consequently, that they have been constrained to approach this Court through this Arbitration Request. 3. I have heard Sri.K.Shrihari Rao, learned counsel for the petitioner. 4. Even though notices were issued to the respondent, from this Court, they were returned with the endorsement 'building sealed **'** and therefore, the petitioner sought service on them at another address of theirs in Punjab. However, the notice issued to this address has not returned even after five months, which compelled this Court to direct the petitioner to obtain the relevant extracts of the Company Master Data to verify the present address of the respondent. The said Data has been produced on record by **AR NO. 104 OF 2018** **4** Sri.Srihari Rao, along with his memo dated 25.09.2021, in which the address of the respondent - Company is still shown to be as reflected in the cause title of this Arbitration Request. 5. I am, therefore, of the firm view that this Court will be now justified in considering this Arbitration Request, treating that the respondent is refusing to appear before this Court. 6. I have examined Annexure A3, as also the General Conditions of Contract (GCC) - which is stated to be appended to the said agreement. The GCC contains provisions for cancellation of the contract, as also for dispute resolution, which are available from clauses 52 to 70. The Arbitration Clause is couched in Clause 70 of the GCC, which mandates that all disputes between the parties shall be resolved only through the process of Arbitration and that the sole Arbitrator shall be a serving officer having a Degree in Engineering or equivalent or having passed final/direct final examination of Sub Division II of Institution of Surveyor (India), recognized by the Government of India. 7. Ineluctably, though the parties have bound themselves to the stipulation that the disputes between them will be resolved through the process of Arbitration, the further provisions in Clause **AR NO. 104 OF 2018** **5** 70 - that the Union of India will nominate an Arbitrator would be now hit by the stipulations in Section 12(5) of the Act. 8. The Hon'ble Supreme Court has in **TRF Limited v. Energo Engineering Projects Limited [(2019) 8 SCC 377],** which has been followed by this Court in **Tulsi Developers India Pvt.Ltd. v. Dr.Appu Benny Thomas [2021 (5) KHC 404],** has declared the law affirmatively that a party to an agreement cannot arbitrate or nominate an Arbitrator. 9. Obviously, therefore, this Court is now obligated to disregard the provisions of Clause 70 of the GCC, which allows the Government of India to nominate an Arbitrator. 10. In fact, the Government of India also accedes to this, which is evident from the fact that they had addressed Annexure A40 letter to the respondent asking them if they are agreeable to waive the imperative mandate of Section 12(5), but conceding that no such waiver has been made. 11. I am, therefore, of the firm view that this Arbitration Request now deserves to be allowed, which I do in the following manner: (a) I nominate Mr.Justice P.R.Raman, Dikshit, 113-Jawahar **AR NO. 104 OF 2018** **6** Nagar, Kadavanthra, Kochi - 682 020, as the sole Arbitrator, to adjudicate and resolve the disputes and differences between the parties to this case, arising from Annexure A3 agreement. (b) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of two weeks from today and to obtain a Statement of Disclosure from him under Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996. (c) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall release the certified copy of this order, with a copy of the said statement appended to it, retaining the original of the same on the files of this case. (d) The fees of the Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. (e) The parties to this case are ad idem that they will share the arbitration costs and fees equally and it is so recorded. (f) In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance **AR NO. 104 OF 2018** **7** before him at 11.00 am on 08.11.2021. Since the respondent has remained ex-parte before this Court, I request the learned Arbitrator to issue an apposite notice to them notifying them of the afore date or a future date. This Arbitration Request is thus ordered. SD/- **DEVAN RAMACHANDRAN JUDGE** rp **AR NO. 104 OF 2018** **8** ## **APPENDIX OF AR 104/2018** |**PETITIONER ANNEXURE**|| |---|---| |**ANNEXURE A1**|**TRUE COPY OF THE LETTER OF ACCEPTANCE DATED**| ||**26.3.2010**| |**ANNEXURE A2**|**TRUE COPY OF THE WORK ORDER DATED 31.3.2010 OF**| ||**THE PETITIONER TO THE RESPONDENT**| |**ANNEXURE A3**|**TRUE COPY OF THE CONTRACT AGREEMENT DATED**| ||**3.2.2010**| |**ANNEXURE A4**|**TRUE COPY OF THE FRONT PORTION OF THE GENERAL**| ||**CONDITIONS OF CONTRACT**| |**ANNEXURE A5**|**TRUE COPY OF THE RELEVANT PORTION OF THE GENERAL**| ||**CONDITIONS OF CONTRACT**| |**ANNEXURE A6**|**TRUE COPY OF THE RELEVANT PORTION OF THE GENERAL**| ||**CONDITIONS OF CONTRACT**| |**ANNEXURE A7**|**TRUE COPY OF THE RELEVANT PORTION OF THE GENERAL**| ||**CONDITIONS OF CONTRACT**| |**ANNEXURE A8**|**TRUE COPY OF THE LETTER DATED 6.10.2010 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A9**|**TRUE COPY OF THE LETTER DATED 20.10.2010 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A10**|**TRUE COPY OF THE LETTER DATED 22.12.2010 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A11**|**TRUE COPY OF THE LETTER DATED 10.1.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A12**|**TRUE COPY OF THE LETTER DATED 22.1.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A13**|**TRUE COPY OF THE LETTER DATED 21.2.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| **AR NO. 104 OF 2018** **9** |**ANNEXURE A14**|**TRUE COPY OF THE LETTER DATED 24.2.2011 OF THE**| |---|---| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A15**|**TRUE COPY OF THE LETTER DATED 26.3.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A16**|**TRUE COPY OF THE LETTER DATED 28.4.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A17**|**TRUE COPY OF THE LETTER DATED 19.5.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A18**|**TRUE COPY OF THE LETTER DATED 31.5.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A19**|**TRUE COPY OF THE LETTER DATED 20.6.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A20**|**TRUE COPY OF THE LETTER DATED 22.6.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A21**|**TRUE COPY OF THE LETTER DATED 6.7.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A22**|**TRUE COPY OF THE LETTER DATED 2.9.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A23**|**TRUE COPY OF THE LETTER DATED 13.10.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A24**|**TRUE COPY OF THE LETTER DATED 18.11.2011 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A25**|**TRUE COPY OF THE LETTER DATED 17.1.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A26**|**TRUE COPY OF THE LETTER DATED 1.2.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A27**|**TRUE COPY OF THE LETTER DATED 17.2.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A28**|**TRUE COPY OF THE LETTER DATED 2.4.2012 OF THE**| **AR NO. 104 OF 2018** **10** ||**PETITIONER TO THE RESPONDENT**| |---|---| |**ANNEXURE A29**|**TRUE COPY OF THE LETTER DATED 19.4.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A30**|**TRUE COPY OF THE LETTER DATED 4.6.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A31**|**TRUE COPY OF THE LETTER DATED 9.7.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A32**|**TRUE COPY OF THE LETTER DATED 8.8.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A33**|**TRUE COPY OF THE LETTER DATED 11.9.2012 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A34**|**TRUE COPY OF THE NOTICE DATED 9.12.2014 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANNEXURE A35**|**TRUE COPY OF THE LETTER DATED 29.12.2014 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANNEXURE A36**|**TRUE COPY OF THE LETTER DATED 30.11.2015 OF THE**| ||**PETITIONER TO THE RESPONDENT WITH THE PARTICULARS**| ||**OF THE WORK**| |**ANNEXURE A37**|**TRUE COPY OF THE LETTER DATED 5.1.2016 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANNEXURE A38**|**TRUE COPY OF THE LETTER DATED 15.1.2016 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANNEXURE A39**|**TRUE COPY OF THE LETTER DATED 23.3.2016 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| |**ANNEXURE A40**|**TRUE COPY OF THE LETTER DATED 15.4.2016 OF THE**| ||**PETITIONER TO THE RESPONDENT**| |**ANNEXURE A41**|**TRUE COPY OF THE LETTER DATED 26.9.2016 OF THE**| ||**PETITIONER TO THE RESPONDENTS**| **11** ## **AR NO. 104 OF 2018** ## **ANNEXURE A42** **TRUE COPY OF THE LETTER DATED 7.6.2017 OF THE PETITIONER TO THE RESPONDENT**