Delhi High Court
Power Grid Corpn. Of (I) Ltd. vs Rpg Transmission Ltd. on 1 July, 2015
Author: V. Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on February 12, 2015
Judgment delivered on July 01, 2015
+ ARB.P. Nos.539/1999, 540/1999, 541/1999, 542/1999 &
544/1999
POWER GRID CORPN. OF (I) LTD.
..... Petitioner
Through: Mr. Parag P. Tripathi, Sr.
Advocate with Mr. P.K.
Mishra & Ms. Kanika
Tandon, Advs.
versus
RPG TRANSMISSION LTD.
..... Respondent
Through: Mr. J.M. Mukhi, Mr. M.K.
Garg & Ms. Shakumbri
Singh, Advs.
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.
1. These five petitions have been filed by Power Grid Corporation of
India Ltd. under Section 11 of the Arbitration & Conciliation Act, 1996
("Act" in short). These petitions were disposed of by this Court vide
order dated August 20, 2001, which order was challenged by the
respondent herein initially before the Division Bench of this Court by
way of a Writ Petition No.7226/2000, whereby the Division Bench had
dismissed the writ petition vide order dated May 09, 2002.
2. The order dated May 09, 2002 was challenged by the respondent
before the Supreme Court in Civil Appeal No.1389/2003, whereby the
Supreme Court vide its order dated April 22, 2009 set aside the
impugned order of the High Court and remanded back the petitions to
the learned Chief Justice for deciding the case expeditiously in the light
of decision of the Supreme Court in the case of SBP & Co. vs. Patel
Engineering Ltd. & Anr. 2005 (8) SCC 618.
3. In these petitions it is the case of the petitioner that certain
disputes have arisen and as per the arbitration clause contained in the
agreements the petitioner had appointed Justice V.A. Mohata (Retired),
former Chief Justice of Orissa High Court as its nominee Arbitrator. A
request was made to the respondent to appoint its arbitrator. However,
the respondent did not appoint the arbitrator and took various objections
with regard to invocation of arbitration clause by the petitioner.
4. I note that the prayer in these petitions was for appointment of an
Arbitrator and/or Arbitral Tribunal and reference of the claims/disputes
of the petitioner.
5. The common facts in all the petitions are, that 26 contracts have
been entered into by the predecessors in interest of the petitioner like
National Hydroelectric Power Corporation (NHPC), National Thermal
Power Corporation (NTPC), North Eastern Electricity Power
Corporation (NEEPCO) prior to March, 1988 with the predecessor in
interest of the respondent namely SAE (India) Ltd., which name has
been changed to RPG Transmissions Ltd. (now called as KEC
International Ltd.).
6. By an Act of Parliament namely, Act No.24 of 1993 the
transmission lines inclusive of contracts entered into by the aforesaid
three organizations stood transferred to and vested in Law to the
petitioner. The petitioner's case is, it was given to believe by the
respondent that the fabrication of tower parts was in law exigible to
Excise Duty and accordingly the Excise Duty was being regularly paid
by the respondent on the said fabrication of tower parts. It was on this
basis that the petitioner made the payment year after year from 1982 to
1988 to the respondent. The petitioner's stand is that without informing
the petitioner, and keeping the petitioner totally in the dark, the
respondent after depositing Excise Duty was also objecting to the
imposition, levy and recovery of Excise Duty on the fabrication of tower
parts with the Excise Authorities. Without notice to the petitioner and
keeping the petitioner in the dark, the respondent regularly filed refund
claims with the Excise Authorities. These refund claims were finally
allowed by CEGAT and some of the appeals against the same eventually
came to be dismissed in the Supreme Court sometime in April/May,
1996. It is also the petitioner's case that in April, 1996 the petitioner
wrote to the respondent calling upon the respondent to furnish details of
central excise duties paid by the respondent and the refund in respect
thereof obtained by the respondent vide notices dated April 30, 1996,
May 22, 1996, June 10, 1996 and June 18, 1996 (till date full details
have not been furnished). By reply dated June 10, 1996 the respondent
claimed that the matter was an old one and sought time. However, the
petitioner kept on calling upon the respondent to furnish the details.
Thereafter vide letter dated August 16, 1996 the respondent admitted the
totality of the refund received by the respondent "from Central Excise
Authorities and legally due to petitioner now becomes refundable to
petitioner from the date of judgment." By a subsequent letter dated
September 13, 1996 the petitioner submitted detail of the contracts in
respect of which the Excise Duty was paid by the petitioner to the
respondent. There was repeated correspondence and reminders sent by
the petitioner to the respondent. Finally, the respondent by a letter dated
October 03, 1996 tried to shift its stand and claimed that "as far as the
refunds were concerned, it is still not legally established and these are
due". However, simultaneously in the same letter, the respondent
pleaded liquidity crunch and requested for adjustment against other
payments allegedly due by the petitioner to the respondent. By a
subsequent notice dated October 18, 1996 the petitioner demanded the
refund of Excise Duty from the respondent. The petitioner made it clear
that the claim was provisional and without prejudice to the final claim to
be calculated on the basis of details to be furnished by the respondent.
The petitioner also demanded interest on the refund of Excise Duty. Vide
subsequent letter dated October 24, 1996 the respondent quantified the
refunds received during the period April, 1980 to February, 1986 and
March, 1986 to February, 1988 at Rs.3.72 Crores and Rs.2.36 Croes,
aggregating in all to Rs.6.08 Crores. The petitioner would further submit
that in between on November 18, 1996 the respondent wrote a letter to
the petitioner stating that the issue regarding unjust enrichment of excise
refund is awaiting decision of the Supreme Court. Vide letter dated
December 19, 1996 the petitioner demanded refund of interest on Excise
Duty provisionally determined at Rs.26.08 Crores. On December 31,
1996 and January 03, 1997 a meeting was held between the parties. All
through, the respondent was representing that a sum of Rs.6.08 Crores
alone had been received by it towards Excise Duty refund. The petitioner
was demanding the details of the refunds and interest. Finally on January
15, 1997 the first payment of Rs.1 Crore towards Excise Duty refund
was made by the respondent to the petitioner. Subsequently during the
period January 15, 1997, March 04, 1997 and upto April 30, 1997 and
May 08, 1997 a total sum of Rs.6.08 Crores was paid by the respondent
to the petitioner. In between several of the cheques issued by the
respondent were dishonoured and had to be represented again by the
petitioner.
7. It is also the petitioner's case that during February and March,
1997 the petitioner was repeatedly calling upon the respondent to furnish
details of the total refund of excise duty received by the respondent in
respect of the contracts entered into between the parties. Vide letter dated
March 04, 1997 the petitioner informed the respondent that so far as it
has been able to obtain information, a total refund of Rs.17.37 Crores
had been received by the respondent. The respondent was claiming that
out of the total refund received by it only Rs.6.08 Crores related to the
refund in respect of the contracts entered into between the parties. It is
the case of the petitioner that on February 27, 1997, the respondent
informed the petitioner that various legal issues relating to refund of
Excise Duty were finally decided in favour of the respondent on
December 19, 1996 after pronouncement of the judgment in the case of
Mafatlal Industries Ltd. vs. Union of India (1997) 89 ELT 24 SC.
8. It is also the petitioner's case, that a meeting was held on May 26,
1997 between the parties where the parties re-stated their respective
stand. However, it was agreed by both the parties that they will try and
resolve the issues within a period of two months i.e. by July 26, 1997
and that till such time no precipitate action would be taken by either
party. It is the petitioner case that the period of limitation in respect of
the claims begins at the earliest from the said date i.e. July 26, 1997. On
December 15, 1997 another notice was issued to the respondent by the
petitioner calling upon the respondent to make the payment of interest
and refund of Excise Duty. The said notice was replied by the respondent
vide letter dated January 12, 1998 and a defence was raised by the
respondent that finality of the issues of refund was reached only on
December 19, 1996 after the judgment of Supreme Court in Mafatlal
Industries Ltd. (supra). Despite repeated notices and demands the
respondent had refused to pay anything over and above the said sum of
Rs.6.08 Crores. The respondent has also refused to furnish the details of
the total Excise Duty refund received by it and that portion of the Excise
Duty refund which is relatable to the contracts entered into with the
petitioner. Consequently the petitioner was left with no option but to
issue a notice of demand dated October 06, 1999 and addenda dated
October 8, 1999 wherein the petitioner raised the claim that as per the
contract entered into between the parties, the liability of the petitioner
was limited to payment of Excise Duty provided that the Excise Duty
itself was payable in respect of fabrication of tower parts. The petitioner
would further submit that it is an admitted case that for the period upto
February 29, 1988 the fabrication of tower parts did not attract Excise
Duty. The claim of the petitioner is that irrespective of whether Excise
Duty was actually paid by the respondent and/or refund was obtained by
the respondent, since as a matter of fact and law no Excise Duty was in
fact payable on the fabrication of tower parts, the entirety of the amounts
received by the respondent from the petitioner towards Excise Duty is
liable to be refunded to the petitioner by the respondent. It is the
petitioner's case that the amount in respect of the entirety of the 26
contracts prior to March, 1988 was Rs.11.71 Crores, but the same can be
higher. The petitioner would further submit that the total Excise Duty
refund received by the respondent was Rs.17.37 Crores and it is the case
of the petitioner that a part of it relates to the contract entered into
between the parties and it is also entitled to interest on the amount for
which claim made @ 18% per annum.
9. It is the respondent's case that the duties have been correctly paid
at the time of clearance as approved by the competent authorities and the
petitioner cannot make any claim against the respondent. The contracts
have all been completed within the stipulated time and excise duties have
been paid as adjudicated by the Assistant Collector. It is further
submitted that there is no provision in the contract for payment of any
amount to the petitioner out of the refund received or otherwise, by the
respondent. In any event, there is no provision for refund to the
purchaser under the Central Excise Law itself. The respondent was also
depositing the central Excise Duty as otherwise the Central Excise
Authorities would not have allowed the clearance of the goods, but was
also objecting to the assessment. The respondent had at every stage
agitated the matter. The respondent would deny that all the 26 contracts
are for fabrication of tower parts supply. According to the respondent, at
the time of clearance, the Excise Duty was payable and had been paid by
the respondent, which was reflected in the RT12 returns filed with the
Central Excise Authorities on each clearance pertaining to all the
contracts. It is also submitted that the Central Excise Duty was payable
and had been paid as assessed even before March 01, 1988. The
petitioner in order to mislead the Court has tried to make submissions
with regard to a cut off date of March 01, 1988 as the date on which the
fabrication of the tower parts had become exigible to Excise Duty, on
account of the fact that an amendment had been introduced to the Central
Excise Act from that date. It is submitted that this submission of the
petitioner is not valid on the sole ground that even before March 01,
1988 the respondent had to pay the Central Excise Duty at the time of
clearance of the goods. The respondent would further submit that there is
no obligation on the part of the respondent to make any payment of the
refund of the Excise Duty received by it to the petitioner, which they
were made to pay at the time of clearance of the goods. It is also
submitted that the petitioner is attempting to mislead this Court by
referring to correspondence between the parties. It is also submitted that
the respondent in its letter dated October 03, 1996 had in the first
instance itself made it clear that the petitioner was not entitled either
under the contract or otherwise nor was there any obligation on the part
of the respondent to pay any sum of money which the respondent may
receive, by way of refund of Central Excise Duty or any other amount.
The respondent had taken a commercial decision to pay an ex-gratia
amount of Rs.6.08 crores. Further the said amount was not legally due to
the petitioner and did not flow out of any rights and obligations arising
out of or in relation to the contract. The question of payment of interest
did not arise at all as in any event there was no interest clause in the
Central Excise Law on the relevant date. This position had been
reiterated by the respondent in all its letters. It is further submitted that
there is no provision for refund of Excise Duty under the Law to a
purchaser. The question of payment of any interest on the said amount
also did not arise.
10. The respondent has further submitted that there is no subsisting
contract between the petitioner and the respondent. It is also submitted
that there is no subsisting Arbitration Clause and no cause of action can
be made out against the respondent. The date of July 26, 1997 as pleaded
by the petitioner is not a valid date and no case can be made out on the
basis of said date. The respondent's stand is also that the Central Excise
Duty had been paid by the respondent at the time of clearance of the
goods which is the only valid date, when the contract was in existence. It
is submitted that any other date is of no relevance. Further the arbitration
clause has ceased and the petitioner has forfeited its right to make any
claim. It had been made very clear to the petitioner that it was not
entitled to any amount as claimed by it purporting to be entitled to, at the
time of payment of the ex-gratia amount. The claim of the petitioner is
totally incorrect and the petitioner with malafide motives is making a
claim which the petitioner is not entitled to.
11. Further, the notice of demand dated October 06, 1999 and addenda
of October 8, 1999 are totally unwarranted and the petitioner cannot raise
any claim on the basis of this demand. The specific pleadings, in each of
the petitions are as under:-
ARB.P. No.539/1999
12. This petition concerns two contracts for fabrication of tower parts
for 400KV single circuit line Jeypore-Indrawati and Indrawati-Rangali
which is also called as Talchar. It is the case of the petitioner that in
respect of the two contracts which are subject matter of this petition, an
amount of Rs.1.57 crore is due from the respondent and the petitioner is
entitled to interest from the date, the petitioner made payment towards
Excise Duty to the respondent till the date, the petitioner received refund
on the entirety of the said payment. The petitioner's case is the
arbitration clause is contained in para 16, which is reproduced as under:-
"If at any time, any question, dispute or differences
whatsoever shall arise between the Purchaser and the
Contractor, upon or in relation to, or in connection
with the Contract, either party may forthwith give to
other, notice in writing of the existence of such
question, dispute or differences and the same shall be
referred to the adjudication of three Arbitrators, one to
be nominated by the Purchaser, the other by the
Contractor and the third by the President of the
International Chambers of Commerce, in the case of
foreign contractors and President of the Institution of
Engineers, India, in the case of local Contractors. If
either of the parties fail to appoint its arbitrator within
sixty (60) days after receipt of notice for the
appointment of the Arbitrator, then the President of
International Chambers of Commerce or the President
of the Institution of Engineers, India as the case may
be, shall have the power at the request of either of the
parties, to appoint an Arbitrator. A certified copy of
the "President" making such an appointment shall be
furnished to both the parties."
13. The reply filed by the respondent to arbitration petition 539/1999
is in fact a reply to Arbitration Petition 541 of 1999. Simultaneously, the
reply to Arbitration Petition 539 of 1999 was filed in Arbitration Petition
541 of 1999. The respondent in a brief reply to this petition, would state
that the two contracts are between the Orissa State Electricity Board and
the respondent. They would also state that OSEB is not a predecessor in
interest of the Power Grid Corporation Ltd (the petitioner herein). The
respondent apart from challenging the jurisdiction of this Court would
also contend that there is no privity of contract between the petitioner
and the respondent in the instant application and the arbitration clause
annexed to the petition and shown as part of schedule D does not form
part of the said schedule with OSEB. The respondent would also refer to
its letter dated October 30, 1999 denying the applicability of the
Arbitration Clause. That apart, the respondent has replied to the merits of
the contentions raised by the petitioner. The respondent has also stated
that the contract was not executed within the jurisdiction of this Court.
According to the respondent, all the payments were made by OSEB at
Bhubaneswar and the application is beyond limitation.
14. In rejoinder to the reply, the petitioner would contend that initially
in the year 1982, the OSEB has awarded the contract to the predecessor
in interest of the respondent. Vide agreement between OSEB and NHPC
the predecessor in interest of the petitioner dated January 11, 1985, the
transmission lines which were subject matter of these Contracts were
taken over by NHPC and the petitioner being successor in interest of
NHPC is fully entitled to raise its claims relating to the contract. The
petitioner had also stated that the arbitration clause annexed to the
petition and as shown in part of Schedule D was referred to in the
agreement dated November 18, 1991 executed between PGCIL and
NHPC wherein the transmission lines along with their contracts were
taken over from the NHPC by the petitioner as item/serial No.2 in
Annexure II of the said agreement. It is also stated in the rejoinder that
the contract relates to the transmission line from Jeypore to Indrawati
and from Indrawati to Rangli, also called Talchar. The petitioner
reiterates that the present dispute raised is within the territorial
jurisdiction of this Court. The respondent's registered office is situated
within the territorial jurisdiction of this Court. The tender was given
publicity on All India level including Delhi within the territorial
jurisdiction of this Court. The correspondence for refund of Excise Duty
was made in Delhi. The refund of Excise Duty was made by the
respondent and received by the petitioner at Delhi.
ARB. P. No.540/1999
15. This petition has been filed by the petitioner with regard to three
contracts entered into by the predecessor in interest of the applicant-M/s
National Hydroelectric Power Corporation (NHPC) with the predecessor
in interest of the respondent dated September 07, 1982, June 17, 1982
and May 04, 1983 for fabrication of tower parts for the transmission
lines between (i) Siliguri to Dalkhola, (ii) Birpara to Siliguri and (iii)
Salal to Jammu, & Salal to Kishanpur/Udhampur. According to the
petitioner, the subject matter of these three contracts is Rs.60.73 lacs
along with interest from the date the petitioner made payment of Excise
Duty to the respondent till the date the petitioner received refund on the
entirety of the said payments from the respondent. The petitioner refers
to para 50 which is an arbitration clause and which reads as under:-
"Except where otherwise provided, all questions,
disputes of differences in respect of which the decision
has not been final and conclusive, arising between the
Contractor the Corporation, in relation to or in
connection with the contract shall be referred for
arbitration in the manner provided as under and to the
sole arbitration appointed as follows:
i) either of the parties may give to the other notice in
writing of the existence of such question, dispute or
difference;
ii) Within thirty (30) days of receipt of such notice from
either party, the Chief Engineer-in-Charge of work at
the time of such dispute shall send to the contractor a
panel of three persons who shall not be the employees
of the Corporation and thereafter the Contractor,
within fifteen (15) days of receipt of such panel,
communicate to the Chief Engineer the name of one of
the persons from such panel and such a person shall
then the appointed sole arbitrator by the Chief
Engineer.
iii) Provided that, if the Contractor fails to
communicate the selection of a name out of the panel
so forwarded to him by the Chief Engineer, then after
the expiry of the aforesaid stipulated period the Chief
Engineer shall without delay select one person from
the aforesaid panel and appoint him as the sole
arbitrator."
16. The petitioner vide its notice dated October 6, 1999 nominated
Mr. Justice V.A. Mohta (Retd.), former Chief Justice of the High Court
of Orissa, Mr. Justice Harbans Lal (Retd.), former Judge of Punjab and
Haryana High Court, Mr. Justice P.K. Bahri (Retd.), former Judge of
Delhi High Court as a panel of Arbitrators. It is the case of the
petitioner, no reply was received to its notice.
17. The respondent has filed its reply to this petition in
Arb.P.544/1999. It is the case of the respondent that the arbitration
clause set out as clause 50 is in part in the petition. However, this clause
ceases to have any effect as by virtue of clause 50.5, unless served with a
notice by either party within 30 days of the expiry of the defects liability
period, all rights and claims under the contract shall be deemed to have
been waived and thus forfeited and absolutely barred. The respondent
would submit that no such notice has been given and hence there being
no subsisting arbitration clause, the petition does not lie. The respondent
would also challenge the jurisdiction of this Court to entertain the
petition under Section 11 of the Act. The respondent would take the
stand that that the application is absolutely barred by time and the
petitioner had waived and forfeited all its rights and claim. The
respondent would state that there is no privity of contract between the
parties. The respondent had also stated that only two contracts have been
supplied even though reference has been made to three contracts. Rest of
the contentions are on the merit of the disputes between the parties, the
details of which have already been given above. The respondent has
denied that the amount of Rs.60.73 lacs along with interest is payable. In
the rejoinder, the petitioner has placed on record the third contract
relating to construction of 220KV transmission lines from Birpara to
Siliguri and Birpara to Bongai Gaon. They deny the applicability of
clause 50.5. The petitioner would also deny that this Court has no
jurisdiction to entertain this petition. It also stated, the petition is within
limitation.
ARB.P. No.541/1999
18. This petition has been filed by the petitioner seeking appointment
of Arbitrator with respect to one contract for fabrication of tower parts
for transmission line from Sarna to Dasuya awarded to the predecessor in
interest to the respondent/Tata Exports. The claim of the petitioner is for
an amount of Rs.8.63 lacs apart from interest from the date the petitioner
had made payment towards Excise Duty to the respondent till the
petitioner receives refund of the entirety of the said payment from the
respondent. The arbitration clause is contained in para 46 of the
document annexed as Annexure I to the petition, which is reproduced as
under:-
"Except where otherwise provided in the contract, if at
any time, any question, dispute or difference
whatsoever, shall arise between the contractor and the
Purchaser upon or in relation to or in connection with
this contract either of the parties may give to the other
notice in writing of the existence of such a question,
dispute or difference and the same shall be referred to
Sole Arbitration of the person appointed by the
Corporation Engineer at the time of dispute. It will be
no objection in such appointment that the Arbitrator so
appointed is Corporation's employee, and in the case
of his duty as Corporation's employee, we have
expressed view on all or any of the matters in dispute
or difference. The Arbitrator to whom the matter is
originally referred, being transferred or vacating his
office or being unable to act for any reason, then to act
as Arbitrator, in accordance with the terms of the
Contract. Such person shall be entitled to proceed with
reference from the stage at which it was left by his
predecessor."
19. The petitioner's case is, it, vide notice dated October 6, 1999 had
nominated Mr. Justice V.A. Mohta (Retd.), Former Chief Justice of
Orissa High Court as an Arbitrator but no reply has been received by the
petitioner to the notice dated October 6, 1999 and Addenda dated
October 08, 1999.
20. The respondent in its reply filed to Arbitration Petition has stated
that the arbitration clause sought to be invoked and set out in the petition
does not exist. According to the respondent the clause as set out by the
petitioner in the application was deleted and substituted by the following
clause:-
"Clause 46.1 of the General Conditions of Contract in
respect of Arbitration shall be deemed to have been
deleted and substituted by the following:
"Except where otherwise provided for in the contract,
all questions, disputes or difference whatsoever,
arising between the contractor and the Corporation
upon or in relation to or in connection with this
contract either of the parties may give to other notice
in writing of the existence of such a question, dispute
or difference. Within 30 days of receipt of such notice
from the either party the Corporation Engineer shall
send to the contractor panel of three names of persons
who shall be presently not under the employment of the
Corporation. The Contractor shall thereupon within 15
days receipt of this list select and communicate to the
Accepting Authority the name of one of the persons
from the list who shall then be appointed Sole
Arbitrator. If the contract fails to communicate
selection of name of one of the persons from the list
who shall then be appointed Sole Arbitrator. If the
contractor fails to communicate selection of name
within the aforesaid stipulated period, the Corporation
Engineer shall without delay, select one person from
the list and appoint him as the Sole Arbitrator."
The respondent has also referred to clause 46.4. The same is also
reproduced as under:-
"46.4 A notice of the existence of any question, dispute
or difference in connection with this Contract, shall be
served by either party within 180 days of the issue of
taking over certificate by the Purchaser failing which
all rights and claims under this Contract shall be
deemed to have been forfeited and absolutely barred."
21. It is the case of the respondent that the petitioner has not given any
notice of the existence of any dispute or difference in connection with
the contract within 180 days of the issue of taking over certificate as
stipulated in clause 46.4 of the contract and having failed to do so cannot
seek to invoke the arbitration clause. The respondent has also taken a
stand that the contract was concluded in the year 1981 and no rights are
surviving to enforce the contract against the respondent. It has also been
averred that this Court has no jurisdiction to entertain the present
petition, apart from stating that there is no privity of contract between the
petitioner and the respondent. The respondent has also stated that the
contract was only for survey and erection and not for fabrication of tower
parts and admittedly on which no central Excise Duty is payable. The
respondent has also denied the liability of refunding the Excise Duty.
The respondent apart from denying the liability of Rs.8.63 lacs along
with interest has also stated that it had by mistake paid to the petitioner a
sum of Rs.1,16,000/-. The respondent referred to its reply dated October
30, 1999 wherein it has denied the applicability and existence of
Arbitration Clause.
22. In the rejoinder the petitioner has stated that the present dispute
raised in this petition is within the territorial jurisdiction of this Court.
According to the petitioner the registered office of the respondent is
situated within the territorial jurisdiction of this Court. The tender was
floated within the territorial jurisdiction of this Court. Payments to the
respondent were made in Delhi. The petitioner has also stated, even it is
assumed not admitting that the new clause has been substituted as
reproduced by the respondent then also the current dispute between the
parties is fully covered by the arbitration clause. According to the
petitioner, the interpretation of clause 46.4 given by the respondent is
wholly misplaced. The dispute between the parties does not relate to
"taking over certificate by the Purchaser". In fact the dispute/ difference
relate to refund of Excise Duty obtained by the respondent and not
transferred to the petitioner. The petitioner in any case would state that
the clause 46.4 has no applicability. Alternatively the petitioner would
state, even on interpretation, clause 46.4 itself falls within the large and
omnibus category, such a dispute/difference can be decided by recourse
to the arbitration clause contained in the contract. The petitioner denied
that the petition is barred by time. The contract between NHPC, the
predecessor in interest of the present applicant and Tata Exports Ltd. was
for supply of tower parts. The Tata Exports Ltd. has further sub-
contracted to the present respondent with the approval and permission of
the petitioner herein. The goods were supplied by the respondent directly
to NHPC. It, therefore, follows that the respondent not only had privity
of contract with the petitioner but the respondent claimed under Tata
Exports Ltd. The contract entered into between the petitioner and the
Tata Exports Ltd. contemplate sub-contracting of the work by Tata
Exports Ltd. to sub-contractors and defines the sub-contractor as a
person to whom any part of the contract has been sub-let with the
consent in writing of the Engineer. The Engineer is the employee of the
petitioner and as such there is privity between the respondent who was
the sub-contractor and the petitioner and the respondent as sub-
contractor performed part of the contract sub-contracted to it and
received payment from the petitioner for the same. It has denied that
this Court has no territorial jurisdiction.
ARB.P. No.542/1999
23. This petition relates to two contracts for fabrication of tower parts
for the construction of 132KV (S/C) dated April 24, 1982 and for
additional transmission line project vide letter of acceptance dated April
16, 1985 awarded by Northern Eastern Electric Power Corporation Ltd.
to the predecessor in interest of the respondent. The amount in respect of
these two contracts is Rs.34.73 lacs. The petitioner has also claimed
interest from the date when the Excise Duty was paid till the date the
petitioner receives the refund on the entirety. The petitioner would rely
upon arbitration clause contained in para 32, which reads as under:-
"32 Arbitration
(a) all disputes or differences shall be as far as
possibly mutually settled.
(b) if at time any dispute or difference shall arise
between NEEPCO and Contractor which cannot be
settled within a reasonable time the same shall be
referred to arbitration as per the provision of the
Arbitration Act, 1940 at the time in force. The
contractor will first submit them to NEEPCO in
writing.
(c) Venue for arbitration shall invariably be Shillong
in all such cases."
According to the petitioner, it nominated Mr. Justice (Retd) V. Mohta,
retired Chief Justice of Orissa High Court vide its notice dated October
6, 1999 but no reply was received from the respondent.
24. The petitioner pleads that this Court has territorial jurisdiction to
entertain the petition inasmuch as the contract was given All India
Publicity including at Delhi within the territorial jurisdiction of this
Court. The entire correspondence for the refund of Excise Duty was
made with the respondent and payment received by the petitioner at
Delhi.
25. The respondent in its reply has stated that only one contract has
been annexed to the petition even though in the Annexure I to the
petition two contracts have been mentioned. The arbitration clause which
is sought to be invoked by the petitioner has ceased and is not applicable.
According to the respondent the arbitration was envisaged only after
there was no mutual settlement of the disputes or differences. The
contract of 1985 was completed on September 11, 1987 and the final bill
has been paid. The respondent would also state that this Court has no
jurisdiction to entertain the present petition. The application is barred by
time. There is no privity of contract between the petitioner and
respondent and on merits the petitioner is not entitled to any refund. The
respondent denied the liability of Rs.34.73 lacs along with interest
claimed on the contracts in the present petition.
26. In the rejoinder the petitioner would submit that the dispute
between the parties is within the territorial jurisdiction of this Court and
within limitation. The respondent has registered office situated within
the territorial jurisdiction of this Court. The tender for the contract was
floated within the territorial jurisdiction of this Court. The refund of
Excise Duty was made by the respondent and received by the applicant
in Delhi. Part of the cause of action has arisen within the territorial
jurisdiction of this Court.
27. The petitioner in the rejoinder has submitted that initially there
was a contract between the petitioner and the answering respondent
which contract has already been annexed as Annexure I to the petition.
This contract was regarding the transmission line from Haflong to
Kumar Ghat. Later on the coverage of the transmission line was
extended and contract for additional transmission line project was also
granted to the respondent on the same terms and conditions on which the
first contract was granted. According to the petitioner a perusal of page
53 of the contract would show that additional transmission line project is
in fact a part and parcel of the same contract and, therefore, the earlier
transmission line and the additional transmission line project were to be
treated as one and the same contract since the respondent had agreed to
bind itself to the terms and conditions of the first contract itself. The
petitioner would plead that the present petition is within time and it
would be better if all the disputes are referred to a single Arbitrator. It is
also pleaded that the respondent admits the existence of arbitration
clause 32 in the contract.
ARB.P. No.544/1999
28. This petition relates to 18 contracts for fabrication of tower parts,
granted by NTPC to the predecessor in interest of the respondent through
letters of acceptance issued between the years 1982-1988 for 400KV
(DC) & (SC). The total amount due in respect of the 18 contracts which
are subject matter of the present petition is Rs.9.11 Crores. The
petitioner has also claimed interest from the date the petitioner made
payments towards Excise Duty to the respondent till the date the
petitioner receives refund on the entirety of the said payments from the
respondent. The arbitration clause on which reliance has been placed by
the petitioner is contained in para 26.6.1 which reads as under:-
"The arbitration shall be conducted by three Arbitrators,
one each to be nominated by the Contractor and the
Owner and the third to be named by the President of the
Institution of Engineers, India. If either of the parties fail
to appoint its arbitrator within sixty (60) days after receipt
of a notice from the other party invoking the Arbitration
clause, the President of the Institution of Engineers, India,
shall have the power at the request of either of the parties,
to appoint the Arbitrator. A certified copy of the said
President making such an appointment shall be furnished
to both the parties."
It is the case of the petitioner, it had nominated Mr. Justice V.A Mohta
(Retd), Chief Justice of Orissa High Court vide its notice dated October
6, 1999 but no reply was received from the respondent.
29. The respondent in its reply stated that out of 18 contracts only 17
have been supplied. Even from the 17 contracts one of the contract is
with Best & Crompton and there is no privity of contract between the
petitioner and the respondent. The Respondent would also submit that
insofar as contract Nos.3,6,7,8,9, & 16 are concerned, the general
conditions of contract, inter-alia contained two clauses numbered as 25
and 26. Clause 25 dealt with settlement of disputes and clause 26 was in
respect to arbitration.
30. According to the respondent the arbitration clause under clause 26
can be invoked after exhausting clause 25 and clause 26 is operative
during the currency of the contract and not thereafter. According to the
respondent the dispatches in contract at item Nos.1,2,3,6,7,8,9, 15, 16 &
18 were continued to be made after February 29, 1988 which the
petitioner itself admits that duty was leviable from March 01, 1988 on
transmission towers. It is the case of the respondent that there is no
arbitration clause and hence the petition is not maintainable. The
respondent would also state that this Court has no territorial jurisdiction
to entertain the present petition. It also stated that the petition is barred
by time. The respondent has also denied the liability to make payment to
the petitioner of the refund of Central Excise Duty.
31. In rejoinder the petitioner has stated that out of the 18 contract 17
contracts have been supplied to the respondent. The remaining one
contract has been filed by the petitioner along with the rejoinder. The
said contract relates to Kawas Bharuch transmission line which has been
mentioned as item No.17 in Annexure I to the petition. The said contract
was between Gujarat Electricity Board (GEB) and the respondent herein.
As per the memorandum of understanding between NTPC and GEB
dated March 07, 1987 wherein NTPC has assigned to GEB the work of
construction of certain transmission lines including the Kawas Bharuch
transmission line. Thereafter the GEB has sub-contracted a part of the
work relating to the construction of Kawas Bharuch transmission line to
the respondent herein vide contract dated June 09, 1987. According to
the petitioner, clause 40 of the terms and conditions contains the relevant
arbitration clause, which is reproduced as under:-
"40 Arbitration:
(a) If, at any time, any question, dispute or difference
whatsoever shall arise between the Purchaser or
the Consulting Engineers and the Seller/Contractor,
upon, or in relation to or in connection with the
contract either party may forthwith give to other
party notice in writing of the existence of such
question, dispute or difference and this shall be
referred to two arbitrators one to be nominated by
the Purchaser and one to be nominated by the
Seller/Contractor or in case of disagreement
between the arbitrators, to an Umpire appointed by
the arbitrators in writing under their hands before
proceeding with the arbitration and the decision of
such arbitrators or Umpire shall be final and
binding on both the parties. Any such reference
shall in respects conforms to such statutory
enactment or enactments, regulations relating
arbitration as from time to time in force and
arbitration proceeding shall be conducted at such
place in India as the arbitrators may determine.
The expenses of the arbitrators shall be paid as the
arbitrators may determined.
(b) Performance under this contract shall, if
reasonably possible, continue during the arbitration
proceedings, and no payments due or payable by
the Purchaser shall be withheld unless they are the
subject-matter of the arbitration proceedings."
32. The petitioner's case is that the arbitration clause is widely worded
to cover within its ambit, the present dispute between the parties to be
referred to arbitration. Insofar as the contention of the respondent that
there is no privity of contract between the respondent and Best &
Crompton is concerned, it is clearly mentioned at page 2 of the contract
that the respondent herein is the sub-contractor with whom Best &
Crompton will be entering into a contract for supply of tower parts.
Further the invoices which Best & Crompton had been sending to NTPC,
clearly mentions and relies upon the copy of the respondent's invoice
which was sent to Best & Crompton. The copy of the form GP1 attached
along with Best & Crompton invoice is also one which was drawn and
signed by the respondent herein. Hence, there exists a privity of contract.
33. Mr.Parag Tripathi, learned Senior Counsel appearing for the
petitioners would contend that there are 26 contracts in total in which the
petitioners are seeking appointment of Arbitrator/Arbitral Tribunal. He
states, the 26 Contracts executed were between NHPC, NTPC and
NEEPCO and the predecessor in interest of the respondent for supply of
tower parts etc. The power transmission systems of these three
companies with a view to develop a national power grid were transferred
and vested first in the Central Government and then with the petitioner
herein namely Power Grid Corporation of India Ltd. (PGCIL) vide an
Act of Parliament dated April 02, 1993 and became effective from April
01, 1992. He has drawn my attention to Section 3 of the Act of 1993. He
has also drawn my attention to Section 4(1) & (2) and Section 7(1) of the
Act to contend that the transfer included the rights and powers and debts,
liabilities and obligations incurred and to contracts, agreements and other
instruments made by any of the three companies and to legal proceedings
relating to those matters pending in any Court, Tribunal or other
authority in India. He has taken me through the averments made in the
petitions and the documents filed by the petitioner. According to him,
the assignment in favour of the petitioner is statutory in nature and
PGCIL is no stranger to the contracts. He states that even though
original signed copy could not be produced, the respondent had admitted
in its pleading about the refund being payable and the existence of the
arbitration clause. According to him, in fact, in the earlier round of
litigation there was no whisper, that there is no arbitration clause. He
would draw my attention to the order passed by the Division Bench in
W.P.(C) 7226 of 2001 wherein the Court had noted that there is no
dispute that each of the contracts contained an arbitration clause. Even
the objection with regard to privity of contract is unsustainable in view
of the fact that an amount of Rs. 6.08 Crores has been paid by the
respondent to the petitioner. He states, the respondent admits its
liability, which is clear from the various communications referred to and
annexed with the petitions. The objection that there is no arbitration
agreement in writing between the parties in terms of Section 7 of the Act
is unsustainable. That apart, he would state, the objection of the
respondent, that the petition is barred by limitation is not tenable. He
would state that it was only in the year 1996, the petitioner came to know
about the refund of the Excise Duty to the respondent; thereafter various
letters have been written to the respondent and the respondent has paid
an amount of Rs. 6.08 Crores which is also an acknowledgement of the
liability and in the meeting held in the month of May 1997, it was agreed
between the parties to resolve the issues within two months. According
to him, the cause of action arose only after expiry of two months. He
would rely upon the judgment of the Supreme Court reported as 2009 (1)
SCC 269 National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd. to
contend that when an issue/claim is dead or alive and where the party has
concluded the contract/transaction by recording satisfaction of their
mutual rights and obligations or by receiving final payment without
objection, such issue(s) can be decided by the Chief Justice or his
designate if necessary by taking evidence. Alternatively, he may leave
those issue(s) open with a direction to Arbitral Tribunal to decide the
same. He would also rely upon the judgment of the Supreme Court
reported as 2011 (3) SCC 507, Indian Oil Corporation Vs. SPS
Engineering Ltd. to contend that only such claims which are long time
barred and there is no need of detail consideration of evidence be
dismissed at the threshold and where there is a disputed question whether
a claim is barred by limitation or not, such issue be left for decision of
the Arbitrator. He would also rely upon the judgment of the Madras
High Court in the case of Cash and Gain Finance and Investments &
Ors. Vs. Manjula Udaya Shankar, CRP (PD) No. 1337 of 2008 decided
in the month of October 2008 to contend that where a document
containing arbitration agreement is admitted and made the basis of the
suit itself, such a party cannot complain that there has been non-
compliance of the requirement under Section 8(2). In other words,
according to him, it was held, filing of the certified copy by the party is
adequate to satisfy the requirement of Section 8(2). He would also refer
to the judgment of this Court reported as 211 (2014) DLT 215, Aez
Infratech Pvt. Ltd. Vs. Sng Pvt. Developers Ltd. where this Court has
held that where one party had itself relied upon the agreement containing
the arbitration clause and has not denied the averment of the other party
as to the existence of the arbitration clause, the provision of Section 8(2)
ought to not stand in the way of the matter being referred to arbitration.
Mr.Tripathi also takes support from the order of this Court dated August
20, 2001 in the earlier round, to contend, the findings given by this Court
are relevant and need to be considered by this Court, as being
conclusive.
34. On the other hand, Mr.J.M.Mukhi, learned counsel for the
respondent would contend that under Section 11 of the Act, it is the
function of the Chief Justice or his designate to ascertain the existence of
the arbitration agreement between the parties conclusively and not on
prima facie basis. In that regard, he would state, the mandatory rule
require a request to state the ground and to file an original or
authenticated copy of the arbitration agreement as well as the affidavit of
satisfaction of the conditions in sub-Section 5 or 6 of Section 11.
According to him, it is no where stated that the arbitration agreement in
writing came into existence in any exchange of letters or by way of
admission in any defence to a statement of claim. In other words, there
is no arbitration agreement arising by way of exchange of letters or by
way of non denial in any defence to a statement of claim. He says, an
application under Section 11 which is not in compliance with the
mandatory rules need to be rejected. He would state, it is the case of the
respondent that there is no arbitration agreement within the meaning of
Section 7 of the Act i.e. it is to be in writing signed by both parties or it
emerges from an exchange of communications or when there is an
exchange of statement of claim and defence, it is essential in the
statement of claim, the existence of Arbitration clause is alleged and not
denied in the defence statement. According to him, in terms of the Act
of 1993, only those agreements relating to the power transmission
system that were subsisting or having effect as on April 1, 1992, were
transferred to PGCIL. Agreements that were dead performed, satisfied
were not be transferred to PGCIL. He would also state in terms of
Section 4, no debts or claims of NTPC, NHPC or NEEPCO were
transferred to PGCIL. According to him, if any question arises as to the
transfer of a contract or agreement from NTPC, NHPC or NEEPCO to
PGCIL, the same was to be referred to Central Government.
He would concede to the fact that in the original reply, this point was not
taken. He states, that, the absence of original or authenticated copy of
the arbitration agreement was canvassed in the Writ Petition and before
the Supreme Court. According to him, the 1993 Act has no relevance
unless the contracts are produced in original or an authenticated copy
thereof. In any event, according to him, the purported notice of 1999
was hopelessly time barred since it related to refund of receipt in
December 1988, January 1989 and June 1993. In this regard, he would
state, the limitation period in respect of the same expired on December
15, 1991, January 26, 1992, June 6, 1996. Accordingly, there was no
extension of the limitation period by any alleged acknowledgment of
liability. According to him, it was only on account of good business
relations with the petitioner and on the petitioner's insistence the
respondent made an ex-gratia payment of the entire amount to the
petitioner stating clearly that it was under no legal liability to do so.
According to him, this aspect has been recorded clearly in the Minutes of
the meeting held on December 31, 1996, January 3, 1997 and May 26,
1997. He would state that a reply to the application under Section 11 is
not a defence to a statement of claim. According to him, under the
1996's Act, the non-denial has to be in a defence to the statement of
claim. It is his submission that there was no admission at any time
whatsoever. He also refers to the notification dated February 2 1996
issued by the High Court of Delhi framed in exercise of power under
Sub-Section 10 of Section 11 of the Act to contend that an application
under Sub-Section 10 of Section 11 of the Act shall be made in writing
and accompanied by the original arbitration agreement or a true copy
thereof, an affidavit, supported by relevant documents or true copy
thereof to the effect that the conditions have been satisfied. In the end, it
is his submission that Section 35 of the Stamp Act, 1859 dictates that no
Court or Authority shall entertain a document that is not duly stamped.
He would rely upon the following judgments:
(i) SBP & Co. Vs. Patel Engineering Ltd., AIR 2006 SC 450
(ii) Jagdish Chander Vs. Ramesh Chander (2007) 5 SCC 719
(iii) National Insurance Co. ltd. Vs. Boghara Polyfab AIR 2009 SC 170
(iv) Yogi Aggarwal Vs. Inspiration Clothes & U (2009) 1 SCC 372
(v) Indowind Energy Ltd. Vs. Wescare (Inia) Pvt. Ltd. (2010) 5 SCC
(vi) AP Tourism Development Co. Vs. Pampa Hotel Ltd., (2010) 5 SCC
(vii) Alva Aluminium Ltd. Bangkok Vs. Gabriel India Ltd. (2011) 1
SCC 167
(viii) Reva Electric Car Co. Pvt. Ltd. Vs. Green Mobil (2012) 2 SCC 93
(ix) Rickmers Vervaltung GMBH Vs. Indian Oil Corporation (1999) 1
SCC 1
(x) Shree Ram Mills Ltd. Vs. Utility Premises Pvt. Ltd. (2007) 4 SCC
(xi) Union of India Vs. Onkar Nath Bhalla (2009) 7 SCC 350
(xii) Anil Kumar Vs. B.S. Neelkanta AIR 2010 SC 2715
(xiii) Indian Oil Corporation Vs. SPS Engineering Ltd. (2011) 3 SCC
(xiv) Iron and Steel Co. Ltd. Vs. Tiwari Road Lines (2007) 5 SCC 703
(xv) N. Radhakrishnan Vs. Maestro Engineers (2010) 1 SCC 72
35. Having heard the learned Counsel for the parties and considered
the detail submissions, both oral and written made, before I deal with the
same, as the matters were remanded back by the Supreme Court to be
decided in terms of its judgement in S.B.P and Co. (Supra), I deem it
appropriate to first refer to the said decision wherein the Court had
determined the scope and power exercised under Section 11 of the Act,
by the Chief Justice or his designate. The Court was of the view that
while exercising power under Section 11, the following need to be seen:
(i) The party making the motion has approached the right High
Court;
(ii) There is a valid Arbitration Agreement as defined in the Act;
(iii) The person who has made the request under Section 11 is a party
to such agreement.
36. The Court also held that when an application is made under
Section 11 of the Act, the Chief Justice has to decide whether the
applicant has satisfied the aforesaid conditions for appointing an
Arbitrator and to determine whether the claim was a dead one or a time
barred claim that was sought to be resurrected or whether the parties
have concluded the transaction by recording satisfaction of their mutual
rights and obligations and receiving the final payment without objection.
However, the question whether the live claim come within the purview
of the Arbitration Clause may not be possible to be decided at this stage.
Such a question, must be left to be decided by the Arbitral Tribunal, on
taking evidence and deciding it with the merits of the claims, raised in
the Arbitration.
37. In a subsequent judgment, rendered in Jagdish Chandra (supra),
which was also referred to by learned counsel for the respondent, the
Supreme Court has inter-alia held that the Chief Justice or his designate
under Section 11 is not empowered to appoint an Arbitrator in the
absence of Arbitration Agreement. In fact, in a still later judgment in
National Insurance Company (supra) also referred to by learned
Counsel for the respondent, the Court identified and segregated the
preliminary issues that would arise for consideration in an application
under Section 11 of the Act into three categories. The issues in the first
category, which this Court as a designate of the Chief Justice, has to
decide are;
a. Whether the party making the application has approached the
appropriate High Court;
b. Whether there is an arbitration agreement and whether the party
who has applied under Section 11 of the Act is a party to such an
agreement.
38. The issues in the second category which this Court may choose to
decide or leave to the Arbitral Tribunal or Chief Justice/his designate
are;
a. Whether the claim is a dead (time barred) claim or a right claim
b. Whether the parties have concluded Contract/transaction by
recording satisfaction of their mutual rights and obligations and
receiving the final payment without objection.
39. The third category of issues which would be left exclusively to the
Arbitral Tribunal and which are;
a. Whether a claim made false within the Arbitration Clause for
example, a matter which is reserved for final decision of a departmental
authority and expected or excluded from arbitration;
b. Merits of any claim involved in the Arbitration.
40. It is in the aforesaid background, the submissions made by learned
counsel for the parties need to be considered.
Privity of Contract
41. The submission of learned counsel for the respondent was that
there was no privity of contract between it and the petitioner. Suffice to
state, given the correspondence, exchanged between the parties, a
reference of which has already been given above and the fact that the
respondent has paid an amount of Rs.6.08 crores and on a reading of the
provisions of the Act of 1993, it is clear that the rights and liabilities
stood transferred to the petitioner as is clear from the words "subsisting
or having effect immediately before the appointed date". The plain
meaning of the words are, those agreements etc. subsisting or having
effect immediately before April 1, 1992. The issue of refund of Excise
Duty for the year 1982-88 was subjudice pending adjudication, finally
decided in the year 1997. I note from the judgment in Mafat Lal
Industries (supra), Supreme Court was concerned with an issue, where
Excise Duty has been paid under mistake of law and whether the same
was liable to be returned back. The issue having been decided in favour
of the respondent , surely a corresponding duty is cast on the respondent
to refund the amount to the petitioner. Surely, such a claim is subsisting
on the appointed date, as such a claim, relates to the rights and
obligations of the parties to the agreements. Even otherwise, it is noted
from the facts, the respondent has never disputed its liability inasmuch as
the respondent in its communication dated June 10, 1996 had claimed
that the matter was an old one and sought time. Thereafter, in the
communication dated August, 16 1996 the respondent admitted that the
totality of the refund received by the respondent from the Central Excise
Authority and legally due to the petitioner, becomes refundable to the
petitioner. Even, in its communication dated October 24, 1996, the
respondent quantified the refund received during the period April 1980
to February 1986 and March 1986 to February 1988 at Rs.3.72 crores
and Rs.2.36 crores, aggregating in all, Rs.6.08 crores. In the meetings
dated December 31, 1996 and January 3, 1997, the respondent
represented that only a sum of Rs.6.08 crores has been received towards
the Excise Duty refund and accordingly, a total sum of Rs.6.08 crores
was paid by the petitioner to the respondent. That apart, in its
communication dated October 30, 1999, which was a response to the
notices issued by the petitioner on October 6, 1999 and October 8, 1999
respectively, the respondent did not challenge the privity of contract
between it and the petitioner. Payment of Rs.6.08 crores by the
respondent to the petitioner even as a commercial decision only to
maintain business relations would also reflect the acceptance of liability
by the respondent.
42. Accordingly, I hold that there exist privity of contract between the
petitioner and the respondent, by operation of law and on facts. I may
only add, this conclusion of mine is with regard to all the contracts
which are subject matter of these petitions except in Arbitration Petition
No.541/1999 and two contracts in Arbitration Petition No.544/1999
which I would deal with, while considering the individual petitions.
There is no Arbitration Agreement:
Before, I deal with this submission of Mr.Mukhi, I note, section 7 of the
Act stipulates that an Arbitration Agreement has to be in writing when;
a. It is signed by both the parties;
b. When it emerges from an exchange of communication;
c. When there is an exchange of statements of claim and defence; it
is asserted in the statement of claim and is not denied in the defence.
43. It was contended by Mr. Mukhi that there was no Arbitration
Agreement signed between the parties i.e PGCIL and RPG
Transmission, nor any exchange of communications which provides a
record of an Arbitration Agreement between the two parties nor there is a
statement of claim and defence in which the existence of Arbitration
Agreement between the parties has been alleged by one party and not
denied by other. Such an issue was never raised by the respondent in the
earlier round of litigation. Rather, I find, that the Division Bench of this
Court while deciding Writ Petition No. 7226/2007 has observed; "It is
not disputed that each of the Contract contains an Arbitration Clause".
That apart, I note, that in response to the notice(s) of the petitioner dated
October 6, 1999 and October 8, 1999 invoking the Arbitration Clause,
the respondent, vide its letter dated October 30, 1999 has not denied the
existence of Arbitration Clause except stating that the invocation of
Arbitration Clause of the Contracts are not applicable to the facts and
circumstances.
44. Now I deal with the individual petitions, wherein I would examine
the issue raised by the respondent of there being no Arbitration
Agreement between the parties and whether the petitioner has filed the
Arbitration Agreement in original or attested copy thereof.
ARB.P. No. 539/1999
45. In this petition, the petitioner has pleaded that it had issued a
notice dated October 6, 1999 and addenda dated October 8, 1999,
wherein the petitioner has referred to Arbitration Clause contained in
para 16 and reproduced the same. The claim of the petitioner was for an
amount of Rs.1.57 crores as principal amount alongwith interest @ 18 %
per annum. On the objection of the respondent that the contracts were
executed by the OSEB and the predecessor in interest of the respondent,
the petitioner in the rejoinder has clarified that in terms of agreement
dated January 11, 1985, the NHPC has taken over the contracts and
contracts were referred to in the agreement dated November 18, 1991
between NHPC and PGCIL. In view of the stand of the petitioner, the
objection of the respondent on this aspect need to be rejected. The
respondent has denied that the arbitration clause annexed to the petition
is part of Schedule D in the contract with OSEB. It is clarified by the
petitioner in the agreement between the petitioner and NHPC dated
November 18, 1991, the contract which is the subject matter of the
petition, is mentioned at Serial No. 2. Further, as admitted by the
respondent in its reply, that the notices dated October 6 and 8, 1999 were
replied by it vide its letter dated October 30, 1999 wherein the
respondent has not challenged the locus of the petitioner herein to claim
the refund of the Excise Duty made by the predecessor in interest of the
petitioner. Rather, I note, the respondent has only disputed the claim of
the petitioner on merit as well as the petition being beyond the statutory
time limit. The objection of the respondent that there is no arbitration
clause needs to be rejected.
ARB.P. 540/1999
46. This petition relates to three Contracts being
NH/CPG/BC/13/81/DTD dated September 7, 1982; NH/CPG/EC/13 &
15/81 dated June 17, 1982; NH/CPG/EC/3B/83-84 dated May 4, 1983
wherein the claim of the petitioner is for Rs.60.73 Lacs alongwith
interest @ 18 % per annum. It is noted that the petitioner has annexed
with the petition only two contracts and the third one has been annexed
along with the rejoinder i.e. Birpara to Siliguri and Birpara to
Bongaigaon. Be that as it may, a reference of issuance of notice invoking
arbitration, vide letter dated October 6, 1999 has been made by the
petitioner in this petition. According to the petitioner, in terms of the
Arbitration Clause contained in para 50, it had nominated a panel of
three Arbitrators. The respondent in its reply to the petition in this Court
has referred to clause 50.5 to state that if within 30 days of the expiry of
the defects liability period a notice with regard to all claims, is not
served, they are deemed to be waived. The existence of the arbitration
clause is not denied, except the manner of invocation is contested. Even
in its reply of October 30, 1999, the respondent has not consented to the
appointment of panel of arbitrators as alleged. In its reply to the notice,
the petitioner has not denied the existence of Contracts between NTPC,
NHPC and NEEPCO with the respondent nor has denied the Arbitration
Clause (clause 50) which was referred to by the petitioner in its notice
dated October 6, 1999 except stating that the said Arbitration Clauses in
the Contracts is not applicable to the facts and circumstances. The
objection of the respondent that there is no arbitration clause needs to be
rejected.
ARB.P. 541/1999
47. In this petition, it transpires from the pleadings of the parties that
the respondent was Sub-contractor, having given the contract by M/s.
Tata Exports Ltd.. The case of the petitioner is that the respondent, even
though Sub-contractor, the Sub-contract was awarded with the consent
of the Engineer, who is the employee of the petitioner. The material was
supplied by the respondent directly to the petitioner and the respondent
received payment from the petitioner. This would still not prove any
privity of contract between the petitioner and the respondent. The
reliance placed on the arbitration clause in the petition would not show,
that would bind the petitioner and the respondent. The present petition
needs to be dismissed.
ARB.P. 542/1999
48. In this petition the petitioner has referred to its notice dated
October 6, 1999 making a claim for refund of Excise Duty alongwith
interest @ 18% per annum and nominating a sole Arbitrator. The
petitioner in this petition has referred to Arbitration Clause contained in
para 32 and in rejoinder has explained how a subsequent contract for
additional line was considered part of the first contract on the same terms
and conditions. In reply to the petition, the respondent relied upon its
reply dated October 30, 1999 wherein a stand has been taken that the
invocation of the Arbitration Clause in the Contract is not applicable to
the facts and circumstances. The respondent in its reply does not dispute
the existence of an Arbitration Clause, except that it cease to exist, as the
final bill paid. The objection of the respondent that there is no
arbitration clause needs to be rejected.
ARB.P. 544/1999
49. This petition as observed in para 28 above, relates to 18 contracts.
The petitioner relied upon clause 26.6.1 which relates to the arbitration.
The clause stipulates the arbitration to be conducted by the 3 Arbitrators,
one each to be nominated by the contractor and the owner, and the third
to be nominated by the President of Institution of Engineers India. The
petitioner nominated Justice V.A.Mohta. The respondent has taken an
objection that out of 18 contracts, only 17 contracts have been supplied.
The petitioner has filed the 18th contract along with the rejoinder. One of
the contracts is with Best and Crompton, as such, there is no privity
between the petitioner and the respondent. There is also one contract
executed between Gujarat Electricity Board and the respondent. In terms
of an understanding between the NTPC and the Gujarat Electricity
Board, the NTPC has assigned GEB the work of construction of
transmission lines including Kawas Bharuch line. Thereafter, the GEB
subcontracted a part of the work of Kawas Bharuch line to the
respondent. The contract between the petitioner and the respondent
cannot be a subject matter of this petition as there is no privity of
contract between the parties herein. The dispute if any in this contract
was between the petitioner and Gujarat Electricity Board and not with
the respondent. Such a dispute cannot be referred to the Arbitrator in
these petitions. Similar is the position with regard to the contract
between the petitioner and Best and Crompton. The respondent was the
subcontractor of the Best and Crompton. The dispute could be between
the petitioner and Best and Crompton and not between the petitioner and
the respondent in the absence of any privity of contract. Insofar as the
rest of the contracts are concerned, the respondent has stated that the
clause 26 can be invoked only after exhausting clause 25. Suffice to
state, the existence of the arbitration clause has not been denied. The
objection of limitation has already been dealt above. The objection of the
respondent on arbitration clause, except with regard to two contracts
with GEB and Best and Crompton, needs to be rejected.
50. Insofar as the objection of Mr.Mukhi based on the notification
dated February 2, 1996, issued by this Court is concerned, the same is
liable to be rejected in view of the two judgments of this Court. In
Johnson's Rubber Industries Vs. General Manager, Eastern Railways
and Anr., 2000 (54) DRJ 59 has held as under:
"A pedantic approach to statutory provisions, which
approach would have the effect of defeating the purpose
of law, is to be eschewed. Surely, the intent of Section 8 is
to en-sure that frivolous objections should not be raised.
Having incorporated the Arbitration Clause in the
application itself, it would serve no further purpose if the
contract or a certified copy thereof is still to be
additionally filed. In fact, greater sanctity is bestowed on
the pleadings of the parties, especially where these are
also supported by the affidavits. Greater reliance should
be placed on them, rather than on documents which are
yet to be admitted and/or proved. In my view the
requirements of Section 8 of the 1996 Act have been
substantially and sufficiently met in the present case. This
is all the more so since the Agreement between the parties
is what is loosely called a 'Standard Form Agreement'. In
this genre of contracts, the specific points pertaining to
the particular contract at hand, are negotiated, spelt out
and thereafter reduced to writing. There is, however, an
overriding understanding that if an Agreement is arrived
at between the parties, it would be subject to the 'general
terms', applicable to all other contracts entered into
between that party and other individuals."
Further, this Court in Aez Infratech Pvt. Ltd. (supra) has held as under:
"13. The objective of filing certified copy is to ensure that
there is no dispute apropos existence of the arbitration
clause. However, it would be pedantic to insist upon
compliance of the said provision in a situation like the
present where the agreement containing the arbitration
clause itself forms the basis of the suit and the said clause
itself is clearly admitted by the respondent. The
consideration before the Court would be that it should
refer the matter to arbitration, when it is brought to the
notice of the Court that such an agreement exists between
the parties, and such request is made before filing of the
Written Statement. It is not as if the Court's jurisdiction is
ousted by the non-filing of the certified copy or the
original copy of the agreement. Conversely, it cannot be
said that it is the filing of the certified copy of the original
agreement or its certified copy that vests jurisdiction on
the Court. What the Court is required to see as per the
scheme of the Arbitration Act is that an arbitration clause
exists which is accepted by the parties. During the course
of the arguments a query was put to counsel for the
respondent where he disputed the existence or contents of
flat buyer's agreement. His answer was in negative.
Therefore, it is admitted that the flat buyer's agreement
(containing the arbitration clause) which forms basis of
the suit exists. Therefore, quite clearly, the Trial Court
fell into error in not referring the parties to arbitration.
This view also appears to be in consonance with various
pronouncements of the High Courts as well as the
Supreme Court, where applications under section 8 of the
Act were allowed, except where the plaintiff denied the
existence of the agreement itself, or of the dispute
actually arising out of the agreement".
In view of my above conclusion read with the individual facts as noted
above, the objection of the respondent is not sustainable. The aforesaid
shall answer the objection of the respondent that the original of the
agreements or certified copies thereof have not been filed.
Limitation:
51. Insofar as the objection of limitation taken by the respondent is
concerned, the same was primarily for the reasons; (1) that the petitioner
has referred to document in its possession which shows the knowledge of
the petitioner that the refunds that are claimed were received by the
respondent on December 16, 1988, January 27, 1989 and June 10, 1990
and the limitation having expired on December 15, 1991, January 26,
1992 and June 9, 1993; (2) the PGCIL having come into existence on
April 1, 1992; (3) to maintain good business relations with the petitioner
and on the petitioner's insistence, the respondent made an ex-gratia
payment of the entire amount of the refund to the petitioner stating
clearly that it was and had been under no legal obligation to do so which
are clearly recorded in the minutes of the meeting held on December 31,
1996, January 3, 1997 and May 26, 1997. In other words, the
claim/invocation is beyond the period of three years in terms of Article
24 of the Limitation Act. On the other hand, it is the case of the
petitioner that it was only in the year 1996, the petitioner had come to
know that the respondent has received the refund of the Central Excise
duty and it was thereafter, only the petitioner wrote to the respondent
calling upon it to furnish the details of the Central Excise duty paid by
the respondent and the refund in respect thereof, obtained by the
respondent. Vide letter dated June 10 1996, the respondent had claimed
that an issue was an old one and sought time. In its letter dated August
16, 1996, the respondent admitted that the totality of the refunds received
by the respondent are legally due to the petitioner and it is averred by the
petitioner that vide letter dated October 24, 1996, the respondent
quantified the refunds received during the period April 1980 to February
1986 and March 1986 to February 1988 aggregating in all, Rs.6.08
crores. Further, it is the case of the petitioner that vide letter November
18, 1996, the respondent has stated that the issue regarding refund of
Excise Duty is awaiting decision of the Supreme Court and which was
ultimately decided by the Supreme Court only in December, 1996. It is
also the case of the petitioner that the respondent had paid a sum of
Rs.6.08 crores on different dates i.e January 15, 1997 March 4, 1997 and
upto April 30, 1997 and May 8, 1997 aggregating to Rs.6.08 crores and
in the meeting held on May 26, 1997 between the parties the parties have
agreed that the they will try and resolve the issue within a period of two
months i.e July 26, 1997 and till such time, no precipitate action would
be taken by either of the parties and it is the case of the petitioner that the
limitation would start only from July 26, 1997, after the expiry of two
months period, and the invocation having been made vide notice dated
October 6, 1999 and the petition having been filed on October 14, 1999,
the petition is within limitation. The facts as noted above, shows the
issue of limitation is not conclusive but a debatable one. Keeping in
view the ratio of the judgment of the Supreme Court in the case of
National Insurance Co. Ltd (supra) wherein the Supreme Court has
culled out three categories determining the preliminary issues that may
arise for consideration in an application under Section 11 of the Act, the
issue of limitation being an issue, which falls in second category, as
determined by the Supreme Court, and the issue being a debatable one,
in view of divergent stands of the parties, I am of the view that this issue
should be left to be examined by the Arbitral Tribunal.
Jurisdiction:
52. The respondent has taken the objection of jurisdiction of this
Court to entertain the present petitions. The respondent did not elaborate
as to how this Court would have no jurisdiction to entertain the present
petition. The issue of jurisdiction would depend upon whether part of
cause of action has arisen within the jurisdiction of this Court; the situs
of the Registered Office of the respondent on the principle enshrined in
Section 20 of the Code of Civil Procedure; the venue of arbitration; the
jurisdiction is outseted if the parties have decided so; Nothing has been
placed on record by the respondent to show that in terms of the Contracts
executed by the parties, the jurisdiction of the Courts in Delhi has been
ousted. There is no denial to the fact that the Registered Office of the
respondent is in Delhi. It has been also averred by the petitioner that the
refund of the Excise Duty was made by the respondent and received by
the petitioner in Delhi. Although, it is stated, in some petitions, that the
tender has been floated within the territorial jurisdiction of this Court.
Such a submission may not be available with respect to those tenders
which have been floated outside Delhi. Be that as it may, since the
Registered Office of the respondent is in Delhi, so also, the Registered
Office of the petitioner and there is nothing on record to suggest that the
jurisdiction of the Courts in Delhi has been ousted. Keeping in view the
judgment of this Court in Barco Electronics Systems Pvt. Ltd. Vs. Mrs.
Kiran Malik 187 (2012) Delhi Law Times 19, I proceed on the premise
that this Court has jurisdiction.
53. Insofar as the submission of Mr.Mukhi that in view of the Section
35 of the Stamp Act, 1859, no Court shall entertain a document that is
not duly stamped is concerned, the same is also liable to be rejected
inasmuch as no such objection was taken by the respondent in its reply to
enable the petitioner to respond to such a plea. Even otherwise,
Mr.Mukhi has not elaborated the said submission as to which document
is not duly stamped. It has to be seen whether the document as referred
to by Mr.Mukhi is required to be stamped in accordance with the law. In
other words, the plea is vague. Insofar as the judgments which have
been referred to by Mr. Mukhi and not dealt in this judgment, suffice to
state, the same are all on the aspect of the scope of power and function of
a Court under Section 11 of the Act and it may not be necessary to deal
with those judgments in view of the judgment of the Constitution Bench
in SBP and Co. (supra) to which a reference has been made by this
Court.
Relief:
54. From the above, it is clear that the contracts, which are subject
matter of the five arbitration petitions, contains arbitration clause,
(except Arb. Pet. 541/1999 and two contracts in Arb. Pet. 544/1999,
where it is held that there is no privity of contract between the petitioner
and the respondent). In some petitions, the clause stipulates adjudication
by three arbitrators, one each to be appointed by both the parties and the
third by an Institution (Arb.Pet. 542/1999 and Arb. Pet. 544/1999); in
some petitions, the clause stipulates appointment of Sole Arbitrator from
the panel of three persons (Arb.Pet. 540/1999); in some petitions, the
clause stipulates adjudication by a Sole Arbitrator (Arb.Pet. 542/1999).
Keeping in view, that the petitions have been pending adjudication since
1999, and noting the factual position, that, the arbitration agreements,
provide a particular procedure for appointment of the Arbitrator, and
keeping in view the judgment of the Supreme Court in the case of North
Eastern Railway and Ors. Vs. Tripple Engineering Works, 2014 (3)
Arb. L.R. 327 (SC), wherein the Supreme Court, noticing that the
pendency of the arbitration proceedings, for the last two decades, and in
such situation, the power of the Court to depart from the agreed terms of
appointment of the Arbitrators must be acknowledged, this Court is of
the view, one Arbitrator be appointed who can adjudicate the disputes,
with regard to all contracts being common. This Court accordingly
appoints Justice S.S. Nijjar, Retd. Judge of the Supreme Court of India
as the Sole Arbitrator in respect of all the contracts, which are subject
matter of these petitions (except Arb. Pet. 541/1999 and two contracts in
Arb. P. Nos. 544/1999, Gujarat Electricity Board and Best & Crompton)
to adjudicate the disputes and differences between the parties in terms of
claims and counter claims if any. The learned Arbitrator would fix his
fee for conducting the proceedings and incidental charges to be incurred
for holding the proceedings, which would be shared equally by both the
parties.
55. The petitions are disposed of.
(V.KAMESWAR RAO)
JUDGE
JULY 01, 2015
km/ak/akb
