The Gujarat High Court has issued an order to suspend arbitration proceedings against the Vapi Municipal Corporation (VMC), formerly known as Vapi Nagarpalika, in a legal conflict involving lake development leases. The case, titled Vapi Municipal Corporation v Shashijit Infra Projects Ltd. & Anr., concerns disputes over lease agreements for Lakhamdev, Dungra, and Chala lakes.
Justice LS Pirzada issued the suspension on June 2, following a series of petitions submitted by VMC. These petitions challenge the arbitration initiated by Shashijit Infra Projects Ltd., which involves claims approximating ₹100 crore. The proceedings were being conducted by a sole arbitrator, the former Chief Justice of the Bombay High Court, KR Vyas.
In the order, Justice Pirzada noted that the petitions presented issues that necessitate further scrutiny, stating, “Considering the submissions made by the learned advocate for the petitioner (VMC) and the averments in the petition, the present petition requires consideration.”
The VMC argues that the arbitrator’s appointment was done unilaterally by Shashijit Infra Projects Ltd., without the corporation’s consent, thereby questioning the legal validity of the arbitration process. Furthermore, the corporation highlighted that similar issues are currently under the court’s consideration, with a scheduled hearing on June 18.
Prior to the court’s intervention, the arbitrator had scheduled a hearing on June 2 and cautioned that if the VMC failed to submit a reply, they could lose their right to defend, potentially resulting in an ex parte decision. VMC stressed the risk of an ex parte ruling, asserting that the ongoing arbitration could prejudice their case and create conflicting judgments.
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VMC further contended that such disputes, involving notified public undertakings, should be resolved by the Public Works Tribunal instead of private arbitration, referencing a previous High Court ruling. Recognizing these concerns and the overlap with pending court matters, Justice Pirzada ordered the arbitrator to halt proceedings temporarily.
The order stated, “The respondent no. 2 (arbitrator) may not proceed with the arbitration proceedings and not pass any order till the next date of hearing.” The Court has scheduled the next hearing for June 18, following its summer recess.
Representing Vapi Municipal Corporation were Government Pleader GH Virk and advocates Jagrat Shah, Chinmay M Gandhi, and Nikita C Gandhi.
