The Rs. 23.9 crore contract, signed on July 31, 2013, had an 18-month deadline ending June 2, 2015. However, the project saw a three-year delay, with completion only on May 15, 2018. Mohammed, citing prolonged delays by HLL and its officers, sought revised market rates for extended works and filed arbitration proceedings under the agreed contractual clause.
“After the expiry of the contract period, I was compelled to complete the project under market rates,” stated Mohammed in his legal claim. “The respondents defaulted on admitted dues, leading me to initiate W.P.(C) No. 36322 of 2018 before this court.”
Despite a High Court judgment in December 2018 directing HLL to pay the admitted amounts within three months, non-compliance led to contempt proceedings (W.P.(C) No. 3199/2024). Partial payments were eventually made, but the financial dispute persisted. On June 12, 2019, Mohammed issued a fresh demand for Rs.7.11 crore for unpaid completed works.
Efforts at internal redressal failed after HLL's Dispute Redressal Committee denied his claims in January 2020. Invoking the arbitration clause, Mohammed requested a panel of retired judges to appoint one as arbitrator. Following due procedure, Hon. Justice M. Ramachandran (Retd.) was appointed the sole arbitrator, and the claim amount was valued at Rs.9.2 crore.
Justice Ramachandran’s final arbitral award (dated August 18, 2021) directed HLL to pay Rs.7,31,89,098 within three months and to release an additional Rs.1,10,45,050 in retention amount upon proper representation. He also rejected HLL’s counterclaims for liquidated damages.
HLL challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing procedural impropriety and lack of jurisdiction due to the alleged violation of Section 12(5). The petitioner countered that a valid written waiver existed under the Act, as both parties agreed on the arbitrator from the proposed panel of judges.
“The petitioner's nomination of the arbitrator and the respondent’s confirmation constitutes a written waiver under Section 12(5),” noted Justice Basant Balaji in his judgment. “The statutory bar under Section 12(5) is not attracted once this waiver is executed.”
The High Court upheld the arbitral award, dismissing the objections raised by HLL, and reaffirmed the enforceability of contractual arbitration clauses in public sector disputes.
This verdict reinforces judicial backing for arbitration in commercial construction disputes, particularly where government enterprises are party to delayed infrastructural projects.
Read The Judgment Here
keywords: arbitration award, Kerala High Court, HLL Lifecare, government contractor dispute, construction contract dispute, Section 12(5) Arbitration Act
