Ramjee Power Construction Ltd. through its duly authorized representative Sri Dharmendra Sharma, Ranchi v. Jharkhand Urja Vikas Nigam Ltd. through its Chairman-Cum-Managing Director, Ranchi
2019-01-03
APARESH KUMAR SINGH
body2019
DigiLaw.ai
ORDER : Heard learned counsel for the parties. 2. Petitioner has prayed for appointment of an arbitrator to adjudicate the dispute arising in connection with the following two Packages awarded to it under NIT No. 145/PR/JSEB/2003:- (i) Design, supply, Erection, Testing and Commissioning of 132 KV 3 phase Double Circuit Transmission Line from existing Grid Sub Station at Deoghar to Dumka and Design, supply , erection, testing and commissioning of 132/33 KV 2x50 MVA Grid Sub Station including construction of control room building and approach road, other civil works at Dumka: Package-A (ii) Design, Supply, Erection, Testing and Commissioning of 132 KV 3 Phase Double Circuit Transmission Line from Dumka to Pakur: Package-C. 3. Tender Documents for both packages including one Package-B for similar work from Lalmatia to Sahebganj; The Letter of Intent (LOI) for Package A & C dated 16.12.2004 and 28.04.2005, work order no.2 and purchase order no.7 dated 19.01.2005 and 18.01.2005 respectively; work order no.5 and purchase order no.20 dated 17.5.2005 are enclosed as Annexures 17 to 23 to the second supplementary affidavit. Petitioner turned out to be a successful bidder in both packages. LOI was awarded in his favour on 16.12.2004 vide letter no. 1347 by the Chief Engineer (Transmission), Jharkhand State Electricity Board (Annexure-18 to the second supplementary affidavit). Consequent thereto, purchase order no.7 was issued on 18.01.2005 in relation to supply of materials for the work of Design, Supply, Erection, Testing & Commissioning of 132 KV 3 phase Double Circuit Transmission line from existing Grid Sub-station at Deoghar to Dumka on Double Circuit Tower and 132/33 KV 2x50 MVA Grid Sub-station at Dumka on turnkey basis of the same NIT. Work Order No. 2 dated 19.1.2005 was for Design, Erection, Testing & Commissioning of the same work on turnkey basis in respect of the same NIT under Package-A. Work Order No.5 and Purchase Order No.20 dated 17.05.2005 both under Package-C are at Annexure-22 and 23 relating to the Transmission Line from Dumka to Pakur. Both the work orders have similar terms under arbitration clause no. 14 as under :- “14. Arbitration:- Any dispute arising between the contractor and purchase shall be settled as per the Indian Arbitration Act (Latest revision).” 4. Agreements were entered into in respect of both the work order and purchase order bearing nos.
Both the work orders have similar terms under arbitration clause no. 14 as under :- “14. Arbitration:- Any dispute arising between the contractor and purchase shall be settled as per the Indian Arbitration Act (Latest revision).” 4. Agreements were entered into in respect of both the work order and purchase order bearing nos. 12 and 13 in respect of Package No.A. Agreement No. 12/2004-05 dated 07.02.2005 is in respect of purchase order for design, supply of materials, erection, commissioning of the aforesaid work (Annexure-9 to the rejoinder). Agreement No. 13/2004-05 dated 07.02.2005 is in relation to the work order for design, erection, testing and commissioning of the same work under the same NIT. Similar agreement nos. 21 and 22 of 2005-06 dated 19.5.2005 were entered in respect of work order and purchase order under Package-C (Annexure-10). Both the agreements under each of these Packages-A & C contained the following clause:- “The work order, the purchase order, terms and conditions of tender specifications and modification, will form part of this agreement”. The tender document contains the arbitration clause 36(a), which reads as under:- “Any dispute arising between the contractor and purchaser dispute will be settled as per arbitration act (latest Indian Arbitration Act). The purchase order no.7 dated 18.01.2005 under Package-A contained the following stipulation:- “This purchase order should be read in conjunction with the work order no.2 dated 18.01.2005 issued to you separately for erection, testing & commissioning of the materials and equipments supplied under this purchase order”. Similar stipulation is contained in the work order no.2 under Package-A dated 19.01.2005 that “This Work Order should be read in conjunction with the Purchase Order No. 07 dated 18.01.2005 issued to you separately for supply of equipment and materials to be erected, tested & commissioned under this work order”. 5. It is evident from above, description of Package-A that the total work was composite in nature. Distinctiveness of the work under Package-C is also evident on comparison with Package-A. Package-C deals with Design, Supply, Erection, Testing and Commissioning of 132 KV 3 Phase Double Circuit Transmission Line from Dumka to Pakur.
5. It is evident from above, description of Package-A that the total work was composite in nature. Distinctiveness of the work under Package-C is also evident on comparison with Package-A. Package-C deals with Design, Supply, Erection, Testing and Commissioning of 132 KV 3 Phase Double Circuit Transmission Line from Dumka to Pakur. Incidentally the same petitioner turned out to be successful in respect of tender submitted under Package-C. As such, LOI, purchase order and agreement were also entered with the petitioner for execution of the work under Package-C. Both these works were distinct and related to erection of transmission line for two different stations. 6. When the matter was taken up earlier on 23.02.2018, learned counsel for the petitioner was allowed time to make good his submission that both agreement nos. 12 and 13 form the same contract. Learned counsel for the petitioner has in the background of the terms and conditions of the tender, arbitration clause thereunder, common LOI issued for Package-A and purchase orders as well as agreement no. 12 and 13, which incorporate all the terms and conditions of the tender documents, has been able to substantiate his submission that work under Package-A was composite and has been allotted to the same person. Entering of separate agreements do not convey a picture that work under Package-A was not composite in nature. The parties are the same and both the work are interlinked. Erection depends upon supply of equipments, materials to be undertaken by the same agency. Intention of the party to that effect is also evidenced right from the tender document up to the allotment of the work to the petitioner. [See M/s. Duro Felguera, S.A. Vrs. M/s. Gangavaram Port Limited reported in (2017) 9 SCC 729 ]. However, learned counsel for the petitioner has conceded that work under Package-C is of distinct nature. Therefore, prayer for appointment of an independent arbitrator may be confined to one package at a time. He has therefore sought liberty to press appointment of an arbitrator to adjudicate the dispute between the parties in respect of the work under Package-A. He seeks liberty to raise an independent cause of action for appointment of an arbitrator in respect of any dispute which arises under Package-C. 7. Liberty is granted. 8.
He has therefore sought liberty to press appointment of an arbitrator to adjudicate the dispute between the parties in respect of the work under Package-A. He seeks liberty to raise an independent cause of action for appointment of an arbitrator in respect of any dispute which arises under Package-C. 7. Liberty is granted. 8. Petitioner has further contended that dispute have arisen during execution of the work relating to wrongful act of omission and commission on the part of the J.S.E.B. Correspondences have been exchanged between the parties. Penalty has also unfairly been imposed upon the petitioner claimant. As such petitioner has invoked the arbitration clause for adjudication of the dispute/ claim by letter dated 23.08.2016 addressed to the Chief Engineer (Transmission) Jharkhhand Urja Sancharan Nigam Limited ; Managing Director, Jharkhhand Urja Sancharan Nigam Limited and the Chairman cum Managing Director, Jharkhand Urja Vikas Nigam Limited (Annexure-6). Though annexure-6 relates to notice invoking arbitration clause for both Package-A and C, petitioner has confined his prayer for Package-A in this application. Various elements of dispute have been narrated in the instant notice. Respondents have failed to reply to the notice. Therefore, petitioner has approached this Court for appointment of an independent arbitrator invoking Section 11(4) of the Arbitration and Conciliation Act, 1996. 9. Respondent –Nigam has filed counter affidavit and contested the case of the petitioner on merits. Supplementary counter affidavit has also been filed. As per the stand of the Respondents, Package-A deals with purchase order no. 07 and work order no. 2 dated 18.01.2005 and agreement no. 12 and 13, both dated 07.02.2005. Package-C related to different purchase order dated 17.05.2005 under Agreement No. 21 and 22, both of 2005-06 dated 19.5.2005. Details of work under Package-A and Package-C have been mentioned at Para 10. It has been indicated that 18 months was stipulated time for completion of the contract but commissioning of the work was done on 20.02.2009 and 31.01.2010 in respect of Package-A. Time was the essence of the contract known to the Agency. But due to lackluster attitude and non-adherence to time schedule of the contract, the whole work got delayed by approximately 3 to 4½ years from original schedule date of completion of work. The project cost escalated from 55.29 Cr. to 100.58 Cr. thereby putting heavy financial burden to JUSNL in addition to delay in meeting the power to general public.
But due to lackluster attitude and non-adherence to time schedule of the contract, the whole work got delayed by approximately 3 to 4½ years from original schedule date of completion of work. The project cost escalated from 55.29 Cr. to 100.58 Cr. thereby putting heavy financial burden to JUSNL in addition to delay in meeting the power to general public. Time extension was granted by Board up to 15.06.2007 for both Packages. Again second time extension was approved up to 31.12.2008 without penalty and with PV but beyond that heavy penalty should be imposed. Third time extension was made up to 30.06.2009 and forth time extension was made up to 31.12.2010. Other reference relating to Package-C is not material for discussion herein. RITES was the consultant for project management and supervision for this project. Details of the contract value and valuation of the project cost have also been mentioned at para 14 in respect of Package-A. 10. Respondents have in their supplementary counter affidavit also referred to previous arbitration proceeding before the sole Arbitrator in connection with the same Package-A under both Agreement Nos. 12/2004-05 and 13/2004-05. In the statement made under para 4 and 5 of the supplementary counter affidavit, Respondents have tried to convey that further dispute has arisen between the parties. Sole Arbitrator was requested by the petitioner to adjudicate upon the dispute that so emerged, upon which preliminary hearing was held on 09.11.2010. Respondents challenged the decision of the sole Arbitrator in the Court of Sub Judge-I, Ranchi in Misc. Case No. 71 of 2010, it was pending and the next date of hearing was 10.11.2017. Petitioner had in the meantime issued a fresh notice under Section 11(5) of the Act of 1996 upon the respondent Company on 23.08.2016. Petitioner has not produced the entire order sheet of the sole Arbitrator after notice dated 01.11.2010. It is therefore not clear whether earlier proceedings were still continuing or were terminated or concluded by the earlier arbitrator. Misc. Case No. 71 of 2010 was still pending before the learned Court below. Therefore petitioner cannot choose a forum as per his convenience when earlier arbitration proceedings were not terminated. Prayer for appointment of an arbitrator has been made after lapse of 6 years, which is not maintainable in the eyes of law. 11.
Misc. Case No. 71 of 2010 was still pending before the learned Court below. Therefore petitioner cannot choose a forum as per his convenience when earlier arbitration proceedings were not terminated. Prayer for appointment of an arbitrator has been made after lapse of 6 years, which is not maintainable in the eyes of law. 11. Petitioner in his rejoinder has enclosed the 3 awards rendered by the sole Arbitrator, first one being dated 25.11.2007(Annexure-11), second one dated 14.02.2008 (Annexure-11/1) and the third one dated 29.03.2009, which is at Annexure-11/2. The second supplementary affidavit has been filed by the petitioner on 27.06.2018 where he sought to convey that the dispute on which arbitration is sought, arises out of one contract under two Packages i.e., Package-A and Package-C. The contents of second supplementary affidavit are not of much relevance in the light of the submission of learned counsel for the petitioner that petitioner seeks to confine the prayer for appointment of an Arbitrator to the work allotted under Package-A only in the present application. The third supplementary affidavit filed on 24.10.2018 has brought on record the copies of the previous claim petition dated 12.09.2007 and 10.02.2008, which were subject matter of the earlier round of arbitration culminating into awards dated 25.11.2007, 14.02.2008 and 29.03.2009. 12. Learned counsel for the petitioner has strenuously tried to show that the claims sought to be arbitrated upon are those which were not subject matter of previous arbitration, save and except certain claims for refund of keep back against arbitration for Rs.11 Crore, which the petitioner would not be claiming for in the presently proposed arbitration. Learned counsel for the petitioner further submits that challenge to all the 3 awards filed under Section 34 of the Act of 1996 have failed. The amounts awarded have also been paid. He also points out that though an effort was made to raise the subsequent dispute before the same Arbitrator but the respondents neither explicitly nor implicitly consented to adjudication of the subsequent claims through the same Arbitrator. He has referred to the minutes of the proceedings on few dates at Annexure-13 series. He points out from the documents at page 33 of the main application being memo no.
He has referred to the minutes of the proceedings on few dates at Annexure-13 series. He points out from the documents at page 33 of the main application being memo no. 341 dated 24.08.2007 issued by the Chief Engineer (Transmission) JSEB that appointment of the sole Arbitrator was made with consent of the parties earlier to adjudicate the dispute arising out of Agreement Nos.12/2004-05, 13/2004-05, and also Agreement Nos. 21/2005-06 and 22/2005-06. But after delivery of the award the mandate of the Arbitrator came to an end. Though petitioner endeavoured to raise further dispute before him but respondents never consented to or acceded thereto. In fact, they challenged the continuance of the arbitration proceeding in Misc. Case No. 71 of 2010 before the Court of learned Sub Judge-I, Ranchi. Therefore, dispute which are being raised for reference to an Arbitrator were distinct and not adjudicated upon by the erstwhile Arbitrator. 13. Learned Senior Counsel for the Respondent has in his reply again submitted that the fate of the proceedings before the sole Arbitrator is still unclear, whether it has concluded after delivery of the awards or the Arbitral Tribunal continues to function. In the latter case, it would not be proper to once again refer this dispute for arbitration to an independent Arbitrator. Learned Senior Counsel has also made submission on merits of the claim in order to show that the claim raised now were also raised before the sole Arbitrator in 2010 after delivery of the award and may be overlapping. Petitioner has also in his wisdom made an alternative prayer for continuation of same Arbitral Tribunal. Both prayers are inconsistent to each other. In substance the prayer for appointment of an Arbitrator has been opposed. 14. I have considered the submission of learned counsel for the parties in detail conspectus of facts and documents placed on record and relied upon by them. The prayer made herein can be looked into in two parts: (i) Whether the petitioner is entitled to seek appointment of an Arbitrator in respect of a dispute raised under Package-A alone? (ii) Whether in view of the previous arbitration proceedings between the parties under the same agreements, fresh appointment of an Arbitrator would be permissible in law? 15.
The prayer made herein can be looked into in two parts: (i) Whether the petitioner is entitled to seek appointment of an Arbitrator in respect of a dispute raised under Package-A alone? (ii) Whether in view of the previous arbitration proceedings between the parties under the same agreements, fresh appointment of an Arbitrator would be permissible in law? 15. Petitioner has not sought to press the appointment of an Arbitrator in respect of dispute under Package-C. In the opinion of this Court, works under Package-A and Package-C form two distinct and two separate contract for the reasons recorded herein above. In the foregoing paragraphs of this order the first question has been duly answered. 16. The second question needs to be answered hereinafter. I find that the parties consented to reference of the dispute to an independent Arbitrator earlier in respect of these two agreements under package-A and also under Package-C as per the communication contained in memo no.341 dated 24.08.2007 by the Chief Engineer (Transmission) (part of Annexure-2 series). The claims were raised by the petitioner on 12.09.2007 and 14.02.2008 before the said Arbitrator. Three awards were delivered by the Arbitrator dated 25.11.2007 described as interim award, 14.02.2008 which does not contain the description as an interim award and the 3rd being 29.03.2009 also not described as an interim award. It is not disputed that the execution of the work had not been completed in respect of these two agreements under package-A till the 3rd award was delivered on 29.03.2009. It is also evident from both the notices dated 23.08.2016 and the submissions made by the respondents in their counter affidavit and supplementary counter affidavit. As per Section 32(2) of the Arbitration and Conciliation Act, 1996 arbitral proceeding shall be terminated by the final arbitral award or by an order of the arbitral tribunal. Section 32 reads as under :- “32. Termination of proceeding – (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under Sub-section (2).
Section 32 reads as under :- “32. Termination of proceeding – (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under Sub-section (2). (2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where – (a) The claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute, (b) The parties agree on the termination of the proceedings, or (c) The arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (3) Subject to section 33 and sub-section (4) of Section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.” 17. Respondents had laid challenge to all these three awards under Section 34 before the learned court of Sub-Judge, Ranchi. It has been brought to the notice of the Court that the challenge has failed on the ground of limitation. After delivery of the 3rd award on 29.03.2009 petitioner made effort to raise further dispute before the same Arbitrator. Notices were also issued by the same Arbitrator upon the respondents as contained in Annexure-13 series. On 21.11.2010 as per Annexure-13/2 respondents were not represented. On 12.12.2010 also they were not represented. On 09.01.2011 again the respondents remained absent. Minutes of the proceeding dated 01.05.2011 show that the respondents wanted to file some petition with respect to continuance of this arbitral tribunal and prayed for time. Proceedings of subsequent two dates i.e. 10.06.2011 and 28.07.2011 referred to the submissions of the parties to explore possibility of amicable settlement. Proceedings have not continued thereafter. Respondents have stated that they laid a challenge to the continuance of the arbitral proceeding before the learned court in Misc. Case No.71/2010. These facts and circumstances lead to two inferences: one that after delivery of the awards which became subject matter of the challenge also by the respondents under Section 34 before the learned Civil Court, Ranchi, the mandate of the sole arbitrator had come to an end; secondly, though petitioner believed that the consent accorded by letter dated 24.08.2007 by the JSEB for appointment of the sole arbitrator for adjudication of the dispute under the Agreement Nos.
12/2004-05 and 13/2004-05 continued, but there was no explicit consent on behalf of the respondents nor such consent can be gathered implicitly from their conduct in view of their stand taken before the sole Arbitrator. In effect, the learned Arbitrator had lost its mandate to continue with the arbitral proceeding and that is how the parties also believed it to be so. The disputes which have been raised after the delivery of the award remained unadjudicated. This Court is, therefore, of the considered view that the disputes between the parties can be referred for adjudication through arbitration by appointment of an independent arbitrator. 18. The legal notice dated 23.08.2016 (Annexure-6) served by the petitioner also refers to the fact that Dumka Deoghar transmission line and Grid Sub-Station at Dumka were commissioned and handed over in the year 2009 and 2010. 2nd circuit of Dumka Deoghar Transmission line was commissioned and final acceptance certificate was issued after expiry of guarantee period of one year. The statement of claims furnished by the petitioner are towards all pending bills; refund of liquidated damages already deducted from bills; refund of Keep Back against arbitration; refund of all bank guarantees pertaining to the agreement; claim as refund of bank charges for extension of bank guarantees beyond 30th June 2010; claim towards loss of profit, loss of turnover, loss of RPCL goodwill; claim towards price variation on material and erection; etc. Merits of the dispute need not be commented upon as it lies within the domain of arbitrator. The respondents shall have the opportunity to contest the claim on merits and on all available grounds of law as well. Petitioner has also stated that under these agreements part payments have been made as late as 30th March 2016 to the tune of Rs.2,47,16,999/-. There is an arbitration clause at Clause No.36(a) of the Tender Document which is treated as part of the agreement nos. 12 and 13 under package-A with which the present matter relates. Respondents have failed to respond to the request for appointment of an independent arbitrator in terms of Clause 36(a) i.e. arbitration clause in the Tender Documents. 19.
There is an arbitration clause at Clause No.36(a) of the Tender Document which is treated as part of the agreement nos. 12 and 13 under package-A with which the present matter relates. Respondents have failed to respond to the request for appointment of an independent arbitrator in terms of Clause 36(a) i.e. arbitration clause in the Tender Documents. 19. In view of the detailed discussions made and for the reasons recorded herein above, this Court is of the view that the petitioner has been able to satisfy the ingredients of Section 11(6) of the Arbitration and Conciliation Act, 1996 as amended, for appointment of an independent arbitrator to adjudicate the dispute between the parties. As such, this Court proposes to appoint Hon’ble Mr. Justice Vinod Kumar Gupta (Retd.), Former Chief Justice of this Court, at present residing at 58, Todarmal Road, Bengali Market, New Delhi-110001 having mobile no.9650333000/9650355355 as an independent Arbitrator to adjudicate the dispute between the parties. The proposed Arbitrator is required to submit a formal declaration in terms of Section 12 of the Arbitration and Conciliation Act, 1996, as amended. Registry is directed to communicate the instant order to the proposed Arbitrator for submitting the declaration. Let the case be listed on 7th February 2019. Declaration, if any, by the proposed Arbitrator be placed on record by the next date. Ordered accordingly.