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Sri. Lakshmi Constructions vs Ntpc Limited on 21 April, 2023

Author: Yashwant Varma

Bench: Yashwant Varma

                    $~7
                    *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                    +      ARB.P. 1440/2022
                           SRI. LAKSHMI CONSTRUCTIONS             ..... Petitioner
                                         Through: Ms. Amrita Sharma, Mr.
                                                  Darpan KM and Mr. Rajat
                                                  Jonathan Shaw, Advs.

                                              versus

                           NTPC LIMITED                                    ..... Respondent
                                              Through:     Mr. Rituraj Biswas, Mr. Rituraj
                                                           Choudhary, Advocates.

                           CORAM:
                           HON'BLE MR. JUSTICE YASHWANT VARMA
                                              ORDER

% 21.04.2023

1. The present petition has been preferred for constitution of an Arbitral Tribunal consequent to disputes having arisen amongst the parties.

2. The respondent who was placed on notice has filed a reply. From that reply, the following objections emerge. According to the respondent, under the National Programme ―Pradhan Mantri Sahaj Bijli Har Ghar Yojana‖ [SAUBHAGYA] floated by the Government of India, the Governor of Odisha and Western Electricity Supply Company of Odissa Limited [WESCO] entrusted the responsibility to implement the aforesaid scheme and appointed the respondent as the Project Management Agency. It was on the aforesaid basis that the respondent appears to have been entrusted with the responsibilities and obligations to implement the project. Undisputedly the contract in furtherance of the aforesaid government scheme was awarded to the petitioner vide notification of award dated 10 October 2018.

3. The respondent, however, placed reliance upon the terms and conditions as contained in the Quadripartite Agreement dated 18 April 2018 to which Rural Electrification Corporation Limited, Governor of Odisha, WESCO and National Thermal Power Corporation Limited [NTPC] were signatories. The case of NTPC in essence is that since it was implementing a government scheme for and at the behest of the aforenoted three other parties to the Quadripartite Agreement, they must necessarily be joined in the present reference.

4. Learned counsel in support of his aforesaid submission has also placed reliance upon the judgment rendered in M/S RPP Constructions (P.) Ltd. v. Rites Ltd., [NCN : 2017:DHC:177].

5. It was additionally argued that the petitioner has failed to comply with pre-arbitration proceedings relating to conciliation and therefore also the petition preferred under Section 11 of the Arbitration and Conciliation Act, 1996 is premature.

6. The Court had on the last occasion after noticing the contentions which had been addressed by respective sides passed the following order:-

―1. The Court notes from the preliminary submissions which have been addressed that the existence of the arbitration agreement and the relevant clauses relating to settlement of disputes and mutual consultation is not denied by the respondent. The respondent essentially asserts that the dispute redressal mechanism as factored in the agreement contemplates parties approaching the Expert Settlement Council as well as going through the rigours of mutual consultation and conciliation before arbitration could be invoked.

2. For the purposes of appreciating the submissions which are addressed on this score, the Court deems it apposite to extract Clause 38 which reads as follows: -

―38. Settlement Disputes 38.1 If any dispute of any kind whatsoever shall arise between the Employer and the Contractor in connection with or arising out of the Contract, including without prejudice to the generality of the foregoing, any question Signature Not Verified regarding its existence, validity or termination, or the Digitally Signed By:NEHA Signing Date:25.04.2023 10:34:31 execution of the Facilities, whether during the progress of the Facilities or after their completion and whether before or after the termination, abandonment or breach of the Contract, the parties shall seek to resolve any such dispute or difference, to the extent possible, amicably by mutual consultation.

38.2 If the parties fall to resolve such a dispute or difference by mutual consultation at the execution site level, then the dispute shall be referred by the Contractor to the Project Manager, who, within a period of thirty (30) days after being requested by Contractor to do so, shall give written notice of his decision.

38.2.1 The decision/instruction of the Project Manager shall be deemed to have been accepted by the Contractor unless notified by the Contractor of his intention to refer the matter for Arbitration within thirty (30) days of such decision/instruction.

38.2.2 In the event the Project Manager falls to notify his decision as aforesaid within thirty (30) days, the Contractor, if he intends to go for Arbitration, shall notify his intention to the Project Manager within 30 days of expiry of the first mentioned period of thirty days falling which it shall be deemed that there are no dispute or difference between the Employer and the Contractor.

38.3 In case of dispute or difference between the Employer and the Contractor, if the Employer intends to go for Arbitration, he shall notify such Intention to the Contractor.‖

3. Insofar as the issues of conciliation and referral of disputes to the Expert Settlement Council is concerned, learned counsel for the petitioner would submit that they are clearly directory in nature bearing in mind the plain language employed in that clause as well as the fact that parties were granted the option to choose either of the three routes which are mentioned therein or to pursue such other remedies as may be available. Learned counsel for the petitioner has in support of her submissions in this respect also relied upon the judgment rendered recently by a learned Judge of the Court in M/S Oasis Projects Ltd vs. Managing Director, National Highway and Infrastructure Development Corporation Limited, [2023 SCC OnLine Del 645].

4. Learned counsel appearing for the respondent, additionally, asserts that arbitration itself could have been invoked only within a period of six months from the date when the claim came to be repudiated. The question, however, which would arise would be whether that stipulation would otherwise override the prescriptions Signature Not Verified contained under the Limitation Act, 1963 as well as the right of the Digitally Signed By:NEHA Signing Date:25.04.2023 10:34:31 petitioner to invoke the jurisdiction of the Court under Section 11 of the Arbitration and Conciliation Act, 1996.

5. Since learned counsel appearing for the respondent sought some time to go through the decision rendered in Oasis Projects, let the matter be called again on 21.04.2023.

6. Learned counsel for the petitioner may file its rejoinder affidavit in the meanwhile.‖

7. The issues which therefore arise stand duly crystallized in that order of the Court. It becomes pertinent to note that RPP Constructions was a case where the respondent in that petition had acted for and on behalf of Sri Lankan Railways. This is evident from paragraphs 16 to 18 of that decision which are extracted hereinbelow:-

―16. At the outset it is necessary to note that the tenders were invited by RITES on behalf of Sri Lankan Railways. The opening words of the notice inviting tenders clearly indicated that tenders were invited by ―RITES LIMITED for and on behalf of SRI LANKA RAILWAYS". The LOA dated 08.02.2010 also clearly indicated that RIPL‟s tender had been accepted by the Competent Authority of RITES LIMITED "in its capacity as an Agent/Power of Attorney Holder acting for and on behalf of Sri Lankan Railway".

17. The Agreement also clearly stated that the agreement was entered into by RITES for and on behalf of Sri Lankan Railways who was referred to as the ―employer‖. The opening paragraph of the Agreement which describes the parties thereto reads as under:-

―THIS AGREEMENT is made on 7th day of May Two thousand Ten between RITES Ltd. a Government of India Enterprise and a Company registered under Companies Act, 1856 having its registered office at SCOPE Minar, Laxmi Nagar, (Delhi) - 110092 and its Corporate Office at RITES BHAWAN, Plot No.1, Sector 29, Gurgaon (Haryana) representing through General Manager, RITES LIMITED for and on behalf of Sri Lankan Railways hereinafter called the Employer (which expression shall, wherever the context so demands or requires, include their successors in office and assigns) on one part and M/s R. P. P. Constructions (P) Ltd., P&C Tower, 3rd floor No.140, Perundurai Road, Erode- 638011, Tamil Nadu, India hereinafter called the Contractor (which expression shall wherever the context so demands or requires, include his/their successors and assigns) of the other part.‖

18. The Agreement was also signed by RITES ―in the capacity of Agent Signature Not Verified and Power of Attorney Holder for and on behalf of Sri Lankan Railways Digitally Signed By:NEHA Signing Date:25.04.2023 10:34:31 (The Employer)‖. It is apparent from the above that RITES was not a party to the Agreement and the Agreement was only between RIPL and Sri Lankan Railways. Although, RITES had a significant role to play in the execution of the works, the same was only in its capacity as an Agent and a Power of Attorney Holder of Sri Lankan Railways.‖

8. The view taken by the Court while holding that Sri Lankan Railways was liable to be joined in the proceedings also rested upon Clause 25 of the General Conditions of Contract which were also noticed by the Court in paragraph 22. The said paragraph is reproduced hereinbelow:-

―22. Clause 25 of GCC, inter alia, provides for settlement of disputes by arbitration. Sub-clause 3 of Clause 25 expressly provides that the arbitral award shall be binding upon the parties to the disputes. Sub-clause 6 of Clause 25 is relevant as it expressly provides that RITES, acting as an Agent to the Employer as well as the Employer will implead themselves as parties to the arbitration proceedings. The said sub-clause is set out below:-

―6. Parties to be impleaded in the arbitration proceedings In case of any claims by the Contractor, the Employer as well as RITES Ltd. acting as Agent to the Employer will implead themselves as parties to the Arbitration Proceedings.‖‖

9. Undisputedly in the present case, the contract which came to be executed between the parties before this Court was not one which was shown or established to have been executed for and on behalf of the other parties to the Quadripartite Agreement. The contract also does not recite that the respondent here was acting for and on behalf of the parties to the Quadripartite Agreement. There is also no clause akin to Clause 25(6) of the General Clauses of Contract and which appears to have weighed with the Court while rendering its decision in RPP Constructions and in support of its ultimate conclusion that Sri Lankan Railways was liable to be added as a party to the arbitration proceedings. This Court thus finds itself unable to countenance the aforesaid submission based upon RPP Constructions. The said decision, for reasons aforenoted, is clearly distinguishable.

10. Insofar as the contentions resting on Clause 38 and the Chapter dealing with Settlement of Disputes is concerned, the Court notes that in terms of Clause 38.1 parties had been accorded the opportunity to have all disputes settled through "...Expert Settlement Council/ Arbitration/ other remedies available under the other applicable laws". It would thus be evident that the clause itself grated liberty to parties to initiate proceedings for arbitration notwithstanding the avenue of an Expert Settlement Council having been constituted.

11. In view of the aforesaid, the Court finds itself unable to sustain the objections which stand raised.

12. The petition shall consequently stand allowed. The Court hereby appoints Mr. Justice Pankaj Naqvi [Official Address: H-95, Ground Floor, Sector - 41, Noida - 201303] [Mobile No. 9415236770] [email: [email protected]] as the sole arbitrator for resolution of the disputes which have arisen.

13. The parties are directed to appear before the learned arbitrator, as and when notified. This is subject to the learned arbitrator making the necessary disclosure under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act

14. The fees of the arbitrator shall be decided according to the Fourth Schedule of the Act.

YASHWANT VARMA, J.

APRIL 21, 2023 bh Signature Not Verified Digitally Signed By:NEHA Signing Date:25.04.2023 10:34:31