Madras High Court
M/S.Zillion Infraprojects Pvt ... vs Bharat Heavy Electricals Limited on 29 July, 2021
O.P.No.161 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29/7/2021
CORAM
THE HONOURABLE Mr.JUSTICE N.SATHISH KUMAR
Arb.O.P.No.426 of 2021
M/s.Zillion Infraprojects Pvt Ltd
(formerly known as Durha Constructions Private Limited)
rep. by its Authorised Representative
5th Floor, Anushka Shopping Mall
Plot No.2 Garg Trade Centre
Sector 11, Rohini
New Delhi 110 085. ... Petitioner
Vs
Bharat Heavy Electricals Limited
Power Sector Southern Region
Tek-Towers, No.11, Old Mahabalipuram Road
Okkiyam
Thoraipakkam
Chennai 600 097. ... Respondent
Original Petition has been filed under Section 11 (4) & (6) of the
Arbitration and Conciliation Act, 1996, to appoint an Arbitrator to hear and
decide the disputes between the parties arising out of LOI through Fax
bearing No.BHEL:PSSR:SCT:1319, dated 11/16.3.2009.
1/8
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
For petitioner ... Mr.S.Vijay Kumar
For respondent ... Mr.Chethan Sagar
------
ORDER
This Arbitration Original Petition has been filed to appoint an
Arbitrator to hear and decide the disputes between the parties arising out of
LOI through Fax bearing No.BHEL:PSSR:SCT:1319, dated 7/7/2009.
2. Heard Mr.S.Vijayakumar, learned counsel for the petitioner and
Mr.Chethan Sagar, learned counsel for the respondent.
3. The respondent had issued a notice inviting Tender, for handling
of site stores/storage yard, transportation to site of work, erecting, testing &
commissioning of complete Boiler structures, pressure parts, etc. The date
of contract is 6/11/2007. The period of completion is originally eight
months. The work was completed only on 30/9/2010. The petitioner
claimed extra expenses of Rs.7,27,066 and again laid a claim on 14/11/2013
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
for a sum of Rs.9,90,53,560/- (Rupees Nine crores ninety lakhs fifty three
thousand five hundred and sixty only). However the respondent had
rejected the claim of the petitioner, by letter, dated 26/6/2014, on various
grounds. Thereafter, the petitioner, made a representation to the respondent
for making the payment towards claim and dispute. Again the petitioner
was invited for negotiation by the respondent, on 9/4/2015. Negotiation
had continued till 6/10/2016. In the year 2018, the petitioner Company
went on liquidation and thereafter, the appointment of Interim Resolution
Professional was confirmed as Resolution Professional (RP) by the Tribunal
on 22/4/2019. After the appointment of Interim Resolution Professional,
Committee of Creditors was formed and steps were taken for resuming talks
with the respondent. Though the petitioner has sent a letter, dated 9/3/2021
calling upon the respondent to nominate an Arbitrator, no steps have been
taken by the respondent. Hence the petitioner has come forward with the
present Arbitration Original Petition.
4. Counter affidavit was filed by the respondent, wherein it is stated
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
that the maintenance period/guarantee period of the Contract stood
completed on 13/2/2012. The arbitration clause ought to have been invoked
within three years from the said date, present Arbitration Original Petition
and the claims made by the petitioner are clearly barred by limitation.
5. It is further stated in the counter affidavit that the scope of work
was completed and all payment obligations were fulfilled by the respondent.
After seven years, all of a sudden, the petitioner has invoked the arbitration
clause, contained in the Contract, vide, its letter, dated 9/3/2021, is clearly
barred by limitation.
6. It is the further contention that this claim is only with regard to the
damages when the claim itself is repudiated and rejected in the year 2014
invoking arbitration in the year 2021 would not be permissible and the
claim is hopelessly barred.
7. The main submission of the learned counsel for the petitioner is
that the petitioner has a claim of Rs.9,90,53,560/- against outstanding bills
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
and claims against the respondent for the work done as per the contract and
the same is not yet paid by the respondent.
8. From the materials available on record, it is clear that the factors
of of rejection of claims was informed to the petitioner, vide respondent's
letter, dated 26/6/2014. Appointment of an Arbitrator is sought for to enter
into the reference with regard to the dispute said to have been arisen in
respect of the damages payable by the respondent. It is not disputed by the
petitioner that the final bill has already settled as early as on 26/11/2014.
What was sought to be agitated is only for damages. The claim for damages
was rejected in the year 2014 itself. Though there are subsequent
correspondence, inviting the petitioner for negotiation, mere exchange of
correspondence and negotiation will not automatically extend the period of
limitation. The rejection was admittedly made in the year 2014. Therefore,
any such claim or damages ought to have been made within three years from
the date of rejection.
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
9. The Hon'ble Supreme Court, in a judgment of UTTARKHAND
PURV SAINIK, KALYAN NIGAM LIMITED Vs. NORTHERN COAL
FIELD LIMITED (2020) 2 SCC – 455), has held that the limitation is a
mixed question of fact and law. The issue of limitation being a
jurisdictional issue, can be decided by the Tribunal, under Section 16 of the
Act.
10. In the judgment of the Hon'ble Apex Court in
SECUNDERABAD CANTONMENT BOARD Vs.
B.RAMACHANDRAIAH & SONS (Civil Appeal Nos.900-902 of 2021)
dated 15/3/2021, considering the various judgments including the
UTTARAKHAND PURV SAINIK, KALYAN NIGAM LIMITED, has held
that Application under Section 11 of the Act, themselves being hopelessly
time barred, no arbitrator could have been appointed by the High Court.
11. In view of the decision rendered by the Hon'ble Supreme Court,
in SECUNDERABAD CANTONMENT BOARD Vs.
B.RAMACHANDRAIAH & SONS, this Court is of the considered view
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
that appointing an arbitrator in this instant Arb.O.P., is nothing but a futile
exercise. Accordingly, this Arbitration Original Petition is dismissed.
29/7/2021
mvs.
https://www.mhc.tn.gov.in/judis/
O.P.No.161 of 2017
N.SATHISH KUMAR,J
mvs.
Arb.O.P.No.426 of 2021
29/7/2021
https://www.mhc.tn.gov.in/judis/
