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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION NO. 9 OF 2005
Datar Switchgear Limited )
a Company registered under the Companies )
Act, 1956 having its Registered Office at )
Datar Apartments, Commercial Complex )
Vakilwadi, Nasik 422 001. )..Applicant
Versus
1) Maharashtra State Electricity Board )
A body Corporate formed under the )
Electricity Supply Act, 1948 having its )
Head Office at "Prakashgad", Bandra (E) )
Bombay. )
2) Maharashtra State Distribution Company )
Limited having its Registered Office at )
"Prakashgad", Bandra (E), Mumbai 400 051. )
3) State of Maharashtra )
through The Principal Secretary (Energy) )
Government of Maharashtra, Mantralaya )
Mumbai. )..Respondents
Mr. Mukul Taly with Ms.Swati Deshpande, Mr. Sheikh Yusuf
i/b Shaunak Satpute for the Applicants.
Mr. Nagendra Rai, Senior Advocate, with Mr.Prashant Chavan,
Mr. Chandra Prakash and Mr. Ram Prakash i/b Khare Legal
Chambers for Respondent Nos.1 and 2.
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Mr. P.G. Lad, Assistant Government Pleader, for the State.
CORAM : SWATANTER KUMAR, C.J.
JUDGMENT RESERVED ON : 7TH NOVEMBER 2009
JUDGMENT DELIVERED ON : 19TH NOVEMBER 2009
JUDGMENT
The applicant which is a Public Limited Company entered into a
contract of lease with the respondents for supply, including erection,
commissioning, maintenance, testing and transportation at specified
locations, of 47,987 Low Tension Load Management Systems (hereinafter
referred to as `LTLMS’). The work order was issued by the Chief Engineer
(Distribution) of the Respondents. The applicant installed 17,294 LTLMS.
However, in the year 1998, some disputes arose between the parties which
were referred to the Arbitral Tribunal consisting of Mr. Justice V.D.
Tulzapurkar (Retd.), Mr. Justice S.C.Pratap (Retd.) and Mr. Justice M.L.
Pendse (Retd.). The Arbitral Tribunal made an Award on 18th June, 2004.
Some relief was granted to the applicant. The relief granted by the Arbitral
Tribunal reads as under:
“AWARD
(A) The Respondents shall pay to the claimants sum of
Rs.185,97,86,399/- (Rupees One hundred Eighty Five
Crores Ninety Seven Lakhs Eighty Six Thousand
Three hundred Ninety Nine only) towards damages in::: Downloaded on – 09/06/2013 15:19:22 :::
3respect of work order dated March 27, 1997.
(B) The aforesaid amount is payable after deducting
therefrom Rs.6,81,99,390/- (Rupees Six Crores
Eighty One Lakhs Ninety Nine Thousand Three
Hundred Ninety only) paid by the Respondents to theClaimants in pursuance of interim order passed by
the Tribunal.
(C) The Respondents shall pay interest at the rate of 10%
p.a. on the sum of Rs.179,15,87,009/- (Rupees One
Hundred Seventy Nine Crores Fifteen Lakhs Eighty
Seven Thousand Nine only) from the dae of the
award till realisation.
(D) The Respondents shall pay to the claimants sum of
Rs. 1,00,00,000/- (Rupees One Crore only) towards
the cost of the proceedings.
(E) The counter claim filed by the Respondents stands
dismissed in its entirety.
(F) The Bank guarantees furnished by the Claimants in
pursuance of interim orders passed by Tribunal to
stand discharged one month after the date ofdeclaration of Award.”
2. Against the Award dated 18th June, 2004, the respondents herein
filed a petition (Arbitration Petition no.374 of 2004) under section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”)
challenging the said award. The applicant, on the other hand, filed two
petitions viz. Arbitration Petition No.372 of 2004 and 524 of 2004 both
under section 9 of the Act, praying that the respondents deposit a sum of Rs.
61,68,47,975/- and a sum of Rs.244,22,33,845/-, respectively, in court. Vide
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judgment dated 3rd August, 2005 in Arbitration Petition No.374 of 2004, the
award dated 18th June, 2004 was set aside. This judgment was challenged
in appeal (Arbitration Appeal No. 672 of 2005) and the Appellate Court vide
its judgment dated 22nd October, 2008 set aside the judgment of the Single
Judge and remanded the case back for adjudication afresh in accordance
with the parameters set out by Section 34 of the Act. In a Special Leave
Petition preferred against the judgment of the Appellate Court, before the
Supreme Court, the Supreme Court vide order dated 18th December, 2008
declined to interfere with the order of the Division Bench and requested the
learned single Judge, to whom the case had been remitted, to dispose of the
same expeditiously within three months. The learned single Judge vide
judgment dated 18th March 2009 dismissed the petition. Both the parties to
the present application have filed appeals (Appeal Nos. 165 of 2009 and 166
of 2009) which are pending. In view of the subsequent events, the
applicant did not press the petitions under section 9 and the same were
withdrawn.
3. In other words, since the year 1999, the parties have been pursuing
their respective remedies under the Act and various orders have been passed
from time to time. During the interregnum period, vide letter dated 30th
August, 2004, the Advocates acting on behalf of the respondents served a
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letter upon the applicant requiring them not to remove any panel without
the permission of the respondents and if such an act was done and the
panels are not returned within one week then they reserved their right to
take action in accordance with law. This letter was replied to by the
applicant vide its letter dated 31st August, 2004. The arbitration
proceedings between the parties had concluded and they asserted that the
material was being unauthorisedly detained by the respondents. This further
aggravated the differences between the parties and vide notice dated 14th
October, 2004, the applicant raised demand and also claimed interest and
claimed a sum of Rs.245,22,33,845/- with 18% interest on the said claims.
These claims were primarily raised on the basis of the wrongful detention of
LTLMS and LTSC’s. In furtherance to this notice of demand, vide letter
dated 27th November, 2004, the applicant invoked clause 15 of the work
order dated 27th March, 1997. The respondents did not respond and accept
the request for arbitration resulting in filing of the present arbitration
application, No.9 of 2005, under section 11 of the Act. Clause 15 of the
Arbitration agreement reads as under:
15.0 Arbitration/Disputes:
If any dispute arise by virtue of this lease contract
both the parties shall strive to settle the disputes amicably.
However, if such dispute cannot be settled mutually, the
matter shall be referred for Arbitration jointly in accordance
with the provisions of the Indian Arbitration Act for the time::: Downloaded on – 09/06/2013 15:19:22 :::
6being in force, with one Arbitrator appointed by each party
and an Umpire appointed by prior mutual consent.
However, if the dispute is not resolved the Cl.No.16 shall beoperated.”
4. The agreement between the parties is not disputed and
resultantly there is no dispute to the arbitration agreement as well. Clause
15 of the agreement between the parties had been admittedly invoked
earlier by the parties, correspondence was being exchanged between the
parties as back as in the year 2004, notice for further disputes had been
given by the present applicant. The contention raised before this Court by
the respondents is that the Award dated 18th June 2004 had determined all
the controversies between the parties and, therefore, the arbitration clause
stood exhausted. It is further argued that the applicant ought to have
claimed or ought to have raised all claims at the first instance and cannot
claim any amounts which the applicant ought to have claimed at the very
initial stage. Non-claiming of such amount tantamounts to waiver of the
claim and, therefore, the present petition is not maintainable. These
questions being legal, should be determined by this Court and cannot be left
to the Arbitrator for being decided. On the other hand, the applicant
contends that the claim raised now are even for the period subsequent to the
invocation of the arbitration agreement and primarily relate to the wrongful
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retention, use of LTLMS and the interest on that amount has been claimed.
Thus, it is not covered even indirectly under the provisions of Order 2 Rule 2
of the Code of Civil Procedure and the applicant has not waived any of its
claims. The contention raised and even the objections taken by the
respondents can fairly be decided by the Arbitrator within the ambit and
scope of Section 16 of the Act. Reliance has been placed on the case of
National Insurance Company Limited v Boghara Polyfab Private Limited,
(2009) 1 SCC 267. Reliance has also been placed upon the judgment of the
Supreme Court in the case of K.V. George v Secretary to Government, Water &
Power Department, Trivandrum and another, (1989) 4 SCC 495.
5. It is really not necessary for this Court to examine the merit of the
contentions raised in a petition under Section 11 of the Act. These are
disputes which would require documentary and oral evidence to be
examined in their correct and legal perspective. Suffice it to note that in
terms of the judgment of the Supreme Court in the case of Union of India v
M/s Onkar Nath Bhalla & Sons, JT 2009 SC (5) 682, the arbitration
agreement is in existence. According to the applicant, the disputes have
arisen between the parties. This arbitration clause has been invoked by the
applicant on an earlier occasion and even Section 9 petition had been filed
in which there was hardly any dispute with regard to existence and validity
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of the arbitration agreement. The question whether the disputes now raised
are covered by the arbitration agreement or not and whether there is any
abandonment of claim by the applicant at any earlier stage is a mixed
question of fact and law and can more appropriately be gone into by the
learned Arbitral Tribunal in view of the language of Section 16 of the Act.
These questions are the questions which will fall in the second category of
the issues or points of determination as classified by the Supreme Court as
observed in the case of National Insurance Company Ltd. (supra). These are
not the issues which would fall in paragraph 22(1) of that judgment
inasmuch as it is not even pleaded that the applicant has not approached the
appropriate Court and that both parties are not parties to the agreement.
Whether the claim is barred in law or the claim falls within the arbitration
clause or not are the matters which can quite safely be determined by the
Arbitral Tribunal. This would further require some evidence, oral and
documentary, before any of the parties to the present application can
succeed on the merit of the issues raised. It is neither appropriate nor would
it be in the interest of parties that this Court should examine the merit or
otherwise of the claims and the scope of the arbitration agreement in the
peculiar facts and circumstances of the case. Vide Award dated 18 th June
2004 no claims of the applicant were accepted which were ultimately upheld
by the Court. Whether the subsequent claims are covered under the
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arbitration clause or not and whether such claims could be raised in face of
the previous litigation between the parties, are the matters which can legally
and fairly examined by the Arbitral Tribunal. Whether the invocation of the
arbitration agreement and consequently pronouncement of the award would
exhaust the arbitration clause or not again is a mixed question of fact and
law.
6. In the circumstances afore-noticed, the petition under Section 11 is
allowed. The respective parties are hereby directed to nominate their
respective Arbitrators, within one week from the pronouncement of this
judgment, who in turn, will appoint an Umpire by mutual consent in terms
of clause 15 of the arbitration clause. No order as to costs.
CHIEF JUSTICE
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