Kerala High Court
M/S.Shriram Epc Limited vs M/S.Kerala Feeds Ltd on 7 December, 2020
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
MONDAY, THE 07TH DAY OF DECEMBER 2020/16TH AGRAHAYANA, 1942
A.R.No.102 OF 2019
PETITIONER:
M/S.SHRIRAM EPC LIMITED
SIGAPPAIACHI BUILDING, 4TH FLOOR, 18/3,
RUKMINILAKSHMIPATHYSALAI, (MARSHALS ROAD,) EGMORE,
CHENNAI-600008, REPRESENTED BY ITS SENIOR VICE
PRESIDENT - SECRETARIAL & LEGAL MR. R. SRIDHARAN.
BY ADVS.SRI.M.RAMESH CHANDER (SR.)
SRI.JOHN JOSEPH VETTIKAD
SRI.C.JOSEPH JOHNY
RESPONDENT:
M/S.KERALA FEEDS LTD.
KALLETTUMKARA, THRISSUR DISTRICT - 680 683,
REPRESENTED BY ITS MANAGING DIRECTOR.
BY SRI.MOHAMMED AL RAFI S., SC, KERALA FEEDS LIMITED
THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON
07.12.2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
A.R.No.102/2019 :: 2 ::
ORDER
The petitioner/applicant is a company incorporated under the Companies Act, 1956, having its registered office at 4th floor, Sigappi Achi Building, Door No.18/3, Rukmini Lakshmipathi Road (Marshalls Road), Egmore, Chennai, Tamilnadu. It is stated that the petitioner was awarded a contract pursuant to a Global Tender for design, engineering, supply, erection, testing and commissioning of all structural, mechanical, electrical and instrumentation equipments/works for a 300 Ton Per Day cattle feed plant at Thiruvangoor in Kozhikode District for a total order value of Rs.30.28 crores. It is the case of the petitioner that though it had completed the entire work within the period mutually extended by the parties, and although the respondent had issued both the Provisional and Final Acceptance Certificates, the respondent had refused to honour the claim of the petitioner for additional charges for extra works to the tune of Rs.10.53 A.R.No.102/2019 :: 3 ::
crores. It is also the case of the petitioner that the respondent issued to the petitioner show cause notices proposing to deduct 10% of the contract amount towards liquidated damages which the petitioner had seriously refuted. It is the said disputes that have arisen between the parties, that the petitioner intends to get redressed through the arbitration mechanism contemplated between the parties under the agreement entered into with the respondent. The arbitration clause is contained at clause 25 of the General Conditions of Contract and clause 7.0 of the Special Conditions of Contract. They read as follows:
GENERAL CONDITIONS OF CONTRACT 25.0 RESOLUTION OF DISPUTES The Purchaser and the Supplier shall make every effort to resolve amicably by direct informal negotiation any disagreement or dispute arising between them under or in connection with the Contract. 25.2 If, after thirty (30) days from the commencement of such informal negotiations, the Purchaser and the Supplier have been unable to resolve amicably a Contract dispute, either party may require that the A.R.No.102/2019 :: 4 ::
dispute be referred for resolution to the formal mechanisms specified in the Special Conditions of Contract.
SPECIAL CONDITIONS OF CONTRACT 5.0 RESOLUTION OF DISPUTES Subject to the provisions of the relevant clause in General Conditions of Contract, any dispute or differences that could not be resolved be referred to the adjudication of sole Arbitrator. Within thirty days of receipt of notice from the Supplier of his intention to refer the dispute to arbitration, the Purchaser shall finalise a panel of three Arbitrators and intimate the same to the Supplier. The Supplier shall within fifteen days of receipt of this list, select and confirm his acceptance to the appointment of one from the panel as Arbitrators. If the Supplier fails to communicate his selection of name within the stipulated period, the Purchaser shall, without delay, select one from the panel and appoint him as the sole Arbitrator. If the Purchaser fails to send such a panel within thirty days as stipulated, the Supplier shall send a similar panel to the Purchaser within fifteen days. The Purchaser shall then select one from the panel and appoint him as the sole Arbitrator within fifteen days. If the Purchaser fails to do so, the Supplier shall communicate to the Purchaser the name of one from the panel who shall then be the sole Arbitrator. The appointment of sole Arbitrator so made shall be final and conclusive. The Arbitration shall be A.R.No.102/2019 :: 5 ::
conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 and rules there under or any statutory modifications thereof for the time being in force. The Arbitration proceedings shall be held in INRINJALAKKUDA, THRISSUR DISTRICT, KERALA ONLY at a time as the sole Arbitrator may decide. The Arbitrator shall give a speaking award and the decision of the sole Arbitrator shall be final and binding upon the parties and the expenses of the Arbitrator shall be paid as may be determined by the Arbitrator.
Performance under the Contract shall, if reasonably possible, continue during the Arbitration proceedings and payments due to the Supplier by the Purchaser shall not be withheld, unless they are the subject of the Arbitration proceedings.
Neither party is entitled to bring a claim to Arbitration if the Arbitrator has not been appointed within thirty days after expiration of the warranty/guarantee period.
2. Through a counter affidavit filed on behalf of the respondent, the respondent contends that the invocation of the arbitration clause is severely belated, and hence, the claim is barred by limitation. It is their further contention that inasmuch as the claim itself is belated, the arbitration clause in the agreement has become inoperative.
A.R.No.102/2019 :: 6 ::
3. On a consideration of the rival submissions, I find that it is not in dispute between the parties that, in the agreement entered into between them, there was a dispute resolution clause which required the parties to invoke arbitration as a dispute resolution mechanism. Consequent to the judgment of the Supreme Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. (M/s.) v. Northern Coal Field Limited - [2019 KHC 7177], this Court, in exercise of its powers under Section 11(6A), is required only to examine the existence of the arbitration agreement, and all other preliminary or threshold issues are to be left to be decided by the arbitrator appointed by this Court. Since, in the instant case, there is no dispute with regard to the existence of the arbitration agreement in the contract between the parties, I deem it appropriate to nominate Justice (Retd.) Sri.T.R.Ramachandran Nair, a former Judge of this Court, as the sole arbitrator to arbitrate on the disputes that have arisen between the parties herein.
(a) Appointment of Arbitrator: Justice (Retd.) T.R.Ramachandran Nair, is hereby nominated to act as a Sole Arbitrator to decide the disputes and differences A.R.No.102/2019 :: 7 ::
between the parties herein.
(b) Communication to Arbitrator of this order:
(i) A copy of this order will be communicated to the learned Sole Arbitrator by the Advocates for the petitioner within one week from the date of uploading of the order.
(ii) In addition, within one week of this order being uploaded, the Registry will forward an ordinary copy of this order to the learned Sole arbitrator at the following postal and email addresses:
Arbitrator: Justice (Retd.) Sri.T.R.Ramachandran Nair Former Judge, High Court of Kerala Address: Thekkedath House, House No.60/2783, Diwan's Road, Ernakulam, Kochi - 682 016.
Mobile 9447090104
(c) Disclosure: The learned Sole Arbitrator is requested
to forward his statement of disclosure under Section 11(8) read with Section 12(1) of the Arbitration Act to the A.R.No.102/2019 :: 8 ::
Registrar of this Court, referencing this arbitration application, as soon as possible, and in any case sufficiently in advance of his entering upon the reference to his arbitration. That statement will be retained by the Registrar on the file of this application. Copies will be given to both sides.
(d) Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as he nominates to obtain appropriate directions in regard to fixing a schedule for completing pleadings, etc.
(e) Contact/communication information of the parties: Contact and communication particulars are to be provided by both sides to the learned Sole Arbitrator within one week of this order being uploaded. The information is to include a valid and functional email address.
(f) Application under Section 16: Liberty is granted to either side to file an application before the learned Sole Arbitrator under Section 16 in regard to any matter or claim and its arbitrability, jurisdiction and the arbitral tribunal competence.
A.R.No.102/2019 :: 9 ::
(g) Interim Application/s:
(i) Liberty is granted to both sides to make an
interim application or interim applications including (but not limited to) interim applications under Section 17 of the 1996 Act before the learned Sole Arbitrator.
(ii) Any such application will be decided in such manner and within such time as the learned Sole Arbitrator deems fit.
(h) Fees: The Arbitrator's fees shall be governed by the Kerala High Court (Fee Payable to Arbitrators) Rules, 2017.
(i) Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal shares in the first instance.
(j) Consent to an extension if thought necessary:
Parties immediately consent to a further extension of up to six months to complete the arbitration should the learned Sole Arbitrator find it necessary.
A.R.No.102/2019 :: 10 ::
(k) Venue and seat of arbitration: The venue will be at
Ernakulam in Kerala as per the convenience of the parties and the Arbitrator.
(l) Contentions kept open: All contentions before the learned Sole Arbitrator are specifically kept open.
This Arbitration Request is allowed. Post on 05.01.2021 for the disclosure statement.
Sd/-
A.K.JAYASANKARAN NAMBIAR
JUDGE
prp/7/12/2020
A.R.No.102/2019 :: 11 ::
APPENDIX
PETITIONER'S EXHIBITS:
ANNEXURE A1 THE TRUE COPY OF TENDER DOCUMENT
NO.KFL/KITCO/MEC/01/2012.
ANNEXURE A2 THE TRUE COPY OF THE CONTRACT EXECUTED BY
THE PETITIONER AND THE RESPONDENT DATED 15.04.2013.
ANNEXURE A3 THE TRUE COPY OF THE CONTRACT EXECUTED BY THE PETITIONER AND THE RESPONDENT DATED 16.04.2013.
ANNEXURE A4 THE TRUE COPY OF THE CONTRACT EXECUTED BY THE PETITIONER AND THE RESPONDENT DATED 17.04.2013.
ANNEXURE A5 THE TRUE COPY OF THE
PROVISIONAL/PRELIMINARY ACCEPTANCE
CERTIFICATE (PAC) IN RESPECT OF DESIGN AND ENGINEERING ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 19.04.2017.
ANNEXURE A6 THE TRUE COPY OF THE
PROVISIONAL/PRELIMINARY ACCEPTANCE
CERTIFICATE (PAC) IN RESPECT OF SUPPLY ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 19.04.2017.
A.R.No.102/2019 :: 12 ::
ANNEXURE A7 THE TRUE COPY OF THE
PROVISIONAL.PRELIMINARY ACCEPTANCE
CERTIFICATE(PAC) IN RESPECT OF ERECTION AND COMMISSIONING ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 19.04.2017.
ANNEXURE A8 THE TRUE COPY OF THE FINAL ACCEPTANCE CERTIFICATE (FAC) IN RESPECT OF DESIGN AND ENGINEERING ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 09.05.2018.
ANNEXURE A9 THE TRUE COPY OF THE FINAL ACCEPTANCE CERTIFICATE (FAC) IN RESPECT OF SUPPLY ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 09.05.2018.
ANNEXURE A10 THE TRUE COPY OF THE FINAL ACCEPTANCE CERTIFICATE(FAC) IN RESPECT OF ERECTION AND COMMISSIONING ISSUED TO THE PETITIONER BY THE RESPONDENT DATED 09.05.2018.
ANNEXURE A11 THE TRUE COPY OF THE LETTER DATED 30.06.2018 ISSUED BY THE PETITIONER TO THE RESPONDENT.
ANNEXURE A12 THE TRUE COPY OF THE LETTER NO.KFL/2026/12/C/274/19 DATED 18.01.2019 ISSUED BY THE RESPONDENT TO THE PETITIONER. ANNEXURE A13 THE TRUE COPY OF THE LETTER NO.KFL/2026/12/C/275/19 DATED 18.1.2019 ISSUED BY THE RESPONDENT TO THE PETITIONER. ANNEXURE A14 THE TRUE COPY OF THE LETTER NO.KFL/2026/12/C//276/19 DATED 18.1.2019 ISSUED BY THE RESPONDENT TO THE PETITIONER. ANNEXURE A15 THE TRUE COPY OF LETTER NO.SCPC/DA/KFL-
CLT/3560 DATED 4.6.2019 ISSUED BY THE PETITIONER TO THE RESPONDENT.
A.R.No.102/2019 :: 13 :: ANNEXURE A16 THE TRUE COPY OF THE PRINT OUT FROM THE
POSTAL DEPARTMENT SHOWING THE DELIVERY OF POSTAL ARTICLE.
ANNEXURE A17 THE TRUE COPY OF LETTER NO.KFL/2026/12/L234/SRO/19 DATED 29.06.2019 ISSUED BY THE RESPONDENT TO THE PETITIONER.
RESPONDENT'S EXHIBITS: NIL.
//TRUE COPY//
P.S. TO JUDGE