Arbitration Case No. 81 of 2008 [1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Arbitration Case No. 81 of 2008 Date of Decision: 31.07.2009 M/s K.R.Hotels Ltd. ..Petitioner versus Haryana Industrial & Infrastructure Development Corporation Ltd. ..Respondent CORAM: HON'BLE MR. JUSTICE T.S.THAKUR,CHIEF JUSTICE 1.Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present : Mr. Arvind Kumar Sharma, Advocate with Mr. Saravjit Singh, Mr. Amitabh Sonker and Ms. Gurpreet Kaur, Advocates for the petitioner Mr. R.S.Sihag, Advocate for the respondent. ***** T.S.Thakur, C.J. (Oral) This is a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 (for short 'the Act') for appointment of an Arbitrator to adjudicate upon the disputes that have arisen between the parties in connection with the allotment of a site for “serviced apartments” in the Industrial estate at Rai. The site in question measuring 6012 Sq. Meters, it appears was offered for sale in an open Arbitration Case No. 81 of 2008 [2] auction held by the respondents for that purpose. It is common ground that the petitioner made the highest offer of Rs. 31.20 Crores for the same. An allotment letter, a copy whereof has been enclosed as Annexure A-3, was consequently issued in favour of the petitioner. Among others the letter stipulated the condition that in the event of any disputes and differences arising between the parties out of or in any way touching or concerning the allotment, the same shall be referred to the sole arbitration of the Managing Director of the HSIIDC or any other officer appointed by him. For facility of reference, clause 20 of the allotment letter may be extracted at this stage:- “All disputes and differences arising out of or in any way touching or concerning this allotment whatsoever shall be referred to the sole arbitration of the MD, HSIIDC or any other officer appointed by him. It will not be an objection to such appointment that the Arbitrator so appointed is a government servant or officer of the HSIIDC that he had to deal with the matter to which this allotment relates in the course of his duties as such Government servant or officer as the case may be, he has expressed his views on all or any of the matters in dispute or difference. The decision of such arbitrator shall be final and binding on the concerned parties.” The petitioner-company, it appears was required to deposit upto 13.04.2007, a sum of Rs. 4, 68, 00,000/- in addition to Rs. 3,12,000,00/- already deposited by it to make up for 25% of the price offered for the site. The balance of the amount i.e. Rs. 23,40, 000,00/- was to be paid in lump sum without interest within 60 days from the date of issue of the allotment letter or in eight half yearly Arbitration Case No. 81 of 2008 [3] instalments. It is not in dispute that payment towards 25% of the sale price was not made by the petitioner within the time stipulated. On the contrary, the petitioner appears to have addressed a letter dated 11.04.2007 requesting the Corporation to grant extension of time by two months for depositing the deficit amount. That request was granted by the respondent by a communication dated 24.04.2007 and time for payment extended upto 13.06.2007. The petitioner was also informed that in the event of its failure to deposit the amount, no further extension will be granted and the allotment would stand cancelled without any further notice to the petitioner. The letter further stated that the amount of Rs.3,12,000,00/- already deposited representing 10% of the bid money would also in that event stand forfeited. The petitioner's case appears to be that certain litigation had been instituted by a third party in this Court in connection with the plot of land offered to it by the respondents. This according to the petitioner provided a reasonable justification for it to withhold the payment and to ask for settlement of the legal issues that had been raised in the said proceedings in relation to the allotment in question. The respondents did not subscribe to that view and as a consequence of the failure of the petitioner to deposit the balance amount, cancelled the allotment by a communication dated 02.08.2007 forfeiting the amount already deposited. The result was that differences between the parties arose which the petitioner desired should be referred to the Arbitrator for adjudication as is evident from its communication dated 17.10.2007. The respondents having declined the said prayer left the Arbitration Case No. 81 of 2008 [4] petitioner with no other option but to approach this Court with the present petition for appointment of an independent Arbitrator to adjudicate upon the disputes that have arisen between them. I have heard learned counsel for the parties and perused the record. The material facts are not in dispute. It is not in dispute that the terms and conditions governing the allotment required all the disputes and differences arising in relation to the allotment to be adjudicated upon by way of arbitration. It is also not in dispute that differences have arisen between the parties in as much as while the respondent has cancelled the allotment and forfeited the amount already deposited with it, the petitioner questions its rights to do so and seeks not only the refund of the amount but also compensation for what according to the petitioner is a clear illegality committed by the respondent. It is also not in dispute that the respondents have declined to appoint an Arbitrator in pursuance to the request made by the petitioner within the time available for that purpose or till the filing of this petition or even till date. In the circumstances, therefore, and keeping in view the legal position as settled by the decision of the Supreme Court in Datar Switchgears Ltd. V. Tata Finance Ltd. & Anr. 2000(8) SCC 151, the respondent must be deemed to have forfeited its right to make any appointment at this stage. It also means that the disputes in question shall have to be referred for adjudication to an independent Arbitrator of impeccable integrity. The argument that since default on the part of the petitioner is evident from the record,neither any dispute has arisen nor can the same be referred for Arbitration Case No. 81 of 2008 [5] adjudication, has not impressed me. I say so because the assertion of a claim or a right and the denial of the same by the opposite party would itself tantamount to a dispute which assertion and default is abundantly clear from the record of the present proceedings. In the totality of the circumstances, therefore, I allow this petition and appoint Justice Kuldeep Singh, former Judge of the Supreme Court of India as sole Arbitrator to adjudicate upon all the disputes and differences that have arisen between the parties and the claims and counter claims that they may choose to make in relation thereto. Sole Arbitrator shall be free to fix his own fee. Parties shall appear before the sole Arbitrator for directions on 28.08.2009. (T.S.THAKUR) CHIEF JUSTICE 31.07.2009 'ravinder'