1 2025:CGHC:53607 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR ARBR No. 3 of 2025 M/s Shri Durgamba Through Its Authorized Signatory Avinash T., S/o Shri Tharanath Shetty, Aged About 34 Years, Having Its Registered Office At Main Road, Kundapura, Udupi District, Karnataka - 576201, ... Applicant versus Bilaspur Urban Public Transport Society Limited, Through It Secretary, Office of BUPTS, 1st Floor, New Jila Vyapar Evam Udyog Kendra, Office Premises of Collector, Bilaspur, C.G. --- Presently At Office of BUPTS, Municipal Corporation, Nehru Chowk, Vikas Bhawan, 2nd Floor, Bilaspur (C.G.) - 495001, Chhattisgarh ... Respondent For Applicant : Mr. Shubham Pandey, Advocate. For Respondent : Mr. Anubhuti Marhas, Advocate. Hon'ble Mr. Ramesh Sinha, Chief Justice Order on Board 03.11.2025 1. Heard Mr. Shubham Pandey, learned counsel for the applicant as well as Mr. Anubhuti Marhas, learned counsel for the respondent. 2. By this application, the applicant is invoking the jurisdiction of this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, the Act of 1996) seeking appointment of Sole Arbitrator for adjudicating upon disputes and differences between the parties. 3. The facts, in brief, as projected by the applicant are that the applicant is a proprietorship firm and is inter-alia engaged in the business of public PREETI KUMARI Digitally signed by PREETI KUMARI Date: 2025.11.10 11:02:17 +0530 2 transportation across different States of India. The respondent is a society established by the Government of Chhattisgarh and Municipal participation with an aim to improve and face-lift the scenario of public transport. The respondent in the year 2015 issued a RFP, for selection of bus operator maintenance and operation of city bus services in Bilaspur and accordingly, the applicant participated in the aforesaid RFP and the respondent after duly considering the bids were pleased to declare the applicant as the L1 and an LoI was issued in favor of the applicant on 09.07.2015 and the applicant was appointed as bus operator for maintenance and operation of city bus services in Bilaspur, Chhattisgarh and soon thereafter, an agreement was entered between the respondent and the applicant herein under the terms and conditions mentioned therein. As per the terms of clause 4.2.1 and clause 6 of the agreement the applicant herein was required to furnish a Performance Security for an amount equal to Rs.20 Lacs on the date of the execution and as per the terms of clause 4.2.2 (a) and clause 7 of the agreement the applicant herein was required to pay an amount of Rs.122.64 Lacs towards upfront contribution, both the conditions precedent was followed by the applicant and the amounts as required was paid by the applicant as per the requirement of the respondent. Under the said agreement as per the terms and conditions, the applicant had the following scope of works which is more particularly described under clause 5 of the agreement, as detailed in paragraph 5 of the petition. 4. Mr. Shubham Pandey, learned counsel for the applicant submitted that under the said agreement, the duty of purchasing the buses and other assets were totally the responsibility of the respondent and under the said term of the contract the respondent have granted the applicant a total number of 50 buses of SML Make manufactured in the year 2015. 3 It is pointed out at this juncture as the entire buses contracted for operation and management has been purchased by the respondent. As the said buses were custom-made buses of a particular company and the said manufacturer in the year 2017/2018 stopped manufacturing the buses and therefore, right from the very inception the applicant has been facing acute problems of parts shortages for maintaining the buses and the service charges for the same has also increased multi fold due to stoppage of production by the company/manufacturer. The applicant accordingly started undertaking the work of the city bus operation as per the direction of the respondent and also by complying with the mandates of the agreement entered between the parties. The applicants have been performing their scope of work in terms of the agreement to satisfaction of the respondent however, the respondent have failed to adhere to and abide by the sacrosanct conditions of the contract. 5. Mr. Pandey further submitted that the applicant has always informed the respondent about the challenges and the predicament that has been faced by them, due to the lack of support of the respondent as well as the various other factors of the industry. The applicant states that they have made repeated request for increasing the ticket prices so as to keep the operations viable, but the respondent have made the applicant run from pillar to post but no heed has been paid by the respondent to the most reasonable request made by the applicant nor any support has ever been provided to them. As per clause 14 which provides that the determination of fares to be collected from passengers has to be determined by the authority and revision is to be done at the instance of the Authority however, in the instant case even though at various points of time the same was requested by the applicant however, the same 4 was never done by respondent which is nonetheless a breach of the contract. Soon thereafter the whole country was affected by the widespread of Global Pandemic of COVID-19 which resulted in a nationwide lockdown and all the modes of public transportation were suspended which further escalated the predicaments faced by the applicant as they were unable to manage the basic expenses of the contract awarded to them such as salaries, vendor payment and any other operational expenses and therefore, the applicant wrote a letter to the respondent on 24.03.2020 requesting for termination of the agreement by invoking force majeure clause of the agreement (clause 28.1.2), in furtherance to the nationwide lockdown imposed by the Government of India but no actions whatsoever was taken by the respondent. On 30.03.2020 the applicant has clearly shown their anguish towards the intimation given to the bank for unilateral invocation of performance guarantee and has also apprised the respondent towards the unfortunate death of Late Shri Sunil Chatra who was the former proprietor of the applicant. Such unilateral action of invocation of performance guarantee was never informed to the applicant, and the applicant got the said information from the bank. Even though continuous communication was made by the applicant, however, the respondent maintained absolute silence over the concerns raised by the applicant. Thereafter the applicant has made several other correspondences with the respondent seeking solutions as they were facing operational issues due to the reasons stated above and also requested the respondent for waiving off royalty payments to the government, releasing the upfront contributions deposited after deduction of pending dues if any, releasing the outstanding advertisement amount and also to release the outstanding payment of 5 bus services availed for transferring migrants, employees during the lockdown period which was done by the applicant in spite of the arbitrary actions of the respondent as an act of dedicated service even when the whole nation was severely suffering from the widespread of COVID-19, bills of which were already submitted with the respondent. The Correspondences made by the applicant in the year 2020 are as follows: a. Letter dated 24.03.2020, b. Letter dated 30.03.2020, c. Letter dated 07.04.2020, d. Letter dated 17.04.2020, Reminder letter dated 04.05.2020, f. Letter dated 08.06.2020, g. Letter dated 11.06.2020, h. Letter dated 26.06.2020, i. Letter dated 01.09.2020, j. Letter dated 16.10.2020, k. Letter dated 05.10.2020, 1. Reminder Letter dated 19.10.2020. The notice/reminder dated 17.04.2020 sent by the applicant was for the first time responded by the respondent on 02.06.2020 while directing the applicant to submit documents in terms of Clause 20.1.2(e), 20.1.4, 20.1.5(a), 20.1.10 within a period of 3 days to their good office before the scheduled meeting for discussion of operation and maintenance of contracted buses under agreement clause 20.1.2 (h) and 28.1.3, the said clauses are as follows: 20.1.2 (h) participate in all meetings discussion as directed by the authority from time to time. 28.1.3 as soon as practicable and in any case within 5 days of notification by the affected party in accordance with the preceding subclause (a), the party shall hold discussion in good faith in order to: a) assess the impact of the underlying force majeure event. b) to determine the likely duration of force majeure period. And c) to formulate damage mitigation measures in steps to be undertaken by the parties for resumption of obligation of performance obvious shall have been affected by the underline force majeure event. The said letter does not at all specified any particular day and time for the discussion meeting. The said directives 6 were issued by the respondent when the entire country was facing severe lockdown imposed not only by the Central government but also when the restrictions were imposed by the State government. 6. Mr. Pandey next submits that the said letter dated 02.06.2020 was duly responded by the applicant vide their email dated 02.06.2020 itself bringing into the notice of the respondent, the prevailing situation as also the material fact of the applicant being placed at Bangalore and because of the travel restrictions their inability to travel and thus a request for appearing through video conferencing was made and also it has been pointed out that all the reports and documents as per the terms of the contract is already been made available in hard copies to the office of the respondent and further that the applicant is willing to provide all further documents as may be required within a period of seven days viz the reports of a particular period if any. Post this letter no response was received by the applicant with regard to discussion in terms of the contract. It is further necessary to point out that the documents which was sought for by the respondent were very much available with them as the same was provided to them in hard copies. The notice dated 02.06.2020 clearly establishes the fact that the respondent at that relevant point of time wanted to follow the due process as mentioned under the contract, however, in papers only. In as much as on 04.10.2020 Mr. Anupam Tiwari, the Nodal Officer of BUTPS has directed orally to the employee of the applicant to vacate the premises officially allocated to them without there being any notice or request being made for such eviction and therefore the applicant has immediately on 05.10.2020 has written a letter to the Commissioner as well as the authorities informing such illegal acts and thereafter also the applicant has written various letters to the respondent however the same went into vain. When no response whatsoever was received from 7 the respondent. with respect to the afore quoted references made and hence, a Writ Petition (C) no. 3324 of 2020 was filed before the Hon'ble High Court of Chhattisgarh by the Applicant seeking a direction to the respondent for termination of the agreement by invoking the force majeure clause. Thereafter, on 26.04.2022 abruptly enough a notice has been sent by the respondent to the applicant directing them to submit the work plan for commencing the bus operation which has been stopped since 24.03.2020. Such a letter from the respondent's end after taking the possession of the allocated premises clearly smacks of malafides on their part in as much as work plan has been called upon by the respondent with respect to the contract which was not adhered by them and even though process under clause 28 was already initiated and even after co-operation given by the applicant and yet such notice has been issued by the respondent. Thereafter, yet again on 12.05.2022 a further notice has been issued wherein a reference has been made to notice dated 02.06.2020 and 03.06.2020 and it has been falsely claimed that such notice was issued for commencement of operation under the contract. As the circumstances speak for itself the letter dated 02.06.2020 was not with respect to commencement of work but the same was with respect to the pandemic situation going on and for discussion. Such manipulation of fact has been done with a clear intent of causing wrongful loss to the applicant. Thus, said notice was duly replied by the applicant on 19.05.2022 via e-mail wherein the applicant has clearly spelt out all the previous communications made by them and also all the material facts have been duly stated therein. The respondent without considering the several repeated requests made notice dated by the applicant issued 11.07.2022 in relation to termination of the agreement entered with the applicant and also for 8 forfeiture of the upfront amount & bank guarantee and further, asked the applicant to appear before themselves for handing over of the Buses and documents on 21.07.2022. The applicant replied to the said notice of the respondent on 25.07.2022 stating that as the applicant was already evicted by the Nodal officer of the respondent from the office depot on 04.10.2020 which was allocated to the applicant by the respondent for city bus operation and at the time of evicting the applicant from the office depot, all the buses and all the relevant documents were already taken. back from the applicant and thus the applicant again prayed to the respondent for termination of the agreement as per the force majeure clause of the agreement and requested the respondent to reschedule the meeting to a later date for giving detailed reply in-person with respect to the notice dated 11.07.2022. It is pertinent to mention here that the information regarding the said eviction of bus depot by the nodal officer of respondent was already communicated to the respondent on 05.10.2020 by the applicant. It is pertinent to note at this juncture that the notice dated 11.07.2022 clearly demonstrate that the termination and a paper decision with respect to forfeiture was already taken and formality of notice has been made with a pre-determined mind which is also the subject matter of the instant dispute. In response to applicant's letter dated 25.07.2022, the respondent vide their letter dated 03.08.2022 agreed upon. discussion in-person and therefore have directed the applicant to appear on 10.08.2022 and on the said date various points relating to the agreement discussed was between the respondent and applicant but yet again no appropriate actions whatsoever was taken by the respondent till date for termination of the contract in terms of the clause of force majeure. and to release the upfront amount and other 9 payables to the applicant. In the meanwhile the Writ Petition (C) no. 3324 of 2020 filed before the Hon'ble High Court of Chhattisgarh by the applicant was withdrawn by their counsel on 05.07.2023 and no information whatsoever was given to the applicant herein and the knowledge of the same could only be gathered by the applicant when he received an e-mail from the Korba Urban Public Transport Society Limited on 11.07.2024 which contained a letter of the Korba Urban Public Transport Society Limited written to the Chief Manager, Union Bank of India for confiscation of Bank Guarantee in furtherance to the Judgment dated 14.07.2023 of the Hon'ble High Court of Chhattisgarh and then the applicant found out that their case has been withdrawn by his counsel with liberty to avail appropriate remedy before the appropriate forum. Even after several verbal and written reminders and follow-ups by the applicant, the respondent utterly failed to respond to the requests of the applicant in their incessant callous attitude because of which the applicant has suffered both mentally and financially. 7. As per clause 28 of the agreement, post notification of the Force Majeure incident it was a duty casted upon the respondent to hold discussion in good faith in order to assess the impact of the underlying Force Majeure event, to determine the likely duration of Force Majeure Period and to formulate damage mitigation measures and steps undertaken by parties for resumption of obligations. Although such a notice was duly sent by the Applicant to the respondent as aforesaid however, respondent decided not to respond to the same at any point of time and therefore, in terms of Clause 28.1.5 the contract stood terminated under this clause and not in terms of the notice dated 11:07.2022 to be more specific it is pointed out at this juncture that the contract has not been terminated till date, as there is no official 10 communication till date regarding termination of the contract to the applicant. As per the terms of the contract the respondents have already taken the possession of contracted buses, bus depots, terminals, parking spaces and other assets from the applicant on 04.10.2020. It is further submitted that prior to taking such possession no notice whatsoever has been given by the respondent to the applicant as to under which clause such action has been undertaken by them which is a breach of the material terms of the contract on the part of the respondent. It is pertinent to mention herein that the above acts of the respondent clearly states their intention as they did not respond to the most humble requests of the applicant to terminate the agreement by invoking the force majeure clause thereafter, the respondent have evicted the applicant and its staff from the office depot allotted to the applicant on 04.10.2020 and then issuance of the notice dated 11.07.2022 clearly demonstrate that the intentions respondent with respect to termination and forfeiture and the notice dated 11.07.2022 was just a paper formality been made with a pre-determined mind thus, the present application has been filed by the applicant herein seeking interim relief so that the disputes with regard to the illegal and arbitrary actions of the respondent may be adjudicated by the arbitrator and no adverse action against the Applicant with respect to forfeiture, termination or blacklisting can be taken by the respondent because their action clearly smacks of malafide and the chances are high that the respondent might act against the interest of the applicant herein. Along with the above illegal and arbitrary acts of the respondent, they have also failed to release in favor of the applicant. The upfront premium deposited by the applicant as per the terms of the agreement amounting to Rs.80,20,785/- and to pay to the applicant Rs. 11,77,000/- towards 11 the usage of the City Buses for public transportation, Rs.1,80,180/- towards the advertisement payment, Rs. 2,00,000/- towards the use of city buses in Lok Sabha Election, Rs. 2,00,000/- towards the amount received from insurance companies. Without admitting that such midway eviction of the applicant has resulted into repudiation of the contract by the respondent without any justifiable cause and therefore because of such illegal act the applicant has suffered various losses towards operation of the contract in question which includes salaries and wages paid by the applicant to their employees concerned, Maintenance charges and vendor payments and any other charges payable by them as mentioned under the contract which has been consolidated at present as below without prejudice to add or amend the same. Particulars Amounts (in Rs.) Salaries and wages of employees from April 2020 to June 2020 77,000/- Vendor Payments 25,00,000/- 8. In the above circumstances, the respondent is also liable to make good the losses suffered by the applicant due to their illegal and unilateral acts and thus the respondent are liable for payment of compensation/damages to the tune of Rs. 60,00,000/- towards loss of profit over and above the amount claimed by the applicant in the aforementioned paras. As per the terms of clause 31.1 of the contract entered between the parties, the Applicant herein has made a reference to the Chief Executive Officer/other designated officer, authority for amicable settlement on 26.08.2024. 9. As per clause 31.2 which is an arbitration clause which states that in the event of any dispute with regard to the contract than the same has to be settled through arbitration in accordance with the provisions of the 12 Arbitration and Conciliation Act, 1996 and the same is reproduced hereinbelow for immediate perusal of this Hon'ble Court: "31.2. Arbitration 31.2.1 Arbitrator “In the event of any dispute arising between the parties in relation to or under this contract, the same shall be settled by arbitration conducted by an arbitration tribunal consisting of 3 arbitrators, one to be appointed by each party and the 3rd arbitrator being appointed by the 2 arbitrators so appointed. The decision of the arbitration tribunal shall be final and binding.” 10. The applicant herein in order to seek interim relief filed an application under section 9 of the Arbitration and Conciliation Act, 1996 before the learned Commercial Court (District Level) Naya Raipur and the application of the Applicant herein was registered as Arb. MJC. No. 49 of 2024 (M/s Sri Durgamba vs Bilaspur Urban Public Transport Society Limited) and notice was issues to the respondent but the notice issued by the learned court below was refused by the respondent and hence, the matter was proceeded ex-parte and the learned court below on 06.09.2023 has dismissed the application under Section 9 of the Arbitration and Conciliation Act, 1996 filed by the applicant. The applicant challenged the said order dated 06.09.2024 before this Hon'ble Court by filing an Appeal under Section 13 of the Commercial Courts, Commercial Division & Commercial Appellate Division of High Courts Act, 2015 read with section 37 (1) (b) of the Arbitration and Conciliation Act, 1996 and the same was registered as ARBA/38/2024 (M/s Sri Durgamba vs Bilaspur Urban Public Transport Society Limited) and the same was dismissed by this Hon'ble Court on 09.12.2024. It is further submitted that the applicant on 06.12.2024 made a representation/notice under section 21 of the Arbitration 7 Conciliation Act, regarding the nomination of the arbitrator which was received by 13 the respondent on 16.12.2024. However, despite the passage of more than 7 days from the receipt of the notice, the respondents have failed to take any action to either settle the outstanding payment or agree to the nomination of the arbitrator, as required by the notice. As a result, the applicant has been left with no choice but to invoke the jurisdiction of this Hon'ble Court for the appointment of an arbitrator to adjudicate the dispute between the parties. It is further submitted that the applicant has already nominated Hon'ble Justice (Retired) Shri G Minhajuddin as the Arbitrator to resolve the dispute, as outlined in the notice dated 06.12.2024. Thus, although dispute has arisen between the parties and since the respondents are not responding to the fervent requests nomination made by the applicant thus being left with no other option the applicant files the instant application for the prayer as mentioned below. The contract has been entered between the parties at Bilaspur and the performance of the contract has been done at Bilaspur and as per the exclusive the Arbitration Clause jurisdiction has been vested with the Courts at Bilaspur which is within the jurisdiction of this Hon'ble Court, therefore, this Court has exclusive jurisdiction to entertain the present application after accrual of cause of action on the day and date of notices mentioned above and each day thereafter. 11. On the other Mr. Anubhuti Marhas, learned counsel for the respondent submits that apparently, it is an admitted fact that the applicant who was operating Bilaspur City Bus had abruptly stopped working and following such abrupt discontinuance and operations and also following various notices that were sent to the applicant, the agreement was rescinded in terms of order dated 11.07.2022. It is also submitted that by the same order, the applicant/representative was directed to appear in the office and to handover possession of 50 City Buses along with 14 their records on 21.07.2022. However, the applicant did not do so, therefore, the possession of buses was taken by the respondent on their own. Entire proceedings with regard to the issuance of aforesaid order was also recorded in the note-sheet of the respondent. The applicant has claimed various reliefs while the notice under Section 21 of the Arbitration and Conciliation Act, 1996 was issued for the first time in the month of December, 2024, which is almost after 2½ years of the cancellation of the agreement. Even otherwise, Section 21 of the Arbitration and Conciliation Act, 1996 provides for commencement of arbitral proceedings and does not pertain to appointment of the Arbitrator/Arbitral Tribunal. The applicant had every knowledge about the cancellation /termination of the agreement / contract since long but failed to exercise option to invoke the proceedings for appointment of Arbitrator which it did not do at the relevant time and now at a belated stage the notice (that too was sent under wrong provision) has been sent for appointment of Arbitrator which cannot be acceded to at this stage. Over a period of more than about 5 years, citizens of Bilaspur are deprived of the benefit of City buses for which the applicant is responsible and in these circumstances, the prayer for appointment of Arbitrator in terms of the agreement which has already been cancelled deserves to be turned down and the instant arbitration deserves to be dismissed with exemplary costs. 12. Mr. Marhas further submits that though return has been filed denying the contentions of the applicant and praying for dismissal of this arbitration request, however, he submits that the respondent will have no objection if this Court appoints an arbitrator to resolve the dispute involved in this petition. 13. Mr. Pandey, learned counsel for the applicant, has proposed the name 15 of Hon’ble Mr. Justice Gulam Minhajuddin, a retired Judge of this High Court and Mr. Marhas, learned counsel for the respondent, has proposed the name of Hon’ble Mr. Justice V.K. Shrivastava, also a retired Judge of this High Court, for appointment as an arbitrator on behalf of the respondent. 14. In view of above, Hon’ble Mr. Justice Gulam Minhajuddin and Mr. Justice V.K. Shrivastava, retired Judges of this High Court are appointed as Arbitrator from the side of the applicant and the respondent, respectively. Hon’ble Mr. Justice Gulam Minhajuddin and Hon’ble Mr. Justice V.K. Shrivastava may thereafter appoint the third Arbitrator, and thereafter, they may adjudicate upon the disputes and differences between the applicant and respondent arising out of and/or in relation to the agreement. 15. The Registry is directed to communicate this order to Hon’ble Mr. Justice Minhajuddin and Hon’ble Mr. Justice V.K. Shrivastava in the proper address. 16. The remuneration of the arbitrator shall be settled with the mutual consent of the parties. 17. The arbitration application, accordingly, stands allowed. Sd/- (Ramesh Sinha) CHIEF JUSTICE Preeti