2023 (11) TMI 459 - HC - Indian Laws

Arbitrator Appointed to Resolve GST Dispute Arising from Project Delays and Tax Changes Under Arbitration Act.

Bhupinder Pal Mahajan Versus State of H.P. & another

The HC allowed the application for the appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. Mr. L.N. Sharma, a ... Appointment of an Arbitrator for decision on entitlement of the applicant to receive the amount claimed towards GST - Section 11(6) of the Arbitration and Conciliation Act, 1996 - HELD THAT:- Notice in this application had been given to the respondents and they have filed a reply opposing the entitlement of the applicant for GST on merits, but no pleading has been taken in reply filed by the respondents as to why an Arbitrator cannot be appointed. Admittedly, there is an Arbitration Clause 25 in the agreement between the parties providing for arbitration in the event of a dispute arising between them. The existence of dispute is clear from the pleadings of both the parties and admittedly the applicant had issued Annexure P-3 notice dt. 9th December, 2021 for appointment of arbitrator. Having regard to the fact that in the reply filed by the respondents there is no objection raised as to the appointment of Arbitrator, this application is allowed and Mr. L.N. Sharma, District & Sessions Judge (retired), R/o Laxmi Niwas, near Girls Senior Secondary School, The Mall Solan, H.P. is therefore appointed as Arbitrator to adjudicate the dispute between the parties, after his disclosure in writing is obtained in terms of Section 11(8) of the Act and only after receipt thereof, shall his appointment, as an Arbitrator, come into force. Application disposed off. Issues Involved:The issues involved in the judgment are the appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, regarding the entitlement of the applicant to receive the claimed amount towards GST.Appointment of Arbitrator:The applicant sought the appointment of an Arbitrator due to delays in the execution of a construction project and unresolved financial claims. The applicant invoked Clause 25 of the agreement between the parties and issued a legal notice for arbitration. The respondent did not object to the appointment of an Arbitrator. Consequently, Mr. L.N. Sharma, a retired District & Sessions Judge, was appointed as the Arbitrator to adjudicate the dispute after providing a written disclosure as required by Section 11(8) of the Act.Entitlement to GST Amount:The applicant contended that there was a delay in project completion, not attributable to them, and the change in tax regime post the Goods and Services Tax Act, 2017 affected the project's finances. Despite settlement attempts, the claim for GST remained unresolved. The applicant sought the Arbitrator's decision on their entitlement to receive the claimed amount towards GST. The respondent opposed the applicant's entitlement on merits but did not contest the appointment of an Arbitrator.Conclusion:The application for the appointment of an Arbitrator was allowed, and Mr. L.N. Sharma was appointed to resolve the dispute between the parties. Upon his consent, the Arbitrator would proceed with the reference and issue an award in accordance with the law. The appointed Arbitrator was entitled to a fee as per the 4th Schedule of the Act. The application was disposed of accordingly, ensuring a fair resolution of the dispute.