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1993 DIGILAW 192 (DEL)

MAINTECH ENGINIRS v. JOTINDRA STEEL AND TUBES LIMITED

1993-03-18

V.B.BANSAL

body1993
Mr. V. B. Bansal, J. ( 1 ) M/s. Maintech Engineers has moved this petitionunder Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred toas "the Act"), with a prayer that the respondents be directed to file theagreement between the parties, in Court, and make a reference of the disputesbetween the parties to the arbitration of the General Manager. Bharat Heavyelectricals Limited (BHEL), which is in consonance with the Arbitrationagreement between the parties. ( 2 ) BRIEFLY stated, the averments made in the petition are, that thepetitioner is a partnership firm, duly registered under the. Indian Partnership act and Shri Parvinder Singh is one of its registered partners and iscompetent to sign, verify and institute the suit. It is also pleaded that therespondent No. 1 is a company, duly incorporated under the Companies Actand respondent No. 2 is a division of respondent No. 1. It is further pleadedthat the petitioners are consultants and maintenance specialists in dieselengines, steam plants, gas turbines, chilling systems, pipe lines, air conditioning systems, control systems and automation, and that respondent No. 2 wasawarded the work of erection of boilers etc. of the Haryana State Electricityboard at the Panipat Thermal Power Station by the Bharat Heavyelectricals Ltd. It is also claimed that respondent No. 2 sub-let a part of thework for erection of pressure parts, non-pressure parts and structurals at thepanipat Thermal Power Station vide letter of Intent dated 14/01/1985. It is further pleaded that petitioners were also awarded the work forthe application of insulating and refractory materials and sheet metal covering and dueting at Panipat Thermal Power Station vide letter of Intent dated 25/02/1985. It is also claimed that in pursuance of the aforesaidletters of Intent, the works allotted to the petitioner were completed to entiresatisfaction of the Engineer Incharge at the site and the work was accordinglyhanded over by the respondents to the Haryana State Electricity Board bythe Bharat Heavy Electricals Limited. It is also claimed that it was agreedbetween the parties that the terms of payment, as applicable to respondentno. 2 in its contract with BHEL shall be applicable to the petitioner also onback to back basis and the payment will be made for the work done by thepetitioner on the measurements certified by the BHEL. There was also astipulation that the work already completed partially, would be paid on proportionate basis. 2 in its contract with BHEL shall be applicable to the petitioner also onback to back basis and the payment will be made for the work done by thepetitioner on the measurements certified by the BHEL. There was also astipulation that the work already completed partially, would be paid on proportionate basis. ( 3 ) FURTHER averments made in the petition are that the petitioner hassubmitted the running bills to respondent No. 2 for the work carried out andagainst which only part payments have been made and that there have beenvarious meetings between the parties representatives in respect of the settlement of the bills and the respondent No. 2 had been giving assurances toreconsider the bills of the petitioner and to release the payment but to noeffect. It has further been pleaded that the petitioner wrote letter dated25. 5. 1989 demanding a sum of Rs. 9,16,421. 44. 00in respect of Until III andrs. 26,90,029. 60 in respect of Unit-IV and a consolidated final bill for all theitems in respect of both the units was submitted to respondent No. 2 whohas not settled the dispute. It has, thus, been pleaded that since the respondents have failed to settle the claim of the petitioner, the same is required tobe referred to the arbitrator and the respondents having failed to do so, thepresent petition has been filed. ( 4 ) THIS petition has strongly been contested by the respondents, whohave inter alia pleaded that the petitioner is not a partnership firm, dulyregistered under the Partnership Act. It is also claimed that Respondentno. 1. through its Engineering Division, respondent No. 2 was awardedcontract for erection of boiler at Panipat Thermal Power Station and part. ofthis work was allotted to the petitioner regarding which, letters of intentdated 141. 1985, 25. 2. 1985 were issued, which subsequently were merged inthe Purchase Order dated 6. 3. 1985. It is also claimed that the work wascarried out by the petitioner, as stipulated in the letter dated 6. 3. 1985 andthe payment was also made in terms of the said letter. It is also claimed thatthe payments have already been made to the petitioner on the same basis onwhich the respondent No. 1 was to be paid by BHEL. It is also admitted thatthere was a meeting of 16. 2. 3. 1985 andthe payment was also made in terms of the said letter. It is also claimed thatthe payments have already been made to the petitioner on the same basis onwhich the respondent No. 1 was to be paid by BHEL. It is also admitted thatthere was a meeting of 16. 2. 1987 between the officers of the parties aboutwhich minutes have been prepared but it has been denied that the respondents had given by assurance to reconsider the bills of the petitioner andrelease payments as claimed. It is also pleaded that the petitioner did notcarry out any work at the site after January, 1987 and that the letters writtenby the petitioner were duly replied It is thus, pleaded that there has notbeen any agreement between the parties for making any reference to thearbitrator and there could not be any implied agreement on the basis of thealleged indentment letters. A prayer has thus been made that the petitionmay be dismissed. ( 5 ) PLEADINGS of the parties gave rise to the following issues, whichwere framed on 14. 2. 1991 : (1) Whether the petitioner is a partnership firm duly registeredunder the Indian Partnership Act and Shri Parvinder Singh isone of the Partners? (2) Whether there exists a valid arbitration agreement between theparties ? (3) Whether the disputes mentioned in the petition are covered bythe arbitration agreement ? (4) Whether the petition is barred by time 7 (5) Relief. ( 6 ) IN support of its case, the petitioner has filed the affidavit by wayof evidence of Shri Parvinder Singh and reliance has been placed on documents Exs. P-1 to P-10. The respondents have filed the affidavit of Sita Ramsurekha, Managing Director of the respondent-company by way of evidenceand reliance has been placed on documents Exs. R-1 to R-6. ( 7 ) I have heard the learned Counsel for the parties and have alsogone through the records. My conclusion on the issues, is as under. Issue No. 1 : Whether the petitioner is a partnership firm duly registeredunder the Indian Partnership Act and Shri Parvinder Singhis one of the partners ? ( 8 ) THE case of the petitioner has been that the petitioner is aregistered partnership firm, duly registered under the Partnership Act andparvinder Singh is a registered Partner. In his affidavit, swori. on, 11. 11. ( 8 ) THE case of the petitioner has been that the petitioner is aregistered partnership firm, duly registered under the Partnership Act andparvinder Singh is a registered Partner. In his affidavit, swori. on, 11. 11. 1991,parvinder Singh has stated that the petitioner is partnership firm, dulyregistered under the Indian Partnership Act, 1932 with the Registrar of firms,delhi and that he is one of the partners of the petitioner firm. He has alsofiled Ex. P-1, a photocopy of the Form-A of Registrar of Firms, maintainedunder Section 29 of the Indian Partnership Act. A perusal of this documentshows that Parvinder Singh and Amarjit Singh Chopra are the two partnersof the Maintech Engineers, petitioner. There is nothing in the affidavit filedby Sita Ram, Managing Director of the respondent, filed by way of evidenceto contradict the evidence of the petitioner. Learned Counsel for the respondents has not been able to point out any evidence against this issue. It is,thus, clear that the petitioner has proved that it is a partnership firm, dulyregistered under the Indian Partnership Act and Parvinder Singh is one of itspartners. This issue is decided. in favour of the petitioner. Issue No. 2 : Whether there exists a valid arbitration agreement between theparties ? ( 9 ) LEARNED Counsel for the petitioner has submitted that respondentno. 1, through respondent No. 2 had obtained a contract from BHEL forcarrying out work at the Panipat Thermal Power Station and a part of thiswork was assigned to the petitioner by way of sub-contract. This propositionis not disputed by the learned Counsel for the respondents. The petitionerhas placed reliance upon the letter of intent for election of pressure parts,non-pressure parts and structurals at the Panipat Thermal Power Station Ex. P-2 and letter of intent for application of insulation and refractory materialsand sheet metal covering and ducting at Panipat Thermal Power Stationex-P-3. The execution of these documents between the parties is not indispute. The petitionerhas placed reliance upon the letter of intent for election of pressure parts,non-pressure parts and structurals at the Panipat Thermal Power Station Ex. P-2 and letter of intent for application of insulation and refractory materialsand sheet metal covering and ducting at Panipat Thermal Power Stationex-P-3. The execution of these documents between the parties is not indispute. ( 10 ) LEARNED Counsel for the petitioner has submitted that there wasan agreement between the respondents and Bharat Heavy Electricals Limited,in which, all the terms of the contract had been mentioned and there was anarbitration clause being Clause Nos 2, 14 to the effect that all disputes between the parties to the contract, arising out of or in relation to the contract,other than those for which the decision of the Engineer or of any otherperson is by the contract expressed to be final and conclusive, shall, afterwritten notice by either party to the contract, to other party be referred tosole arbitration of General Manager or his nominee. It has thus, beensubmitted by the Counsel for the petitioner that by necessary implication, ithas to be presumed that there was an agreement between the petitioner andthe respondents that any dispute between them relating to the sub-contract,shall also be referred to the sole arbitration of General Manager of the BHELor his nominee. He relies upon the Clause 7. 1 of the two documents (Ex. P-2and P-3 ). It would, at this stage, be convenient to quote the same, which isas under :- "7. 1 Terms of payment as applicable to us in our contract withbhel shall be applicable to you also on back to back basis andthe payment will be made to you for the work done by you onthe basis of measurements certified by BHEL. The work alreadycompleted partially will be paid on proportionate basis. " ( 11 ) LEARNED Counsel for the respondent has, on the other hand. submitted that there has. not been any privity of contract between thepetitioner and BHEL who are not even a party to the present proceeding. Hehas further submitted that all the terms of Sub-contract between the petitioner and the respondents have been incorporated Exs. P-2 and P-3 and thereis no mention of any agreement about referring any dispute to the arbitrator. submitted that there has. not been any privity of contract between thepetitioner and BHEL who are not even a party to the present proceeding. Hehas further submitted that all the terms of Sub-contract between the petitioner and the respondents have been incorporated Exs. P-2 and P-3 and thereis no mention of any agreement about referring any dispute to the arbitrator. He has thus submitted that in the absence of any specific term for arbitrationit can not be presumed that there was any agreement between the parties torefer the dispute to the arbitrator. A prayer has, thus, been made that theissue may be decided against the petitioner. ( 12 ) I have given my thoughtful consideration to the submissions madeby the learned Counsel for the parties and have also carefully perused thedocuments. There can possibly be no disputs that no particular form isneeded to provide for arbitration in agreement between the parties. Thecourt has to give effect to the intention of the parties, as evidenced in agreement itself without being over technical in its interpretation and suchintention has to be gathered from the whole context. The location of thearbitration clause is not required to he at any specified place and it wouldmake no difference as to whether the clause for arbitration is mentioned inthe beginning or at the end of the document. The short question for consideration in the instant case is as to whether, there has in fact been any agreement between the parties for referring disputes, if any, to the arbitrator. Asalready referred to, the petitioner was appointed as a Sub-contractor by therespondents and there is nothing on record to indicate as to whether this wasapproved by the principal i. e. Bharat Heavy Electricals Limited. Admittedly,there has not been any privity of contract between the petitioner and thebhel. There is no doubt that there was an agreement to refer disputebetween the respondents and BHEL to named arbitrator, but could it be saidthat such a clause would be applicable to the petitioner also. My answer tothis question is in the negative. The clause with regard to the paymentprovides that the payment would be made to the petitioner on back to backbasis and the payment will be made for the work done on the basis ofmeasurements certified by BHEL. My answer tothis question is in the negative. The clause with regard to the paymentprovides that the payment would be made to the petitioner on back to backbasis and the payment will be made for the work done on the basis ofmeasurements certified by BHEL. Had there been any intention between theparties to refer the dispute to the arbitration, such a clause would either havebeen specifically incorporated in the terms, as given in Exs P-2 and P-3 orthere would have been a mention therein that the arbitration clause in theagreement between the respondents and BHEL would be applicable to thepetitioner. In the absence of any such provision in the terms on which thework was assigned to the petitioner, it can not be said that there is anyagreement between the parties to refer the dispute to the arbitrator. Thisissue is decided against the petitioner. Issue No. 3 : Whether the disputes mentioned in the petition are covered bythe arbitration agreement ? ( 13 ) IN view of the decision of Issue No. 2, this issue does not arise. Issue No. 4: Whether the petition is barred by time ? ( 14 ) LEARNED Counsel for the respondents has submitted that the workwas completed in the year 1987 and the present petition has been filed on 7/11/1989 which is barred by limitation and thus, prayed that thisissue may be decided in favour of the respondents. Learned Counsel for thepetitioner has however submitted that minutes dated 16. 2. 87 (Ex. P-4) wereprepared in respect of a meeting between M/s. JST Engineering Services,respondent No. 2 and the petitioner, in which it has clearly been mentionedthat the work was to be continued at site. The present petition has been filedon 7/11/1989. There is a limitation of three years for moving anapplication for arbitration, as per Article 137 of the Schedule of the Limitation Act. In these circumstances, the application is in time and so this issueis decided against the respondents. Issue No. 5 : Relief. ( 15 ) IN view of my aforegoing discussion, the petition is dismissedwith costs.