Delhi High Court
Rattan Singh Builders Pvt. Ltd. vs Punj Lloyd Ltd. on 3 February, 2015
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
ARB.P. 541/2014
RATTAN SINGH BUILDERS PVT. LTD. ..... Petitioner
Through: Mr. Prabhjit Jauhar with
Ms. Anupama Kaul, Advocates.
versus
PUNJ LLOYD LTD. ..... Respondent
Through: Mr. J.P. Sengh, Senior Advocate
with Mr. Divyam Agarwal and
Ms. Ritika Kohli, Advocates.
CORAM: JUSTICE S. MURALIDHAR
ORDER
03.02.2015
1. This is a petition under Section 11 of the Arbitration and
Conciliation Act, 1996 ('Act') seeking the appointment of an
Arbitrator to adjudicate the disputes between the parties.
2. The Petitioner and the Respondent entered into an agreement dated
6th April 2010 whereby the Respondent appointed Petitioner as
contractor to execute the civil and plumbing works for construction of
the proposed land system facility at Malanpur, District Bhind
(Madhya Pradesh). The value of the work was Rs. 21,62,00,000
(Rupees Twenty One Crores, Sixty Two Lakhs only). The contract
was modified by a letter dated 6th April 2010 which formed part and
parcel of the agreement dated 6th April 2010.
3. The Petitioner states that it completed the work order and the
contract to the satisfaction of the Architect in terms of the contract
and handed over the site to him in November 2011. In September
2011, the final bill had been submitted by the Petitioner. The
certificate of payment was issued by the Architect in terms of which
the Petitioner was also entitled to Rs. 2,14,94,273 by the Architect.
4. According to the Petitioner, only part payment of Rs. 60 lakhs was
disbursed by the Respondent to the Petitioner in the month of January
2012. A legal notice dated 12th July 2012 was served upon the
Respondent under Section 434 of the Companies Act, 1956 ('CA').
5. On 29th January 2014, an order was passed by the Company Court
in Company Petition No. 211 of 2013 noting inter alia that between
the parties there remained some controversy with regard to a sum of
Rs. 25,81,500 that had been retained by the Respondent for curing
certain alleged defects. The parties were then referred to the Delhi
High Court Mediation and Conciliation Centre ('DHCMCC'). The
Court in the said order dated 29th January 2014 observed that in the
event the parties were unable to resolve their disputes through
mediation, the Petitioner would be secured by the Respondent by
depositing the aforementioned amount and the parties would be at
liberty to initiate such action as may be advised within a specified
period of two months thereafter.
6. Apparently the mediation proceedings were not successful. On 6th
March 2014, the Respondent wrote to the Petitioner stating that as per
its record as of 31st December 2013 a sum of Rs. 79,67,975 was
payable to the Petitioner, subject to reconciliation. In response
thereto, on 20th March 2014, the Petitioner informed the Respondent
that apart from the outstanding balance as on 31st December 2013 of
Rs. 80,46,702, in the books of the Petitioner, a further sum of Rs.
28,34,452 was to be received from the Respondent. This was
followed by a legal notice dated 1st July 2014 sent to the Respondent
invoking the arbitration clause. It was inter alia stated therein as
under:
"17. That however at the time of raising 12th final bill
against certificate No. 12, my clients inadvertently
claimed only a sum of Rs. 2,14,94,273 but did not claim
the balance amount of Rs. 25,52,429 against previous
balance upto 11th running account certificate as my client
ought to have claimed a sum of Rs. 2,40,46,702 in their
final bill. However later on the said lapse on the part of
my client was duly admitted by addressee company vide
their letter dated 6th March 2014 wherein they have
admitted that an amount of Rs. 79,67,975 was due and
payable to my client as per their books and wanted my
clients to give a confirmation of the said amount due and
payable to my clients."
7. This was followed by another notice dated 14th August 2014 again
seeking the appointment of the Arbitrator.
8. Mr. J.P. Sengh, learned Senior counsel appearing for the
Respondent, referred to a decision of this Court in Sushil Kumar
Bhardwaj v. Union of India 2009 LawSuit (Del) 768 and submitted
that since the procedure outlined in the contract between the parties
was not followed by the Petitioner, the present petition under Section
11 of the Act cannot be entertained. It is submitted by Mr. Sengh that
it is only when the parties failed to resolve the disputes in terms of the
arbitration clause, could the Court be approached under Section 11 of
the Act. It is further submitted that it is not open to the Petitioner to
expand its claim beyond what was stated in the notice issued under
Section 434 of the CA. Relying upon the order dated 29th January
2014, passed in Company Petition No. 211 of 2013 he submitted that
the Petitioner could claim only Rs. 25,81,500.
9. Mr. Prabhjit Jauhar, learned counsel appearing for the Petitioner,
on the other hand submitted that with the parties having failed to
resolve their disputes through mediation, no purpose would be served
in again attempting that process at this stage. In support of the above
proposition he relied upon the decision of the designated Judge in
Datawind Limited v. Indian Institute of Technology Rajasthan
(decision dated 13th December 103 in Arbitration Petition No. 20 of
2013). He also relied upon the decision of the Supreme Court in
Arasmeta Captive Power Company Private Limited v. Lafarge India
Private Limited AIR 2014 SC 525 and submitted that the question
whether the Petitioner can claim anything beyond what was noted in
the order dated 29th January 2014 passed by the Company Court can
be examined by the learned Arbitrator. He pointed out that by a
subsequent order dated 2nd May 2014 in Company Petition No. 211 of
2013, it was noted that the Respondent had deposited a sum of
Rs. 25,81,500 in this Court and that amount was directed to be kept in
an interest bearing fixed deposit.
10. The above submissions have been considered. As regards the
objection of the Respondent with regard to non-compliance of the
procedure outlined in the arbitration clause between the parties, the
Court notes that pursuant to the order passed by the Company Court
on 29th January 2014, the parties did go before the DHCMCC.
Therefore, the requirement of the arbitration clause of the parties
having to attempt to resolve the disputes through mediation was
satisfied. That mediation was not successful is another matter
altogether.
11. This was followed by the deposit made by the Respondent of the
amount noted in the order dated 29th January 2014. While recording
that fact in the subsequent order dated 2nd May 2014 in Company
Petition No. 211 of 2013, the Court directed the parties to initiate
action within two months. Pursuant thereto on 1st July 2014, a legal
notice was issued by the Petitioner invoking the arbitration clause.
Therefore, that order was also complied with. In light of the law
explained by the Supreme Court in Datawind Limited (supra) the
Court finds that there is no bar to the appointment of an Arbitrator,
once it is clear that efforts were made, although unsuccessfully, to
amicably resolve the disputes in terms of the arbitration clause.
12. As regards the issue whether the Petitioner can be permitted to
claim an amount beyond what is stated in the initial notice under
Section 434 of the CA, the Court is of the view that this is an issue
that can be examined by the learned Arbitrator. This Court is not
called upon to examine that issue in light of the legal position
explained by the Supreme Court in Arasmeta Captive Power
Company Private Limited (supra).
13. Accordingly, the Court appoints Mr. Rakesh Kapoor, District &
Sessions Judge (retired), residing at 5-C, Court Road, Civil Lines,
Delhi-110054 (Telephone No. 23993200) as sole Arbitrator to
adjudicate the disputes between the parties including their claims and
counter-claims. The arbitration shall take place under the aegis of the
Delhi International Arbitration Centre ('DAC'). The fees of the
learned Arbitrator will be in terms of the Delhi High Court
Arbitration Centre (Arbitrators' Fees) Rules.
14. The petition is disposed of. A copy of this order be communicated
to the learned Arbitrator as well as Additional Coordinator, DAC
forthwith.
S. MURALIDHAR, J.
FEBRUARY 03, 2015
Rk
