High Court of Punjab and HaryanaARB/101/2014dismissed

Nhpc Limited v. M/S Hindustan Corporation Co. Ltd And ORS

2015-01-30Mr. Justice M.M. Aggarwal10 pages

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

Arbitration Case No. Date of Decision: NHPC Limited Erstwhile ..Petitioner versus M/s Hindustan Construction Co.Ltd. and others ..Respondents

1.Whether Reporters of local papers may be allowed to see the judgment?

2. Whether to be referred to the Reporters or not ?

3. Whether the judgment should be reported in the Digest? Present : Ms. Reeta Kohli, Senior Advocate with Ms. Guneet Babbar, Advocate, for the petitioner. Mr. Chetan Mittal, Senior Advocate with Mr. Sumeet Goel and Mr. Samir Rathaur, Advocates, for respondent No..

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In this petition under Section (6) of the Arbitration and Conciliation Act,

(for short 'the said Act'), the petitioner seeks a declaration of one A.P.Mishra, as its nominee Arbitrator, to adjudicate the disputes between the parties and for quashing the appointment of one D.P.Bajaj?respondent No.2 appointed as an arbitrator on behalf of the petitioner by the President of the Institute of Engineers (India)?respondent No..

The petitioner and respondent No.1 entered into an agreement dated 30.10.2006 for various construction works including construction of dams, diversion channels and surface power house. Clause 67 of the agreement in so far as it is relevant reads as under:?

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Disputes and differences arose between the parties. Respondent No. by a letter dated 07.06.2013 set out some of the disputes and contended that its claims had neither been paid nor deliberated upon. Respondent No.1, therefore, requested the petitioner to resolve the matter amicably as per the above clause and stated that in the event of the disputes not being resolved amicably within four weeks from the receipt of the letter by the petitioner, it would proceed for settlement of the disputes in accordance with the above clause. Respondent No.1 confirmed its readiness and availability for the resolution of the matter amicably at the earliest. 4.

The petitioner did not reply to the above letter. Respondent No., therefore, by further letter dated 08.07.2013 reiterated some of the above facts and listed some of the issues which awaited an amicable resolution. Respondent No. stated that the parties had been unable to resolve the disputes till date and in light thereof invoked Arbitration Clause 67.3 and referred the disputes to

arbitration. Respondent No. appointed one Jayant Nashikkar, as an arbitrator and requested the petitioner to appoint an arbitrator within days of the receipt of the letter to enable further steps to be taken in terms of Clause 67.3. The petitioner, however, did not appoint an arbitrator within days of the receipt of letter dated 08.07.2013. Respondent No., therefore, by its letter dated 27.09.2013 requested the Institute of Engineers (India) to appoint an Arbitrator to complete the constitution of the Arbitral Tribunal for adjudication of the disputes and differences between the parties. Ms. Reeta Kohli, learned Senior Counsel appearing on behalf of the petitioner contended that some of the issues/disputes referred to in this letter were new and were not referred to in the earlier letter dated 07.06.2013.

By its letter dated 09.10.2013 the petitioner informed respondent No. that it had appointed said A.P.Mishra, as an arbitrator. As we mentioned at the outset, the petitioner seeks a declaration of his appointment as its nominee. 6.

On 12.11.2013, Institute of Engineers (India) appointed the said D.P.Bajaj?respondent No. as an arbitrator on behalf of the petitioner pursuant to the request of respondent No. by the said letter dated 27.09.2013.

Soon thereafter, the arbitrator nominated by the petitioner and the arbitrator appointed by the Institute of Engineers (India) appointed the Presiding Arbitrator.

The position, therefore, is this. Before this petition was filed, the Arbitral Tribunal was constituted comprising of the first respondent(s) nominee, the arbitrator appointed on behalf of the

petitioner by the Institute of Engineers (India) and the Presiding Arbitrator appointed by the said two arbitrators. If the reliefs sought are granted, it would in effect result in the removal of one of the arbitrators on the panel, namely, respondent No. nominated by the Institute of Engineers and consequently the removal of the Presiding Arbitrator as well.

Normally, such an application is outside the ambit of Section . It was, however, contended on behalf of the petitioner that the appointment of respondent No. as an arbitrator by the Institute of Engineers (India) was entirely without jurisdiction as the condition precedent for the same had not arisen. The basis of the contention is this. There was no delay on the petitioner's part in appointing the arbitrator. The petitioner did not appoint the Arbitrator earlier because it was under the impression that the parties were yet to explore the possibility of a amicable settlement as contemplated by Clause 67 of the agreement. Although the respondent had raised certain disputes by the letter dated 07.06.2013 which have not been amicably settled, respondent No. raised further disputes by the said letter dated 08.07.2013. Respondent No.

instead of exploring the possibilities of a amicable settlement as required by Clause 67 proceeded to appoint an arbitrator which was impermissible. This first step being impermissible, the subsequent steps, namely, the request of respondent No. to the Institute of Engineers to appoint an arbitrator on behalf of the petitioner, appointment of respondent No.

wholly without jurisdiction and void. The application under Section of the said Act, therefore, according to Ms. Kohli is maintainable. .

The submission is liable to be rejected in view of the judgment of the Supreme Court in

! A similar argument was raised before the Supreme Court. The arbitration clause was invoked without attempting to resolve the disputes as required by the Arbitration Clause in that case. Pursuant to such invocation, the Arbitral Tribunal had been constituted. The question before the Supreme Court was whether the petitioner therein was entitled to proceed in terms of Section (6) of the said Act. The Supreme Court held as under:? $'

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0 The judgment clearly covers the present case. It is not open, therefore, to me to entertain this petition under section (6) of the said Act. I must clarify that I have not dealt with the merits of Ms.Kohli's submissions. There may well be a lot to be said in support of her submissions. The submissions, however, must be considered in

appropriate proceedings which needless to add would be decided on their merits and without being influenced by the result in this petition.

Mr. Chetan Mittal, learned Senior Counsel appearing on behalf of respondent No.1 also contended that this Court has no jurisdiction as the venue of the arbitration is New Delhi/Faridabad. He submitted that an application under section of the said Act, which falls under Part?I thereof, can be made only at the place where the arbitration proceedings are to be conducted i.e. the Courts where the arbitration has to take place. He further contended that an application under Section (6) cannot be made in a place merely because the cause of action is located there. He relied upon the judgment of the Supreme Court in "#

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' (' ) The submission is not well founded. It is in fact contrary to the judgment of the Supreme Court in

which has been relied upon by Mr. Mittal.

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The Supreme Court has infact expressly held that even the Courts where cause of action is located would have the jurisdiction to entertain an application under Section (6) or an application under Part?I of the said Act. The portion emphasized by me establishes this beyond doubt.

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The contention that the application is filed in a place without jurisdiction, is, therefore, rejected. 14.

In the circumstances, the petition is dismissed. There shall, however, be no order as to costs.

(S.J.VAZIFDAR)

ACTING CHIEF JUSTICE 'ravinder'

Whether to be referred to the Reporter.

Yes√ No.