State of Tripura v. Motherson Zanotti Refrigeration System Ltd.
2017-12-08
T.VAIPHEI
body2017
DigiLaw.ai
JUDGMENT & ORDER : In the teeth of the objection made by the respondent, the question which falls for consideration in this petition is whether this Court can appoint an arbitrator to decide the contractual dispute between the petitioners and the respondent? 2. The petitioner No.2 floated the notice inviting tender vide No.1/Agri. (Engg.)/N/2010-11 dated 20-4-2010 for construction of 2000 Mt. Capacity Multipurpose Cold Storage at Dhamranagar (Bagbassa), North Tripura including one year operation and maintenance. The respondent participated in the tender and stood the lowest in the bid whereupon the contract work was allotted to the respondent by the petitioner No.2 by issuing the work order dated 16-12-2010. An agreement was thereafter executed on 17-12-2010 by and between the parties with the stipulation that the work was to be completed within the next twelve month, i.e. by 29-12-2011. According to the petitioners, though the respondent started the work, but there was delay in the progress of the work and it, instead of expediting the execution of the work, at one point of time suspended the work w.e.f. 5-4-2012. When the respondent failed to complete the work despite the assurance made by it, the petitioners issued the show cause notice dated 6-6-2013 upon it. After giving sufficient opportunity to the respondent, the petitioners terminated the contract on 16-9-2013 for getting the remaining work to be executed by a third party at the risk and costs of the respondent. The petitioners also informed the respondent that some excess payments were also made to it and requested it to return the excess amount to them. When the respondent refused to do so, the petitioners finally issued notice in the form of Memo dated 5-1-2016 indicating therein the detail calculation after due deduction as per the terms of the agreement and requested it to deposit the balance amount of Rs.1,46,01,870/-in their account within 15 days from the date of the receipt of the said demand notice, failing which there would be no option but to invoke the arbitration clause for realization of the aforesaid amount. When no reply was made by the respondent, the petitioners, having no alternative filed the application dated 9-3-2016 before the Director of Agriculture, Govt.
When no reply was made by the respondent, the petitioners, having no alternative filed the application dated 9-3-2016 before the Director of Agriculture, Govt. of Tripura for the appointment of an arbitrator under Clause 4.48.0 of General Conditions of Contract (Arbitration Clause) for settlement of the disputes through the process of arbitration by appointment or nomination of one arbitrator by the employer. However, due to the coming into force of the Arbitration and Conciliation Act, 1996 as amended in 2015, this application has been filed. 3. The application is stoutly opposed by the respondent, who, in its reply, contends that the claims raised by the petitioners are time barred as it had already requested for closure of the contract and stopped the work on 20-4-2013 in terms of the contract, which stipulated that in the event of the respondent not working for 28 days, the contract come to an end. As the period of limitation for suing the respondent commenced on 20-4-2013 when the request for closure was so made, the suit became time barred after the expiry of three years on or about 18-5-2016; after the expiry of three years, there is no scope for appointment of an arbitrator. Alternatively, the answering respondent referring to Section 21 of the Arbitration and Conciliation Act, 1996 points out that unless otherwise agreed to by the parties, the arbitral proceedings in respect of a particular dispute commence on the date from which a request for that dispute to be referred to arbitration is received by the respondent and accordingly, submits that no request to that effect has ever been made by the petitioners and, in the absence of such request, no arbitration proceedings can be said to commence till now. Though other contentions are raised by the respondent in their reply, they are not really necessary for adjudication of this petition and are accordingly not referred to for the sake of brevity. 4. After hearing Mr. Soumendu Roy, the learned counsel for the State, who relies on Schlumberger Asia Services Ltd. v. ONGC Ltd., (2013) 7 SCC 562 and Punjab State and others v. Dina Nath, (2007) 5 SCC 28 , to contend that the application is not time barred, and Mr.
4. After hearing Mr. Soumendu Roy, the learned counsel for the State, who relies on Schlumberger Asia Services Ltd. v. ONGC Ltd., (2013) 7 SCC 562 and Punjab State and others v. Dina Nath, (2007) 5 SCC 28 , to contend that the application is not time barred, and Mr. Ruhit Puri, the learned counsel for the respondent, who strenuously argues that the application is hopelessly time barred, I am of the considered opinion that the question as to whether the application is time barred or not involves serious disputed questions of fact, which cannot be decided by this Court in this application, and the matter best left to the decision of the Tribunal. Consequently, I hold that this is a case in which it will be more prudent to appoint the sole arbitrator to decide the issue relating to limitation along with other issues instead of deciding it by myself only on the question of limitation. I am fortified in my view by the decision of the Apex Court in Schlumberger Asia Services Ltd. (supra), the relevant portions are found at paras 24 and 25 of the report, which are in the following terms: “24. I have considered the submissions made by the learned counsel for the parties. A bare perusal of the observations made by this Court in para 39 of the judgment in SBP & Co., SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 makes it clear that the Chief Justice or the designated Judge can also decide whether the claim was dead one or a long barred claim. But it is not imperative for the Chief Justice or his designate to decide the questions at the threshold. It can be left to be decided by the Arbitral Tribunal. 25. The observations made in SBP & Co. were explained by this Court in Indian Oil Corpn. Ltd., Indian Oil Corpn Ltd. v. SPS Engg. Ltd. (2011) 3 SCC 507 which are as under: “14. To find out whether a claim is barred by res judicata, or whether a claim is ‘mala fide’, it will be necessary to examine the facts and relevant documents. What is to be decided in an application under Section 11 of the Act is whether there is an arbitration agreement between the parties.
To find out whether a claim is barred by res judicata, or whether a claim is ‘mala fide’, it will be necessary to examine the facts and relevant documents. What is to be decided in an application under Section 11 of the Act is whether there is an arbitration agreement between the parties. The Chief Justice or his designate is not expected to go into the merits of the claim or examine the tenability of the claim, in an application under Section 11 of the Act. The Chief Justice or his designate may however choose to decide whether the claim is a dead (long barred) claim or whether the parties have, by recording satisfaction, exhausted all rights, obligations and remedies under the contract, so that neither the contract nor the arbitration agreement survived. When it is said that the Chief Justice or his designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time barred claim and there is no need for any detailed consideration of evidence. We may elucidate by an illustration: if the contractor makes a claim a decade or so after completion of the work without referring to any acknowledgment of a liability or other factors that kept the claim alive in law, and the claim is patently long time barred, the Chief Justice or his designate will examine whether the claim is a dead claim (that is, a long time barred claim). On the other hand, if the contractor makes a claim for payment, beyond three years of completing of the work but say within five years of completion of work, and alleges that the final bill was drawn up and payments were made within three years before the claim, the Court will not enter into a disputed question whether the claim was barred by limitation or not. The Court will leave the matter to the decision of the Tribunal.
The Court will leave the matter to the decision of the Tribunal. If the distinction between apparent and obvious dead claims, and claims involving disputed issues of limitation is not kept in view, the Chief Justice or his designate will end up deciding the question of limitation in all applications under Section 11 of the Act.” (emphasis supplied) These observations make it clear that it is optional for the Chief Justice or his designate to decide whether the claim is dead (long barred). It is also made clear by this Court that the Chief Justice or his designate would do so only when the claim is evidently and patently a long time barred claim. The claim could be said to be patently long time barred, if the contractor makes it a decade or so after completion of the work without referring to any acknowledgment of a liability or other factors that kept the claim alive in law. On the other hand, if the contractor makes a claim, which is slightly beyond the period of three years of completing the work say within five years of completion, the Court will not enter into the disputed questions of fact as to whether the claim was barred by limitation or not. The judgment further makes it clear that there is no need for detailed consideration of the evidence.” 5. In the result, this application is allowed and is disposed of. Let a miscellaneous application be registered to start the process for appointment of a new arbitrator to decide the dispute in question and the same will be listed again on 11-12-2017.