2016 Supreme(SC) 559

SUPREME COURT OF INDIA
FAKKIR MOHAMED IBRAHIM KALIFULLA, UDAY UMESH LALIT, JJ.
Electrical Mfg. Co. Ltd. – Appellant
Versus
Power Grid Corpn. of India Ltd. & Anr. – Respondents
Civil Appeal No. 6568 of 2016 (Arising out of SLP (C) No. 17475 of 2008)
Decided On : 20-07-2016

IMPORTANT POINT
Power to enlarge the statutory time is vested in the Court and not in the Arbitrator.

Headnote:(a) Arbitration law – Invocation of arbitration clause – Clause 26(4) of the contract – No decision taken by designated authority on claims of appellant for 30 days – Appellant rightly invoked the arbitration clause. (Para 22)

       (b) Arbitration law – Invocation of arbitration clause – Clause 26(4) of the contract – No action taken within 60 days of invocation of arbitration clause – Appellant rightly approaching Institution of Engineers (India) for appointing arbitrator – Appointment of second and third arbitrators held valid. (Para 22)

       (c) Arbitration law – Invocation of arbitration clause – Clause 26(4) of the contract – NPTC and Power Grid acting in extremely casual manner – Not appearing before Artbitral Tribunal – Grievance of non grant of adjournment – To seek adjournment respondent no. 1 ought to have consented to extension of time as indicated by Tribunal. (Para22)

       (d) Arbitration and Conciliation Act, 1996 – Section 28(1) and (2) of the Act read with Schedule I, Clause 3 – After entering reference Tribunal has to complete proceedings within four months – Time can be enlarged only by consent of the parties – Power to enlarge the time is vested in the Court and not in the Arbitrator. (Para 22)

       (1973) 2 SCC 510 – Relied upon

       Facts of the case:

       A Contract for “400 KV Transmission Line Power Package for Rihand – Kanpur – Eta – Kanpur Line” was awarded by National Thermal Power Corporation (“NTPC”) to the appellant. The contract contained an arbitration clause.

       The Contract was completed and the aforesaid line was taken over by NTPC. The Committee constituted to consider the claims of appellant recommended that claim in respect of Rs.10.35 lakhs could be accepted, provided the appellant confirmed that there were no further claims.

       NTPC and National Power Transmission Corporation Ltd. (“NPTC”) had entered into an agreement for management of construction, operation and maintenance of Transmission System and assorted facilities of NTPC, pending completion of legal formalities for transfer of ownership of the Transmission System to NPTC in due course of time. It was further stated that NPTC would administer the Contract for and on behalf of NTPC and all further correspondence be addressed to NPTC.

       The appellant informed NTPC that it was invoking Clause 26.6.1 of the Contract regarding arbitration and nominating Shri J.C. Jain as its Arbitrator. The appellant requested NTPC to appoint its Arbitrator and give intimation to the President of the Institution of Engineer (India) in order to enable appointment of the third Arbitrator so that adjudication proceedings could be proceeded with. A copy of this letter was forwarded to and received by NPTC. However, nothing was done for next more than three months.

       The Institution of Engineers (India) on 29.09.1992 appointed Shri P.P. Agrawal, Chief Consulting Engineer, Water and Power Consultancy Services (India) Ltd. as the Second Arbitrator in terms of the Contract. On the same date Shri Som Gupta, Fellow of Institution of Engineers was appointed as the Third Arbitrator in the matter. Intimation in that behalf was sent by letter dated 29.09.1992 to the Chairman and Managing Director, NTPC.

       On 08.01.1993, the “National Thermal Power Corporation Ltd, National Hydro Electric Corporation Ltd. and the North-Eastern Electric Power Corporation Ltd. (Acquisition and Transfer of Power Transmission Systems) Ordinance, 1993” (No.10/1993) was promulgated. As per Section 3 of the Ordinance, the Power Transmission System and the right, title and interest of these three companies in relation to their power transmission systems was deemed to have been transferred to and vested in the Power Grid Corporation India Ltd., i.e. respondent No.1 herein. The appointed day under the Ordinance was 1st April, 1992.

       The Arbitral Tribunal by its award dated 05.05.1993 found that the appellant had proved its case and was entitled to a sum of Rs. 72,69,096/- as against its claim of Rs.3.98 crores. The award was then forwarded to the Court to be made Rule of the Court in terms of the provisions of the Arbitration Act, 1940.

       The Single Judge of the High Court made award dated 5.05.1993 awarding a sum of Rs. 72,69,096/-in favour of appellant, Rule of the Court against respondent No.1. The appellant was also held entitled to simple interest @ 12 % per annum from the date of the award till the date of the decree and to simple interest @ 9% per annum from the date of the decree till its realization. The appellant was also held entitled to costs from respondent No.1 which were quantified at Rs.7,500/-.

       Appeal thereagainst was allowed by the Division Bench of the High Court. Allowing the appeal and setting aside the order passed by the learned Single Judge and the award made by the Arbitrator, the matter was referred to the Sole Arbitrator.

       Finding of the Court:

       The Division Bench was not right in observing that the Arbitral Tribunal showed undue haste in the matter.

       Result: Appeal allowed.