MEARS GROUP INC.versusFERNAS INSAAT A.S.

                            [2016) 11 S.C.R. 872



A                          MEARS GROUP INC.
                                      v.
                       FERNAS INSAAT A.S.
              (FERNAS CONSTRUCTION COMPANY INC)
                     (Arbitration Petition No. 13 of2016)
B
                           DECEMBER 14, 2016
      [T. S. THAKUR, CJI AND DR. D. Y. CHANDRACHUD, J.)
           Arbitration and Conciliation Act, 1996 - s.11 (5) -Appointment
    of sole arbitrator - Contract for construction of pipeline - Drilling
c   work - Work order issued to petitioner contained arbitration
    agreement - Dispute between parties - Petitioner claimed unpaid
    dues and invoked arbitration by e-mail - Sought concurrence of
    respondent for appointment of sole arbitrator, in terms of the
    arbitration agreement - Finding no response, proceedings instituted
    by petitioner u/s.11 (5) - No reply filed by respondent -No possibility
D
    of any settlement between the parties - Held: Jn the circumstances,
    a former Supreme Court judge appointed to act as a sole arbitrator
    in terms of the arbitration agreement.
          ORIGINAL CIVIL JURISDICTION: Arbitration Case (C) No.
    13 of2016.
E
          From the Judgment and Order dated 20.07.2016 of the High Court
    of Delhi in Writ Petition No. 3104of2016.
          Arvind Minocha, Adv. for the Petitioner.
          Ji wan Pal Singh, Ms. Mrinmayee Sahu, Advs. for the Respondent.
F
          The Order of the Court was delivered by
          DR. D. Y. CHANDRACHUD, J. I. The Petitioner is a company
    incorporated in the US. The Respondent is incorporated in Turkey.
      The Respondent was awarded a contract for the construction of a
G   pipeline by the Gas Transmission Company Ltd., Bangladesh. A Letter
    of Intent was issued by the Respondent to the Petitioner on 16 April
    2012 for performing Horizontal Directional Drilling works for six river
    crossings under the above-mentioned project in Bangladesh. A detailed
    work order was issued on 12 June 2012 to the Petitioner for a total
    contract price of USO 7,225,000/-. The work to be executed by the
H
                                    872
                                                                             873


Petitioner involved the installation of thirty inch diameter and six inch     A
diameter gas pipe Iines under six rivers in Bangladesh. According to the
Petitioner the effective date of the contract was 16 April 2012, while the
scheduled date of completion was on 13 March 2013. The Petitioner is
stated to have furnished a performance bank guarantee equivalent to
ten per cent of the contract price. Clause 24 of the work order contained
                                                                              B
an Arbitration Agreement in the following terms:-
      "24.0 Disputes and Arbitration
      24.2 Arbitration:
      In case the amicable resolution or settlement is not reached
      between the Parties within a period of 30 days from the                 c
      day on which the dispute(s) or difference(s) arose, such
      dispute(s) or difference(s) shall be referred to a sole
      Arbitrator for settlement by way of arbitration in accordance
      with the provisions of the Arbitration and Conciliation Act·
      1996 of Government of India or any applicable law on                    D
      arbitration that may be in force then, and any amendments
      made thereto. The sole arbitrator shall be appointed by the
      mutual consent of both the Parties. The decision of the
      Arbitrator shall be final and binding on both the Pa1ties.
      The venue of such arbitration shall be at New Delhi, India.
      The Language of the arbitration proceeding shall be in                  E
      English.
       The existence of any dispute(s) or difference(s) or the
       initiation or continuance of the arbitration proceedings shall
       not permit the Parties to postpone or delay the performance
       by the Parties of their respective obligations under this              F
       indenture".
       According to the Petitioner, four letters of credit were opened by
the Respondent so as to facilitate the completion of four crossings. The
remaining letter of credits, it is alleged, were not opened. According to
the Petitioner, it successfully completed work under all the six crossings    G
and its bank guarantee was allowed to lapse.
       2. Disputes have arisen between the parties, resulting in an
exchange of e-mails. The Petitioner has a claim for unpaid dues. The
Petitioner invoked arbitration by an e-mail dated 2 November 2015
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874                SUPREME COURT REPORTS                       [2016] II S.C.R.



A     addressed by its advocate to the respondent. The Petitionerclaimed an
      amount of USO 38, 13,723.76together with interest by its e-mail and
      suggested the names of two former judges of the Delhi High Court. The
      Petitioner sought the concurrence of the Respondent to the appointment
      of one of them as sole arbitrator, in terms of the arbitration agreement.
      Finding no response, these proceedings were instituted under Sec;tion
B
      11(5) of the Arbitration and Conciliation Act, 1996.
             3. Notice was issued in these proceedings on 8 March 2016. On7
      October 2016 the Respondent informed this Court that it was willing to
      negotiate an amicable settlement with the Petitioner and would either
      finalize a settlement or file its objections to the petition for appointment
c     of an arbitrator within four weeks. Neither has any settlement been
      arrived at between the parties nor has a reply been filed to the Arbitration
      Petition.
            4. During the course of the hearing, learned counsel have not
      disputed the existence of the arbitration agreement. Disputes have
D     evidently arisen between the parties and a mutual settlement has not
      been possible.                                     ·
             5. In the circumstances, we hereby appoint Mr Justice FM Ibrahim
      Kalifulla, former judge of the Supreme Court of India to act as a sole
      Arbitrator in terms of the arbitration agreement. The learned arbitrator
 E    shall be at liberty to determine the fees payable to him for the arbitration.
               6. The Arbitration Petition is accordingly disposed of in the above
      terms.


      Ankit Gyan                                                 Petition disposed of
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