M/S Him Electricals, Goel Complex vs Himachal Pradesh State Electricity Board Ltd And Others

Mohammad Rafiq, CJ

The petitioner-Firm is before this Court in this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’), seeking for appointment of an Arbitrator to resolve the dispute that has arisen between the parties.

It is the case of the petitioner, which is a Firm, is that there was an agreement (Annexure P-2), between the petitioners and the respondents and accordingly a contract was entered into between the parties in respect of work “assembling erection, testing & commissioning of 132/33KV 25/31.5 MVA transformer, dehydration of transformer oil, laying and termination of control cable at 132/33KV, 25/31.5 MVA sub-station at Malaina.” The expenditure to be incurred for completion of the aforesaid work was approximately to the tune of Rs.10,52,811/-. The aforesaid work was required to be completed within two months to be reckoned from the 15th day from the issuance of award letter i.e. 17.01.2017. As per the award letter, the scope of work consists of erection of 132 KV, 25/31.5 MVA transformer, fixing of transformer assemblies i.e. HVLV bushings, NIFPS systems on line dry out system, OLTC dehydration of transformer oil i/c conducting recommended oil tests, laying of copper control cables of various sizes etc. Practically work involved erection work/labour work only. Before filling dehydrated transformer oil into the transformer, testing of transformer was essential to ensure that there is not any shortcoming in the transformer. The petitioners requested the Senior Executive Engineer and other officials to test the aforesaid transformer. Thereafter, the petitioners’ technical team and P&T Department HPSEBL, Solan conducted the type test on the power transformer on 17.04.2018. During the test, it was observed that magnetic balance values and PI values were not as per recommendation of ISI specification. Thereafter, the petitioners suggested the respondents to send back the transformer to the original manufacturer for repair. To take this decision, the Electricity-Board took more than six months. In fact, the officials of the Electricity Board were annoyed with the petitioners for raising the issue of getting the transformer repaired from OEM, as it put question mark on their working. Thereafter, the Electricity-Board insisted the petitioner-firm to carry out the work. To pressurize the petitioners, the running payments were withheld. The transformer was already sent to the manufacturer at Sonipat for repair. Without the transformer, the sub-station could not be energized. The transformer came back from the manufacturer after more than four months. Thereafter, the respondents rescinded the contract on 01.12.2018. Since the payments were not released, the petitioners were left with no other remedy, but to invoke arbitration clause for redressal of their grievances. Clause 25 of the Agreement provides for appointment of an Arbitrator.

Notice of the petition was served upon the respondents. They filed reply to the petition, wherein it is contended that the petitioners failed to complete the awarded work within the prescribed time. Reminders were issued by the respondents to the petitioners to complete the work, but they stopped the same. It is further submitted that the petitioners initially furnished the bank guarantee on 13.11.2017, which stood expired on 13.11.2017 and thereafter, the same was not renewed by them. The petitioners have been paid a sum of Rs. 9,10,824 after making deductions towards the taxes and security amount. As the petitioners failed to complete the work within the stipulated time, the respondents awarded the work to another Firm. Due to inaction on the part of the petitioners, the respondents suffered a loss of Rs. 5.00 lacs, as the project got delayed.

Having regard to the rival submissions taken note of, it is found: (i) that it is not disputed that there exists an arbitration clause in the Arbitration Agreement (Annexure P-2) between the parties; (ii) that certain disputes arose between the parties and, therefore, the existence of dispute is not doubted; (iii) that the petitioners invoked the arbitration clause calling upon the respondents to refer the dispute to the arbitrator; and (iv) that the respondents have failed to act in accordance with the agreed procedure in the arbitration agreement to refer the dispute to the arbitrator.

Under these circumstances, it is a fit case for making a reference to an independent arbitrator and this application deserves to be allowed and the dispute referred to arbitration.

Accordingly, Mr. Rajinder Kumar Sharma, District and Sessions Judge (retired), R/o Bansal Bhawan, below Railway Station Malgudam, Old Bus Stand, Shimla, is ordered to be appointed as an Arbitrator, after his disclosure in writing is obtained in terms of Section 11(8) of the Act and only after receipt thereof, shall his appointment, as an Arbitrator, come into force.

On his giving consent to arbitrate the dispute between the parties, as an Arbitrator, Mr. Rajinder Kumar Sharma, District and Sessions Judge (retired), shall enter into reference and shall pass an award in accordance with law. Copy of this order be forwarded to the learned counsel for the parties, as also to the learned Arbitrator. The learned Arbitrator so appointed shall be entitled to fee as per stipulation contained in 4th Schedule appended to the Arbitration and Conciliation Act, 1996.

The arbitration petition is disposed of accordingly, so also pending miscellaneous application(s), if any.