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2007 DIGILAW 748 (ORI)

Ashish Transport Company Ltd. v. Mahanadi Coalfields Limited

2007-09-25

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JUDGMENT A. K. GANGULY, C.J. : This application for appointment of an Arbitrator was filed by the petitioner on 18.2.2003 before this Court. The petitioner entered into an agreement dated 13.10.1992 with the opposite parties and the petitioner was appointed transport contractor. Such contract was to continue for five years commencing from 6.12.1991 and ending in December, 1996. Under the said contract the petitioner was entrusted with the job of transportation of coal. The case of the petitioner is that on expiry of the aforesaid period of contract, the opposite parties engaged the petitioner for a further period of five years from 6.12.1996 to 5.10.2001 and with consent of the petitioner the period of contract was extended. According to the petitioner, the extension is nothing but a continuation of the previous contract. As dispute arose between the parties, the petitioner repeatedly brought to the notice of the opposite parties about its dues, but the opposite parties did not clear the alleged dues of the peti¬tioner. Several committees were set up by the opposite parties to look into the matter and accordingly, the committees recommended payment in favour of the petitioner but the payment has not been cleared. Several demands made by the petitioner have also been disclosed in the petition. As the petitioner’s dues were not paid, the petitioner ultimately was compelled to invoke the arbitration clause in the contract and notice was given to the opposite parties on 11.8.2002 and as no arbitrator was appointed within thirty days, this petition was filed in this Court on 18.2.2003 under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) for appointment of an Arbitrator. 2. In the counter affidavit which has been filed by the opposite parties the stand is that the agreement dated 10.1.1998 does not contain any arbitration clause. It was also contended that after completion of the previous agreement the petitioner entered into a fresh agreement for transportation of coal on 10.1.1998 with effect from 6.12.1996 to 5.12.2001 vide Annexure-2. It was also stated that the petitioner asked for arbitration by its letter dated 11.8.2002 which is seven years after the expiry of the previous agreement. In the counter it has been stated in paragraph 10 that the petitioner has exhausted the dispute settlement machinery set up under Clause 29 of the second agreement dated 10.1.1998. It was also stated that the petitioner asked for arbitration by its letter dated 11.8.2002 which is seven years after the expiry of the previous agreement. In the counter it has been stated in paragraph 10 that the petitioner has exhausted the dispute settlement machinery set up under Clause 29 of the second agreement dated 10.1.1998. It has been reiterated that since the agreement does not contain any arbitration clause the provision of Section 11 of the said Act is not attracted and the petition for appointment Arbitrator has to be rejected. 3. Since existence of the arbitration agreement has been questioned, this Court has to consider whether the contract contains any such arbitration clause. The petitioner has annexed the agreement dated 13.10.1992. Clause 36 of the said agreement is as follows : “36. All disputes arising out of or in any way relating to this contract (other than those the decisions of which have been specifically provided for in the contract) shall be referred to the sole Arbitration of an officer not below the rank of Director appointed by the Chairman-cum-Managing Director of the Company whose decision shall be final and binding and provisos under the Indian Arbitration Act, 1940 or any modification there¬of will apply to such arbitration proceedings.” It is clear that there is an arbitration clause in the said agreement. When the agreement dated 10.1.1998 was entered into between the parties the same was nothing but an extension of the previous agreement. This is clear from Clause 2 of the agreement dated 10.1.1998 which is to the following effect : “2. The extension of contract shall be for a period of 5 (five) years commencing from 06.12.96. The contractor is de¬ployed at Kalinga O.C.P. for loading and transportation of 10.5 Million Tonnes for 5 years at the rate of 7000 Tes/day. Loader and Tipper to be deployed shall be 4 nos. & 40 nos. respectively.” There is an annexure to the said agreement of 1998 which was treated as part of the contract. In the said agreement of 1998 Clause-II of the Annexure is the General Terms and Conditions applicable to M/s. Ashis Transport Company Ltd., namely the petitioner. Loader and Tipper to be deployed shall be 4 nos. & 40 nos. respectively.” There is an annexure to the said agreement of 1998 which was treated as part of the contract. In the said agreement of 1998 Clause-II of the Annexure is the General Terms and Conditions applicable to M/s. Ashis Transport Company Ltd., namely the petitioner. In the first agreement dated 13.10.1992 there is the same Annexure as “General Terms and Conditions” and the said words were repeated in Clause-II of the Annexure to the 1998 agreement to indicate that the General Terms and Conditions which are applicable to the first agreement are also applicable to the second agreement. The second agreement makes it very clear that the General Terms and Conditions are applicable to M/s. Ashis Transport Company Ltd., namely, the petitioner are also attracted to the second agreement. 4. Under those General Terms and Conditions Clause 36 is the arbitration Clause which has been set out above. It also appears from various correspondence between the parties that the subsequent agreement is nothing but an extension of the previous agreement. Reference in this connection may be made to the letter of the opposite parties dated 12.1.1998 written by CME (Prodn.)/SO (Mining), Kalinga Area of opposite party No. 1 to its Project officer. Similar letters have been disclosed in the petition, particularly letter dated 15.7.1997 which is sent by the Chief General Manager (CMS) of the opposite party No. 1 wherein the approval of the competent authority for extension of contract for a further period of five years from 6.12.1996 to 5.12.2001 was recorded. The said approval order is as follows : “This is to convey the approval of the competent authority that the extension of contract of M/s. Ashis Transport Company Limited, an Ex Servicemen Company, has been granted for a further period of 5 (five) years i.e., from 6.12.1996 to 5.12.2001. This proposal is duly concurred by finance Vide EC No. FC/SBP/KA/CT/Ext./C-31/97-98/S-01. dated 14.7.1997. However, Area is advised to submit the quantum of work to be done by the party during the extended period (year-wise) for conveying the sanction of amount after obtaining approval from the Competent Authority. Chief General Manager (CMS)” The petitioner also accepted the said extension by its letter dated 23.7.1997 which was addressed by the petitioner to the Chief General Manager (CMS) of opposite party No. 1. Chief General Manager (CMS)” The petitioner also accepted the said extension by its letter dated 23.7.1997 which was addressed by the petitioner to the Chief General Manager (CMS) of opposite party No. 1. The said renewal of contract has also been approved by the Director Gener¬al, Resettlement, Government of India, Ministry of Defence and it was communicated to the Chief General Manager (CMS) of opposite party No. 1. In view of such clear case of the parties, this Court has to conclude that the subsequent agreement is nothing but an extension of the previous agreement and in the previous agreement there was an arbitration clause as set out hereinabove. The petitioner, therefore, wrote the letter dated 1.8.2002 to the Chairman-cum-Managing Director of opposite party No. 1 for ap¬pointment of an Arbitrator in terms of the arbitration clause. 5. In the counter affidavit which has been filed by the opposite parties the receipt of said notice has been acknowledged in paragraph 6(c) and even after receipt of the said notice as the opposite parties did not appoint any Arbitrator within the period of thirty days this petition was filed on 18.2.2003, after about six months from the date of the said notice. 6. In this connection the learned counsel for the petitioner has referred to a decision of the Delhi High Court in case of A.K.Jaju v. Avni Kumar, reported in AIR 2003 Delhi 364. In that case it was urged on behalf of the opposite parties that no arbitration agreement survived in the second agreement as the same was not mentioned in the second agreement and the second agreement has superseded the first agreement. Repelling the said contention the learned Judge held that when there is an arbitration clause in the first agreement and the second agreement shows that it was silent and was a continuation of the first agreement the plea that arbitration clause does not survive cannot be accepted. In the instant case also the second agreement was merely an extension of the first agreement and in the Annex¬ure to the second agreement it has been made clear that the General Terms and Conditions which have been mentioned at the top of the Annexure to the first agreement are applicable to the petitioner. Therefore, the arbitration clause which was part of the first agreement survives. 7. Therefore, the arbitration clause which was part of the first agreement survives. 7. Reference was also made to a decision of the Supreme Court in the case of Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and others, reported in AIR 1999 SC 2102 . In that case parties entered into two separate agreements, one for construction of flat and another for its interior designing, each containing an arbitration clause. The arbitration clause under the construction agreement covered not only the disputes arising under that contract but also other connected disputes. The dis¬putes under both the agreements were the same. The Supreme Court held that the disputes under both the agreements are to be covered by the arbitration clause under the construction agreement. The instant case is not a case of two agreements. The second agreement is merely an extension of the agreement which contains an arbitration clause and the work under both the agreements are the same. Therefore, the dispute in both the agreements being same, the second agreement is covered by the arbitration clause in the first agreement. 8. Somewhat similar view has been taken by a learned Judge of the Madras High Court in the case of Ramco Super Leathers Ltd. and another v. Associates India Financial Services (P) Ltd., reported in 2004 (1) Arb. LR 241 (Madras). In that case there were two agreements. In the loan agreement there was an arbitra¬tion clause, but the same was not repeated in the agreement creating charge. The learned Judge held that the arbitration clause in a loan agreement must necessarily be incorporated in the agreement creating charge. But in the instant case, the subsequent agreement being an extension of the first agreement, the arbitration clause in the first agreement must be said to have been incorporated in the second agreement and such incorporation is not inconsistent with the terms of the second agreement. 9. For he reasons aforesaid, this Court is of the opinion that there is an arbitration clause between the parties and which has been quoted hereinabove and there was demand by the petitioner for appointment of arbitrator which has not been accepted by the opposite parties within thirty days from the date of receipt of such demand. Therefore, the present petition for appointment of Arbitrator under Section 11 is maintainable. This Court, therefore, appoints Mr. Therefore, the present petition for appointment of Arbitrator under Section 11 is maintainable. This Court, therefore, appoints Mr. Justice Subhransu Kumar Mohanty, a retired Judge of this Court the Arbitrator to decide the dispute between the parties. 10. The Arbitrator so appointed shall enter upon the reference within a period of four weeks from the date of service of this order upon him. The remuneration and other charges of the Arbitrator will be fixed by the Arbitrator himself. The Arbitrator after entering upon the reference shall decide the dispute between the parties and pass an award within a period of six months. This petition is allowed to the extent indicated above. Petition allowed.