Parkaire Engineering Co. (P) Ltd. vs Goyal Mg Gases (P) Ltd. And Anr.
2006 Latest Caselaw 264 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner is stated to be engaged in the designing and manufacturing of all types of heat exchangers, pressure vessels, chilling units etc. Respondent No. 1 is stated to have placed an order on 18.3.2000 on the plaintiff for supply of ammonia chilling unit as per directions mutually settled between the parties.

2. There were disputes about the performance of the unit as respondent No. 1 claimed that the same had not been satisfactorily installed nor the parameters achieved in the final testing. Part-payments had already been made by respondent No. 1.

3. The respondent No. 1 invoked the alleged arbitration clause in the invoice but the petitioner disputed the existence of the arbitration clause. Justice J.K. Mehra (Retd.) was appointed as the Sole Arbitrator who entered upon reference.

4. The petitioner disputed the existence of the arbitration agreement between the parties in terms of its letter dated 30.4.2001 and claimed that the documents were fabricated and manufactured. The petitioner participated in the proceedings but claimed that it was only by sending a representative who at each stage objected to the jurisdiction of the Arbitrator. The petitioner filed a suit for injunction but it is not disputed that no interim orders were granted nor have any orders by way of interim relief been passed till date. The petitioner subsequently stopped participating in the proceedings and the learned Arbitrator made and published the award dated 28.4.2003.

5. The only plea raised by learned counsel for the petitioner is that there is no arbitration agreement between the parties since the invoice of the petitioner did not contain the arbitration clause. Learned counsel submits that they could have sought adjudication under Section 16 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act') in so far as the said issue is concerned but was advised that since there was dispute about the document itself, it would be appropriate to get the matter settled in civil proceedings. Learned counsel submits that this view is now fortified by the judgment of the apex court in SBP and Co. v. Patel Engineering Ltd. and Anr. 2005 IX AD (SC) 473. The Supreme Court has held that the very scheme of the Act involves an adjudicatory process and thus the order of appointment of an arbitrator under Section 11 of the said Act is not merely administrative in nature. The final directions are summed up in para 44. The relevant directions are as under:

(ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.

(x) Since all were guided by the decision of this Court in Konkan Railway Corporation Ltd. and Anr. v. Rani Construction Pvt. Ltd. (2000) 8 SCC 159 and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act.

6. Learned counsel for the petitioner contends that clause (ix) would apply only where an arbitral tribunal has been constituted by the parties but in the present case there was no such constitution as it was unilaterally done by the respondent while the petitioner was disputing the very existence of the arbitration clause.

7. Learned counsel for the respondent, on the other hand, contends that clauses (ix) and (x) make it clear that what has been done on the understanding that Konkan Railway Corpn. Case (supra) was not to be nullified by this judgment.

8. In order to appreciate the rival contentions and the controversy in question, the purchase order itself would have to be considered. It is relevant to note that the arbitrator repeatedly directed that the purchase order should be filed. The respondent filed the office copy of the purchase order. The petitioner failed to file the same and took the stand that the original was filed in the suit. A certified copy was called for but the petitioner failed to file the same. The purchase order bears the signatures of the parties on the first page and on the back contain the terms and conditions. Apart from the terms and conditions at the back, there is a separate Annexure-I which contains the terms and conditions to the purchase order No. 31 dated 18.3.2000 which was the purchase order in question. The copy of the purchase order filed by the petitioner in the present proceedings is once again not even a certified copy. The same contains Annexure-I up to clause 6.0. The purchase order filed by the respondent before the Arbitrator contained further terms up to No. 11.0. The arbitration clause is clause 10.0.

9. Learned counsel for the petitioner strenuously contended that the petitioner never participated in the arbitration proceedings and the findings recorded by the arbitrator to the effect that the petitioner had taken time vide a letter dated 4.9.2001 for placing its statement of facts was an erroneous finding recorded by the arbitrator.

10. The original records were produced and it was found that the letter dated 4.9.2001 was on record. The said letter reads as under:

We hereby authorise our Mr. Vikas Sawhney to appear before your goodselves and request for a change of hearing date from today to Saturday the 15th September 2001 or if this does not suit, then the next Saturday i.e. 22nd September 2001. May kindly be fixed for placing before you the statement of facts.

11. A perusal of the letter shows that the petitioner had clearly stated that the dates fixed did not suit the petitioner and a date may be fixed for placing before you the statement of facts. This document was pointed out to learned counsel for the petitioner who could not dispute the existence of the letter. I am constrained to say that the counsel for the petitioner ought to have verified the records which were available in court before advancing such a plea that no letter dated 4.9.2001 existed. The plea is contrary to record.

12. The aforesaid facts show that the petitioner joined the proceedings, took time to file statement of facts and decided to absent itself from the proceedings before the arbitrator. The petitioner did not file any application as per the then existing position of law which required the issue of jurisdiction to be decided by the arbitrator alone. Even the present legal position is not that the arbitrator is precluded from taking such a decision that the court also can go into this question of the jurisdiction of the arbitrator.

13. In my considered view, the aforesaid legal position as well as the conduct of the petitioner himself seeking time for placing the records, statement of facts and not filing a certified copy of the purchase order despite repeated directions of the arbitrator, leave no manner of doubt that the petitioner was only trying to prolong the arbitration proceedings on one pretext or the other.

14. The petitioner failed to avail of the remedy which would have got this question adjudicated in respect of the existence of the arbitration clause.

15. As noted above, in the present proceedings also if the purchase order is perused, it would be seen that the complete purchase order includes the clause for arbitration. The plea of the petitioner thus is that the last page of the purchase order was not in existence, which is difficult to accept. Learned counsel sought to contend that a perusal of Sub-section (4) of Section 7 of the Act would show that an arbitration agreement has to be in writing and must be signed by the parties. There is no dispute about this position but it is also not in dispute that the arbitration agreement is in writing. It is signed inasmuch as the purchase order is undisputedly signed by the petitioner.

16. There is substance in the contention of the learned counsel for the respondent that a perusal of the objections would show that what was really the intent of the petitioner was that the petitioner did not want the arbitration clause to be incorporated. In para 4 of the petition, the petitioner has stated that during the course of the negotiations regarding the terms of purchase order, it was made clear on behalf of the petitioner to respondent No. 1 that there would not be any arbitration agreement between the parties and the petitioner would not agree to any arbitration agreement between the parties. This would show that there was apparently an arbitration agreement but the petitioner did not want to be bound by the same, if the plea of the petitioner was to be accepted. It is thereafter urged that the arbitration agreement was not incorporated in the terms and conditions. The terms and conditions were the same and they were apparently standard terms and they were signed by the petitioner. Thus, this plea is clearly an after-thought. Learned counsel for the respondent has also urged that in respect of another contract in which the petitioner was supplying certain items, the purchase order was in similar terms but the petitioner never raised the plea about there being no arbitration clause.

17. I find no merit in the objections and the same are dismissed with costs of Rs. 7,500/-.