Jindal Steel & Power Ltd. vs N.S.Atwal, Sole Proprietor, Guru ...
2010 Latest Caselaw 1829 Del

 *          IN THE HIGH COURT OF DELHI AT NEW DELHI

 +                              ARB. P.No. 53/2009

                                                    8th April, 2010


 JINDAL STEEL & POWER LTD.                                      ...... Petitioner
                                       Through:     Mr. A.S. Mathur, Advocate
            VERSUS

 N.S.ATWAL, SOLE PROPRIETOR,
 GURU MEHAR CONSTRUCTION                      ....Respondent

Through: Mr. Siddharth Aggarwal, Mr. Simon Benjamin, Advocates CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest? Yes

% JUDGMENT(ORAL)

VALMIKI J. MEHTA, J

Review Application No. 3/2010

1. A petition under Section 11 of the Arbitration and Conciliation Act, 1996

was filed by the review petitioner for reference of various disputes to arbitration.

This petition was disposed of vide order dated 03.12.2009 and the petition was

ARB. P.No. 53/2009 Page 1 dismissed. The order dated 03.12.2009 dismissed the petition as what was argued

was that those disputes be referred to arbitration which pertained to a loan given

by the petitioner to the respondent. It was found that the Loan Agreement was

much subsequent to and independent of the principal contract/work order dated

02.3.2001 placed upon the respondent by the petitioner (under which the

respondent was to carry out various services of excavation for the petitioner at a

site near Dongamohua Village District Raigarh, M.P.) and only the principal

contract contained the arbitration clause, whereas there was no arbitration clause

in the subsequent loan transaction.

2. Now, the present review application is filed pointing out a mistake that the

disputes which were sought to be referred through the petition under Section 11

of the Arbitration and Conciliation Act, 1996 were the disputes not only for the

Soft Loan Agreement but also with respect to the Agreement originally entered

into on 02.03.2001 and thereafter extended vide letter dated 17.7.2006 and

followed up by a work order dated 04.08.2006. In substance, what is stated in the

review application is that the petition under Section 11 was in two parts. The first

part sought reference of the disputes pertaining to the excavation works and the

second part sought reference of the disputes under the Soft Loan Agreement to

arbitration. Though the disputes under the Soft Loan Agreement were not

referred to arbitration, but, the disputes with respect to the original Agreement of

ARB. P.No. 53/2009 Page 2 excavation ought to have been referred to arbitration. It is not disputed by counsel

for the review petitioner that at the time of hearing which led to the passing of the

order dated 03.12.2009, arguments were only advanced for reference of the

disputes to arbitration with respect to the Soft Loan Agreement and not with

respect to the disputes pertaining to the Excavation Agreement. It is pleaded that

this is a bona fide mistake committed by the petitioner inasmuch as a reference to

the petition under Section 11 shows that what was sought to be referred to

arbitration were the disputes not only of the Soft Loan Agreement but also the

disputes arising out of the principal contract of excavation and as continued in

2006. It is contended that this mistake falls within the meaning of the expression

"any other sufficient reason" as found under Order 47 of the Code of Civil

Procedure, 1908 (CPC).

Notice was issued in this review application and time for reply was taken by

the respondent on 16.02.2010. Three weeks time was given to file a reply on

16.02.2010. However, till date no reply has been filed by the respondent. I am,

therefore, proceeding to dispose of the review application inasmuch as the

opportunity of filing the reply has not been availed by the respondent. In fact,

today, further time was sought for filing of the reply to the review application and

which I have declined.

ARB. P.No. 53/2009 Page 3

3. The counsel for the respondent vehemently argues for dismissing of the

review application and contends that the disputes with respect to the Agreement

of Excavation cannot be referred to arbitration inasmuch as the original contract

with respect to excavation activities containing the arbitration clause is dated

2.3.2001 and which stood expired after the four years period thereof. It is

contended that though the subsequent renewal letter dated 17.7.2006 was received

by the respondent, however, the consequent work order dated 4.8.2006, which

contained the Arbitration Clause, was not received by the respondent. It is,

therefore, contended that since the work order dated 04.08.2006 has never been

received by the respondent and since the respondent has not acted on that basis

disputes cannot be referred to arbitration pursuant to the work order dated

04.08.2006.

4. I do not agree with the contention of the learned counsel for the respondent

for the reason that even assuming that the work order dated 04.08.2006 is not

received by the respondent, it is not disputed that the letter dated 17.07.2006 has

been received by the respondent. This letter dated 17.07.2006 reads as under :-

       "JSPS/VG/ORDER/2006/1707                               July 17, 2006

       M/s. Guru Mehar Construction
       204, Avalon Apartments
       New Mangla Puri
       8, M.G. Road
       New Delhi - 110 030.

ARB. P.No. 53/2009                                                            Page 4
        Kind Attn:          Mr. N.S. Atwal

       Subject:     Excavation works at Jindal Opencast Coal Mine

       Dear Sir,

Please refer to the various correspondences regarding the rates for excavation in various types of soil at the Coal Mine of Jindal Steel & Power Limited. The Management is pleased to renew your contract at the following rates:-

1) Excavation in Soil - Rs.30.25 / BCM - Diesel Capping - 0.6 Ltr/ BCM

2) Excavation in Coal -Rs.31.25 / BCM - Diesel Capping - 0.6 Ltr / BCM

3) Excavation in Hard Store / Shale - Rs. 38.63 / BCM - Diesel Capping

- 0.8 Ltr / BCM

The Excavation quantity for the contract period will be 8.5 Million BCM + 10%.

The above rate will be in force from 15th Feb 2006 to 31st March 2007. Based on your satisfactory performance the terms and contract will be decided further. You may approach ED, JSPL, Raigarh, who will issue formal work order to you.

Thanking you,

Yours faithfully, For JINDAL STEEL & POWER LIMITED

(VIKRANT GUJRAL) VICE CHAIRMAN & CEO"

5. The expression used in the very first para of this letter namely "renew" is

important. Renewal is an extension of an existing contract which is renewed i.e.

an old contract given a new life for a new period. It means that all the terms and

conditions of the original contract stand adopted subject to any variation

contained in the letter dated 17.07.2006. The only variation contained in the

ARB. P.No. 53/2009 Page 5 letter dated 17.07.2006 is the change in the rates with respect to excavation.

Thus, even if there is no work order dated 04.08.2006, the work order dated

02.03.2001 will hold the field and, admittedly, this work order contains an

Arbitration Clause.

6. In fact, the respondent itself understood the issue in this very manner

because in their letters dated 22.11. 2006 and 05.01.2007, the respondent itself

sought reference of the disputes to arbitration in terms of Clause 18 of the work

order dated 02.03.2001. These paragraphs of the letters of the respondent to the

petitioner dated 22.11.2006 and 05.01.2007 respectively read as under :-

"We hereby request you to refer the matter to Arbitration in terms of Clause 18 of the Work Order dated 02 March 2001, flowing out of which the entire episode has come off. We would be submitting our claims separately. The payments due to you or to us can only be finalized after the Arbitration award."

"In view of the above, we would once again request that an Arbitrator should be appointed in terms of Clause 18 of the Work Order dt. 02.03.2001"

7. In my opinion, therefore, clearly there is an Arbitration Agreement. This

Arbitration Agreement is Clause 18 in the work order dated 02.03.2001 and

which has simply been renewed by the letter dated 17.07.2006. Once there is a

renewal, and as already stated by me above, the original terms and conditions

continued and which original terms and conditions do contain an Arbitration

ARB. P.No. 53/2009 Page 6 Clause. Also as already stated by me above, the respondent itself has understood

this accordingly as per its letters dated 22.11.2006 and 05.01.2007.

8. The counsel for the respondent raised an additional point that no review

application is permissible once a petition under Section 11 of the Arbitration and

Conciliation Act, 1996 is disposed of. I have in fact wholly failed to understand

this argument of the learned counsel for the respondent. Surely, provisions of

review are available when a petition under Section 11 of Arbitration and

Conciliation Act is disposed of if the conditions contained in Order 47 CPC are

satisfied. A petition under Section 11 is dealt with by this Court as a delegatee of

the Chief Justice under Section 11 and this Court functions as a civil Court

exercising ordinary original civil jurisdiction vide Section 2(e) of the Arbitration

and Conciliation Act, 1996. To a Civil Court, the provisions of Code of Civil

Procedure, 1908 surely apply. I, therefore, fail to understand the argument raised

by the learned counsel for the respondent on the basis of Section 11 (and more

particularly sub-Section 7 thereof) that a review application is not maintainable

once a petition under Section 11 is disposed of.

9. No other issue/argument/point was urged by either of the parties.

10. Accordingly, I hold that there is an error or mistake apparent on the face of

the record being the order dated 03.12. 2009 and which has arisen on account of

ARB. P.No. 53/2009 Page 7 the bona fide mistake of the petitioner in not arguing for seeking reference of

disputes to arbitration in terms of the work order dated 02.03.2001 and continued

vide letter dated 17.07.2006, although, such a case was in fact laid down in the

petition under Section 11. In my opinion, this in fact also amounts to "any other

sufficient reason" as found under Order 47 Rule 1 of the Code of Civil Procedure,

1908. The disputes pertaining to the principal contract dated 2.3.2001 and as

renewed vide letter dated 17.7.2006 are therefore liable to be referred to

arbitration as there is an Arbitration Clause, the disputes fall within the scope of

the Arbitration Clause and there is no other objection to the maintainability of the

petition.

11. Accordingly, I hereby allow the review application and review the order

dated 03.12.2009 whereby, the petition under Section 11 will stand partly

dismissed in terms of the said order with respect to the Soft Loan transaction

between the parties, however, the disputes/differences/claims/counter-claims

pertaining to excavation activities and which are the subject matter of the work

order dated 02.03.2001 and as renewed by the letter dated 17.07.2006 are referred

to the arbitration of Hon'ble Mr. Justice R.C. Chopra (Retd.) N-7, Greater

Kailash-I, New Delhi-110048 (Mob: 9818097777). I am informed by the counsel

for the petitioner that the claim of the petitioner will be approximately in the

region of one and a half crores at least. This figure I am only stating in order to

ARB. P.No. 53/2009 Page 8 fix the fee of the Arbitrator and it will not prevent the petitioner from raising all

its claims whatsoever it deems fit before the learned Arbitrator. The fees of the

learned Arbitrator is fixed at Rs.2,20,000/- to be equally shared by the parties and

which will be payable in three equal portions. The first portion will be payable

when the Arbitrator enters upon the reference. The second tranche will be

payable when the evidence commences and the third part would be payable at the

time of commencement of the final arguments. The Arbitrator will in addition be

entitled to all actual out of pocket miscellaneous expenses including secretarial

charges. The petitioner should file his claim petition before the Arbitrator within

a period of three weeks from today. The respondent shall file the written

statement and counter claim, if any, within a period of three weeks thereafter.

Replication-cum-written statement to the counter claim be filed within a period of

three weeks thereafter.

12. Parties to appear for preliminary directions before the learned Arbitrator on

23rd April, 2010 at 5.00 PM. The Arbitrator shall endeavour to dispose of the

matter within a period of approximately one year from the date he enters

appearance. None of the parties will seek unnecessary adjournments in the

arbitration proceedings and Arbitrator will be entitled to impose costs with

respect to the unnecessary adjournments which are sought by either of the parties.

I may state that I originally intended to refer the matter to the Delhi High Court

ARB. P.No. 53/2009 Page 9 Mediation and Conciliation Centre, however, the counsel for the parties were not

agreeable in this regard.

13. The review application is accordingly disposed of in terms of the above,

leaving the parties to bear their own costs. Arbitration petition 53/2009 and the

review application both are now disposed of in terms of the present order. I may

clarify that since the Section 11 petition is partly allowed, no costs shall be

payable as imposed upon the petitioner vide order dated 03.12.2009.

                                                        VALMIKI J. MEHTA,

 April 08, 2010
 dkg/J




ARB. P.No. 53/2009                                                         Page 10