The Gujarat High Court has temporarily halted arbitration proceedings initiated against the Vapi Municipal Corporation (VMC) in a dispute linked to lease agreements for the development of three lakes in the city.

The bench of Justice LS Pirzada passed the order while hearing a batch of petitions filed by the VMC, formerly known as the Vapi Nagarpalika. The civic body has challenged the arbitration proceedings started by Shashijit Infra Projects Ltd. over agreements concerning the Lakhamdev, Dungra and Chala lakes.

The arbitration, reportedly involving claims of nearly ₹100 crore, is being conducted by former Bombay High Court Chief Justice KR Vyas, who is acting as the sole arbitrator.

After hearing the submissions, the High Court noted that the issues raised by the VMC required detailed consideration.

"Considering the submissions made by the learned advocate for the petitioner and the averments made in the petition, the present petition requires consideration," the Court observed.

The VMC argued that the arbitrator was appointed unilaterally by the company without the corporation's consent, making the appointment legally questionable. It also informed the Court that similar issues are already pending before the High Court and are scheduled to be heard on June 18.

The civic body further pointed out that the arbitrator had fixed a hearing for June 2 and warned that if the VMC failed to file its reply, its right to defend itself could be closed. According to the VMC, this could result in an ex parte order being passed against it.

Relying on an earlier High Court judgment, the corporation argued that disputes involving notified public undertakings should be decided by the Public Works Tribunal rather than through private arbitration. It also contended that allowing the arbitration to continue while related matters are pending before the Court could lead to conflicting decisions and prejudice its case.

Taking note of these concerns, the High Court directed the arbitrator not to proceed further with the matter for the time being.

"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 ordered.

The Court issued notice in the matter and listed the case for further hearing on June 18 after the summer vacation.

Government Pleader GH Virk, along with advocates Jagrat Shah, Chinmay M. Gandhi and Nikita C. Gandhi, appeared on behalf of the Vapi Municipal Corporation.