Telangana High Court
M/S Sri Laxmi Ganapathi Constructions vs M/S Singareni Collieries Company ... on 2 May, 2025
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
ARBITRATION APPLICATION No.177 OF 2024
ORDER:
Heard Mr. M. Rama Krishna, learned counsel for the applicant
and Mr. P. Sri Harsha Reddy, learned counsel for the respondent.
2. This application is filed under Section - 11 (5) & (6) of the
Arbitration and Conciliation Act, 1996 (for short 'Act, 1996'), to
appoint a sole Arbitrator to adjudicate the disputes/claims between the
applicant and the respondent.
3. CONTENTIONS OF THE APPLICANT:
i) The respondent - M/s. Singareni Collieries Company Limited
(SCCL) floated Tender Enquiry No.E141800480, dated 19.02.2019
for transportation of Coal from KTK-6 Incline & KLP Mine to KTK-5
CHP, Bhupalapally Area on weight basis for a period of two (02)
years.
ii) The applicant - M/s. Sri Laxmi Ganapathi Constructions,
Warangal, participated in the said Tender and stood as successful
bidder. Therefore, the respondent has awarded the said work vide
Work Order No.7600007834, dated 24.06.2019. They have also
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entered into an Agreement dated 30.07.2019 on the specific terms and
conditions mentioned therein. The work was commenced from
24.06.2019 and it is going to expire by 23.06.2021.
iii) The said contract is based on the quantity of the coal
provided to the applicant on the rates prescribed under the said
contract. But, from the beginning of the contract, the respondent did
not provide the minimum quantity of coal for transportation causing
immense loss to the applicant.
iv) The respondent has abruptly stopped providing coal for
transportation to the applicant. The respondent neither sent any
communication nor assigned any reason for stopping the allocation of
coal abruptly. Therefore, the applicant had submitted a letter dated
04.09.2020 to restore the contract and comply with the terms of the
work order and agreement. The applicant also addressed several
letters to the respondent demanding to settle the said dispute by
paying dues and restore the original contract. There was no response
from the respondent.
v) Since there was no response from the respondent to settle the
dispute by way of negotiations, in the month of October, 2022, the
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respondent orally informed the applicant that they would not restore
the contract and pay the forfeited amount on the ground that there is
no explicit provision in the purchase order for refunding of forfeited
and recovered amount. Therefore, the applicant has issued legal
notice to the respondent demanding an amount of Rs.7,47,97,089/-
towards damages for breach of contract along with forfeited amount of
Rs.48,09,060/- within fifteen (15) days from the date of receipt of the
said notice or in the alternative initiate arbitration proceedings for
adjudication of disputes raised by the applicant within thirty (30) days.
Despite receiving and acknowledging the said legal notice, there was
no response from the respondent. Therefore, the applicant filed the
present application seeking appointment of arbitrator to adjudicate the
disputes.
4. CONTENTIONS OF THE RESPONDENT:
i) The respondent had filed counter admitting about the
contract entered between the parties on 30.07.2019 and that the same
is for a period of two (02) years. According to the respondent, the
applicant has commenced the work on 03.07.2019. From the date of
commencement of the contract, the applicant did not work smoothly,
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created lot of inconvenience to the Mines Authorities of respondent
company by not deploying required number of trucks for
transportation of coal as per Clause No.5.9 of the work order.
ii) The applicant has to transport 533 Tons per day from KTK-
6 and 800 Tons per day from KLP Mine. The applicant did not
provide sufficient number of Lorries at KTK-6 and KLP Mine due to
which coal was dumped at those places every day instead of
transporting to the KTK-5 CHP that hampered the production badly.
The SCCL failed to supply Coal to its customers and the contract was
ended on 31.03.2020 due to non-transport of targeted production from
KTK-6 and KLP Mine.
iii) The contract was closed early by SCCL on 31.03.2020 as
there was no coal linkage provided in financial year 2021-22 by SCCL
for admitting coal. The applicant applied for release of Security
Deposit (SD)/EMD. The applicant performance could not meet the
requirement of the Company and not satisfactory. Keeping in view
the pre-closure of the contract period and in a sympathetic way, the
SD/EMD amount was released and paid to the applicant.
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iv) Despite the requests made by the respondent to deploy
sufficient number of lorries at KTK-6 and KLP mine to avoid
dumping of coal, the applicant did not do so. The reasons for
stoppage of the contract vide purchase order dated 24.06.2019 was
intimated to the applicant orally.
v) The SD/EMD amount of Rs.10.00 lakhs was released and
paid to the applicant vide cheque No.636435 dated 29.06.2020 i.e.,
before completion of contract period upon submission of application
dated 11.05.2020 by the applicant, as such, the allegation of the
applicant that she had no official communication rescinding the
contract is false and baseless. The present application is not
maintainable. The applicant did not follow the procedure laid down
under the agreement and did not file the present application within
120 days on failure of negotiations. The present application is
hopelessly barred by limitation. Therefore, there are no disputes
between the applicant and the respondent to adjudicate.
5. Both learned counsel for the applicant and respondent made
their submissions extensively.
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ANALYSIS AND FINDINGS OF THE COURT:
6. The aforesaid rival submissions would reveal that the
respondent is opposing the present application on the following
grounds:
i. The present application is barred by limitation;
ii. The applicant did not follow the procedure laid down under
Clause - 10 of the work order dated 24.06.2019 and the
agreement bond dated 30.07.2019;
7. There is no dispute that the respondent has issued tender
dated 19.02.2019 for transportation of coal from KTK-6 Incline and
KLP Mine to KTK-5 CHP, Bhupalapalli on weight basis for a period
of two (02) years. The applicant participated in the said tender and
stood as successful bidder. The respondent has issued work order
dated 24.06.2019, and both the applicant and respondent have entered
into an agreement on 30.07.2019 on the specific terms agreed therein.
According to the applicant, it has commenced the work from
24.06.2019, whereas, according to the respondent, the applicant has
commenced the work from 03.07.2019.
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8. It is the specific contention of the applicant that it has
executed the work strictly in accordance with the agreement dated
30.07.2019. According to the respondent, the applicant did not deploy
sufficient number of trucks for transportation of coal at KTK-6 and
KLP Mine to avoid dumping of coal. The performance of contract by
the applicant could not meet the requirement of the respondent. The
applicant did not provide the loaders as required at the respective
mines. Therefore, the respondent has closed the contract on
31.03.2020 itself.
9. As discussed above, the agreement is dated 30.07.2019 and
the last payment was made on 29.06.2020. The respondent has also
paid the SD/EMD amount of Rs.10.00 lakhs to the applicant vide
cheque bearing No.636435, dated 29.06.2020. According to the
applicant, the respondent stopped providing coal without assigning
any reasons and without issuing any notice. The applicant submitted a
letter dated 04.09.2020 to the respondent with a request to provide
coal and not to stop the same abruptly. The applicant also issued
similar letters dated 20.10.2021 and 30.12.2021. Vide letter dated
17.09.2022, the respondent replied to the applicant that the respondent
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withheld/forfeited an amount of Rs.48,09,060/- as per the terms and
conditions of respective purchase orders and there is no explicit
provision in the said purchase orders for refunding the
forfeited/recovered amount. Therefore, vide notice dated 08.04.2024,
the applicant requested the Chairman and Managing Director of the
respondent to intervene/pay an amount of Rs.7,47,97,089/- towards
damages for the breach of contract along with the forfeited amount of
Rs.48,09,060/-. Despite receiving and acknowledging the said notice,
there was no response from the respondent.
10. In the light of the aforesaid submission, it is relevant to
note that in Bharat Sanchar Nigam Limited v. Nortel Networks
India Private Limited. 1, the Hon'ble Supreme Court held that the
High Court being the referral Court may refuse to refer to arbitration
only in rare and exceptional cases where claims are manifestly time
barred.
11. In NTPC Ltd., v. SPML Infra Ltd. 2, the Apex Court
clarified that while the limitation for filing under Section - 11 of the
Act, 1996 is three (03) years under Article - 137 of the Limitation
. (2021) 5 SCC 738
. (2023) 2 SCR 846
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Act, the issue of whether the underlying claims are time barred is for
the arbitral Tribunal to decide.
12. In Aslam Ismail Khan Deshmukh v. Asap Fluids Private
Limited 3 placing reliance on its earlier judgments, in paragraph
No.43, a Three-Judge Bench of the Apex Court held that while
determining issue of limitation in the exercise of powers under Section
- 11 (6) of the Act, 1996, referral Court must only conduct a limited
enquiry for the purpose of examining whether Section - 11 (6)
application has been filed within the limitation period of three (03)
years or not. At this stage, it would not be proper for the referral
Court to indulge in an intricate evidentiary enquiry into the question
of whether the claims raised by the petitioner are time-barred and such
a determination must be left to the decision of the arbitrator. It further
held that in a scenario where the referral Court is able to discern the
frivolity in the litigation on the basis of bare minimum pleadings, it
would be incorrect to assume or doubt that the Arbitral Tribunal
would not be able to arrive at the same inference, especially when
. (2025) 1 SCC 502
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they are equipped with the power to undertake an extensive
examination of the pleadings and evidence adduced before them.
13. In the light of the aforesaid principle laid down by the Apex
Court, coming to the facts of the present case, as discussed above, the
applicant and the respondent have entered into the agreement dated
30.07.2019, and it is for a period of two (02) years. According to the
applicant, the respondent stopped providing coal abruptly without any
reasons and without issuing any notice. Therefore, the applicant has
submitted a letter dated 04.09.2020 to the respondent to provide coal.
The respondent did not provide the coal. Even according to the
respondent, the contract was closed by it on 31.03.2020 and it has paid
the SD/EMD amount vide cheque No.636435, dated 29.06.2020. The
applicant had submitted letters dated 20.10.2021 and 30.12.2021 to
the respondent with a request to provide coal, negotiate and settle the
disputes. Vide letter dated 17.09.2022, the respondent informed the
applicant that it has withheld/forfeited the said amount of
Rs.48,09,060/- as per the terms and conditions of the purchase orders
and there is no explicit provision in the said purchase orders for
refunding the forfeited/recovered amount. Even in the counter filed
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by the respondent, it is specifically mentioned that the reasons for
stoppage of the contract vide purchase order dated 24.06.2019 was
intimated to the applicant orally. Therefore, there is continuous cause
of action. The applicant filed the present application on 19.07.2024.
Thus, it cannot be termed as manifestly time barred. Even the aspect
of delay/limitation can be considered by the Arbitrator himself. In the
light of the aforesaid discussion, this Court is of the considered view
that the present application is not manifestly time barred and it is not a
rare and exceptional case to dismiss the present application.
14. As discussed above, there are disputes between the
applicant and the respondent with regard to the following aspects:
i) According to the applicant, it has commenced the work
from 24.06.2019, whereas according to the respondent,
the applicant has commenced the work from 03.07.2019;
ii) According to the respondent, the applicant did not work
smoothly and created lot of inconvenience to the mine
authorities of the respondent by not deploying required
number of trucks for transportation of coal as per Clause
No.5.9 of the work order;
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iii) Performance of the applicant could not meet the
requirement of the Company and not satisfactory; and
iv) Applicant did not provide the loaders as required at the
respective mines etc.
Therefore, the said aspects are factual aspects, arbitral disputes which
the Arbitrator has to consider. Thus, this Court is of the considered
view that there are disputes between the applicant and the respondent
and the same are arbitrable in nature.
15. With regard to the contention of the respondent that the
applicant did not follow the procedure laid down in Clause - 10 of the
Purchase Order, it is relevant to extract the same which is as under:
"10. ARBITRATION:
Normally all disputes should be settled by
negotiations between the Company and the
concerned parties.
In case any dispute / difference is not settled
through negotiations, the respective parties can
seek remedy through Arbitration only by invoking
the same within 120 days of raising of dispute. No
disputes shall be referred to civil courts other
than/through Arbitration.
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(a) In case of any dispute Sole Arbitrator shall be
appointed from the list of 3 judicial officers
maintained by SCCL duly following the provisions
of Arbitration and conciliation act 1996 as
amended from time to time: The list of such names
shall be forwarded to the party as and when the
party requests for resolving the dispute. Such
Judicial Officer as chosen by the party will be
appointed by the Chairman & Managing Director
to adjudicate the dispute as a Sole Arbitrator. The
Arbitrator so appointed shall conduct the
proceedings in accordance with the Arbitration &
Conciliation Act, 1996 as amended from time to
time and pass a reasoned award. Both the parties
should bear the cost of the arbitration equally.
(b) If the Sole Arbitrator appointed by the Chairman &
Managing Director of the Singareni Collieries
Company Limited is unable to continue as an
Arbitrator for any reasons to be recorded in writing
and the Chairman& Managing Director of Singareni
Collieries Company Limited thinks fit for
appointment of a new Arbitrator in the place of
existing Arbitrator, he is having a power to do so.
Such new Arbitrator shall be appointed following
the same procedure as contemplated in (a) above.
(c) As and when such new Arbitrator is appointed, he
can either continue the arbitration proceedings from
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the stage where the earlier Arbitrator discontinued
his proceedings or alternatively the new Arbitrator
may start proceedings de novo if the circumstances
warrant him to do so.
(d) Failing to invoke Arbitration Clause within 120
days of dispute (from the date of the raising of the
dispute) it is deemed that there is no dispute
between the parties. No disputes shall be entertained
in any form and on any matter pertaining to contract
after expiry of 120 days of the period.
(e) The expenses payable to the Sole Arbitrator shall be
governed by the Arbitration & Conciliation Act,
1996 as amended from time to time and shall be
borne equally by both parties to the dispute."
16. As per the said clause, in case any dispute/difference is not
settled through negotiations, the respective parties can seek remedy
through Arbitration only by invoking the same within 120 days of
raising of dispute. No dispute shall be referred to Civil Courts other
than through Arbitration.
17. As discussed above, the respondent stopped supply of coal
to the applicant. According to the respondent, it has informed the
reasons to the applicant orally. According to the applicant, the
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respondent did not inform the applicant about stoppage of coal and
without assigning any reasons and without issuing notice, the
respondent stopped supply of coal to the applicant. Therefore, the
applicant has given a letter dated 04.09.2020 to the respondent with a
request to provide coal and restore the contract. Despite receiving and
acknowledging the said letter and so also the notice dated 08.04.2024,
there was no response from the respondent. The applicant has
submitted two more letters dated 20.10.2021 and 30.12.2021 with
similar request and the applicant also requested the respondent to
settle/resolve the disputes. The respondent has sent letter dated
17.09.2022 to the applicant stating that there is no explicit provision to
refund the forfeited amount. However, the said aspect is an arbitrable
dispute and it is for the Arbitrator to consider the same.
18. This Court being referral Court has to see the existence of
agreement and arbitration clause. In the present case, there is an
agreement and arbitration clause. Other aspects will be considered by
the Arbitrator.
19. In the light of the aforesaid discussion, this Court is of the
considered view that there are disputes between the applicant and the
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respondent which are arbitrable in nature to be adjudicated by an
Arbitrator.
20. The present arbitration application is accordingly allowed,
and Sri Justice M. Seetharama Murti, Former Judge, High Court of
Andhra Pradesh at Amaravati, R/o Flat No.602, 'A' Block, White
House Apartments, H.No.8-2-674/2 & 2A, Road No.13, Banjara Hills,
Hyderabad, Telangana State - 500 034 (Mobile # 9440405308 &
email Id: [email protected]), is appointed as an Arbitrator to
adjudicate the disputes between the applicant and the respondent.
Liberty is granted to both the parties to raise all the contentions and
grounds which they have raised in the present application before the
learned Arbitrator and it is for the learned Arbitrator to consider the
same. In the circumstances of the case, there shall be no order as to
costs.
As a sequel thereto, miscellaneous applications, if any, pending
in the Arbitration Application shall stand closed.
_________________
K. LAKSHMAN, J
2nd May, 2025
Mgr
