Gujarat High Court
Aashirvad Clearing Agencies vs Container Corporation Of on 13 December, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
AASHIRVAD CLEARING AGENCIES....Petitioner(s)V/SCONTAINER CORPORATION OF INDIA LTD....Respondent(s) O/IAAP/76/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD PETN. UNDER ARBITRATION ACT NO. 76 of 2013 ================================================================ AASHIRVAD CLEARING AGENCIES....Petitioner(s) Versus CONTAINER CORPORATION OF INDIA LTD....Respondent(s) ================================================================ Appearance: NANAVATI ASSOCIATES, ADVOCATE for the Petitioner(s) No. 1 NOTICE SERVED for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI Date : 13/12/2013 ORAL ORDER
The petitioner seeks appointment of Arbitrator to resolve the disputes arising between the petitioner and the respondent Container Corporation of India Ltd (hereinafter referred to as CCI ) arising out of Letter of Intent dated 4.2.2011 and 16.12.2009.
Though served, no one appeared for the respondent. Previously on 29.11.2013, same position prevailed. I have, therefore, proceeded ex parte.
Facts in brief are as follows:-
3.1 For the purpose of transporting containers from ICD, Khodiyar to Ports of Pipavav and from ICD, Khodiyar to Mundra, the respondent awarded transportation contract to the petitioner pursuant to the tenders invited for such purpose by the said respondent. Under such transport agreement, the petitioner was to carry out certain specific tasks of container transportation for and on behalf of CCI. During the working of such agreement multiple disputes arose between the parties. The petitioner raised certain disputes in a notice issued to the respondent on 29.4.2013 and contended as under:-
1) The tender conditions do not restrict movement of more than 1 container in a truck. They do not provide specific number of containers to be loaded to a truck. However the Terminal Manager indicates that this cannot be done. We also refer to the subsequent situation which has arisen consequent on the letter of March 19 2013 of CONCOR by which CONCOR has abrogated to itself a right to change the tender conditions by attempting to bring in a change in the tender conditions especially in terms of rates. The rates which are indicated in the tender are binding on both the parties and remain valid for the whole tenure of the tender. We submit that the above demand to alter the rates by CONCOR is unreasonable and de hors the tender conditions.
2) The other major issue is the imposition of penalties for alleged refusal of job orders and consequent non performance without providing any specific details on the said refusal. We deny any refusal on our part which respect to performance of the obligations under the above referred tender contracts.
3) CONCOR has imposed penalties in form of bill wise deductions on us under the head of refusals without justifying the same on the basis of any documentary evidence towards these deductions. Nowhere in the terms has the term refusal been described and there is no indication of any penalties. Our communication in this regard remains unanswered.
4) Presently CONCOR works on the grant of private permission to the full and the Lead Transporter is being wantonly ignored in allotment of job orders. The basic idea seems to be one of inflicting monetary and financial losses to the contractor since when the container is handled by the Lead Transporter CONCOR should be gaining more in terms of revenues than handing over private permissions.
In view of the above mentioned facts and circumstances and more particularly since it has become completely unviable for us to perform the contract in the manner as forced to do by CONCOR, which is a stark deviation from what is contained in the contract itself, the company is compelled to seek by way of this last and final letter a release from the performance of the obligations under the contract. It is stated that we are, owing to the above problems faced by us and their unfortunate persistent presence at the hands of CONCOR ARE CONSTRAINED TO REQUEST VIDE THIS LETTER, a release from the abovementioned contract without prejudice. We further submit that if there is no response from CONCOR latest by 10 th May 2013, it would tantamount to acceptance of our request thereby relieving us from our obligations under the contract. We shall continue to perform our obligations under the contract for this period and thereafter shall not be bound under it, which please note.
4. Such disputes were brought to the notice of the respondent by the present petitioner through legal notice dated 28.5.2013 pointing out inter alia that:-
2. During the operation of the aforesaid tender contract, there have been instances whereby attempts were made to subvert the conditions specified in the tender contract by supplying various interpretations by different officials of your office to suit their whims and fancies. During course of the operation of the aforesaid tender contract, there were certain major issues affecting the operations and performance of the contract at the instance of your office. Our Clients issued several communications highlighting the issues with respect to the operations of the tender contract, however to no avail. In view of the said facts, our clients issued a final notice dated 29.04.2013 highlighting the major issues and also intimating to terminate the tender contract in case of non-response from your side. Despite the said final notice, there was no response from your side and hence our client suspended its operations by way of another letter dated 13.05.2013 with immediate effect. Our clients further requested to remit the outstandings that still stands to the credit of our clients.
3. It is to bring to your notice that you have imposed penalties in the forms of deductions on several bills issued to our clients without there being any justification on your part. With reference to the transportation of the containers to Pipavav as well as Mundra Port, it is to state that you have imposed wrongful penalties describing it as penalty for refusal of job order, other penalties, etc. It is to state that you have not specified any reason or legal basis for levy of the aforesaid penalties. Enclosed herewith and marked as Enclosure-I(Colly.) are copies of the statement for penalty deducted from the bills with respect to both the parties.
It is further bring to your notice that our clients have paid Toll Tax time and again during the transportation for the period between 01.04.2012 and 15.05.2013. It is to state that the Annexure-I to the tenders provide for rate schedule for transportation between ICD Khodiyar and Mundra/ Pipavav Ports. The said rate schedule clearly specifies that any taxes and levies would be charged extra thereby meaning that our clients would be entitled to recover the said amount from your side in accordance with the provisions of the tender contract. Enclosed herewith and marked as Enclosure-II(Colly.) are the copies of the Ledger Accounts of our clients specifying the levy of toll tax.
It is submitted on behalf of our clients that yourself have sought to levy the outstanding refund penalty for differences in transit time from ICD to Pipavav Port as on March 31, 2013. It is further submitted that you have sought to levy the outstanding of the handling charges (Internal Shifting) at ICD Khodiyar as on March 31, 2013. It is to state that the aforesaid amount is wrongly claimed by you and hence our clients are legally entitled to recover the same. Enclosed herewith and marked as Enclosure-III(Colly.) is the statement of the outstanding refund penalty as well as outstanding of the handling charges.
5. On the basis of such dispute, the petitioner raised demand of Rs.56.94 lakhs (rounded off) from the respondent in the said notice.
6. Further correspondence ensued between the parties. It is, however, not necessary to take note of such correspondence except to note that the disputes raised by the petitioner remained unresolved. In terms of the tender document, the parties have agreed to resort to arbitration in case of any dispute that may arise during the course of working of the contract. Relevant portion of the arbitration clause reads as under:-
21. ARBITRATION 21.1 Except where otherwise provided for in the contract, all questions and disputes relating to the meaning of the words, terms, specifications, operations, and instructions, mentioned in this contract and as to the quality of workmanship or performance of handling and/or transportation, any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, specifications, operating instructions, orders or these conditions; or otherwise concerning the transport and handling operations, 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 a sole arbitrator to be appointed by the Tender Accepting Authority of CONCOR.
There will be no objection if the arbitrator so appointed is an employee of CONCOR.
7. In terms of such arbitration agreement, the petitioner issued notice dated 29.6.2013. In addition to reiterating its grievances and repeating its demand for payment of Rs.56.94 lakhs in such notice, the petitioner referred to the above noted arbitration clause and raised demand for reference to arbitration as under:-
10. In view of the above, we hereby propose the name of Hon ble Mr.Jusitce (Retd.) G.T.Nanavati, Retd. Judge of the Hon ble Supreme Court of India, as a sole arbitrator for adjudication of the aforesaid dispute between our client and your Company. You are hereby requested to communicate your decision for the appointment of the Sole Arbitrator, within 7 days from the receipt of the present notice; failing which our client shall be constrained to approach the Hon ble Chief Justice of the High Court of Gujarat under the provisions of Section 11(5) of The Arbitration and Conciliation Act,1996, for appointment of Arbitrator, which may please be noted.
8. In response to such notice, the respondent replied under communication dated 8.7.2013 and stated as under:-
We are in receipt of your notice dated 29.06.2013. While denying the illegal and wrong demands made by your client through your good office, it is brought to your notice that various contentions made by our client are already replied by our Advocate Mr.Ravi Karnavat. Such reply stands delivered to your office as per the acknowledgment received by him.
2. As far as appointment of arbitrator is concerned, the power to appoint arbitrator is vested with the Tender Accepting Authority of CONCOR.
Accordingly, the appointment can be made only by the Chief General Manager of CONCOR.
3. The suggestion to appoint Mr. Justice (Retd.) G.T.Nanavati is not acceptable to us and we do not concur in such appointment. At this point, we draw your attention to reply of our advocate which is self explanatory. In view of our letter dated 07.06.2013 along with corrigendum dated 11.06.2013 and reply of our advocate, it is absolutely clear that your client instead of performing the agreement is interested in litigating only. In view of our aforesaid communications, no dispute remains to be resolved by having recourse to arbitration. Your client appears to have suppressed the communication received at the time of issuance of this notice, otherwise you would have advised it not to invoke arbitration clause as no dispute remains to be resolved. A copy of the said communication along with corrigendum is attached along with for your ready reference. Your client needs to sit with our officers and do the needful.
4. Still, in case your client insists for appointment of arbitrator, the competent authority under the agreement shall appoint the matter and refer the alleged disputes (though there exists none in view of the communications referred) to him upon hearing from your side in this regard.
9. From above sequence of events, it clearly emerges that arbitrable disputes have arisen between the parties. Such disputes are covered in the arbitration agreement. Though the petitioner issued notice to the respondent for appointment of Arbitrator, the respondent rejected the request on two grounds. Firstly, that it is only the Tender Accepting Authority which shall appoint Arbitrator and secondly that according to the respondent, no arbitrable dispute has arisen.
10. To my mind, both the objections were invalid. Firstly, the petitioner s notice for appointment of Arbitrator dated 29.6.2013 was addressed to the Chief General Manager. Under the tender document in clause 7.1, the authority of acceptance/rejection of the tender documents is defined as the Chief General Manager. The petitioner s notice, therefore, was addressed to the Chief General Manager. It was the Chief General Manager, who had replied to such notice under communication dated 8.7.2013. His first objection that only the Tender Accepting Authority could appoint the Arbitrator was, therefore, not a valid objection. He could have exercised the powers under the arbitration clause and appointed an Arbitrator as envisaged therein. He instead raised another contention, namely, that no dispute remains to be resolved by resorting to arbitration. There was a clear negation of the petitioner s demands for appointment of an Arbitrator. The petitioner s only choice, therefore, left was to approach the Chief Justice or his designate for appointment of an Arbitrator in terms of section 11(6) of the Arbitration and Conciliation Act, 1996.
11. It is true that in the last paragraph of the said reply the Chief General Manager of CCI did say that if the petitioner still insists on appointment of an Arbitrator, the competent authority under the agreement shall appoint and refer the dispute to such Arbitrator. In my opinion, this last assertion would not be sufficient to oppose the petitioner s request for appointment of an Arbitrator. What the petitioner was required to do under the Arbitration Act and under the arbitration agreement between the parties was to request for an appointment of an Arbitrator to the Chief General Manager as the Tender Accepting Authority. The Chief General Manager had to exercise his powers and appoint an Arbitrator. If for some invalid reasons, he opted not to do so, the petitioner had a right to approach the Chief Justice for such purpose.
12. Under the circumstances, I request Justice C.K.Thakkar, Retired Supreme Court Judge to act as a Sole Arbitrator to resolve the disputes between the petitioner and the respondent arising out of the said agreement. Petition is disposed of accordingly.
(AKIL KURESHI, J.) SUDHIR Page 9 of 9