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2013 DIGILAW 334 (CHH)

HARINARAYAN v. SOUTH EASTERN COALFIELDS LTD.

2013-11-22

SANJAY K.AGRAWAL

body2013
ORDER 1. This order shall govern the disposal of Arbitration Applications No. 39 and 40 of 2013 as the question of law involved in both applications is one and the same. However, for the sake of convenience, Arbitration Application No. 39 of 2013 is taken-up as the lead case. 2. Applicant – M/s Harinarayan & Co. filed this application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (henceforth 'the Act, 1996') seeking appointment of an arbitrator in terms of agreement dated 06.03.1995 entered into between the applicant and the respondent to adjudicate the dispute arising between the parties. 3. Facts leading to filing of the lead case, i.e., Arbitration Application No. 39 of 2013 may briefly be noted thus: (3.1) The applicant entered into an agreement on 6.3.1995 with the respondent/S.E.C.L. for construction of "56 Nos MQ & 28 Nos. B-Type quarters for Beherabandh Project of Hasdeo Area. The said work was awarded in favour of the applicant vide Work Order No. CE ©/BSP/WO/HSD/5672-78 dated 24.01.2005 and the total value of contract was Rs. 87,52,095.64/- and the work was required to be commenced with effect from 04.03.1995 and to be completed on 03.09.1996. It was further pleaded in the application, though the work was completed on 17.01.1997 in all respects to the entire satisfaction of the Respondent Company but neither final bill was prepared nor payment was made leading to issuance of notice dated 18.07.2006, 05.08.2006, 15.09.2006 & 20.04.2008 stating that final bill pertaining to the contract has not been prepared and paid and when no action was taken by the respondent/Company, Arbitration Application No. 13/2008 was filed before this Court, ultimately the said application was withdrawn by the applicant vide order dated 10.07.2012 as 30 days notice for appointment of Arbitrator as per clause 9 of the General Conditions of the agreement was not given to the respondent before filing arbitration application. (3.2) The applicant sent notice to the respondent by memo dated 7.8.2012 clearly stating that till this date claim of the applicant has neither been denied nor the final bill has been prepared by the respondent and within 30 days no action was taken by the respondent leading to filing of this application for appointment of sole arbitrator for resolving the dispute between the parties with regard to payment of total bill of Rs. 87,52,095.64/-. 87,52,095.64/-. (3.3) On being noticed, the respondent has entered into appearance and filed reply stating inter alia that work in question has already been completed on 17.01.1997 and thereafter first communication from the applicant side as per its own case was only on 18.07.2006 i.e. nearly after 114 months since completion of the work and, therefore, there is no live arbitrable issue requiring adjudication by this Court and application for appointment of arbitrator deserves to be rejected. 4. Mr. Manoj Paranjpe, learned counsel appearing for the application would submit that there is an valid arbitration agreement between the parties dated 6.3.1995 in shape of general conditions of the contract and there is a arbitral dispute between the parties for which the applicant has approached this Court which is the appropriate High Court for appointment of sole arbitrator for resolution of arbitral dispute arose between the parties as the respondent has failed to make appointment of arbitrator as per clause 9 of the agreement within stipulated period of 30 days. 5. Per contra, Shri Raj Kumar Gupta, learned counsel appearing for the respondent would submit that though there is arbitration agreement between the parties but looking to the fact that agreement was entered into between the parties on 6.3.1995 and work in question has already been completed on 17.1.1997 and the first notice for payment of bill was issued only on 18.07.2006, thus claim of the applicant is hopelessly barred by limitation and as such there is no live issue requiring adjudication by the Arbitrator and, therefore, the application for appointment of Arbitrator deserves to be dismissed. 6. I have heard and considered the rival submissions and have perused the documents appended thereto. 7. Having regard to the pleadings and submissions made by the parties, the following questions arise for consideration. (i) Whether there exists a valid and enforceable arbitration agreement between the parties and the applicant has approached appropriate High Court? (ii) Whether there is live arbitrable issue exists between the parties in the instant case ? and/or (iii) Whether the claim made by the applicant is hopelessly barred by limitation. Answer to Question No. (i) : 8. (i) Whether there exists a valid and enforceable arbitration agreement between the parties and the applicant has approached appropriate High Court? (ii) Whether there is live arbitrable issue exists between the parties in the instant case ? and/or (iii) Whether the claim made by the applicant is hopelessly barred by limitation. Answer to Question No. (i) : 8. The General Tern1s & Conditions annexed to the Agreement provides for arbitration vide Clause No. 9, which reads as under:- "All disputes or differences whatsoever arising between the parties out of or relating to the constitution, meaning and operation of this contract or breach thereof shall be settled by a sole arbitrator appointed by CMD of South Eastern Coalfields Ltd. and the awards or arbitrator shall be final and binding on the parties concerned. The arbitrator may from time to time with the consent of the parties enlarge the time for making & publishing the award the arbitration proceedings shall be in accordance with the Arbitration Act, 1940." 9. Pursuant to the agreement between the parties, the work has already been completed on 17.1.1997 and the four notices for payment of bill were issued by the applicant to the respondent dated 18.07.2006, 05.08.2006, 15.09.2006 and 20.04.2008, since no action has been taken by the respondent/Company for payment of bill, pursuant to which, 30 days’ notice for appointment of arbitrator as per clause 9 of the GOC was issued for appointment of arbitrator, but the respondent/Company has not taken any action for appointment of arbitrator, applicant has filed present application under Section 11(6) of the Act, 1996 for appointment of sole arbitrator. 10. 10. The existence of aforesaid arbitration clause as contained in the General Conditions of the Contract has not been disputed by the respondent/Company in the instant case and on the other hand, it has been stated that there is no dispute regarding existence of arbitration agreement between the parties, therefore, in light of the arbitration clause provided in the General Conditions of the Contract which is a part of agreement dated 06-03-1995 entered into between the parties, and in view of said fact having not been disputed by the respondent/SECL, I hold there is valid and enforceable arbitration agreement as provided under Section 7(1) of the Act, 1996 between the parties in which the applicant and the respondent both are parties and the applicant has made a request for appointment of an Arbitrator under Section 11(6) of the Act, 1996 to this Court which is appropriate High Court for appointment of Arbitrator in the instant case. Question No. (i) is answered accordingly. Answer to Question No. (ii) : 11. Indisputably, the work in question has been competed on 17.1.1997. It is also not disputed that final bill has not been prepared and no payment has been made after completion of the work to the applicant by the non-applicant/SECL. 12. It is true, first notice to the non-applicant claiming payment of bill issued only on 18.07.2006, which was reiterated by notice dated 5.8.2006, 15.09.2006 and 20.04.2008 and ultimately the application for appointment of arbitrator was filed on 30.06.2008. Fact remains that respondent/SECL has not disputed the fact the work assigned to the applicant has been competed long back in the year 2007 but the final bill has neither been prepared nor any payment has been made to the applicant till this date towards the work done by the applicant. It is also not the case of the non-applicant/SECL that the right and obligation flowing from the agreement in question, have already been concluded and satisfaction have been recorded regarding financial claims made by the applicant without objection. Thus, the non-applicant/SECL has neither concluded the monetary claim for applicant nor have closed his right to get the amount in dispute by recording satisfaction. 13. The Supreme Court in case of SBP & Co. Vs. Thus, the non-applicant/SECL has neither concluded the monetary claim for applicant nor have closed his right to get the amount in dispute by recording satisfaction. 13. The Supreme Court in case of SBP & Co. Vs. Patel Engineering Ltd. and another (2005) 8 SCC 618 had on occasion to define what exactly, the Chief Justice or his designate has to decide while hearing the application under Section 11(6) of the Act and held as under:- "39. It is necessary to define what exactly the Chief Justice, approached with an application under Section 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the question whether the claim was a dead one; or a long-barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal." 14. The Supreme Court in case of Hari Shanker Singhania Vs. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal." 14. The Supreme Court in case of Hari Shanker Singhania Vs. Gaur Hari Singhania (2006) 4 SCC 658 has held that stage of adjudication comes only, where the settlement with or without cancellation is not possible. It has been held as under:- "(24) Where a settlement with or without conciliation is not possible, then comes the stage of adjudication by way of arbitration. Article 137, as construed in this sense, then as long as parties are in dialogue and even the differences would have surfaced it cannot be asserted that a limitation under Article 137 has commenced. Such an interpretation will compel the parties to resort to litigation/arbitration even where there is serious hope of the parties themselves resolving the issues. The learned Judges of the High Court, in our view have erred in dismissing the appellants appeal and affirming the findings of the learned Single Judge to the effect that the application made by the appellants under Section 20 of the Act, 1940 asking for reference was beyond time under Article 137 of the Limitation Act..... . As already noticed, the correspondence between the parties, in fact, bears out that every attempt was being made to comply with the carry out the reciprocal obligations spelt out in the agreement between the parties." 15. The Supreme Court in case of Shree Ram Mills Ltd. Vs. Utility Premises (P) Ltd. (2007) 4 SCC 599 has held as under :- "31. ......... In Groupe Chimique Tunisien SA Vs. Southern Petrochemicals Industries Corpn. Ltd. (2006) 5 SCC 275 this Court had clearly held in para 10 that the Arbitral Tribunal can also go into the question of limitation for the claims in between the parties. We have discussed this subject only to hold that since the issue in between the parties is still alive, there would be no question of stifling the arbitration proceedings by holding that the issue has become dead by limitation. We leave the question of limitation also upon the Arbitral Tribunal to decide." 16. We have discussed this subject only to hold that since the issue in between the parties is still alive, there would be no question of stifling the arbitration proceedings by holding that the issue has become dead by limitation. We leave the question of limitation also upon the Arbitral Tribunal to decide." 16. Thus, considering the nature of dispute between the parties and taking into account the fact that the respondent/SECL has even neither made the bill after completion of work nor has recorded satisfaction of the financial claims of the petition in relation to the contract in question, this Court of the considered opinion that there is live arbitrable issue exists between the parties. This question is answered accordingly. In order to decide this question, it would be relevant to notice the decisions on the point, as to whether the question of limitation/long barred claim can be decided by this Court while considering the application under Section 11(6) of the Act. 17. In Bharat Rasiklal Ashra Vs. Gautam Rasiklal Ashra and another (2012) 2 SCC 144 , the Supreme Court held as under: "12. Following the decision in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 , this Court in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 , held as follows: (National Insurance Co. Ltd. case, SCC p. 283, paras 22 & 22.1-22.3) "22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. case. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is, (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. 22.1. The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 22.2. 22.1. The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 22.2. The issues (second category) which the Chief Justice/his designate may choose, to decide (or leave them to the decision of the Arbitral Tribunal) are: (a) Whether the claim is a dead (long-barred) claim or a live claim. (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration." 18. The Supreme Court in case of Balsaria Construction (P) Ltd. Vs. Hanuman Seva Trust Seva and others (2006) 5 SCC 658 , has held as under:- "We are of the opinion that the present suit could not be dismissed as barred by limitation without proper pleadings, framing of an issue of limitation and taking of evidence. Question of limitation is a mixed question, of law and fact. Ex facie in the present case on the reading of the plaint it cannot be held that the suit is barred by time." 19. Question of limitation is a mixed question, of law and fact. Ex facie in the present case on the reading of the plaint it cannot be held that the suit is barred by time." 19. In the instant case the non-applicant has simply made a statement that claim of the applicant is barred by limitation but neither supporting documents have been filed nor specific affidavit have been filed indicating as to how the claim of the applicant is barred by limitation, even otherwise the question of limitation is a mixed question of law and facts to be decided on the basis of proper pleadings and evidence thereon, I do not propose to decide the question as to whether the claim of the applicants is long barred claim/barred by limitation relying upon the decision of Supreme Court in National Insurance Case (supra), followed by the Supreme Court in Bharat Rasiklal case 5 (2012) 2 SCC 144 (supra) and I deem it appropriate to leave the question of limitation/long time barred claim exclusively to be considered and decided by the Arbitral Tribunal on the basis of proper pleadings evidence as same cannot be considered and decided while considering the application for appointment of Arbitral Tribunal under Section 11(6) of the Act, 1996. Thus, the issue No. III is answered accordingly. CONCLUSION 20. Considering that the parties entered into agreement which contains arbitration clause; the respondent/SECL has failed to act on the request of the applicant for appointment of arbitrator; and further considering that the dispute and differences had arisen out of agreement with regard to final bill of the work in question, this Court is of the opinion that a case for appointment of arbitrator is made out and application filed by the applicant under Section 11(6) of the Act deserves to and is hereby allowed. 21. In exercise of my powers under Section 11 (6) of the Arbitration and Conciliation Act, 1996 read with Para 3(ii) the scheme for Appointment of Arbitrator by the Chief Justice of Chhattisgarh High Court, 2002, I hereby appoint Hon'ble Mr. Justice V.K. Shrivastava, Former Judge of the Chhattisgarh High Court, r/o Vidhik Sewa Marg (Ware House Road), Bilaspur 495001, as the sole arbitrator, to adjudicate the disputes that have arisen between the parties, on such terms and conditions as the learned sole arbitrator deems fit and proper. Justice V.K. Shrivastava, Former Judge of the Chhattisgarh High Court, r/o Vidhik Sewa Marg (Ware House Road), Bilaspur 495001, as the sole arbitrator, to adjudicate the disputes that have arisen between the parties, on such terms and conditions as the learned sole arbitrator deems fit and proper. Undoubtedly, the learned sole arbitrator shall decide all the disputes arising between the parties without being influenced by any prima facie opinion expressed in this order, with regard to the respective claims of the parties. 22. The Registry is directed to communicate this order to the sole arbitrator forthwith to enable him to enter upon the reference and decide the matter as expeditiously as possible. No order as to costs. Application Allowed.