- 1 - NC: 2025:KHC:8957 CMP No. 568 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO.568 OF 2024 BETWEEN: ENVIRO INFRA ENGINEERS LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT NO.201, 2ND FLOOR, RG METRO ARCADE SECTOR 11, ROHINI NEW DELHI - 110085 REPRESENTED BY ITS AUTHORIZED SIGNATORY MR.SAKET KUMAR …PETITIONER (BY SRI. SAMEER SHARMA, ADVOCATE) AND: KARNATAKA URBAN WATER SUPPLY AND DRAINAGE BOARD HAVING OFFICE AT FIFTH (5TH) FLOOR JALA BHAVAN BANNERGHATTA ROAD BENGALURU - 560029 REPRESENTED BY THE EXECUTIVE ENGINEER …RESPONDENT (BY SRI.VEERESH R BUDIHAL, ADVOCATE) THIS CMP IS FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING THAT THIS HONBLE COURT MAY BE PLEASED TO APPOINT A SOLE ARBITRATOR FOR Digitally signed by NAGARAJA B M Location: HIGH COURT OF KARNATKA - 2 - NC: 2025:KHC:8957 CMP No. 568 of 2024 THE ADJUDICATION OF DISPUTE THAT HAVE ARISEN BETWEEN THE PETITIONER AND THE RESPONDENT IN TERMS OF THE ARBITRATION CLAUSE (CLAUSE 24 OF THE GENERAL CONDITIONS OF CONTRACT R/W CLAUSE 5 OF THE SPECIAL CONDITIONS OF CONTRACT) IN TENDER AGREEMENT BEARING NO.25/2016-17 DATED 13.07.2016 (ANNEXURE-A) IN THE INTEREST OF JUSTICE AND EQUITY AND ETC. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short '1996 Act') seeking to appoint the sole Arbitrator in terms of Arbitration Clause (Clause 24 of the General Conditions of Contract read with Clause 5 of the Special Conditions of Contract) in Tender Agreement bearing No.25/2016-17 dated 13.07.2016 to resolve the dispute between the petitioner and respondent. 2. After issuance of notice to the respondent, the respondent has engaged a counsel and did not chose to file statement of objection. - 3 - NC: 2025:KHC:8957 CMP No. 568 of 2024 3. The respondent, a governmental entity responsible for infrastructure development, issued a Tender Notification dated 02.03.2016, inviting bids from eligible contractors for the execution of a specialized project. The scope of the tender encompassed comprehensive construction and engineering works, including the establishment of a 10.0-meter diameter wet well cum pump house at Chikkare, along with its associated inlet, screen chamber, and outlet chamber. Additionally, the project entailed the provision and installation of a 600mm diameter Ductile Iron (DI) K-7 rising main pipeline, the construction of a 6x8-meter diesel generator room, and the development of ancillary infrastructure such as a compound wall and asphalt road leading to the sewage treatment plant. The most critical aspect of the project was the construction, supply, installation, testing, and commissioning of civil, mechanical, electrical, and instrumentation components for an 8.52 Million Liters per Day (MLD) Sewage Treatment Plant (STP) utilizing Sequential Batch Reactor (SBR) technology, all of which - 4 - NC: 2025:KHC:8957 CMP No. 568 of 2024 were to be executed under the Urban Development Grant (UDG) Scheme of Hosakote Town, under the purview of the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT). 4. Following a thorough evaluation process, the technical bids submitted by various contractors were assessed. Upon approval of the technical evaluation, the financial bids were opened, and the financial offer submitted by the petitioner was found to be the most competitive. Consequently, the respondent formally accepted the petitioner’s financial bid amounting to Rs.8,29,79,930.46/- (Rupees Eight Crore Twenty-Nine Lakh Seventy-Nine Thousand Nine Hundred Thirty and Forty-Six Paise Only). To formalize the contractual arrangement, a Tender Agreement was executed between the parties on 13.07.2016, which is documented as Annexure-A. As per the terms outlined in the Agreement, the stipulated duration for the completion of the entire project was set at 12 months, commencing from the date - 5 - NC: 2025:KHC:8957 CMP No. 568 of 2024 of receipt of necessary instructions from the respondent’s office. Furthermore, Clauses 36 and 37 of the General Conditions of Contract expressly obligated the respondent to ensure the timely disbursement of payments for the bills raised by the petitioner in accordance with the progress of work executed under the contract. 5. During the period spanning from 2016 to the end of 2017, the petitioner asserts it diligently complied with the contractual obligations by preparing and submitting various technical designs, engineering drawings, structural specifications, and other requisite documents for the respondent’s approval. Despite the petitioner’s timely submission of these crucial documents it is alleged that the respondent failed to accord the necessary approvals within a reasonable timeframe, thereby causing undue delays in the execution of the project. The series of documents submitted by the petitioner, which remain unapproved by the respondent, are evidenced at Annexures B to B-6, respectively. As the scope of work - 6 - NC: 2025:KHC:8957 CMP No. 568 of 2024 expanded significantly beyond the originally envisaged framework, the petitioner was compelled to seek approval for revised rates to account for the additional work and increased financial outlay. Accordingly, the petitioner submitted a formal request to the respondent vide letter dated 20.12.2017, which is annexed as Annexure-C, seeking approval for the necessary cost escalations. 6. Despite the petitioner’s repeated efforts to engage with the respondent in good faith and ensure the project’s smooth progression, it is alleged that the respondent remained unresponsive. The petitioner issued multiple letters detailing the reasons for the delays encountered in the execution of the contract and simultaneously sought the release of pending payments. However, the respondent consistently failed to address these communications, nor did it take any concrete steps to rectify the situation. This lack of cooperation and breach of contractual obligations left the petitioner with no choice but to issue a formal Show Cause Notice dated - 7 - NC: 2025:KHC:8957 CMP No. 568 of 2024 12.06.2024, calling upon the respondent to provide an explanation as to why the Agreement should not be terminated due to the persistent breaches committed by the respondent. 7. In response to the Show Cause Notice, the respondent issued a reply dated 28.06.2024. Petitioner therefore asserts that, instead of providing any substantive resolution to the issues raised by the petitioner, the respondent merely attempted to defer the matter further by issuing a notice summoning the petitioner to participate in a meeting scheduled for 19.07.2024. Given the respondent’s continued failure to adhere to its obligations under the contract and the fundamental breaches that had repeatedly occurred, the petitioner was left with no alternative but to invoke Clause 49 of the General Conditions of Contract and formally terminate the Agreement. Accordingly, the petitioner issued a Termination Notice dated 31.07.2024, which is annexed herewith as Annexure-AC. - 8 - NC: 2025:KHC:8957 CMP No. 568 of 2024 8. Following the termination of the Agreement, the petitioner, in accordance with the dispute resolution mechanism provided under the contract, approached the Indian Council of Arbitrators for the appointment of a Sole Arbitrator pursuant to Clause 5 of the Special Conditions of Contract. Despite exhausting all possible avenues for an amicable resolution, the disputes between the parties remained unresolved. Consequently, the petitioner, having no other effective remedy, is constrained to approach this Court seeking the appointment of an Arbitrator to adjudicate upon the disputes arising out of the Agreement. 9. Upon a meticulous examination of the contents of the petition and the supporting documents submitted as annexures, this Court is satisfied that the petitioner has duly adhered to all procedural and substantive requirements as prescribed under Section 11(4) of 'the Act.' The petitioner has properly invoked the arbitration mechanism stipulated in the Clause No.18 of the General Conditions of Contract and has exhausted all necessary - 9 - NC: 2025:KHC:8957 CMP No. 568 of 2024 preconditions before seeking judicial intervention. In view of the non-compliance by the respondent and failure to respond to the notices issued, this Court finds it appropriate to appoint an Arbitrator to adjudicate the disputes between the parties in accordance with the terms of the General Conditions of Contract and the governing legal provisions. 10. At this juncture, a Joint Memo dated 21.02.2025 is filed indicating the list of Arbitrators in order to adjudicate the lis between the parties. 11. In the light of the above said Arbitration Clause and in view of the Joint Memo dated 21.02.2025, this Court proceeds to pass the following; ORDER (i) The Civil Miscellaneous Petition is allowed, appointing Shri.Justice Subhash B. Adi, Former Judge of this Court, as the sole Arbitrator to resolve the dispute between the petitioner and respondent in terms of the Clause No.24 of the General - 10 - NC: 2025:KHC:8957 CMP No. 568 of 2024 Conditions of Contract read with Clause 5 of the Special Conditions of Contract in the Tender Agreement bearing No.25/2016-17 dated 13.07.2016 (Annexure-A) to the petition. (ii) All contentions are kept open for adjudication in the arbitration proceedings. (iii) The Office is directed to communicate this order to the Arbitration and Conciliation Centre and Shri.Justice Subhash B. Adi, Former Judge of this Court, as required under the Arbitration and Conciliation Centre Rules, 2012. SD/- (SACHIN SHANKAR MAGADUM) JUDGE NBM List No.: 3 Sl No.: 30