Aluminum Industries Ltd. v. Rajasthan State Mines and Minerals Ltd.
2017-09-08
SANGEET LODHA
body2017
DigiLaw.ai
ORDER : SANGEET LODHA, J. 1. This arbitration application has been filed by the applicant under section 11(6) of the Arbitration and Conciliation Act, 1996 ("the Act") for appointment of Sole Arbitrator on account of the respondents failing in appointing the Arbitrator in terms of the arbitration clause in the contract. 2. The applicant company, a sick industrial unit, was awarded contract by the respondent Rajasthan State Mines and Minerals Limited (RSMML) of the work of 'Design, Engineering, Supply, Fabrication, Erection, Testing and Commissioning of Crushing and Screening Plant' at Sanu Lime Stone Project of RSMML. The contract value of the work was Rs. 11,88,00,000/-. The work was to be completed within a period of 16 months from the date of issue of Telex of Intent i.e. 14.8.92 and accordingly, the date of completion of the work was 13.12.93. The parties entered into agreement on 27.2.93. The clause 90 of General Conditions of Contract deals with the settlement of the dispute arising between the parties, which reads as under: "All disputes and differences arising out of or in any way touching this contract whatsoever, except as to any matter, the decision of which is expressly vested in any Authority in this contract, shall be referred to Sole Arbitrator of the person appointed by Managing Director of the Company. The Sole Arbitrator shall give a reasoned, speaking detailed award and the same shall be final and binding on the parties to this contract." 3. The execution of the work was delayed and therefore, on 16.10.95, the applicant company made an application for extension of time without penalty, mentioning therein the detailed reasons for the delay. On 23.11.94 RSMML approved the extension of time upto 30.11.95 without prejudice to its rights in accordance with the terms and conditions of the contract entered into between the parties. The applicant company was requested to get extended the validity of bank guarantee given for Mobilization Advance upto 31.8.96 as also the bank guarantee given for security deposits upto 30.11.97. That apart, the applicant company had requested to assign the entire insurance claim lodged by it with the United India Insurance Company in favour of the RSMML as per the terms and conditions of the contract. The work could not be completed even within the extended period.
That apart, the applicant company had requested to assign the entire insurance claim lodged by it with the United India Insurance Company in favour of the RSMML as per the terms and conditions of the contract. The work could not be completed even within the extended period. Further extension was granted upto 31.3.97 by the RSMML vide letter dated 10.3.97 with clear stipulation that no further extension will be granted and if the contractual obligations are not completed, the further course of action shall be taken as per the provisions of the contract. The applicant company sought further extension of time which was refused vide communication dated 22/24.4.97 and the RSMML undertook the completion of the balance work at the cost and risk of the applicant company. The RSMML invoked the bank guarantee for Rs. 1,18,80,000 which was released by the Bank of Baroda on 20.8.97. The another bank guarantee against the mobilization advance was returned by the RSMML to the applicant company. The final bill was submitted on 19.7.98, which was later withdrawn by the applicant company vide letter dated 27.7.98. 4. Precisely, the case of the applicant company is that the RSMML failed to settle the various claims. It is submitted that on information being sought by the applicant company under Right to Information Act, the RSMML apprised the applicant company that a credit balance of Rs. 7,32,572/- is lying in the books of account of RSMML. The applicant submitted yet another application on 27.12.13 seeking information regarding the closure of the contract, which was not furnished by the RSMML. The applicant company also requested RSMML to permit the inspection of books of account and other financial documents which was not allowed by the RSMML and thus, on 5.4.16 the applicant served the RSMML with a notice invoking arbitration clause in the contract for appointment of sole arbitrator within a period of 30 days claiming a sum of Rs. 2,69,54,945/- plus interest and cost, but to no avail. Hence, this application. 5. Learned counsel appearing for the applicant contended that admittedly, the applicant company was not granted extension for completion of the work beyond 31.3.97 and the bank guarantee for Rs. 1,18,80,000/- was invoked on 13.8.97 and another bank guarantee was returned to the applicant company on 28.11.97.
2,69,54,945/- plus interest and cost, but to no avail. Hence, this application. 5. Learned counsel appearing for the applicant contended that admittedly, the applicant company was not granted extension for completion of the work beyond 31.3.97 and the bank guarantee for Rs. 1,18,80,000/- was invoked on 13.8.97 and another bank guarantee was returned to the applicant company on 28.11.97. It is submitted that the payments in the account of the applicant company were made to various parties as requested in the year 1998 and thereafter, the RSMML did not receive any claim from the applicant company and thus, the claim made by the applicant company after a period of 18 years is apparently barred by limitation and thus, the application preferred for appointment of arbitrator deserves to be dismissed on this count alone. However, it is not disputed that the applicant company has credit balance of Rs. 7,32,572/- in the books of accounts of RSMML. 6. Replying the objection raised on behalf of the respondent, learned counsel appearing for the applicant company submitted that admittedly, withdrawal of the final bill by the applicant company was made with the consent of the RSMML and thus, no finality to the bills has been arrived at till this date. It is submitted that before release of payment against final bill if prepared, both the parties are required to sign a 'No Claim No Dues Certificate' which has not been done and therefore, the contract entered into between the parties remains alive. Learned counsel submitted that it is not in dispute that on the information being sought by the applicant company under RTI Act, vide reply dated 18.12.13, the RSMML has categorically admitted that final payment has not been made to the applicant company and a credit balance of Rs. 7,32,572/- is lying in the books of account of the RSMML. It is submitted that on 29.12.14, the representative of the applicant company accepted the documents relating to the contract in question and the representative of the applicant company was handed over computer generated slip showing an outstanding liability of Rs. 7,32,572/- as on 31.3.14. Learned counsel submitted that on the facts and in the circumstances of the case, the contention sought to be raised that the claim raised is barred by limitation, is absolutely devoid of any merit. 7. I have considered the rival submissions and perused the material on record. 8.
7,32,572/- as on 31.3.14. Learned counsel submitted that on the facts and in the circumstances of the case, the contention sought to be raised that the claim raised is barred by limitation, is absolutely devoid of any merit. 7. I have considered the rival submissions and perused the material on record. 8. Indisputably, there exists an arbitration clause in the agreement entered into between the parties. The only objection raised by the respondent is that the claim of the applicant is barred by limitation and therefore, no arbitrable dispute exists, which could be referred for adjudication to the arbitrator. 9. In the matter of 'Wexford Financial Inc. Panama v. Bharat Heavy Electricals Limited' (2016) 8 SCC 267 , the Hon'ble Supreme Court has specifically held that the matter with regard to the claim sought to be referred to arbitration being barred by law has to be decided by the arbitrator and not by the Chief Justice/Authority Designate in proceedings under Section 11(6) of the Act. The Court held : "We have heard the learned counsel for the parties at some length. The material facts are not in dispute. That a Service Provider Agreement was executed between the parties is admitted. That Article 7 of the said agreement provides for settlement of the dispute in relation to the agreement by way of arbitration is also not in dispute. That disputes have actually arisen between the parties in relation to the agreement is also evident from the averments made in the pleadings. The only method for determination of such disputes is by way of arbitration. Whether or not the petitioner has provided the services envisaged under the agreement and, if so, whether the said services were adequate and satisfactory are matters that can be examined only by the arbitrator. So also the question whether the claim made by the petitioner is time-barred cannot be examined in the present proceedings and shall have to be left open to be raised before the arbitrator. There is, in that view, no gainsaying that the present petition under Sections 11(5) and 11(12) shall have to be allowed with appropriate directions, particularly when this Court is concerned primarily with the question whether an arbitration agreement exists between the parties and if so whether the disputes falling within the scope of the agreement have arisen for determination.
There is, in that view, no gainsaying that the present petition under Sections 11(5) and 11(12) shall have to be allowed with appropriate directions, particularly when this Court is concerned primarily with the question whether an arbitration agreement exists between the parties and if so whether the disputes falling within the scope of the agreement have arisen for determination. Our answer to both these questions being in the affirmative, the petitioner has made out a case for appointment of an arbitrator and for reference of the disputes for adjudication to him/her." (Emphasis supplied) 10. Thus, keeping in view the authoritative pronouncement of the Hon'ble Supreme Court in Wexford Financial Inc. Panama's case (supra), on the facts and in the circumstances of the case noticed above, the question with regard to the claim of the petitioner being barred by limitation is not required to be gone into in the present proceedings. 11. In this view of the matter, the application is allowed. Hon'ble Mr. Justice N.N. Mathur, Former Judge, Rajasthan High Court, 34, Central School Scheme, Jodhpur, is appointed as Sole Arbitrator for adjudication of the dispute alleged to have arisen between the parties in relation to contract in question. It will be open for the parties to raise all contentions on the facts and law including the question with regard to the claim being barred by law before the Sole Arbitrator. The fee and expenses payable to the Arbitrator shall be determined as per clause 34 of the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended vide Manual of Procedure for Alternative Dispute Resolution (Amendment), 2016. The parties shall appear before the Arbitrator on 13.10.17.