Patna High Court
3I Info Tech Ltd vs The State Of Bihar Through Additional … on 24 January, 2025
Author: Ashutosh Kumar
Bench: Ashutosh Kumar
IN THE HIGH COURT OF JUDICATURE AT PATNA
REQUEST CASE No.71 of 2024
======================================================
3i Info Tech Ltd., having its registered office at Tower no.-5, 3rd Floor and
Tower No.-6 at 6th Floor, Vashi, Navi Mumbai-400703, Through its
authorised signatuatory Prakash Chandra Jha, aged about 56 years (Male),
S/o- Tarakant Jha, resident of Vill.- 203, Mangalapuri, Mahrauli, P.S.-
Fatehpur Dairy Dist- South Delhi, Delhi- 100030.
... ... Petitioner/s
Versus
1. The State of Bihar through Additional Chief Secretary, Planning and
Development Department, Government of Bihar, through its Principal
Secretary having its office at Old Secretariat, Patna-800015.
2. The Development Commissioner, Government of Bihar having its office at
Old Secretariat, Patna-800015.
3. The Joint Director, Planning and Development Department, Government of
Bihar through its Principal Secretary having its office at Old Secretariat,
Patna-800015.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Dhananjay Kumar, Advocate
Mr. Kundan Kumar Ojha, Advocate
Mr. Neelmani Raj, Advocate
Mr. Navneet Prashakar, Advocate
For the Respondent/s : Mr. P.K. Shahi, Advocate General
Mr. Vikas Kumar, Advocate
======================================================
CORAM: HONOURABLE THE ACTING CHIEF JUSTICE
ORAL JUDGMENT
Date : 24-01-2025
We have heard Mr. Dhananjay Kumar, the
learned Advocate for the request petitioner and Mr. P.K.
Shahi, the learned Advocate General for the State.
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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2. The petitioner has made a request under
Section 11(6) of the Arbitration and Conciliation Act,
1996 for appointment of an arbitrator.
3. It is not in dispute that a master service
agreement dated 02.08.2016 was executed between the
Planning and Development Department, Government of
Bihar and the petitioner for selection of System
Integrated IT Solution for Mukhyamantri Nischay
Swayam Sahayta Bhatta Yojna Student Credit Card
Scheme Skill Development Programme.
4. According to the petitioner, as required
under the agreement, he initiated the work for the
development of the project and also, in the process,
issued invoices on several dates against various
milestones completed under the agreement. However, on
receipt of a communication against those invoices that an
amount of Rs. 3,51,66,755.00/- was withheld by the
respondents, he inquired for the reason, but there was
none. As such, a notice was issued to the respondents on
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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26.06.2023
, which only came to be replied on
05.09.2023.
5. With respect to each of the invoices, the
respondent has stated the reason for withholding of the
amount. Thereafter, another notice is said to have been
sent to the respondent, but it was never replied.
6. As such, the present petition has been
made under Section 11(6) of the Arbitration and
Conciliation Act, 1996, for appointment of an Arbitrator.
7. Opposing the claim of the petitioner, the
learned Advocate General has drawn the attention of this
Court to Clause 24 of the agreement which reads as
hereunder:
“24. GOVERNING LAW AND
DISPUTE RESOLUTION
24.1. This Agreement shall be
governed by and construed in accordance with
the laws of India, without giving effect to conflict
of law rules. The parties expressly agree to
exclude the application of the U.N. Convention on
Contracts for the International Sale of Goods
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
4/12(1980) to this Agreement and the performance
of the parties contemplated under this
Agreement, to the extent that such convention
might otherwise be applicable.
24.2 Any dispute arising out of or in
connection with this Agreement or the SLA shall
in the first instance be dealt with in accordance
with the escalation procedure as set out in the
Governance Schedule set out as Schedule V of
this Agreement.
24.3 In case the escalations do not
help in resolution of the problem within 3 weeks
of escalation, both the parties should agree on a
Mediator for communication between the two
parties. The process of the mediation would be as
follows:
(a) Aggrieved party should refer the
dispute to the identified Mediator in writing, with
a copy to the other party. Such a reference
should contain a description of the nature of the
dispute, the quantum in dispute (if any) and the
relief or remedy sought suitable.
(b) The Mediator shall use his best
endeavours to conclude the mediation within a
certain number of days of his appointment.
(c) If no resolution can be reached
through mutual discussion or mediation within 30
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
5/12days then the matter should be referred to
Experts for advising on the issue.
(emphasis supplied)
24.4 In case the mediation does not
help in resolution and it requires expertise to
understand an issue, a neutral panel of 3 experts,
agreeable to both parties should be constituted.
The process of the expert advisory would be as
follows:
(a) Aggrieved party should write to
the other party on the failure of previous
alternate dispute resolution processes within the
time frame and requesting for expert advisory.
This is to be sent with a copy to the Mediator.
(b) Both parties should thereafter
agree on the panel of experts who are well
conversant with the issue under dispute.
(c) The expert panel shall use his
best endeavors to provide a neutral position on
the issue.
(d) If no resolution can be reached
through the above means within 30 days then the
matter should be referred to Arbitration.
24.5 Any dispute or difference
whatsoever arising between the parties to this
Contract out of or relating to the construction,
meaning, scope, operation or effect of this
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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Contract or the validity of the breach thereof
shall be referred to a sole Arbitrator to be
appointed by mutual consent of both the parties
herein. If the parties cannot agree on the
appointment of the Arbitrator within a period of
one month from the notification by one party to
the other of existence of such dispute, then the
Arbitrator shall be appointed by the High Court of
Patna, Bihar (India). The provisions of the
Arbitration and Conciliation Act, 1996 will be
applicable and the award made there under shall
be final and binding upon the parties hereto,
subject to legal remedies available under the law.
Such differences shall be deemed to be a
submission to arbitration under the Indian
Arbitration and Conciliation Act, 1996, or of any
modifications, Rules or re-enactments thereof.
The Arbitration proceedings will be held at Patna,
India. Any legal dispute will come under the sole
jurisdiction of district Patna of Bihar.
24.6 Compliance with laws: Each
party will comply with all applicable export and
import laws and regulations.
24.7 Risk of Loss: For each
hardware item, Implementation Agency bears the
risk of loss or damage up to the time it is
delivered to the Implementation/Purchaser-
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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designated carrier for shipment to Purchaser or
Purchaser’s designated location.
24.8 Third party components:
Implementation Agency will provide all third
party components solely on a pass-through basis
in accordance with the relevant third party terms
and conditions.”
8. A bare reading of the clauses would indicate
that any dispute arising out of or in connection with the
agreement would be dealt, in the first instance, in
accordance with the escalation procedure as set out in the
Governance Schedule (Schedule V of the agreement). If
in case, the escalations do not help in resolution of the
problem within three weeks of the escalation, the parties
would be required to agree on a Mediator for
communication between the two parties. The process of
mediation has also been delineated in the afore-noted
said sub-clause 24.3.
9. The aggrieved party in that case has to
refer the dispute to the identified Mediator in writing with
a copy to the other party with the description of the
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
8/12nature of the dispute, the quantum of the dispute, if any,
and relief or suitable remedy sought and the Mediator
shall use his best endeavors to conclude the mediation
within a certain number of days of his appointment.
10. In case, no resolution is reached through
mutual discussion or mediation within thirty days, then
the matter has to be referred to experts for advising on
the issue and for the aforesaid purpose, if it is found that
the resolution requires intervention or explanation by a
person who has an expertise to understand the issue,
then a neutral panel of three experts, agreeable to both
the parties, would be constituted; whereafter only, a
request could be made for appointment of an Arbitrator
by the High Court.
11. The pleadings indicate that with the
escalation procedure as set out in the schedule, the
grievance was voiced through a notice to the respondents
on 26.06.2023. Though it was replied only after a delay
of about three months, but all the issues of difference
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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satisfaction of the petitioner.
12. The clause in the agreement specifies that
in case the dispute is not resolved at this stage, then the
parties will have to agree for a Mediator and the Mediator
shall mediate by a defined process.
13. It appears that before exhausting the
afore-noted procedure set out in Clauses 24.3 and 24.4
of the agreement, the present petition under Section
11(6) of the Act has been filed straightaway.
14. Responding to the afore-noted objection
of the respondents, especially not exhausting the prior
procedure before seeking the intervention of this Court
under Section 11(6) of the Act, the learned counsel for
the petitioner has referred to a judgment of the Supreme
Court reported in Visa International Ltd. v.
Continental Resources (USA) Ltd., AIR 2009 SC
1366, wherein it has been held that if the agreement
requires that the parties would make an attempt at
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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amicable settlement before invoking the arbitration
clause, then, if there is no scope for amicable settlement
of both the parties because of one party having taken a
rigid stand and the evidence by way of correspondence
showing that such dispute could not be resolved by a
Mediator even with the help of an expert, then perhaps,
such a request under Section 11(6) of the Act would not
be considered to be premature.
15. The learned Advocate General has pointed
out that the response to the notice under Clause 24.2 of
the agreement is only an indication of withholding of
monies because of non-fulfilling of the milestones laid out
in the MSA.
16. This does not reflect any rigid stand and
the matter could be mediated.
17. Thus, I find that without exhausting the
procedure delineated in the agreement before coming to
the Court for appointment of an Arbitrator, this
application under Section 11(6) of the Act is premature.
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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18. This Court has also taken note of a
judgment of this Court in Request Case No. 105 of
2019 and Analogous Cases (Nirman Engicons
Private Limited vs. The State of Bihar and Ors.) ,
wherein it has been held that without exhausting the
requirements under the agreement, a request under
Section 11(6) of the Act cannot be allowed.
19. For the aforesaid reason, this Court finds
it difficult to accede to the request made by the petitioner.
20. The prayer is rejected.
21. However, the following directions are
being issued:
If the petitioner takes recourse to the
provisions contained in Clause 24(3) of the
agreement within a reasonable period of three
weeks, the respondents shall respond to it and
would come to a finding regarding the Mediator,
whereafter the Mediator shall identify the issue and
make efforts to resolve the disputes. In case that
Patna High Court REQ. CASE No.71 of 2024 dt.24-01-2025
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resolution of disputes and in case it is found that an
expert opinion is needed to understand any issue, a
neutral panel of three experts, agreeable to both
the parties, would be set in motion.
22. Since the work has been completed and
the dispute only remains with respect to non-payment of
invoices raised on behalf of the petitioner, the issue ought
to be resolved within a period of four months positively.
23. The petition stands disposed off
accordingly.
(Ashutosh Kumar, ACJ)
Sauravkrsinha/
Krishna-
AFR/NAFR NAFR CAV DATE NA Uploading Date 25.01.2025 Transmission Date NA
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