SIMPLEX INFRASTRUCTURES LIMITED, KOLKATA Vs. ENERGO ENGINEERING PROJECTS LIMITED

LAWS(JHAR)-2017-8-25

HIGH COURT OF JHARKHAND

Decided on August 25,2017

Simplex Infrastructures Limited, Kolkata Appellant

VERSUS

Energo Engineering Projects Limited Respondents

JUDGEMENT

AMARESHWAR SAHAY,J. - (1.) Heard learned counsel for the parties. Petitioner herein has invoked Clause-21 of the work order dated 18.11.2010 for appointment of an Arbitrator as the respondent have failed to nominate their own Arbitrator in terms of the Arbitration Clause despite the notice dated 12.02.2016 served upon them in terms of Section 11(4) of the Arbitration and Conciliation Act , 1996. Petitioner was awarded work order for Civil Works of Coal Handling Plant Package, 2 x 270 MW Pit Head Power Project at M/s Corporate Ispat Alloy Ltd, Bana Village, Chitarpur, Chandwa, District-Latehar (Jharkhand), vide Annexure-1 for a value of Rs. 9, 83,88,350/-. The work order was amended from time to time vide letters dated 18.11.2011, 25.02.2011, 17.08.2011 and 07.02.2012 which are enclosed as Annexures to the rejoinder of the petitioner. Clause-13 required the bill to be raised once in a month along with prescribed documents. Clause -14 of the original work order contained the payment terms. Payments were to be made within 15 days from the date of submission of the running bills by their site office and the bills were to be jointly certified by M/s Abhijeet and M/s Energo. Completion period of the civil work was 10 months as per the agreed completion schedule from the date of order. Clause-18 prescribed 12 months defect liability period from the date of virtual completion or work. Clause-20 provided for basis of price and variation quantities. Clause-21 containing the Dispute and Arbitration Clause is quoted hereunder:- "Any disputes or difference arising out of in connection with or in relation with this contract or any of the contract documents, which cannot be settled amicably between the parties, hereto, shall be settled by arbitration in accordance with the rules of Indian Arbitration and Conciliation Act , 1996, by three arbitrators selected in accordance with said rules. The place of such arbitration shall be Ranchi (Jharkhand). The decision of the arbitrators shall be final and binding. The arbitration shall be held in English language only." Clause-22 provided that dispute arising under the contract shall be under the purview of the Jharkhand jurisdiction only. As per the amendment to the original work order, the completion date was extended for a period of seven months from 01.03.2011, in respect of all the four amended work orders. Petitioner served a notice under Clause-21 of the Work Order on 12.02.2016 for nomination of the Arbitrator on the part of the respondent. According to the notice, the petitioner had regularly submitted Running Account bills, Escalation bills, POL Escalation bills and Reimbursement of Excise/VAT/CST bills from January, 2011 to February, 2013 in terms of Clause- 14(b) of the Work Order. It alleged that despite acknowledging receipt of the bills, payment against several bills have not been made by the respondent till date. Petitioner contended that despite receiving no outstanding payment, they continued to work progressively in good faith and in the interest of the project and on assurance that payment would be made soon. Petitioner further contended that they have continuously followed up with the concerned officials of the EEPL and sent reminders from time to time requesting EEPL to honour their part of the obligations under the Work Order. However, having failed and defaulted to perform their obligations, they have been compelled to invoke the Arbitration Clause. Petitioner has nominated learned Arbitrator, Justice K C Sood (Retd.), Former Judge Himachal Pradesh High Court on their part and requested the respondent to nominate their Arbitrator within 15 days from the date of receipt of this notice. Having failed to response, the instant application has been made under Section 11 (6) of the Arbitration and Conciliation Act , 1996 for appointment of the 2nd Arbitrator. Learned counsel for the petitioner submits that the two Arbitrators shall nominate the Presiding Arbitrator in terms of Clause -21 and thereafter, arbitration proceedings should commence. Counter affidavit has been filed on behalf of the respondent and supplementary affidavit has also filed today with a copy to the other side. The respondent have contended that the application is misconceived as amended work orders have not been brought on record. According to them, if the petitioner has contended that works commenced under Work Order in January, 2011 and continued till February, 2013 and several running bills for the said period have remained unpaid, then the claim of the petitioner are evidently time barred. Learned counsel for the respondent has relied upon the bills raised by the petitioner as enclosed to the winding up application preferred before the Delhi High Court against the same respondent- Company being Company Petition No. 327 of 2016. He has referred to the bills such as at page -130 of supplementary affidavit dated 28.07.2017 to contend that it relates to period from 01.02.2010 to 25.02.2013 and has been raised on 14.03.2013. In terms of the relevant Clause of the Work Order, the bills were required to be raised once in a month and only after joint certification by M/s Abhijeet and M/s Energo, payments were to be made within 15 days thereafter. Defect liability period would have also expired, if bills of February, 2010 have been raised for the first time through the bill dated 13.03.2013. Therefore, the claim is time barred and not a live claim. Learned counsel for the respondent further submits that petitioner have filed a petition for winding up before the Delhi High Court under Section 433 (e) and (f) read with Section 434 (1) (a) and (c) and Section 439 of the Companies Act, 1956 against the alleged non payment of the purported admitted outstanding dues of Rs. 6,75,67,908/- of the very same work order. After notice, the respondent have appeared therein also and are contesting the same. The company petition is still pending before the Delhi High Court and the petitioner cannot be allowed to invoke parallel remedy for the same cause of action as it amounts to forum shopping. Appointment of an Arbitrator by the petitioner without requisite statutory disclosure in terms of the Section 12 of the Act is also not in accord of the Act of 1996. Therefore, the instant application is fit to be dismissed with cost. Learned counsel for the petitioner has submitted that the claim of the petitioner relates to outstanding dues against several Running Account bills, Escalation bills, POL Escalation bills and Reimbursement of Excise/VAT/CST bills raised for the period January, 2011 to February, 2013 in terms of the Clause- 14(b) of the Work Order. If bills have remained unpaid over a period of time and have been raised within three years of the cause of action, the same cannot be held to be time barred. A notice for arbitration has also been issued within three years after the raising of the bills as referred to by the counsel for the respondent also. Therefore, the claim is live and the request is in accord with the provisions of the Act of 1996. The dispute raised can always be referred for an Arbitration in terms of Clause-21 of the Agreement between the parties. I have considered the submission of the learned counsel for the parties and gone through the relevant materials on record. The factual canvass of the case recorded on the basis of the pleadings and documents on record indicate that parties were under an agreement/work order dated 18.11.2010, which contains a Dispute. Resolution Clause 21 in the nature of Arbitration Clause (quoted above as well). The respondent also amended the work order from time to time in the year 2011 granting extension of 7 months time for completion of the extended work reckoned from 01.03.2011. One of the bills relied upon by the counsel for the respondent have been raised on 14.03.2013. In any case it is within the three years period from the issuance of the 1st Work Order dated 18.11.2010 and also the amended Work Orders issued on 18.11.2011, 25.02.2011, 17.08.2011 and 07.02.2012, Annexure-A series to the rejoinder dated 08.03.2017. Therefore, I am of the view that the contention of the respondent that the instant dispute is not live claim is not fit to be accepted. The respondent have failed to appoint their own Arbitrator in terms of Arbitration Clause even after notice dated 12.02.2016, Annexure- 2. Petitioner has nominated Justice K C Sood (Retd.), Former Judge Himachal Pradesh High Court as their own nominee Arbitrator. From the aforesaid facts and the discussion made, the application for appointment of an Arbitrator under Clause-21 of the Agreement is maintainable within the provision of the Section 11(6) of the Arbitration and Conciliation Act , 1996. Petitioner are justified in invoking the jurisdiction of the Hon'ble Chief Justice of this Court for appointment of 2 nd Arbitrator as the cause of action lies within the territorial jurisdiction of Jharkhand. In such circumstances, I propose to appoint Hon'ble Mr. Justice Amareshwar Sahay(Retd.), Former Judge Jharkhand High Court as the 2nd Arbitrator. In terms of the provisions of Arbitration and Conciliation Act , 1996 as amended vide Amendment Act No. 3 of 2016, both the nominee Arbitrator of the petitioner i.e. Hon'ble Mr. Justice K C Sood (Retd.), Former Judge Himachal Pradesh High Court and the proposed Arbitrator Hon'ble Mr. Justice Amareshwar Sahay(Retd.), Former Judge Jharkhand High Court are required to submit a declaration in terms of Section 12 of the Amended Act, 1996. Learned counsel for the petitioner submits that declaration in terms of Section 12 on behalf of their nominee Arbitrator would be submitted within three weeks. The learned Registrar General shall communicate the instant order to the proposed Arbitrator Hon'ble Mr. Justice Amareshwar Sahay(Retd.), Former Judge Jharkhand High Court for submission of declaration in terms of Section 12 of the Act within a period of three weeks from the date of receipt of communication of this order. Let the case now appear on 25.08.2017 under the heading "For Orders"." Pursuant thereto declaration in terms of Section 12 of the Amended Act 3 of 2016 as incorporated in the Arbitration and Conciliation Act , 1996 has been furnished by the Proposed Arbitrator through letter dated 16.08.2017 at Flag-Y. The petitioner have also furnished a declaration in similar terms by their nominated Arbitrator Hon'ble Mr. Justice K C Sood (Retd.), Former Judge Himachal Pradesh High Court. Therefore, Hon'ble Mr. Justice Amareshwar Sahay(Retd.), Former Judge Jharkhand High Court is appointed as 2 nd Arbitrator in terms of Clause-21 of the Agreement between the parties. In terms of the Arbitration Clause, the two Arbitrators i.e. one nominated by the petitioner and the 2nd appointed by this Court Hon'ble Mr. Justice Amareshwar Sahay(Retd.), Former Judge Jharkhand High Court, shall nominate the Presiding Arbitrator. Learned Arbitrators would lay down their fees and other expenses to be incurred during arbitration proceeding keeping into account the spirit under Schedule-IV as framed under Section 11(14) of the Act of 1996. The learned Arbitrators would also endeavour to conclude the proceeding keeping into account the Legislative mandate under Section 29 A of the Act of 1996. Learned Registrar General is directed to send copy of the instant order along with entire pleadings of this application to both the learned Arbitrators. The instant Arbitration Application is disposed of accordingly. ;

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