- (1.) The respondent took up the project of construction of a thermal power plant at Ramagundam in Karimnagar District of the State of Andhra Pradesh. It entered into four sub-contracts with the petitioner relating to that work. The general conditions of sub-contracts were to be part of the four separate contracts. The sub-contracts were terminated on 25.7.2001 with effect from 7.8.2001. It appears that there were subsequent discussions between the parties and on the basis of ascertainment of the sums due to the petitioner the same were paid by the respondent and the petitioner in return gave in writing that it had received full and final payment from the respondent in terms of the settlement between the two and also a certificate that all payments against the said four sub-contracts have been made by the respondent to the petitioner and received by the petitioner and that no bills are pending with the respondent for settlement. After the matters rested on this basis, the petitioner made a claim in respect of the four sub-contracts. The petitioner also named an arbitrator and called upon the respondent to name an arbitrator in terms of the arbitration agreement. The respondent disputed the claims of the petitioner and pleaded that there was no subsisting claim for the petitioner based on any of the four sub-contracts. Even then without prejudice to its contentions the respondent also named an arbitrator. In terms of the arbitration agreement, the two nominated arbitrators had together to name the Chairman of the Arbitral Tribunal or the presiding arbitrator. The nominated arbitrators failed to do so.
(2.) Meanwhile the petitioner had also moved the concerned District Court under Section 9 of the Arbitration and Conciliation Act, 1996 seeking what it called interim protection pending an arbitration. Four separate applications were filed. The applications were dismissed by the District Court. The petitioner filed appeals in the High Court of Gujarat. The High Court disposed of the appeals recording the following: "After having argued at some length, learned counsel on both sides agreed and submitted that the main dispute between the parties is the subject-matter of separate arbitration proceedings and at this stage it may not be necessary or advisable to invite observations of this Court as regards the legality and validity of any of the claims or liability of any of the parties to satisfy such claims. It was, therefore, jointly submitted that all the appeals may be disposed as withdrawn with the observation that the parties may put forward their case before the arbitral tribunal, which may decide the dispute referred to it without being influenced by any observation made in the impugned judgment as also the fact that these appeals were not pressed for any orders on merits."
(3.) The relevant clauses relating to arbitration, as contained in the agreement between the parties are as under: "21. SETTLEMENT OF DISPUTES If at any time any question, dispute, or difference arise between the Contractor and the Subcontractor in connection with or arising out of the Subcontract or the Subcontract Works, either party shall give to the other notice in writing specifying the nature of such question, dispute or difference and the point at issue, and the parties shall discuss the matter and shall endeavour to reach an amicable settlement. In case parties fail to reach an amicable solution within sixty (60) days after the date of the said notice, the matter shall be referred to an arbitration in accordance with Clause 22 hereof. 22. ARBITRATION 22.1 Any dispute which could not be resolved between the parties in accordance with clause 21 hereof shall be settled exclusively by arbitration conducted in accordance with the Rules of Concilation and Arbitration of the International Chamber of Commerce. Each arbitral tribunal shall consist of three arbitrators. The Contractor and the sub-contractor shall each appoint one arbitrator and the two arbitrators thus appointed shall jointly agree upon the third arbitrator to act as chairman. If such agreement cannot be reached within thirty (30) days from the date of appointment of the later member, the third arbitrator shall be appointed by the International Chamber of Commerce. The said Chairman shall not be the same nationality of either party to the sub-contract. 22.2 The arbitration shall be conducted in India 22.3 The language to be used on all written documents provided in each arbitration shall be English. 22.4 The decision of the arbitral tribunal shall be considered final and binding upon both parties and shall not be subject to any appeal whatsoever. 22.5 The cost and expenses of arbitration shall be borne by the party based on the award of the arbitral tribunal. 22.6 Performance of the sub-contract work shall continue during the arbitration proceedings notwithstanding the existence of any dispute, controversy or question.";