ALLIANCE CONSTRUCTION Vs. ATMASTCO LIMITED

JUDGEMENT

(1.) This is an application under Ss. 11 and 11(6A) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator.

(2.) The facts, in brief, as projected by the applicant are that the applicant is a proprietary concern, M/s Arindam Mukherjee, based in Kolkata, West Bengal, and engaged in executing state-of-the-art civil projects across India. The respondent is a company incorporated under the Companies Act, 1956, with its registered office in Bhilai, Chhattisgarh, within the jurisdiction of this Hon'ble Court. On 4/3/2022, the respondent awarded a contract to the applicant for the execution of civil work for a 33 MVA SAF Project at FACOR, Odisha, through a Letter of Intent (LOI) dtd. 4/3/2022. This LOI was subsequently amended, fixing the contract value at Rs.12,07,37,500.00 including GST. Further amendments were made, and the final contract value was revised to Rs.11,45,09,850.00 as per the amendment dtd. 24/1/2023. The project was to be completed by 30/4/2023, and the LOI included provisions for defect liability and liquidated damages. Upon receiving the contract, the applicant promptly set up its site office and commenced work. Despite substantial efforts, the applicant faced significant impediments due to the respondent's failure to fulfill various conditions precedent, including delays in approvals, non-certification of bills, and delayed payments. These defaults adversely impacted the project timeline. Notwithstanding these challenges, the applicant achieved substantial progress, completing over 99% of the work by April 2023. The total value of work certified as of April 2023 stood at Rs.14,69,35,373.00, out of which Rs.11,13,54,819.35 was paid, leaving an outstanding amount of Rs.3,44,81,723.65. After adjusting a mobilization advance of Rs.1,20,00,000.00, the net payable amount is Rs.2,24,81,723.65. Further, discrepancies in TDS deductions and deposits led to an additional claim of Rs.2,29,514.00. Including the security deposit, the applicant claims a total of Rs.2,27,11,237.65.

(3.) They further submits that the respondent committed various breaches, including non-return of machinery deployed at the site, delays in bill certification, and wrongful termination of the contract. These breaches caused the applicant to suffer damages amounting to Rs.8,28,39,035.64, along with additional losses due to delayed completion of the project. The applicant served legal notices dtd. 11/9/2023 and 26/9/2023, claiming a cumulative amount of 10.67 crores, but the respondent, through its reply dtd. 10/10/2023, denied the claims and threatened termination of the contract. The applicant refuted these allegations through a rejoinder dtd. 31/10/2023 and subsequently issued a notice under Sec. 21 of the Act on 21/10/2024, invoking the arbitration clause as provided in Clause 22.0 of the LOI. Despite the applicant's efforts, no amicable settlement was reached, and the respondent failed to initiate conciliation proceedings or respond to the arbitration notice. The applicant, being registered under the MSMED Act, 2006, had also approached the West Bengal Micro Small Enterprises Facilitation Council (WBMSEFC), but later withdrew the application to pursue arbitration as the agreed dispute resolution mechanism. Clause 22.0 of the LOI provides for arbitration in accordance with the Act, with the seat of arbitration being Durg, Chhattisgarh. Over 30 days have elapsed since the notice was served, and the respondent has neither appointed an arbitrator nor engaged in conciliation, warranting the intervention of this Hon'ble Court. The applicant respectfully submits that this Hon'ble Court has jurisdiction to entertain the application as the respondent's registered office and the arbitration seat are located within its territorial jurisdiction. Therefore, the applicant prays for the appointment of an independent and impartial arbitrator to adjudicate the disputes.