Telangana High Court
Maytas Infra Ltd., vs Campagnie D Electricite Du Senegal ... on 6 September, 2022
THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
AND
THE HON'BLE SRI JUSTICE C.V.BHASKAR REDDY
CIVIL REVISION PETITION No.496 of 2015
ORDER:(Per the Hon'ble the Chief Justice Ujjal Bhuyan) Heard Mr. K.Devnath, learned counsel for the petitioner.
2. This civil revision petition has been filed under Article 227 of the Constitution of India assailing the order dated 24.09.2014 passed by the learned I Additional Chief Judge, City Civil Court, Secunderabad, in I.A.No.581 of 2011 in O.S.No.85 of 2010.
3. The suit was filed by the petitioner herein. In the pending suit, respondent No.1 filed I.A.No.581 of 2011 under Section 8 of the Arbitration and Conciliation Act, 1996 (briefly, 'the 1996 Act' hereinafter), to direct the plaintiff to initiate arbitral proceedings before the Arbitration Institute of Stockholm Chamber of Commerce 2 as per clause 14 of the Engineering Procurement and Construction (EPC) contract dated 12.07.2008.
4. I.A.No.581 of 2011 was contested by the parties, whereafter the Court below framed the following issue for consideration:
Whether the petitioner in I.A.No.581 of 2011 (respondent No.1 herein) had established substantial grounds to allow the petition or not?
5. The Court below noted that both the parties were undisputedly covered by the EPC contract for 125 MW coal fired power plant in Sendou, Senegal. Clause 14 of the said contract provided for dispute resolution, which was extracted by the Court below as under:
"14.1 Attempt to resolve The parties shall seek to resolve in good faith any dispute or difference arising between them in respect of any matter connected with this contract. If the parties cannot resolve any such dispute or difference within 14 days, or such a period as the parties may subsequently agree, then it shall be submitted to their respective designated representative under the contract.
If the parties fail to resolve any dispute arising between them, they shall refer the dispute to adjudication and 3 arbitration in accordance with FIDIC Silver 1999 with the arbitration institute and rules set forth below.
14.2 Dispute Notification Procedure:
In the event a dispute arises between Employer and Contractor arising out of or relating to this contract, the aggrieved party shall promptly notify the other party to this contract of the dispute.
14.3 Arbitration:
All disputes shall be finally settled by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The arbitral tribunal shall be composed of three (3) arbitrators. The place of arbitration shall be Stockholm. The language to be used in the arbitral proceedings shall be English.
The award rendered by the arbitrators shall be final and binding on Employer and Contractor and judgment may be entered in accordance with applicable law in any court having jurisdiction thereof.
14.4 Performance Contractor shall proceed diligently in accordance with employer's direction with performance of this Contract pending final resolution of any claim, dispute or other matter in question arising out of, or relating to this Contract or the interpretation or breach thereof and Employer shall continue to make payment of all sums which are due and payable to contractor in accordance with this contract and which are undisputed.
14.5 Disputes involving the Utility:4
In the event that there is a dispute between Employer and Contractor arising out of or relating to this contract and such dispute presents substantially the same issues (whether of fact or law) as a dispute between Employer and the utility arising out of or relating to the PPA:
(a) Employer shall keep contractor informed of the development and resolution of such dispute with the utility;
(b) Contractor shall provide such assistance to Employer as Employer may reasonably requested in relation to the dispute with the Utility."
6. It was noted that plaintiff had earlier filed O.P.No.519 of 2009 before the learned I Additional Chief Judge, City Civil Court, Secunderabad, under Section 9 of the 1996 Act and obtained ex parte order on 21.12.1996 by invoking clause 14(2) of the EPC contract. Thereafter, the same plaintiff filed the related suit being O.S.No.85 of 2010. It was in that context that the Court below held as follows:
"From the facts of the present case, the first respondent herein is disputing the right of the petitioner/defendant No.3 from invoking the Bank guarantee under the guise that the termination of contract is not proper, which is a broad question of fact to be determined, is a dispute within the purview of Arbitration clause in the said EPC contract itself.5
Except such large dispute raised as an impediment to invoke the Bank Guarantee, there is no other question of fact to be determined to grant the reliefs in the suit as framed. Therefore, there appears no separate dispute to be determined in respect of the terms of Bank Guarantee between the first respondent and other respondents in respect of the right vested with the respondent Nos.2 and 3 to pay the amount covered by the Bank Guarantee to the petitioner/defendant No.3 because the bank which gave such guarantee is bound to honour it in the absence of allegation of fraud and the very foundation in obtaining such Bank guarantee is not in dispute. In the light of the discussions in the earlier paras, there appears no substantial force in the contentions of the respondent No.1 that respondents 2 and 3 are not parties to the arbitration clause covered by Ex.P1 EPC contract, therefore, respondents 2 and 3 cannot be forced to submit themselves to the Arbitration proceedings. In fact, respondents 2 and 3 being the guarantors on behalf of respondent No.1 impliedly agents of the 1st respondent and they cannot raise any separate dispute to be determined beyond the scope of the dispute between the petitioner/defendant No.3 and the 1st respondent/plaintiff as a requirement for invoking the Bank Guarantee covered by the terms of Ex.P1 EPC contract. Therefore, the real dispute among the parties to the suit is between petitioner/defendant No.3 and the 1st respondent/plaintiff is very much covered by the Arbitration clause in Ex.P1."
7. After holding so, the Court below concluded that the subject matter of the dispute in the suit is covered by 6 clause 14 of the EPC contract between the parties and accordingly directed the plaintiff to proceed under clause 14 of the EPC contract. The suit was accordingly closed. Paragraph 26 of the order dated 24.09.2014 reads as under:
"26. In the light of the observations in the earlier paras, it is held that the subject matter of the dispute in the present suit are covered by clause 14 of Ex.P1 EPC contract between petitioner/defendant No.3 and 1st respondent/plaintiff, and that the other respondents are only proforma parties to determine such real dispute, as such, the present petition is maintainable U/sec.8 of Arbitration Act to direct the respondent No.1/plaintiff to proceed under clause 14 of Ex.P1 EPC contract and accordingly, the suit proceedings shall be closed and that the suit shall be disposed of.
In the result, the petition shall be allowed directing the respondent No.1/plaintiff to proceed under Clause 14 of Ex.P1 EPC Contract for the remedies of his grievances and the dispute and the proceedings of the suit shall be closed."
8. Supreme Court in P.Anand Gajapathi Raju v. P.V.G.Raju (Dead)1 has held that in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their 1 (2000) 4 SCC 539 7 arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. It was held as follows:
"8. In the matter before us, the arbitration agreement covers all the disputes between the parties in the proceedings before us and even more than that. As already noted, the arbitration agreement satisfies the requirements of Section 7 of the new Act. The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. There is no question of stay of the proceedings till the arbitration proceedings conclude and the Award becomes final in terms of the provisions of the new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the Award. The Court to which the party shall have recourse to challenge the Award would be the Court as defined in clause (e) of Section 2 of the new Act and not the Court to which an application under Section 8 of the new Act is made. An application before a Court under Section 8 merely brings to the Courts notice that the subject matter of the action before it is the subject matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the Court trying the action may or may not have had jurisdiction 8 to try the suit to start with or be the competent Court within the meaning of Section 2 (e) of the new Act."
9. However, learned counsel for the petitioner submits that the aforesaid judgment of the Supreme Court cannot be applied to the facts of the present case inasmuch as the subject matter of the dispute is not covered by the EPC contract.
10. This is also an aspect which can be gone into by the learned Arbitrator. Therefore, we are not inclined to continue further with the civil revision petition.
11. Civil revision petition is dismissed. Consequently, the interim order stands vacated.
Miscellaneous applications pending, if any, shall stand closed. There shall be no order as to costs.
______________________________________ UJJAL BHUYAN, CJ ______________________________________ C.V.BHASKAR REDDY, J 06.09.2022 vs