Maintech Engineers vs Jotindra Steel & Tubes Ltd. And ...
1993 Latest Caselaw 208 Del

JUDGMENT

V.B. Bansal, J.

(1) M/S. Maintech Engineers has moved this petition under Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred to as "the Act"), with a prayer that the respondents be directed to file the agreement between the parties, in Court, and make a reference of the disputes between the parties to the arbitration of the General Manager. Bharat Heavy Electricals Limited (BHEL), which is in consonance with the Arbitration Agreement between the parties.

(2) Briefly stated, the averments made in the petition are, that the petitioner is a partnership firm, duly registered under the .Indian Partnership'Act and Shri Parvinder Singh is one of its registered partners and is competent to sign, verify and institute the suit. It is also pleaded that the respondent No. 1 is a company, duly incorporated under the Companies Act and respondent No. 2 is a division of respondent No. 1. It is further pleaded that the petitioners are consultants and maintenance specialists in dieselengines, steam plants, gas turbines, chilling systems, pipe lines, air conditioning systems, control systems and automation, and that respondent No. 2 was awarded the work of erection of boilers etc. of the Haryana State Electricity Board at the Panipat Thermal Power Station by the Bharat Heavy Electricals Ltd. It is also claimed that respondent No. 2 sub-let a part of the work for erection of pressure parts, non-pressure parts and structurals at the Panipat Thermal Power Station vide letter of Intent dated 14/01/1985. It is further pleaded that petitioners were also awarded the work for the application of insulating and refractory materials and sheet metal covering and due ting at Panipat Thermal Power Station vide letter of Intent dated 25/02/1985. It is also claimed that in pursuance of the aforesaid letters of Intent, the works allotted to the petitioner were completed to entire satisfaction of the Engineer in charge at the site and the work was accordingly handed over by the respondents to the Haryana State Electricity Board by the Bharat Heavy Electricals Limited. It is also claimed that it was agreed between the parties that the terms of payment, as applicable to respondent No. 2 in its contract with Bhel shall be applicable to the petitioner also on back to back basis and the payment will be made for the work done by the petitioner on the measurements certified by the BHEL. There was also a stipulation that the work already completed partially, would be paid on proportionate basis.

(3) Further averments made in the petition are that the petitioner has submitted the running bills to respondent No. 2 for the work carried out and against which only part payments have been made and that there have been various meetings between the parties representatives in respect of the settlement of the bills and the respondent No. 2 had been giving assurances to reconsider the bills of the petitioner and to release the payment but to noeffect. It has further been pleaded that the petitioner wrote letter dated25.5.1989 demanding a sum of Rs. 9,16,421.44.00in respect of Until Iii andRs. 26,90,029.60 in respect of Unit-IV and a consolidated final bill for all the items in respect of both the units was submitted to respondent No. 2 who has not settled the dispute. It has, thus, been pleaded that since the respondents have failed to settle the claim of the petitioner, the same is required to be referred to the arbitrator and the respondents having failed to do so, the present petition has been filed.

(4) This petition has strongly been contested by the respondents, who have inter alia pleaded that the petitioner is not a partnership firm, duly registered under the Partnership Act. It is also claimed that respondent No. 1 .through its Engineering Division, respondent No. 2 was awarded contract for erection of boiler at Panipat Thermal Power Station and part.ofthis work was allotted to the petitioner regarding which, letters of intent dated 141.1985, 25.2.1985 were issued, which subsequently were merged in the Purchase Order dated 6.3.1985. It is also claimed that the work was carried out by the petitioner, as stipulated in the letter dated 6.3.1985 and the payment was also made in terms of the said letter. It is also claimed that the payments have already been made to the petitioner on the same basis on which the respondent No. 1 was to be paid by BHEL. It is also admitted that there was a meeting of 16.2.1987 between the officers of the parties about which minutes have been prepared but it has been denied that the respondents had given by assurance to reconsider the bills of the petitioner and release payments as claimed. It is also pleaded that the petitioner did not carry out any work at the site after January, 1987 and that the letters written by the petitioner were duly replied It is thus, pleaded that there has not been any agreement between the parties for making any reference to the arbitrator and there could not be any implied agreement on the basis of the alleged intendment letters. A prayer has thus been made that the petition may be dismissed.

 (5) Pleadings of the parties gave rise to the following issues, which were framed on 14.2.1991 :    (1)Whether the petitioner is a partnership firm duly registered under the Indian Partnership Act and Shri Parvinder Singh is one of the Partners?(2) Whether there exists a valid arbitration agreement between the parties ?(3) Whether the disputes mentioned in the petition are covered by the arbitration agreement ?(4) Whether the petition is barred by time 7(5) Relief.  

 (6) In support of its case, the petitioner has filed the affidavit by way of evidence of Shri Parvinder Singh and reliance has been placed on documents Exs. P-1 to P-10. The respondents have filed the affidavit of Sita RamSurekha, Managing Director of the respondent-company by way of evidence and reliance has been placed on documents Exs. R-1 to R-6.  

 (7) I have heard the learned Counsel for the parties and have also gone through the records. My conclusion on the issues, is as under.Issue No. 1 : Whether the petitioner is a partnership firm duly registered under the Indian Partnership Act and Shri Parvinder Sing his one of the partners ?  

(8) The case of the petitioner has been that the petitioner is a registered partnership firm, duly registered under the Partnership Act andParvinder Singh is a registered Partner. In his affidavit, swori. on, 11.11.1991,Parvinder Singh has stated that the petitioner is partnership firm, duly registered under the Indian Partnership Act, 1932 with the Registrar of firms,Delhi and that he is one of the partners of the petitioner firm. He has also filed Ex. P-1, a photocopy of the Form-A of Registrar of Firms, maintained under Section 29 of the Indian Partnership Act. A perusal of this document shows that Parvinder Singh and Amarjit Singh Chopra are the two partners of the Maintech Engineers, petitioner. There is nothing in the affidavit filed by Sita Ram, Managing Director of the respondent, filed by way of evidence to contradict the evidence of the petitioner. Learned Counsel for the respondents has not been able to point out any evidence against this issue. It is,thus, clear that the petitioner has proved that it is a partnership firm, duly registered under the Indian Partnership Act and Parvinder Singh is one of itspartners. This issue is decided .in favor of the petitioner.Issue No. 2 : Whether there exists a valid arbitration agreement between the parties ?

(9) Learned Counsel for the petitioner has submitted that respondent No. 1, through respondent No. 2 had obtained a contract from Bhel for carrying out work at the Panipat Thermal Power Station and a part of this work was assigned to the petitioner by way of sub-contract. This petitioner has not disputed by the learned Counsel for the respondents. The petitioner has placed reliance upon the letter of intent for election of pressure parts,non-pressure parts and structurals at the Panipat Thermal Power Station Ex.P-2 and letter of intent for application of insulation and refractory materials and sheet metal covering and ducting at Panipat Thermal Power StationEx-P-3. The execution of these documents between the parties is not in dispute.

(10) Learned Counsel for the petitioner has submitted that there wasan agreement between the respondents and Bharat Heavy Electricals Limited,in which, all the terms of the contract had been mentioned and there was an arbitration clause being Clause Nos 2, 14 to the effect that all disputes between the parties to the contract, arising out of or in relation to the contract,other than those for which the decision of the Engineer or of any other person is by the contract expressed to be final and conclusive, shall, after written notice by either party to the contract, to other party be referred to sole arbitration of General Manager or his nominee. It has thus, been submitted by the Counsel for the petitioner that by necessary implication, it has to be presumed that there was an agreement between the petitioner and the respondents that any dispute between them relating to the sub-contract,shall also be referred to the sole arbitration of General Manager of the BHEL or his nominee. He relies upon the Clause 7.1 of the two documents (Ex. P-2and P-3). It would, at this stage, be convenient to quote the same, which is as under :- "7.1Terms of payment as applicable to us in our contract with BHEL shall be applicable to you also on back to back basis and the payment will be made to you for the work done by you on the basis of measurements certified by BHEL. The work already completed partially will be paid on proportionate basis."

(11) Learned Counsel for the respondent has, on the other hand.submitted that there has. not been any privity of contract between the petitioner and Bhel who are not even a party to the present proceeding. He has further submitted that all the terms of Sub-contract between the petitioner and the respondents have been incorporated Exs. P-2 and P-3 and there is no mention of any agreement about referring any dispute to the arbitrator.He has thus submitted that in the absence of any specific term for arbitration it can not be presumed that there was any agreement between the parties to refer the dispute to the arbitrator. A prayer has, thus, been made that the issue may be decided against the petitioner.

(12) I have given my thoughtful consideration to the submissions made by the learned Counsel for the parties and have also carefully perused thedocuments. There can possibly be no disputes that no particular form is needed to provide for arbitration in agreement between the parties. The Court has to give effect to the intention of the parties, as evidenced in agreement itself without being over technical in its interpretation and such intention has to be gathered from the whole context. The location of the arbitration clause is not required to he at any specified place and it would make no difference as to whether the clause for arbitration is mentioned in the beginning or at the end of the document. The short question for consideration in the instant case is as to whether, there has in fact been any agreement between the parties for referring disputes, if any, to the arbitrator. As already referred to, the petitioner was appointed as a Sub-contractor by the respondents and there is nothing on record to indicate as to whether this was approved by the principal i.e. Bharat Heavy Electricals Limited. Admittedly,there has not been any privity of contract between the petitioner and theBHEL. There is no doubt that there was an agreement to refer dispute between the respondents and Bhel to named arbitrator, but could it be said that such a clause would be applicable to the petitioner also. My answer to this question is in the negative. The clause with regard to the payment provides that the payment would be made to the petitioner on back to back basis and the payment will be made for the work done on the basis of measurements certified by BHEL. Had there been any intention between the parties to refer the dispute to the arbitration, such a clause would either have been specifically incorporated in the terms, as given in Exs P-2 and P-3 or there would have been a mention therein that the arbitration clause in the agreement between the respondents and Bhel would be applicable to the petitioner. In the absence of any such provision in the terms on which the work was assigned to the petitioner, it can not be said that there is any agreement between the parties to refer the dispute to the arbitrator. This issue is decided against the petitioner.Issue No. 3 : Whether the disputes mentioned in the petition are covered by the arbitration agreement ?

(13) In view of the decision of Issue No. 2, this issue does not arise.Issue No. 4: Whether the petition is barred by time ?

(14) Learned Counsel for the respondents has submitted that the work was completed in the year 1987 and the present petition has been filed on 7/11/1989 which is barred by limitation and thus, prayed that this issue may be decided in favor of the respondents. Learned Counsel for the petitioner has however submitted that minutes dated 16.2.87 (Ex. P-4) were prepared in respect of a meeting between M/s. Jst Engineering Services,respondent No. 2 and the petitioner, in which it has clearly been mentioned that the work was to be continued at site. The present petition has been filed on 7/11/1989. There is a limitation of three years for moving an application for arbitration, as per Article 137 of the Schedule of the Limitation Act. In these circumstances, the application is in time and so this issue is decided against the respondents.Issue No. 5 : Relief.

(15) In view of my a foregoing discussion, the petition is dismissed with costs.