1 2025:CGHC:16903 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBR No. 21 of 2024 Raigarh Pathalgaon Expressway Limited DSM 6090610, 6th Floor, DLF Towers, Shivaji Marg, Najafgarh Road, New Delhi, 110015 ...Petitioner versus Chhattisgarh Road Development Corporation Limited 3rd Foor, Sirpur Bhawan, Campus, Behind Akashwani Civil Lines, Raipur, Chhattisgarh 492001, Through Its Managing Director ... Respondent For Petitioner : Mr. Abhimanyu Bhaduri, Senior Advocate through video conferencing assisted by Mr. Sabyasachi Bhaduri, Advocate For Respondent : Mr. Shashank Thakur, Advocate Hon'ble Shri Ramesh Sinha , Chief Justice Order on Board 11.04.2025 1. Proceedings of this matter have been taken through video conferencing. 2. Heard Mr. Abhimanyu Bhaduri, learned Senior Advocate through video conferencing assisted by Mr. Sabyasachi Bhaduri, learned counsel for the petitioner. Also heard Mr. Shashank Thakur, learned counsel, appearing for the respondent. BABLU RAJENDRA BHANARKAR Digitally signed by BABLU RAJENDRA BHANARKAR Date: 2025.04.21 10:19:10 +0530 2 3. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘Act of 1996’) for appointment of Arbitrator. 4. The facts, in brief, as projected by the petitioner are that the respondent had resolved to construct, operate, maintain (project) approximately 110.181 km of roads from Pathalgaon to Raigarh along State Highway-1, in the State of Chhattisgarh. Accordingly, the Respondent invited bids for the project vide its Request for Qualification dated 01.07.2015. After evaluation of the bids received, the respondent accepted the bid of Jindal Steel and Power Limited which is the parent company of the petitioner, by way of a letter of Acceptance ["LOA"] dated 10.08.2016. Thereafter, the Petitioner - Company was incorporated by Jindal Steel and Power Limited, as a special purpose vehicle for undertaking the Project. By an agreement between Jindal Steel and Power Limited and the Respondent, it was decided that the petitioner will assume the obligation of undertaking the Project in terms of the LOA. Consequently, in terms of the LOA, the respondent and the petitioner entered into a Concession Agreement dated 20.10.2016 which sets out the terms and conditions for undertaking the Project 5. In terms of the Agreement, the rights and obligations of the petitioner and the respondent were subject to the satisfaction of certain conditions precedent as set out in Clause 4.1 of the Agreement (Conditions Precedent) by the petitioner and the respondent respectively. The 3 conditions precedent required to be satisfied by the respondent were set out in Clause 4.1.2. The said clause imposes an obligation on the respondent to, interalia, procure a Right of way to the Site, issuance of the Fee Notification, a clearance under the Environment Protection Act, 1986, a forest clearance under the Forest Conservation Act, 1980 and approval of the railway authorities, for construction of the Project. Similarly, the conditions precedent required to be satisfied by the petitioner were set out in the Clause 4.1.3, which primarily requires the petitioner, inter-alia provide a performance security (in the form a bank guarantee) and execute financing agreement to procure funds for the Project, etc. Further in terms of Clause 4.5 of the Concession Agreement, the petitioner is required to fulfil the conditions for procuring finance under the finance agreement ('Financial Close") and Conditions Precedent (of both the Petitioner & Respondent) are required to be satisfied or waived, prior to the first anniversary of the Agreement or such other extended time as may be agreed between the parties. The Petitioner satisfied the conditions precedent of furnishing a performance security to the Respondent by furnishing a performance bank guarantee dated 10.01.2017 for an amount of Rs. 14,43,00,000/-. As a pre-requisite to the completion of certain conditions precedent by the petitioner, the respondent was required to complete its conditions precedent. For instance, for the completion of the conditions precedent of execution of a finance agreement, the lenders were demanding 4 that all statutory approvals in relation to the Project should have been obtained by the respondent prior to the execution of the finance agreement such as Forest Clearance, Environment Clearance etc. notwithstanding the non-completion of its conditions precedent by the respondent, the petitioner was exploring various options to complete the conditions precedent pertaining to execution of the finance agreement. As third party lenders were refusing to grant loan till the conditions precedent by the respondent were fulfilled, Jindal Steel and Power Limited, being the parent company of the petitioner, vide letter dated 03.04.2017, undertook to finance the Project. 5. By its letter dated 10.04.2017, the petitioner, while providing the status of its conditions precedent, requested the respondent to complete its conditions precedent in terms of Clause 4.1.2 of the Agreement, such as obtaining forest clearances and undertaking land acquisition for the Project, so that the petitioner may proceed to complete its conditions precedent and achieve a Financial Close in terms of the Concession Agreement. In reply to the letters dated 03.04.2017 and 10.04.2017, the respondent vide its letter dated 22.04.2017 raised its objections to Jindal Steel and Power Limited, becoming the financier for the Project. The respondent further mentioned that it had completed some of its conditions precedent and was in process of completing others, such as obtaining forest clearance. However, soon thereafter, the respondent also started exploring the option of having Jindal Steel 5 and Power Limited, as the financier for the Project besides exploring the option of granting the petitioner an extension of time for arranging a lender and achieving Financial Close. But, when Jindal Steel and Power Limited, encountered certain financial difficulties, both the respondent and the petitioner explored the option of having Jindal Power Limited as the new owner of the petitioner and the financier for the Project. Despite ongoing discussion between the petitioner and respondent regarding road- map for achieving completion of the conditions precedent pertaining to execution of a finance agreement, the respondent in its meeting dated 15.09.2017 with the respondent sought to rest the entire blame for non-fulfillment of the aforementioned conditions precedent on the petitioner. The respondent further went on to invoke the penal provisions under Clause 24.1.1 for extending the period for achieving the Financial Close and imposed a penalty of Rs.1,33,47,750/- on the petitioner. 6. The petitioner vide its letter dated 21.09.2017, again clarified that it was due the respondent's failure to procure a right of way for the petitioner, issuing a fee notification and obtaining environment clearance and forest clearance that the financial institutions were not willing to execute the finance agreement with the petitioner. In this regard, an email from SBI Cap (one of the possible lender) was also attached to the said letter dated 21.09.2017. Thereafter, an independent engineer for the Project viz. L.N. Malviya Infro Project Private Limited (Independent Engineer) under clout and 6 upon instructions received from the respondent wrote a letter dated 25.09.2017 to the petitioner responding to and dismissing the petitioner's claim regarding non-fulfilment of conditions precedent by the respondent. The Independent Engineer stated inter alia, that the Project did not require any forest clearance or environmental clearance as alleged by the petitioner and the respondent relied upon the said letter and wrote another similar letter dated 05.10.2017 to the petitioner. Further, though the Independent Engineer and respondent were claiming that no forest clearance etc, were required for the project, the Department of Forest, Dharamjaigarh, vide letter dated 25.09.2017 directed the respondent to obtain a forest clearance and when the respondent failed to comply the same, the Department of Forest vide its letter dated 16.10.2017 directed the respondent to cease all the activities related to the Project. The work so objected and stopped by the Department of Forest also formed the part of conditions precedent to be achieved by the respondent. Thus, the alleged claim of the respondent qua such permissions and clearances not being required were palpably false, incorrect and misleading. 7. Thereafter, in response to the letter dated 25.09.2017 and 05.10.2017 by the Independent Engineer and the respondent respectively, the petitioner in its letter dated 17.10.2017 reiterated that it had undertaken all actions required in terms of the Concession Agreement and that it was the failure of the 7 Respondent to fulfil its conditions precedent that had caused considerable delay in the appointment date. The said letter detailed out the work undertaken by the petitioner (such as setting up of camps, deployment of equipment, earth work excavation etc.) and that a cost of Rs.59,00,00,000/- had already been incurred in relation to the project. Thereafter, the respondent unilaterally invoked the terminated the Concession Agreement in terms of Clause 4.5 (Deemed Termination upon delay) and also invoked the performance bank guarantee for an amount of Rs. 14,43,00,000/- by way of the communication/ letter dated 20.10.2017. In addition to the termination of the Concession Agreement, the respondent had also issued a letter of the even date to State Bank of India for encashment of the Performance Bank Guarantee, which further forwarded to the Petitioner by State Bank of India. The Respondent also failed to issue any communication to the petitioner conveying its intention of issuing a termination notice and did not even grant 15 days to petitioner to make its representation, prior to actually terminating the agreement, in terms of Clause 38.1.9. Also the cure period as provided in Clause 9.2 was not granted to the petitioner. 8. The said action of the Respondent in unilaterally, wrongfully and illegally terminating the Concession Agreement and invocation of the bank guarantee was challenged by the Petitioners before this Court by filing writ petition being WPC No.2580 of 2017 (Raigarh Pathalgaon Expressway Ltd. v. Chhattisgarh Road Development 8 Corporation Ltd. and Ors.). The said writ petition was dismissed by this Court on 05.03.2024 in view of disputed question of facts being raised by the parties. However, this Court had explicitly reserved liberty in favour of the petitioner to invoke the dispute resolution mechanism as contained in the Agreement. Accordingly, since an arbitration agreement existed between the parties as contained in the Concession Agreement and disputes that have arisen thereof, the same are liable to be resolved through arbitration. The petitioner was constrained to send a legal notice dated 10.04.2024 invoking the arbitration clause and requesting for appointment of an Arbitral Tribunal in terms of Article 45.3 of the Concession Agreement to recover the amount of Rs.21,06,65,391/- for wrongful appropriation of performance guarantee by the respondent along with interest as well as to seek damages for an amount of Rs. 1,96,29,000/- for wrongful termination of the agreement. The petitioner appointed Justice Vineet Saran (Retired Judge of the Supreme Court of India) as its nominee arbitrator in terms of Article 45.3.2. and made clear to the respondent that it could nominate the second Arbitrator who does not have any conflict of interest with the parties. Subsequently, the two Arbitrators could appoint the third Arbitrator. However, the respondent has neither replied to the said notice nor appointed their nominee arbitrator. Thus, left with no other option, the petitioner has been constrained to approach this Court in terms of Section 11 of the Arbitration & Conciliation Act, 1996 for 9 appointment of the Second Arbitrator who with the First Arbitrator shall appoint the Third Arbitrator for the adjudication of all disputes, differences and claims between the parties arising out of or relating to the agreement. The said Notice dated 10.04.2024 was served on the respondent through Speed-Post. 9. Learned Senior Advocate for the petitioner submits that the dispute arose between the petitioner and the respondent and the petitioner had a concession agreement. Earlier the petitioner had filed writ petition being WPC No.2850 of 2017 before this Court and this Court by a detailed order dated 5.3.2024 dismissed the writ petition filed by the petitioner with liberty to the petitioner to invoke the mechanism of conciliation and arbitration clause as provided in Clauses 45.1, 45.2 and 45.3 of the agreement. The order of the writ Court has not been challenged by the petitioner in any higher forum and accepting the said order, the petitioner initiated arbitration and sent a letter to the respondent to appoint its nominee arbitrator, but the respondent refused to do so saying that this has not go to the Arbitrator and this will go to some statutory Tribunal for dispute resolution. 10. On the other hand, learned counsel for the respondent opposes the submissions made by learned counsel for the petitioner and submits that Article 45 of the agreement deals with dispute resolution. It is the part of contract entered between the parties and Clause 45.4 of the agreement specifically provides that any 10 dispute shall be adjudicated by a tribunal. Since it is an essentially a work-contract, there is special Act enacted by the legislature, which is titled as ‘Chhattisgarh Madhyastam Adhikaran’ and ‘Chhattisgarh Madhyastam Adhikaran’ is still in force and the entire work-contract entered between an agency of the Government and the private entity and Section 2 (i) of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983 defines “works-contract”. He further submits that Court in one identical case in the matter of Chhattisgarh State Industrial Development Corporation v. M/s Radius Water Limited and another (ARBR No.12 of 2022), decided on 14.07.2023 has relegated the parties to the Tribunal. He relied upon the judgment of this Court passed in ARBA No. 7 of 2015 (M/s Lal Babu Singh v. State of Chhattisgarh and another) decided on 22.03.2016, wherein a coordinate Bench of this Court after considering all the aspects of the matter and further taking into account that the Special Act has been enacted by the legislature in the erstwhile State of Madhya Pradesh, which has been adopted in the State of Chhattisgarh, which covers this type of disputes and this order was assailed before the Hon’ble Supreme Court and appeal has also been dismissed by the Supreme Court. Further, the Hon’ble Supreme Court in the matter of Madhya Pradesh Rural Road Development Authority and Another v. L.G. Chaudhary Engineers and Contractors reported in (2012) 3 SCC 495, the identical issue came before the Hon’ble Supreme Court and the 11 Hon’ble Supreme Court from paras 46 to 56 has answered this that once the issue involves work-contract and there is a Special Act, then the matter has to be essentially heard by the Tribunal. 11. Learned Senior Advocate for the petitioner replied that (1) there is a detailed arbitration clause in the agreement which says that it will be dealt through an arbitration, (2) in the writ Court when the matter came up it was an averment of the respondent that the writ petition is not maintainable as the petitioners have efficacious statutory alternative remedy to resolve the dispute under Clause 45.1.1 and has not made an averment in writ Court that the petitioner should go to the statutory Tribunal and by recording their submission, the writ petition was dismissed with liberty to invoke the mechanism of conciliation and arbitration clause as provided in Clauses 45.1, 45.2 and 45.3 of the agreement and that judgment is binding on both the parties and as such, that order has attained its finality as the same has not been challenged by either of the parties in any higher forum and (3) the statutory forum has a limitation of one year since the dispute arisen and there is an embargo that no one can go that forum after one year, so under the contract law the petitioner has a limitation of three years when there is any breach of contract. As such, the application under Section 11(6) of the Act of 1996 for appointment of Arbitrator deserves to be allowed and Hon'ble Mr.Vineet Saran, retired Judge of the Supreme Court of India may be appointed as its nominee Arbitrator. 12 12. I have heard learned counsel for the parties and perused the documents appended with arbitration request. 13. Admittedly, the writ petition filed by the petitioner and another was dismissed by this Court with liberty to the petitioners to invoke the mechanism of conciliation and arbitration clause as provided in Clauses 45.1, 45.2 and 45.3 of the agreement and that order has not been challenged by either of the parties before any higher forum and that order has attained its finality. If the respondent has any grievance against the writ Court order, they ought to have challenged the same before any higher forum. 14. On a pointed query being made from learned counsel for the respondent as to why the order of the writ Court has not been challenged by the respondent in any higher forum when the respondent has any grievance against that order, he could not give satisfactory reply and proposed that Hon’ble Mr.Satish K. Agnihotri, former Chief Justice of the Sikkim High Court may be appointed as nominee Arbitrator on behalf of the respondent. 15. At this stage, it would be appropriate to notice Article 45 of the agreement which deals dispute resolution as under:- “45.1 Dispute resolution 45.1.1 Any dispute, difference or controversy of whatever nature howsoever arising under or out of or in relation to this Agreement (including its interpretation) between the Parties, and so notified in writing by either Party to the other party (the “Dispute”) shall, in the first instance, be 13 attempted to be resolved amicably in accordance with the conciliation procedure set forth in Clause 45.2. 45.1.2 The Parties agree to use their best efforts for resolving all Disputes arising under or in respect of this Agreement promptly, equitably and in good faith, and further agree to provide each other with reasonable access during normal business hours to all non- privileged records, information and data pertaining to any Dispute. 45.2 Conciliation In the event of any Dispute between the Parties, either Party may call upon the Independent Engineer to mediate and assist the Parties in arriving at an amicable settlement thereof. Failing mediation by the Independent Engineer or without the intervention of the Independent Engineer, either Party may require such Dispute to be referred to the Managing Director, CGRDC and the Chairman of the Board of Directors of the Concessionaire for amicable settlement, and upon such reference, the said persons shall meet no later than 7 (seven) days from the date of reference to discuss and attempt to amicably resolve the Dispute. If such meeting does not take place within the 7 (seven) day period or the Dispute is not amicably settled within 15 (fifteen) days of the meeting or the Dispute is not resolved as evidenced by the signing of written terms of settlement within 30 (thirty) days of the notice in writing referred to in Clause 45.1.1 or such longer period as may be mutually agreed by the Parties, either Party may refer the Dispute to arbitration in accordance with the provisions of Clause 45.3 14 45.3 Arbitration 45.3.1 Any dispute which is not resolved amicably by conciliation, as provided in Clause 45.2, shall be finally decided by reference to arbitration by an arbitral tribunal constituted in accordance with Clause 45.3.2. Such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi (the “Rules”), or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration and Conciliation Act, 1996. The place of such arbitration shall be the capital of the State, and the language of arbitration proceedings shall be English. 45.3.2 There shall be an arbitral tribunal comprising three arbitrators, of whom each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected, and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules. 45.3.3 The arbitrators shall make a reasoned award (the “Award”). Any Award made in any arbitration held pursuant to this Article 45 shall be final and binding on the Parties as from the date it is made, and the Concessionaire and the Authority agree and undertake to carry out such Award without delay. 45.3.4 the Concessionaire and the Authority agree that an Award may be enforced against the Concessionaire and/or the Authority, as the case may be, and their respective assets wherever situated. 45.3.5 This Agreement and the rights and obligations of the Parties shall remain in full force and effect, pending 15 the Award in any arbitration proceedings hereunder. 45.4 Adjudication by a tribunal In the event of constitution of a statutory tribunal or other forum with powers to adjudicate upon disputes between the Concessionaire and the Authority, all Disputes arising after such constitution shall, instead of reference to arbitration under Clause 45.3, be adjudicated upon by such tribunal or forum in accordance with the Applicable Laws and all references to Dispute Resolution procedure shall be construed accordingly.” 16. This Court while dismissing writ petition being WPC No.2850 of 2017 filed by the petitioner and another has observed as under:- “26. Considering the submissions advanced by the learned counsel for the parties, in view of serious disputed questions of fact and considering the fact that there was a mechanism for conciliation and arbitration clause in the agreement for resolving the disputes arising between the parties, the petitioners have directly approached this Court by means of this writ petition under Article 226 of the Constitution of India for redressal of their grievances without taking recourse to the mechanism of resolving the dispute with the terms of the agreement agreed and signed by them, hence, applying the principle of law laid down by the Supreme Court in Puna Hinda (supra) and the material available on record, we do not find any force in this writ petition. 27. Accordingly, the writ petition being devoid of merit is liable to be and is hereby dismissed. However, liberty is reserved in favour of the petitioners to invoke the mechanism of conciliation and arbitration clause as provided in Clauses 45.1, 45.2 and 45.3 of the 16 agreement. No cost(s). ” 17. Considering the submissions advanced by learned counsel for the parties, also considering Article 45 of the agreement, in view of observations made by this Court in paras 26 and 27 of WPC No.2850 of 2017 and as proposed by the parties for appointment of Arbitrators on their behalf, this Court deem it appropriate to appoint Hon'ble Mr.Vineet Saran, retired Judge of the Supreme Court of India and Hon’ble Mr.Satish K. Agnihotri, former Chief Justice of the Sikkim High Court as Arbitrators and they shall appoint Third Arbitrator to adjudicate the dispute that has arisen between them. Order accordingly. 18. The Registry is directed to communicate this order to Hon'ble Mr.Vineet Saran and Hon'ble Mr.Satish K. Agnihotri in their proper addresses. 19. The remuneration of the Arbitrators shall be settled with the mutual consent of the parties. 20. The arbitration request, accordingly, stands allowed. No order as to costs. Sd/- Sd/- (Ramesh Sinha) Chief Justice Bablu