In CM-3741-42-CII-2022-PUNJ HC- There should be minimal interference and judicial intervention in arbitral proceedings: P&H HC Justice Lisa Gill [08-04-2022]

Read Order: State Of Haryana v. M/S Vichitra Prestressed Concrete Udhyog Pvt Ltd And Others

Monika Rahar

Chandigarh, April 21, 2022: While dealing with a revision petition, the Punjab and Haryana High has held that it is a settled position of law that there has to be minimal interference and judicial intervention in arbitral proceedings.  

Prayer before the Bench of Justice Lisa Gill in this revision petition was for setting aside the order of the Arbitrator whereby the preliminary issue of maintainability of two claim petitions by the claimants in the single arbitration matter was permitted. 

Primarily, the work of providing Water Supply Scheme at Sohna Town, District Gurugram and all the other allied tasks necessary to be undertaken for this project was allotted to the Joint Venture of M/s Jain Construction Company and M/s Vichitra Prestressed Concrete Udyog Private Limited. The allotment letter was issued to the first respondents on December 03, 2019. Dispute admittedly arose between the parties. 

By an order of the Engineer-in-Chief, Haryana Public Health Engineering Department, Panchkula, dated August 28, 2020, Dr Bharat Bhushan Parsoon (Retired Judge of the Punjab and Haryana High Court)was appointed as the Sole Arbitrator.

The case of the Counsel for the petitioner was that there was a specific note in the order dated August 28, 2020 (appointing the Arbitrator) to the effect that both partners of the Joint Venture i.e. M/s Jain Construction Company and M/s Vichitra Prestressed Concrete Udyog Private Limited were requested to file a consolidated claim under the signatory authority of the Joint Venture before the Arbitrator as the work in dispute was executed by the Joint Venture and under the same agreement. However, separate claims were raised before the Arbitrator by both the entities comprising the Joint Venture. 

Aggrieved therefrom, an objection was raised by the present petitioner before the Arbitrator seeking dismissal of both the claims. Accordingly, the preliminary issue was framed by the Arbitrator in this regard as to whether two separate claim petitions independent of each other in view of the Joint Venture being the contracting party with the respondent, were maintainable. 

The Arbitrator after giving due opportunity to the parties and examining the matter, observed that as the scope of work was clearly separate and distinct and separate bills were raised by both the parties to the extent of work executed by them with the same being duly accepted by the applicant- State notwithstanding the fact of it being a Joint Venture of both claimants, there was nothing unjustified in the claims being filed separately by both the entities. Aggrieved therefrom, the present petition was filed. 

The counsel for the petitioner vehemently argued that keeping in view the specific note appended with the order appointing the Sole Arbitrator, it was not open to the Arbitrator to have accepted separate individual claims from the two entities.

At the very outset, the Court noted that a copy of the agreement executed between the parties was not on record and neither was it produced, during the course of the hearing. Insofar as allotment of work to the Joint Venture of the first two respondents was concerned, it was not in dispute. 

The court further added that though it was stated that it was the Joint Venture of these respondents to whom the work was allotted, it was not denied that there was no third separate entity that was created by both the respondents which had an identity separate from the two respondents as such.

Also, it was noted that it was a case of both these respondents working together as a Joint Venture to complete the work as allotted. The Court thus noticed that it was in these circumstances that Arbitrator observed that once the State, notwithstanding the fact of a Joint Venture of both claimants accepted their independent status and entertained their separate bills in terms of separate and distinct scope of work in tune with Article 3 of their Joint Venture agreement, proceeded to make separate payments in their separate accounts after deducting tax at source distinctly i.e. giving credit of the same to their respective income tax account separately, there was no impediment in the filing of two separate claims and entertainment thereof by the Arbitrator. 

It was further noted by the Court that the Arbitrator observed that the petitioner was unable to show how it was prejudiced even remotely by filing separate claim petitions by the claimant- respondents. Thus, against this backdrop, the Court opined that counsel for the petitioner was unable to point out the same even at this stage. 

Furthermore, the Court added that there has to be minimal interference and judicial intervention in arbitral proceedings, and in the present case no such ground of exceptional rarity was found by the Court so as to warrant any interference by the Court at this stage. 

In case, any kind of prejudice etc. is ultimately shown to have been caused to the petitioner by the course so adopted, it would be open to the petitioner to take up all pleas at the relevant time before the competent authority, held the Court. Accordingly, the revision was dismissed.