Jharkhand High Court
Hindustan Copper Ltd vs M/S Predicate Consultants ... on 22 February, 2023
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arbitration Appeal No. 7 of 2016
Hindustan Copper Ltd. ... ... Appellant
Versus
M/s Predicate Consultants Private Limited... ... Respondent
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CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
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For the Appellant : Mr. Pandey Neeraj Rai, Advocate
: Mr. Rohit Ranjan Sinha, Advocate
For the Respondent : Mr. A.K. Das, Advocate
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40/22.02.2023 Arguments on behalf of the Appellant
On the point of jurisdiction of the learned Arbitrator, learned
counsel for the appellant has submitted that initially the learned
Arbitrator did not decide this issue properly and consequently, the
matter was remitted back for decision on the point of jurisdiction.
However, the earlier arbitrator refused to take up the matter further,
the matter was referred to another Arbitrator. The decision on the
point of jurisdiction of the arbitrator is also under challenge.
2. The learned counsel has relied upon the judgment passed by
Hon'ble Kolkata High Court reported in AIR 1980 Cal 86 (Excalcer
Vs. The State of West Bengal) to submit that the arbitration clause in
the present case is similar to the one which was involved in the
judgment passed by Hon'ble Kolkata High Court. He has also
submitted that as per the agreement, the CMD of the appellant was the
Arbitrator and he stood appointed as Arbitrator by virtue of signing of
the agreement and under such circumstances, mere silence on the part
of the CMD pursuant to invocation of arbitration clause has to be
interpreted to mean that he was already acting as an arbitrator. The
learned counsel has further submitted that in view of the aforesaid
submissions, that CMD was already an arbitrator, then in case of
change of arbitrator or any grievance in connection with the arbitrator,
recourse was available under Section 15 (2) and Section 14 of the
Arbitration and Conciliation Act, 1996 and not under Section 11 (6).
He has further submitted that the law in the field is governed by the
judgment of Konkan Railway which was overruled with effect from
26.10.2005 as held by the Hon'ble Supreme Court in the case of (SBP
& Co. Vs. Patel Engineering Ltd. and Anr.) reported in (2005) 8 SCC
618 and therefore it was open to the appellant to contend before the
learned Arbitrator that the very order by which the arbitrator was
appointed i.e., order under Section 11 (6) was not justified and the
legality and validity of such order could also be examined. He has
relied upon judgment passed by this Court reported in (2004) 1 JLJR
449 (HC) (Cement Corporation of India Ltd. Vs. M/s Narula
Trading Corporation & 4 Ors.) and has submitted that similar view
has been expressed by this Court as well. The learned counsel has
further referred to the judgment passed by Hon'ble Supreme Court
reported in (2016) 1 SCC 721 (Huawei Technologies Company
Limited Vs. Sterlite Technologies Limited), (2006) 10 SCC 763
(National Highways Authority of India and Anr. Vs. Bumihiway
DDB Ltd. (JV) and Others), (2009) 17 SCC 313 (Nimet Resources
Inc. and Another Vs. Essar Steels Limited), (2022) 10 SCC 235
(Swadesh Kumar Agarwal Vs. Dinesh Kumar Agarwal and Ors.) to
submit that the recourse under Section 15 (2) / 14 of the Arbitration
and Conciliation Act, 1996 was available to the claimant but the order
passed under Section 11 (6) appointing the arbitrator was not in
accordance with law.
3. The learned counsel for the appellant has also submitted that
notice for appointment of arbitrator giving 15 days' time for
appointment which was sent to the appellant by the respondent was
itself a vague notice and it did not specify that in case the arbitrator is
not appointed, they will invoke Section 11 (6) of the Act of 1996. The
learned counsel submits that in the notice, it was only stipulated that
the respondent will send the matter for judicial decision and therefore,
the said stipulation in the notice could only co-relate to appropriate
proceedings in terms of Section 14 of the Act of 1996. Section 11 (6)
was not at all contemplated.
4. On the point of jurisdiction, learned counsel for the appellant
has also referred to the ground 'f' of the petition under Section 34
regarding the point of jurisdiction to submit that the invocation of
bank guarantee could not have been the subject matter of
consideration by the learned Arbitrator. He has submitted that the
notice for request for appointment of Arbitrator was given on
17.04.2002 and the application under Section 11 was filed on
13.06.2002 and the bank guarantee was invoked thereafter on
18.06.2002. Therefore, the Hon'ble Chief Justice while making the
appointment on 05.07.2002 could not appoint arbitrator straightaway
to decide the dispute relating to invocation of the Bank guarantee
without opportunity to Hindustan Copper Limited's Chairman-cum-
Managing Director to make appointment in terms of the arbitration
clause.
5. Learned counsel for the appellant on merit has submitted that
the entire work was to be executed in 3 packages which constituted a
composite whole. He further submits that certain certificates regarding
completion/acceptance were issued, but no final certificate regarding
acceptance of the work was ever issued. Learned counsel submits that
whatever work the respondent had done, they were paid for it and still
an amount of Rs.8,30,162/- under package 2 and withheld amount of
10% of the contract value under package 3 which amounted to Rupees
98 lakhs and odd was claimed by the respondent. He further submits
that the reason for non-issuance of final acceptance certificate was that
100 days test run could not be completed and the crux of the matter is
that both the parties are blaming each other for non - completion of
100 days test. He submits that the test was carried out only for a
period of 68 days and no more and before the arbitral proceedings, the
parties joined issue on account of non-performance of reciprocal
obligations for the purposes of completion of the remaining test
period. He has further submitted that the failure on the part of the
respondent has been recorded by the learned Arbitrator, but no clear
finding has been given and further no adverse inference has been
drawn by the learned Arbitrator on account of failure on the part of the
respondent to produce the necessary records in support of supply of
sulphuric acid.
6. Learned counsel for the appellant has referred to paragraph 13,
15 and 16 of the award to place the factual background of the case. He
has further referred to paragraph 91 read with paragraph 28 and 82 of
the award to submit that there were altogether 58 failures on the part
of the respondent, but this fact has not been properly considered by the
learned Arbitrator, rather no finding has been recorded to that effect.
He has further submitted that issue no. vi as decided by the learned
Arbitrator is to be read with issue no. iv, v and vii.
7. The learned counsel has further submitted that in paragraph 91,
the learned Arbitrator has recorded a finding that the failure of the
further test run was on account of the appellant, but the learned
Arbitrator has not backed this finding by discussion of any materials
on record.
8. Learned counsel for the appellant has referred to the paragraph
21 and 89 of the award. Period of test run as stated by the appellant
was from 25.06.1998 to 31.08.1998. Learned counsel for the appellant
has also referred to the grounds No. 29 and 30 of the petition filed
under Section 34 of the Arbitration and Conciliation Act, 1996 and
submits that relevant clause of the agreement i.e. clause 3.63.7 and
3.64 have been totally ignored by the learned Arbitrator. He submits
that these clause dealt with the certification regarding completion of
work and they clearly stipulate that no other certification could be
binding upon the appellant. He also submits that even part payment
should not be construed as an admission on the part of the appellant
regarding completion of work by the respondent. Learned counsel
submits that these two clauses of the agreement have not even being
referred to, directly or indirectly, in the entire award passed by the
learned Arbitrator. As a consequence thereof the entire contractual
value of the work paid to the respondent has been rightly recovered by
invocation of bank guarantee. Non consideration of relevant clauses of
the agreement calls for interference by this Court. The point is not the
interpretation of these clauses, the point is non consideration of these
clauses by the learned Arbitrator as well as by the learned court below.
9. Arguments of the appellant is concluded.
10. Respondent has commenced their arguments. The matter
remained inconclusive as the Court's time is over.
11. Post this case for further hearing tomorrow i.e., on 23.02.2023.
(Anubha Rawat Choudhary, J.)
Saurav/Binit
