NCC Limited vs Bharat Heavy Electricals Limited

Sanjay Kishan Kaul, C.J.—The respondent, vide its Letter of Intent dated 02.05.2006 awarded the contract for construction and performing the civil and architectural works for main plant of 2 x 120 MW expansion of captive power plant at Nalco, Angu, Orissa, to the petitioner for a fixed sum of Rs. 33,73,63,507/- to be completed within 20 months from the date of start of the work. The contract was entered into on 19.12.2006.

The petitioner claims that the work commenced at site on 15.04.2006 and thus, the work had to be completed by 10.01.2008. The period for execution of the contract was extended upto 30.11.2010, vide respondent''s letter dated 12.11.2010.

Disputes are stated to have arisen inter se the parties even during the execution of the work and the petitioner pointed out these disputes by the letters dated 20.11.2010 and 30.12.2010 demanding release of balance payment and issuance of completion certificate. Reminders were sent vide letters dated 16.03.2011 and 14.04.2011, whereafter even a meeting was held and minutes was sent on 17.05.2011. The petitioner claims that despite assurances, nothing happened and thus, the petitioner was left with no option but to invoke the arbitration clause inter se the parties vide letter dated 13.09.2011, to which there has been no response.

The arbitration clause reads as under:

''''44.0 SETTLEMENT OF DISPUTES AND ARBITRATION:- Except where otherwise provided in the contract all quotations and disputes relating to the meaning of specifications, design, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used in the work as to any other question claim, right, matter or thing whatsoever in any work arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the work or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to and decided by the engineer whose decision shall be final to the parties hereto subject however to the Arbitration referred hereunder. Any disputes or differences including those considered as such by only one of the parties arising out of or in connection with the contract shall be to the extent possible settled amicably between the parties. If amicable settlement cannot be reached then all such disputed issues shall be referred to the sole arbitration of the person appointed by the General Manager of the Employer.

There will be no objection to any such appointment that the Arbitrator so appointed is a Government servant or in the employment of the Employer, that he had to deal with the matters to which the contract relates and that in the course of his duties or any of the matters in dispute or difference as a government servant or as an employee of the employer he had expressed views on all or any of the matter in dispute or difference. The arbitrator to whom the matter is originally referred being transferred or vacating this office or being unable to act for any reason the General Manager -- as aforesaid at the time or such transfer or vacation of office or inability to act shall appoint another person to act as Arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. The arbitrator from time to time with the consent of the parties may enlarge the time for making and publishing award. The arbitrator shall at the time of making and publishing the award give reasons thereof. The award made and published by the Arbitrator shall be final and binding between the parties.

Performance of the contract shall continue during arbitrator proceedings unless the employer shall order the suspension or termination thereof or any part thereof of the work or any portion of work.

Subject as aforesaid the provisions of Arbitration Act, 1996 (India) or any statutory modifications or re- enactment''s thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. The venue of arbitration shall be New Delhi.''''

The petitioner has, thus, filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, stating that as the contract was entered into at Chennai, jurisdiction of this Court was being invoked.

There has been no reply even to the notice in the petition, even though the respondent had been served long time back and a counsel had entered appearance, as recorded in the order of the Master dated 09.07.2012. It is, thus, a case of no return on part of the respondent.

In view of the pleadings and the documents filed on record, it is quite apparent that disputes have arisen inter se the parties, which are liable to be resolved through arbitration. The petitioner called upon the respondent to nominate the Arbitrator in terms of its letter dated 13.09.2011, but no Arbitrator has been appointed till date. The respondent, thus, has lost the right to appoint the Arbitrator in view of the judgment of the Hon''ble Supreme Court in Datar Switchgears Ltd. Vs. Tata Finance Ltd. and Another, , followed subsequently in National Insurance Co. Ltd. Vs. Mastan and Another, , as also by a Division Bench of this Court in The General Manager (Telecom) Madurai Secondary Switching Area, Department of Telecommunication and The Member (Telecommuncation), Department of Telecommunication Vs. Sesa Seat Information Systems Ltd. and Hon''ble Mr. Justice K. Sampath (Retd.), .

A perusal of the arbitration clause, however, shows that the venue of Arbitration is to be at New Delhi. Learned counsel for the parties, however, jointly propose that the venue should be shifted to Chennai.

In view thereof, I appoint, Mr.Justice K.Govindarajan, a retired Judge of this Court, as the Sole Arbitrator to enter upon the reference and after issuing notice to the parties and upon hearing them, pass an award as expeditiously as possible, preferably within a period of six months from the date of receipt of the order. The learned Arbitrator is at liberty to fix the remuneration and other incidental expenses, which shall be borne by the parties equally.

The original petition is, accordingly, allowed, leaving the parties to bear their own costs.