Alfa Laval (India) Ltd. vs J.K. Corp. Ltd. & Anr.
1999 Latest Caselaw 1114 Del

ORDER

Manmohan Sarin, J.

This is a petition filed under Section 9 of the Arbitration and Con-

ciliation Act, 1996. Notice of the petition was issued to respondent on 19.11.1999 for today. The petition is taken up for disposal with the consent of the counsel for the parties, who have been heard.

2. Petitioner had entered into a contract with the respondent for the supply of Black Liquor Evaporator Plant used in the manufacture of paper. The contract was entered into 19.1.1996. The plant has been supplied and as per the petitioner it has been delivered, installed and commissioned on 13.11.1997. Petitioner a grievance is that the respondents who are com-plaining of underperformance of the plant have not provided adequate opportunity to the petitioner to improve the performance of the plant by taking appropriate measures. Petitioner is stated to be ready and willing to improve the performance of the plant and rectify the defects, if any. Learned counsel for the petitioner submits that petitioner had suggested measures, as late as on 30.10.1999, for improvement in the performance of the plant. It is stated that arbitration clause of the contract has been invoked by the petitioner and an arbitrator has been nominated by them. The respondents are also agreed on reference of disputes to the arbitration and would nominate their arbitrator within the stipulated time.

3. Learned counsel fore petitioner has urged before me that petitioner ought not to be deprived of the opportunity to improve the performance of the plant. It is submitted that respondent itself had problems at its works inasmuch as there was a strike and certain other internal problems and the petitioner never had the opportunity to undertake appropriate measures for improving the performance of the plant or establishing that the plant was functioning normally. He also submits that during the entire year of 1998 there was no complaint from the respondent.

4. Learned counsel for the petitioner submits that respondents are intending to engage another agency for improving the performance of the plant and if they are permitted to do so petitioners may never be in a position, in future, to take appropriate measures and carry out necessary repairs to improve the performance of the plant. Petitioner also apprehends that the other agency may not be able to suitably carry out the rectification and may even further damage the plant. In these circumstances, learned counsel for the petitioner submits that, as in interim measure, the respondents be restrained from engaging any other agency to rectify the plant to improve its performance or in the alternative an independent agency or experts be appointed to examine the plant and suggest corrective measures.

5. Another point on which the parties are at issue is the necessity to convert the plant from the tubular type to the plate type. While the peti-

tioner maintains that with the tubular type it can improve the performance of the plant, the respondents are of the view that it would be necessary to switch over from the tubular to plate type for improving the performance.

6. Learned counsel for the respondent refutes the claims made by the petitioner submits that they have, in fact, out of the total cost of Rs. 10 crores, already paid approximately Rs 9.50 crores. He submits that the correspondence placed on record is replete with the number of opportunities and requests being made to the petitioner to improve the performance, rectify the defects and, in particular, to change the system from 'tubular' to 'plate' but to no avail. He submits that, in these circumstances, respondent has already engaged a new agency for mproving the performance of the plant and orders for necessary spares have also been placed.

7. Learned counsel for the respondent has drawn my attention to Article 14 of the Contract between the parties, where the obligation of the petitioner for repairing and rectifying the defects is provided. As extract from the said clause reads as under:

"Alfalaval undertake to replace and/or repair with least possible delay and in reasonable time such defective part or equipment and in case the same is not done in reasonable time, the company shall have full right and liberty but no obligation of procuring such equipment or getting the same repaired from any source at the entire cost, risk and responsibility of Alfalaval."

Reference is also invited to Article 12 sub-clause (viii) of the Contract, which reads as under :

"Alfalaval undertake that in case the 65% output concentration of liquor is not achieved Alfalaval shall replace free of cost, the first tubular body and its standby with plate type body and the modifications and for replacements on this account shall be done by Alfalaval at no cost to the company."

8. Learned counsel for the respondent urged that the contract specifically contemplated and envisaged the present contingencies and eventualities. He states that a period of more than two years has elapsed but the defects have not been removed.

9. Having considered the rival submissions of the parties as well as provisions of the contract to which my attention has been drawn, I am of the view that the merits and demerits of the respective contentions of the parties can be gone into by the arbitrators during the arbitration proceedings. The question before the Court is of grant of interim protection. In the instant case the contract made a specific provision for rectification and repairs by the petitioner. Petitioner itself does not claim that repairs have been carried out. Petitioner's case is that it has been denied an opportunity to do so. The factum of low performance is also not in dispute. Whether it was on account of denial of opportunity to repair or on account of failure of the petitioner to change the system from 'tubular' to 'plate' are questions which will be gone into during arbitration.

10. In the light of the foregoing discussion, and the specific provision in the contract for repairs and rectification being carried out by another agency, petitioner does not have a prima facie came for grant of interim protection. Besides, this is a contract which is not specifically enforceable and the petitioner is not entitled to injunction under the provisions of the Specific Relief Act. There is no irreparable injury to the petitioner, which cannot be compensated by damages at a later stage if petitioner's stand is vindicated. The petitioner has failed to make out a case for grant of protection under Section 9 of the Arbitration & Conciliation Act, 1996. The petition is dismissed.

11. The observations made in this order are on a prima facie view of the matter and shall not affect the proceedings or decision of the arbitrators, including petitioner seeking interim directions from the arbitrators, if warranted at law.