Technofab Engineering Limited v. National Aluminium Company Ltd
2019-03-01
K.S.JHAVERI
body2019
DigiLaw.ai
JUDGMENT : K.S. JHAVERI, J. By way of this application under Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner has prayed for the following reliefs: “(i) Constitute an independent and impartial Arbitral Tribunal to adjudicate upon the aforesaid dispute between the parties; (ii) Pass such other or further order/s as this Hon’ble Court may deem fit and proper be also passed in favour of the appellant and against the Opp. Party ” 2. Learned counsel for the petitioner has contended that pursuant to the tender floated by the opposite party, the petitioner submitted its bid and the same having been found to be lowest, the opposite party has entered into a Contract with the petitioner and the petitioner had been issued with Work Order No.CPP/CNT/TCE.5905A-H-574-002/W.O./2011/507, dated 12.02.2011 and Supply Order No. CPP/CNT/TCE.5905A-H-574-002/S.O./2011/508, dated 12.02.2011 for “33kv Switchyard & Transmission Line of Ash Disposal to Mines Void in Lean Slurry Mode”. 3. Under the Contract, there are two clauses for arbitration. One is Clause-87 of the General Conditions of Contract (for short ‘GCC’) and another is Clause-21 of the Special Conditions of Contract (for short ‘SCC’), under Annexure-2, which read as follows: “87. Arbitration: All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof of the contract or the rights touching or concerning the works or the execution or maintenance thereof of this contract or the construction meaning operation or effect thereof or to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination, foreclosure or breach of the contract (other than those in respect of which the decision of any person is by the contract expressed to be final and binding shall after written notice by either party to the contract to the other of them and to the Appointing Authority hereinafter mentioned be referred for adjudication to a sole Arbitrator to be appointed as hereinafter provided.”. (The clause 87 further provides for the procedure for appointment of a sole arbitrator and the procedure to be adopted by the arbitrator for adjudication.) 21. Dispute Resolution Expeditious amicable resolution should be the first effort of dealing executives of two parties.
(The clause 87 further provides for the procedure for appointment of a sole arbitrator and the procedure to be adopted by the arbitrator for adjudication.) 21. Dispute Resolution Expeditious amicable resolution should be the first effort of dealing executives of two parties. However, in the event that the dispute stays, the first step would be to refer issues to a duly authorized senior executive from each of the two companies for them to come with a resolution within 30 (thirty) days. In case it is still not resolved then arbitration as per Indian Arbitration & Resolution Act 1996 shall become applicable.” 4. Learned counsel for the petitioner contended that the dispute having arose between the parties, letter was issued by the petitioner to the Chairman & Managing Director (NALCO) on 17.11.2015 (Annexure-3). The relevant portion of the said letter reads as under: “xxx. The contract consist of two dispute resolution clauses and Technofab Engineering Ltd is of one view whereas NALCO is of different view and accordingly dispute between the parties further crystallized. The extract of some of the correspondences on the issue of dispute resolution are recorded herein under so that your honour is appraised of facts pertaining to different stands taken by Technofab Engineering Ltd & NALCO. xxx” 5. Learned counsel for the petitioner in support of his contention also draws attention of this Court to point nos. 2, 3 and last but two paragraphs of the said letter dated 17.11.2015. The relevant portion of the said points, to which learned counsel for the petitioner referred to, read as under: “2. As against above communication stated herein above at serial no.1, NALCO took a different stand interalia that they appointed Shri K.K. Panda as the Senior Executive for the purpose of amicable settlement under the following words: “Keeping in view your request invoking clause 21 of SCC in your letter ref.DO:3532/934, dated 24.04.2015, Sri K.K. Panda, General Manager (CPP)/NALCO, Angul has been appointed by NALCO as its authorized senior executive for the purpose of amicable resolution of all disputes”. 3. xxx xxx xxx In terms of clause 21 of SCC vis-à-vis the Arbitration clause at page 64 of GCC clause No.87, your attention is invited again to clause 21 of SCC wherein dispute resolution clause for amicable solution exists. It is submitted that this clause has already been exhausted and could be understood from our communication no.
3. xxx xxx xxx In terms of clause 21 of SCC vis-à-vis the Arbitration clause at page 64 of GCC clause No.87, your attention is invited again to clause 21 of SCC wherein dispute resolution clause for amicable solution exists. It is submitted that this clause has already been exhausted and could be understood from our communication no. DO:3532/1633, dated 23.05.2014. xxx xxx xxx It is submitted that once clause 21 had already been exhausted the parties are having the right in terms of the contract to rely on clause 21 interalia Arbitration clause. Technofab Engineering Limited has already invoked Arbitration clause no.21 vide letter no. 3532/934 dated 24.04.2015 by appointing nominee of the claimant and requested under the following words through our letter no.DO:3532/2347 dated 08.06.2015. “We thus again request you to appoint your nominee within a period of 21 days failing which we will take recourse of contract and law at your risk, cost and consequences.” xxx xxx xxx In terms of clause 87 of the contract all dispute and differences so arose between the parties hereto etc, shall after written notice by either party to the contract to the other of them and to the Appointing Authority mentioned herein shall be referred for adjudication to a sole Arbitrator to be appointed by your honour. Thus therefore while invoking clause 87 of GCC we call upon you to send within 30 days of the receipt of this notice a panel of 3 names of persons, so that one of the name among the three names so proposed can be selected to be appointed as sole Arbitrator.” 6. Learned counsel for the petitioner further contended that in response to the above letter of the petitioner, NALCO has suggested three names pursuant to Clause-21 of the SCC and Clause-87 of the GCC, vide its letter dated 26.12.2015, which reads as under: “As per Clause-21 of the Special Conditions of Contract dealing with the Arbitration and Clause No.87 of General Conditions of the Contract, a panel of 03 names of persons is to be communicated and accordingly the Appointing Authority (CMD, NALCO) has nominated the following panel of three names. (1) Mr. S. Patnaik, Former GM (Law), D-9, Prince Apartment, Naurajee Road, Visakhapatnam, Pin: 530002. (2) Mr. C.R. Pradhan, Ex-CMD, NALCO, N/4/181, IRC Village, Nayapalli, Bhubaneswar-751 015. (3) Mr.
(1) Mr. S. Patnaik, Former GM (Law), D-9, Prince Apartment, Naurajee Road, Visakhapatnam, Pin: 530002. (2) Mr. C.R. Pradhan, Ex-CMD, NALCO, N/4/181, IRC Village, Nayapalli, Bhubaneswar-751 015. (3) Mr. S.K. Banerjee, Ex-CMD I/C, NALCO, A-4/6, KMDA Baltallk Co-operative Housing Society Baghajatin, Kolkata.” 6.1 Accordingly, Mr. S. Patnaik, Former GM (Law) was appointed as sole Arbitrator by the CMD, NALCO being the Appointing Authority for adjudicating upon the disputes between the parties. Pursuant to the direction of the Arbitrator, the petitioner submitted their detailed claim statement on 8.04.2016 claiming 13 numbers of claims, in total, amounting to Rs.11,98,51,160.77 along with interest from the due date till making the payment. 7. Upon filing of the claim by the petitioner, an application under Section 16(2) of the Arbitration and Conciliation Act, 1996 (for short “the Act”) came to be moved by the opposite party and on 27.01.2017 and the Arbitrator under Annexure-9 passed the following orders: “10. The Respondents, in support of their application under Section 16 submitted that for any dispute to be resolved through arbitration, the Claimants had to follow the procedure laid down in Clause 21 before invoking arbitration. That since the claimants have not followed the mandate given in Clause 21, they submitted that the claims are not arbitrable. They further submitted that even the claims are in a fluid state and are differing from time to time. In support of their contentions they relied upon several judgments of the Honourable Supreme Court and various High Courts, some of which are mentioned below: i. AIR 1999 Supreme Court 2102 ii. AIR 2006 Supreme Court 450 iii. 2008 (2) ARB LR 76 iv. AIR 2007 Supreme Court 2441 v. AIR 1983 Orissa 29 vi. AIR 1996 Supreme Court 2965 vii. AIR 1992 Supreme Court 1809 viii. AIR 2000 Supreme Court 122 ix. AIR 1989 Supreme Court 1498 x. AIR 2003 Supreme Court 2629 xi. AIR 2003 Supreme Court 1495 xii. AIR 2004 Kolkata 267 xiii. AIR 2004 Rajasthan 51 etc 11. The main emphasis of submissions of the Respondents is that Clause 21 of the Contract mandates that before reference to arbitration it has to go through certain steps namely; i. Efforts for amicable resolution failing which ii. Meeting of senior executives of both the parties for resolution where after, if the dispute still remain unresolved. iii.
The main emphasis of submissions of the Respondents is that Clause 21 of the Contract mandates that before reference to arbitration it has to go through certain steps namely; i. Efforts for amicable resolution failing which ii. Meeting of senior executives of both the parties for resolution where after, if the dispute still remain unresolved. iii. It has to be referred for arbitration as per the Indian Arbitration & Conciliation Act 1996. 12. Clause 87 of the GCC quoted above provides the procedure for appointment of an Arbitrator. Under the said clause, disputes whatsoever which shall at any time arise between the parties xxx xxx shall after written notice by either party to the other and to the Appointing Authority be referred for adjudication to a sole Arbitrator. The Clause provides for detailed procedure for appointment. 13. The main contention of the Respondents is that the Claimants instead of adopting the mechanism provided in Clause 21 issued a letter purporting for appointment of an Arbitrator under Clause 21 of the SCC. They contended that Clause 21 is not the Arbitration Clause but it only lays down the pre-conditions for invocation of arbitration and that only under Clause 87 an Arbitrator can be appointed. They further contended that the Claimants have not only failed to exhaust the procedure in Clause 21 but they also failed to comply with the conditions of Clause 87 as well. Clause 87 provides that a written notice is required to be given by a party to the other party and also to the Appointing Authority for adjudication of disputes to be referred to a sole arbitrator. They contended that no such notice of the alleged disputes was issued to the Appointing Authority for reference. 14. The Respondents submitted in their application that certain disputes arose between the parties which could not be resolved amicably between the dealing executives of both the parties where after the Claimants for the first time vide their letter dated 23.05.2014 issued a notice under Clause 21 with a request to appoint a senior executive for resolution of disputes including a claim of Rs.3,26,08,214=00, that thereafter a meeting was held between the senior executives of both the parties on 14.07.2014 and an MOM was drawn up, that the Claimants representative Mr. M.L. Agarwal did not sign the said MoM.
M.L. Agarwal did not sign the said MoM. Consequently, the MoM was sent by mail to the Claimants for signature of the Claimants, that instead of signing the same the Claimants raised other issues vide their notice dated 08.09.2014. The said correspondence filed in this proceeding was referred to. 15. The Respondents contended that in respect of the so called other issues, the procedure contemplated in terms of Clause 21 were not followed namely, there was no effort for amicable resolution or no meeting of the senior executives of both the parties was held before invoking the arbitration Clause under 87. 16. That after a lapse of one year, they raised new claim amounting to Rs.7,02,34,423=54 which is a claim totally different from the earlier claim for which arbitration was sought. The Respondents further contended that the claims have been enhanced from time to time which cannot be permitted or adjudicated. They referred to the list of such claims in Para 9 of their petition under Section 16. Xxx xxx xxx 23. The Claimants in their course of submissions through Sri S.R.Thakurta, Senior Counsel, apart from the decisions cited above also referred to various judgments like i. Civil Appeal No.973 of 2007-Manohar Lal case at Para 33 ii. 1993 (3) Rajasthan 355-Thyssen Stahlunion gamb (corresponding to AIR 1999 SC 3923 ) at Para 34 which deals with the distinction between the Acts of 1899/1940 and 1996 with reference to ‘reference’, submission/reference’ etc’. There is nothing like ‘reference’ under the new Act’, that without prejudice it was also submitted that Clause 21 of SCC has also been given a go bye by the parties. iii. In the case of B.L. Sreedhar vs K.M. Munireddy (Supreme Court) reported in 2002, Justice Arjit Pasayat, it is contended that if a representation is made based on which a party acts in good faith, the said party cannot later go back on it. iv. AIR 1979 SC 621 -Motilal Sugar Mills Case-dealing with the principle of Estoppel. v. Supreme Court in Babulal Badriprasad Varma reported on 02.05.2008 has dealt with the principle of waiver. vi. AIR 1974 SC 158 -Damodar Valley Corporation Case - dealing with arbitration clause where the wordings are similar to Clause 87. Damodar Valley Corporation Case was also referred to by the respondents, which gives a wider application relating to raising of claims at different points of time. vii.
vi. AIR 1974 SC 158 -Damodar Valley Corporation Case - dealing with arbitration clause where the wordings are similar to Clause 87. Damodar Valley Corporation Case was also referred to by the respondents, which gives a wider application relating to raising of claims at different points of time. vii. Roshanlal Gupta vs Parasuram Holdings-Delhi High Court Decision dated 11.02.2009 at Para 39 deals with the issue of deciding a preliminary issue. In fact unless all the facts and documents are brought on record before the arbitrator, the preliminary issue cannot be decided (Ref.Page 5 of the reply of the claimants to Section 16 petition.) 24. The Claimants also referred to commentaries on the relevant sections of the Arbitration Act. 25. The Parties reiterated their respective stands in their written briefs. After careful consideration of the entire matter and the rival contentions, I am of the view that most of the issues raised are merely academic in nature without any significant impact at this stage on the points involved. Those can be addressed in the final analysis in the Award if a need arises. For example, much breath has been wasted on the point whether the application U/S 16 of the Act could be filed before filing the Counter to the Statement of Claims etc. From some of the decisions cited by the parties it is undisputed that such an application can be filed even before filing the Counter, as has been done in the instant case. This position has also not been seriously disputed by the Claimants. Had the application been filed after filing the Counter, it would perhaps have called for an in depth analysis of the issue. Since it has been filed before filing the Counter, the efforts of the parties is purely academic without any real bearing on the maintainability of the application U/s 16 of the Act. 26. As has been held by the Hon’ble Delhi High Court in the case of Roshanlal Gupta vrs Parasuram Holding Ltd. as well as the decision of the Hon’ble Supreme Court in the case of Maharshi Dayanand University and another Vrs Anand Coop Ltd it is not mandatory for the Arbitrator to decide the preliminary issue at the outset and that it can be decided even in the final Award.
However by deciding an issue as a preliminary issue, it will obviate the parties from indulging in wasteful time and effort on such issues that may ultimately be held as not maintainable. In other words, if some of the claims are prima facie not maintainable/arbitrable on some technicalities or as per the terms of the Contract and it is held so at the outset, the parties need not delve into the details of those by adducing avoidable evidence, submissions etc in the course of the regular hearing, thereby saving the time, effort etc. of the parties as well as the Arbitrator. 27. The next point of relevance is whether Clause 21 of SCC has been impliedly given a go bye by the parties as contended by the Claimants and whether they acted on the alleged representation of the Respondents and whether the Respondents are estopped from raising the plea that the preconditions of Clause 21 of SCC are required to be complied with before the “dispute” attains the character of an arbitrable dispute. 28. On a careful scrutiny of the documents and correspondence filed so far by the parties and referred to in the course of the respective submissions, I find that there is no substantial material to establish that the parties had given a go bye to the Clause 21 of SCC as claimed by the Claimants, nor are the Respondents estopped from raising such a plea. True it is that initially the Claimants contention that they laboured under the impression that Clause 21 is an arbitration clause and that when Respondents objected to it, they, on their own volition invoked Clause 87 of GCC for appointment of an Arbitrator. I conclude that there is no misrepresentation on the part of the Respondents nor is there any estoppels. 29. In the leading case of Alopi Prasad, reported in AIR 1960 Supreme Court page 588, it has been held that the Arbitrator has to give effect to the Contract and that an express stipulation governing the relations between the parties under a contract cannot be displaced and that an arbitrator cannot ignore an express term in the contract. Infact the Arbitrator is a creature of the contract and has to give effect to the terms of the contract even if any such terms are onerous. 30.
Infact the Arbitrator is a creature of the contract and has to give effect to the terms of the contract even if any such terms are onerous. 30. In the absence of an amendment to the contract by written consent of the parties, Clause 21 of SCC cannot be ignored and it has full application. Therefore the pre-conditions stipulated in Clause 21 of SCC have to be complied with to make a “dispute” an “arbitrable dispute”. 31. The requirements of Clause 21 of SCC in short are that a) effort should be made for a mutual settlement of a dispute, failing which (b) it has to be resolved through a meeting of Senior Executives of both the parties, and failing which (c) It can be referred to arbitration. 32. Therefore, it being a binding clause on both the parties, it is to be seen if any or all the claims raised in this proceeding complied with these pre-conditions to make them “arbitrable dispute” It is in this context, the correspondence and documents relied upon by the parties assumes significance. 33. The following few correspondences are considered relevant at this stage to analyse the issue (1) Letter dtd. 23.5.2014 from Claimants to respondents (C-65/1) (2) MOM dtd. 14.7.2014 (C-69/1) (3) Letter dtd. 24.4.2015 from Claimants to Respondents (C-93/4) (4) Letter dtd. 23.5.2015 from res to Claimants (Ann A to Sec 16 Ptn) (5) Letter dtd. 08.6.2015 from Claimants to Res (C-109/16) (6) Letter dtd. 15.7.2015 from Claimants to Res (C-109/27) (7) Letter dtd. 23/24.7.2015 from Res to Claimants (Ann B to Sec 16 Ptn) (8) Letter dtd. 25.8.2015 from Claimants to Res (C-109/29- incomplete copy) (9) MOM dtd. 4th & 5th Nov 2015 (C-110/1 & 2) 34. Apart from the rival contentions, some of these correspondences refer to the Contractual provisions governing the parties. 35. It transpires that the contract is a Turnkey-Lump sum contract with an original contract period of ten months from 9.12.2010 i.e. up to 8.9.2011. 36. As per letter of intent dated 8-12-2010 the scope of work includes supply and service work excluding O & M services with a contract period of 10 months and a contract value of Rs.5,18,57,986/-(Ref C-1/1) 37. It is seen from the correspondence that the work spilled over much beyond the contract period and even some of the extensions of time were more than even the original contract period.
It is seen from the correspondence that the work spilled over much beyond the contract period and even some of the extensions of time were more than even the original contract period. The time extensions given were also in terms of the contractual stipulations. 38. Now coming to the issue of the claims as to in respect of which the preconditions of Clause 21 of SCC were complied with (other than any consequential claims) claim Nos.7 to 11 needs to be examined. 39. The claimants vide their letter dt.25.3.2014 (C-65/1) had raised claims totaling to Rs.1,87,74,362 plus alleged loss of profit, in all totaling to Rs.3,26,08,216/-and in respect of this they invoked Clause 21 and requested for discussions for settlement of the said claims. It transpires that there were mutual discussions as well as discussions by Senior executives by both parties as per Clause 21 and a Minutes of Meeting were drawn up on 14-7-2014. 40. Subsequently by their correspondence dt.24-4-2015 (ref.C-93/4) the Claimants raised a claim of Rs.7,02,34,623.54 contending that the requirements of Clause 21 have been complied with & that in terms of the said clause they appointed Shri B.K. Biswas as their nominee for adjudication of disputes stating that they have invoked the arbitration clause 21 as Clause 87 of GCC stands superseded by Clause 21 of SCC. The Respondents refuted the same on the ground that the arbitration clause is Clause 87 of GCC and that no arbitration can be commenced merely on invoking clause 21. They also contended that the preconditions of clause 21 have not been complied with in respect of the claims in C-93/4 referred to above and as such these are not arbitrable. 41. It also transpires that the Respondents nominated one Shri K.K. Panda as their nominee for mutual discussions of settlement at senior executive level, to which the Claimants refuted and stated that since they have already nominated their arbitrator, the matter should go to arbitration. The Respondents denied the said contentions drawing the attention to Clause 87 of GCC which is the arbitration clause in the contract and that an arbitrator can be appointed only in terms of Clause 87 by the Appointing Authority after following the procedure prescribed therein. They further contended that the preconditions of clause 21 have not been complied with to make any of these claims as “arbitrable disputes”. 42.
They further contended that the preconditions of clause 21 have not been complied with to make any of these claims as “arbitrable disputes”. 42. Thereafter the claimants initiated action for arbitration in terms of clause 87 of GCC by requesting the Appointing Authority to appoint an arbitrator and after following the procedure laid down therein, I have been appointed as an Arbitrator by the Appointing Authority named in Clause 87 of GCC. 43. On a perusal of the correspondence referred to above and the documents placed, the requisite meeting of the parties for a settlement where after discussions held as senior executive level of both the parties and the Minutes of the Meeting dt.14-7-2014 were drawn up which relates to the claims of Rs.3,26,08,216/-. There does not seem to be any effort for mutual settlement and discussions at senior executive level as required under Clause 21 in respect of any of the other claims as claimed in the Statement of Claims by the Claimants. 44. As has been held above in my preceding part of this Order, Clause 21 of SCC is a pre-requirement for invoking arbitration and since this has not been complied with by the claimants, all the other claims except the claim for Rs.3,26,08,216/-cannot come within the purview of “Arbitrable Disputes”. 45. In the aforesaid circumstances, I hold that the above claim of Rs.3,26,08,216/-and any consequential claims arising out of the said claim is only covered by Clause 21 of SCC and is arbitrable and that all the other claims are not arbitrable at this stage. 46. The parties also drew my attention to Order 2 of Rule 2 CPC, which I feel is not within the purview of examination in this arbitration. 47. Accordingly, the application under Section 16 of the Arbitration and Conciliation Act 1996 as amended in 2015, filed by the Respondents NALCO is partly allowed. 48. The Respondents are directed to file their detailed Counter expeditiously in respect of the above claim which has been held to be arbitrable. ” 8. It is contended that pursuant to the order passed by the Arbitrator, the petitioner approached the General Manager (CPP), NALCO on 31.05.2017 for expeditious amicable solution of the pending 11 claims, which were held to be none arbitrable by the Arbitrator.
” 8. It is contended that pursuant to the order passed by the Arbitrator, the petitioner approached the General Manager (CPP), NALCO on 31.05.2017 for expeditious amicable solution of the pending 11 claims, which were held to be none arbitrable by the Arbitrator. In response to the above letter of the petitioner, the opposite party-NALCO responded to it on 21.06.2017, relevant portion of the letter dated 21.6.2017 of opposite party reads as under: “In reference to the above subject I am to inform you that the aforesaid notice is illegal and not entertainable in view of the fact that the claims claimed by you in the aforesaid letter/notice has been adjudicated by the learned Arbitrator Sri Sudhakar Patnaik and has been determined by him U/s.16 of the Arbitration & Conciliation Act 1996 and while a part of your claim which has not been covered U/s.16 order is under adjudication process the demand for payment of the claims as claimed by you is not entertainable.” 9. Again on 20.06.2017, the petitioner wrote a letter to the opposite party invoking Clause 21 of SCC, relevant portion of the said letter reads as under: “In terms of Clause 21 of SCC, expeditious amicable resolution should be the first effort of dealing executives of the two parties. It is further submitted that the portion of the claims which the learned Arbitrator has refused to adjudicate on the alleged plea of “Gamut of Procedure” has to be sorted out with reference to clause 21 of SCC read with clause 87 of the GCC. Thus therefore while invoking clause 21 of SCC, we call upon you to depute your duly authorized senior executive so that our executive whose name is mentioned hereunder can expeditiously sit for amicable resolution within 30 days as prescribed under the contract Clause 21 of SCC. It is further submitted that Shri M.L. Agarwal-Chief Gen. Manager of the Company is nominated as our authorized Senior Executive for expeditious amicable resolution. The claims which are to be amicably resoluted were enclosed with our letter No.DO:3532/1963 dated 31.05.2017, a copy of this letter along with Annexure-A (our claims) is also enclosed for your kind reference and taking further action as requested above.” 10.
Manager of the Company is nominated as our authorized Senior Executive for expeditious amicable resolution. The claims which are to be amicably resoluted were enclosed with our letter No.DO:3532/1963 dated 31.05.2017, a copy of this letter along with Annexure-A (our claims) is also enclosed for your kind reference and taking further action as requested above.” 10. In reply to the letter dated 21.6.2017 of the opposite party, the petitioner on 29.06.2017 sent a letter contending that Clause 21 of SCC is independent of decision taken under Section 16(2) of the Act. The letter dated 29.6.2017 of the petitioner reads as under: “We are in receipt of your letter dated 21.6.2017 and unable to agree with any of your contention. The claims which have been referred to you for following the gamut of procedure as prescribed in clause 21 of Special Condition of Contract are not before the Ld.Arbitrator Shri Sudhakar Patnaik and in view of the above your contention that this claim has been adjudicated and determined by the Ld. Arbitrator is factually incorrect. It is further submitted that the limitation of section 16 of the Arbitration and Conciliation Amendment Act 1996 is very specific and the scope of said section is limited to jurisdiction of the Ld. Arbitrator. The Ld. Arbitrator has neither adjudicated anything nor determined anything except that he has expressed his views that certain claims are not within the purview of his adjudication as gamut of procedure had not been followed by the claimant in accordance with Clause 21 of the Special Condition of the Contract, even though in the instant case, we are unable to agree with the Ld. Arbitrator in view of the reasons that clause 21 was allowed to be waived by the consent of the parties. Even otherwise Section 34 of the Arbitration and Conciliation Act is absolutely clear in regard to the Award to be published by the Ld. Arbitrator. Under the circumstances, we again call upon you trough this Notice to follow the gamut of procedure as available under clause 21 of the agreement for the claims which have never been adjudicated by Shri Sudhakar Patnaik the Ld. Arbitrator. It will be essential to record here that in one case Hon’ble Supreme court has opined under the following words.
Under the circumstances, we again call upon you trough this Notice to follow the gamut of procedure as available under clause 21 of the agreement for the claims which have never been adjudicated by Shri Sudhakar Patnaik the Ld. Arbitrator. It will be essential to record here that in one case Hon’ble Supreme court has opined under the following words. “However, before parting with these appeals, we must note that rightly or wrongly the appellant-contractor has a simmering grievance since 1992 when his four contracts were terminated giving rise to diverse claims which, though rejected by the respondent-authorities, were required to be adjudicated upon by the arbitrators as envisaged by the parties under the contracts. As ears have rolled by, it would be appropriate to direct the respondent-authorities to comply with the Orders passed the leaned Single Judge as confirmed by the Division bench and also by us at the earliest. The procedure laid down by Clause 63.3.2 read with Clause 63.3 (b) shall be carried out by the respondent-authorities within four weeks of the receipt of copy of this Order at their end and thereafter the appellant-contractor shall also carry out this obligations under the relevant clauses and the two arbitrators, to be appointed by the Chairman-cum-Managing Director, shall see to it that the arbitration proceedings are completed at the earliest and not later than four months from the date on which they enter upon the reference. Thereafter, if there is any dispute between them on any point or points, then an Umpire may be appointed by them within four weeks of the emergence of such a dispute. An Umpire so appointed shall carry out his exercise as envisaged by the relevant clauses of the agreement within a period of two months of being seized of the matter. Thus, latest within eight months or so, both sides may come to know where they stand in connection with the disputes in question. Finally, we call upon you to give the name of your Sr. Executive within 21 days from the issue of this letter, alternatively we will presume that the procedures to be followed by us for the claims attached with this letter has already been seen by you and that the gamut of procedure as laid down under clause 21 of the Contract Agreement stands fulfilled.
Executive within 21 days from the issue of this letter, alternatively we will presume that the procedures to be followed by us for the claims attached with this letter has already been seen by you and that the gamut of procedure as laid down under clause 21 of the Contract Agreement stands fulfilled. If no reply is received within this above notice period we will take recourse of the contract as available under clause 21 of the Agreement.” 11. In response to the above letter of the petitioner, opposite party-NALCO on 26.07.2017 replied as under: “xxx xxx xxx After adjudication by the learned Arbitrator who determined your most of the claims under Section-16 of the Arbitration and Conciliation Act, 1996 you were free to move to the court which you did not do and instead chose to proceed with the Arbitration. Now in terms of the statute you have to wait till the Award is delivered which is the mandate of law under Section 16(5) and if aggrieved you have to challenge under Section 34 as per Section-16(6). It is stated once again that once you have abandoned the procedure under Clause 21 and invoked the Arbitration Clause, question of referring the same dispute in terms of clause 21 does not arise once again. We do not need to refer to the observation of the Hon’ble Supreme Court as stated by you since no details of the same are given and after consulting our legal experts we say that the same is not applicable as the stage of Clause-21 is over. 12. Learned counsel for the petitioner submits that finding no other alternative, the petitioner again wrote a letter to the opposite party on 01.08.2017, the relevant portion thereof as under: “xxx xxx xxx It is further submitted that the portion of the claim which the Ld. Arbitrator refused to adjudicate on the alleged plea of gamut of procedure is required to be adopted with reference to clause 21 of SCC read with clause 87 of GCC. However, from your reply letter GM(CPP)/2017/151 dated 26/07/2017, its seems that you are not interested to appoint the Arbitrator for the adjudication of our pending claims and trying to refrain us from claiming our legitimate dues. As regards your plea interalia that the Ld.
However, from your reply letter GM(CPP)/2017/151 dated 26/07/2017, its seems that you are not interested to appoint the Arbitrator for the adjudication of our pending claims and trying to refrain us from claiming our legitimate dues. As regards your plea interalia that the Ld. Arbitrator has refused to adjudicate certain portion of our claims, it only reestablishes our stand interalia that Gamut of Procedure as laid down was not been followed by us. Our letter dated 29/06/2017 also shows through a judgment that none of the claims for Rs.8,28,12,538.00 which have been sent by us has extinguished meaning thereby that once we follow the Gamut of Procedure those claims can become ripe claim for the purpose of adjudication. Therefore, Technofab Engineering is left with no alternative but to request you again for the appointment of Arbitrator in terms of clause 21 read with 87 of the Contract. Therefore, it is most respectfully prayed that a list of three Arbitrator may kindly be communicated to us in juxtaposition and in accordance with section 12(5) read with 7th schedule of Arbitration and Conciliation (Amendment) Act, 2015 and enable us to choose one out of them to adjudicate our disputes and differences as notified vide letter No. dated 31.5.2017 being the value of claims of Rs.8,28,12,538.00. 13. On 28.08.2017, opposite party-NALCO while responding to the above letter of the petitioner replied as under: “xxx xxx xxx First of all we have not received your letters No.3532/2004 dated 20-6-2017 and D.O. 3532/1963 dated 31-5-2017 at all. But now you have enclosed letter No. D.O. 3532/1963 dated 31-5-2017 from which we found that the contents thereof are similar to letter No. D.O. 3532/1604 dated 31-5-2017 where you have raised the claims which are under adjudication. We have made our stand clear in this regard in our letter No.GM(CPP)/2017/CPP/151 dated 26.7.2017. We have examined your letter dated 01.08.2017 above along with your letter No.3532/1604 dated 31-5-2017 above and found that the claims which you have sought to be referred therein are before the Arbitrator who has determined them U/s 16 of the Arbitration and Conciliation Act, vide order dated 27-1-2017.
We have examined your letter dated 01.08.2017 above along with your letter No.3532/1604 dated 31-5-2017 above and found that the claims which you have sought to be referred therein are before the Arbitrator who has determined them U/s 16 of the Arbitration and Conciliation Act, vide order dated 27-1-2017. It was your duty to move to the Court U/s 37 of the Act which you did not prefer and now you have to wait till the outcome of the Award as provided under Section 16(5) of the Act and may take recourse of law thereafter as provided under Section 16(6) of the Act. 14. Taking into consideration the above facts, learned counsel for the petitioner contended that the petitioner’s claim of Rs.8,28,12,538/-has not be adjudicated and therefore he has invoked the jurisdiction of this Court under Section 11(6) of the Act for appointment of Arbitrator for resolution of the dispute, inasmuch as the Arbitrator, who was appointed, has said that he has no jurisdiction to adjudicate the claim of Rs.8,28,12,538/-. 15. Learned Senior Counsel for the opposite party-NALCO, with reference to the counter affidavit, submits that Clause 21 of the SCC, which has already reproduced hereinabove, refers to amicable resolution of the dispute between the parties and in case the matter is not settled in view of said clause, Clause 87 of GCC has to be invoked. Accordingly, the petitioner invoking Clause 87 of GCC requested the opposite party to send a panel of three names. Thereafter the opposite party sent three names out of which the petitioner chose Sri Sudhakar Pattnaik to be the Arbitrator. 16. The main contention of the learned Senior Counsel for the opposite party is that in view of section 37 of the Arbitration and Conciliation Act, 1996, the order passed in the application under Section 16 of the Act, accepting the plea of the opposite party, is appealable. It is submitted that the order passed on 27.01.2017 is required to be challenged in an appeal before the authority, however, instead of that the petitioner has proceeded with the adjudication and has led evidence on 07.06.2017, 08.06.2017, 09.06.2017 and 04.08.2017 as per Annexure-E/1 series to the counter affidavit. For ready reference, relevant portion of Section 37 of the Act is reproduced hereunder: “37.
For ready reference, relevant portion of Section 37 of the Act is reproduced hereunder: “37. Appealable orders xxx xxx xxx (2) An appeal shall also lie to a Court from an order of the arbitral tribunal - (a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16 xxx” 17. Learned counsel for the opposite party submits that for the self same dispute the second arbitration is not permissible and in support of his contention, he has relied upon the decision of the Hon’ble Supreme Court in Antrix Corporation Ltd. v. Devas Multimedia P. Ltd, 2013 (2) Arb.LR 226 (SC), more particularly to paragraphs 24, 28, 31, 32 and 33 of the said judgment, which read as under: “24. As indicated hereinbefore, the question which we are called upon to decide is whether when one of the parties has invoked the jurisdiction of the International Chamber of Commerce and pursuant thereto an arbitrator has already been appointed, the other party to the dispute would be entitled to proceed in terms of Section 11(6) of the 1996 Act. 28. As will be evident from the aforesaid provisions, when any of the parties to an arbitration agreement fails to act in terms thereof, on the application of the other party, the Chief Justice of the High Courts and the Supreme Court, in different situations, may appoint an arbitrator. 31. The matter is not as complex as it seems and in our view, once the arbitration agreement had been invoked by Devas and a nominee arbitrator had also been appointed by it, the arbitration agreement could not have been invoked for a second time by the petitioner, which was fully aware of the appointment made by the respondent. It would lead to an anomalous state of affairs if the appointment of an arbitrator once made, could be questioned in a subsequent proceeding initiated by the other party also for the appointment of an arbitrator. In our view, while the petitioner was certainly entitled to challenge the appointment of the arbitrator at the instance of Devas, it could not do so by way of an independent proceeding under Section 11(6) of the 1996 Act. While power has been vested in the Chief Justice to appoint an arbitrator under Section 11(6) of the 1996 Act, such appointment can be questioned under Section 13 thereof.
While power has been vested in the Chief Justice to appoint an arbitrator under Section 11(6) of the 1996 Act, such appointment can be questioned under Section 13 thereof. In a proceeding under 11 of the 1996 Act, the Chief Justice cannot replace one arbitrator already appointed in exercise of the arbitration agreement. It may be noted that in case of Gesellschaft Furiotechnologische Forschun GMBH vs. Kopran Laboratories Ltd. and another, (2004) 13 SCC 630 =2005 (Suppl.) Arb. LR 30 (SC), a learned Single Judge of the Bombay High Court, while hearing an appeal under Section 8 of the 1996 Act, directed the claims/disputes of the parties to be referred to the sole arbitration of a retired Chief Justice with the venue at Bombay, despite the fact that under the arbitration agreement it had been indicated that any disputes, controversy or claim arising out of or in relation to the agreement, would be settled by arbitration in accordance with the Rules of Conciliation of the International Chamber of Commerce, Paris, with the venue of arbitration in Bombay, Maharashtra, India. This court held that when there was a deviation from the methodology for appointment of an arbitrator, it was incumbent on the part of the Chief Justice to assign reasons for such departure. 32. Sub-section (6) of Section 11 of the 1996 Act quite categorically provides that where the parties fail to act in terms of a procedure agreed upon by them, the provisions of sub-section (6) may be invoked by any of the parties. Where in terms of the agreement, the arbitration clause has already been invoked by one of the parties thereto under the ICC Rules, the provisions of sub-section (6) cannot be invoked again, and, in case the other party is dissatisfied or aggrieved by the appointment of an arbitrator in terms of the agreement, his/its remedy would be by way of a petition under Section 13 and, thereafter, under Section 34 of the 1996 Act. 33. The law is well settled that where an arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an arbitration is not maintainable.
33. The law is well settled that where an arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an arbitration is not maintainable. Once the power has been exercised under the arbitration agreement, there is no power left to, once again, refer the same disputes to arbitration under Section 11 of the 1996 Act, unless the order closing the proceedings is subsequently set aside. In Som Datt Builders Pvt. Ltd. vs. State of Punjab, 2006 (3) RAJ 144 (P&H)=2006(3) Arb. LR 201 (P&H) (DB) the Division Bench of the Punjab & Haryana High Court held, and we agree with the finding, that when the arbitral tribunal is already seized of the disputes between the parties to the arbitration agreement, constitution of another arbitral tribunal in respect of those same issues which are already pending before the arbitral tribunal for adjudication, would be without jurisdiction.” 18. Learned counsel for the petitioner submits that it is not the same dispute rather it is post-termination dispute. 19. Heard learned counsel for the parties and perused the record. 20. Before proceeding with the matter, it will not be out of place to mention that both the disputes are arising out of the same Contract work and between the same parties. Therefore, the basic fundamental of the rule of law is that there cannot be two litigations for the same contract. 21. In that view of the matter and in view of the basic principle of law, I am of the considered opinion that second arbitration is not permissible as the application under Section 16(2) of the Act, is appealable under Section 37 (2) (a) of the Arbitration and Conciliation Act, 1996. 22. In view of the above, merely because the Arbitrator, who adjudicated the dispute, has said in the impugned order that he has no jurisdiction to entertain the application; the same is not a ground for appointment of another Arbitrator. In that view of the matter, it will not be appropriate for me to appoint any Arbitrator in exercising the power conferred under section 11 of the Arbitration and Conciliation Act, 1996. Hence, the application being misconceived deserves to be rejected and the same is rejected accordingly.