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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
Arup Kumar Goswami, J.
M/s. SAN Engineers, a proprietary concern, Rep. by its Proprietor S.Adiniarayana Reddy – Applicant
Versus
M/s. Siddartha Constructions – Respondent
Arbitration Application No.123 of 2015
Decided On : 30-04-2021
Arbitration and Conciliation Act, 1996 - Section 11 - Payment of service tax - Territorial jurisdiction of this Court – Claim of compensation - Whether during execution of works or after completion - Whether before or after repudiation or other termination of contract shall be referred to Arbitrator under Arbitration and Reconciliation Act 1996 with a sole Arbitrator to be appointed by CMD of SSC - Case of applicant in short is that applicant proprietary concern is engaged in engineering works particularly pile foundation works of various technical specifications for various engineering installations - Respondent is a contractor for Indian Oil Corporation Limited engaging in works for said Corporation at its various places of operations - Applicant had undertaken amongst others two works as a sub-contractor of respondent - In that connection respondent had placed a work order for work of BORE cast-in-situ piles and another work order for construction of JSPL for mobilizing, erection and dismantling of rig installation dia bore cast-in-situ piles - It is pleaded that both works were completed and handed over to respondent –
Finding of the Court:
A perusal of work order goes to show that there is no arbitration clause in terms and conditions of said work order - Terms and conditions of work order do not indicate that dispute between parties will be referred to arbitrator in respect of work order also - It also does not appear that applicant had raised any plea before respondent that some pages in respect of terms and conditions of work order were missing - In that view of matter it is apparent that disputes if any are not to be referred to arbitrator so far as work order is concerned - Perusal of notice as well as the rejoinder legal notice goes to show that applicant had made a statement that there is an outstanding amount without segregating how much amount is due in respect of which work order - In context of case when there is no arbitration clause with regard to work order this aspect assumes significance as disputes arising out of this work order cannot be referred to arbitration - In absence of any demand with specific reference to work order it is not possible to determine what is disputed amount with regard to the work order - It is to be noted that in rejoinder legal notice it was also indicated by applicant that on failure to appoint an arbitrator applicant would file a civil suit for recovery of an amount - When applicant had clubbed together purported outstanding amounts for two work orders and there being no arbitration clause with regard to work order court of considered opinion that this application in present form cannot be considered for appointment of an arbitrator as requested by applicant - In view of conclusion it is not necessary for this Court to go into other aspects raised by respondent –
Result: Application stands dismissed
ORDER :
This application is filed under Section 11 of the Arbitration and Conciliation Act, 1996, read with Para 3(i)(c) of Scheme for Appointment of Arbitrators, 1996, as framed by the High Court at Hyderabad, seeking appointment of a sole arbitrator.
2. The case of the applicant, in short, is that the applicant proprietary concern is engaged in engineering works, particularly, pile foundation works of various technical specifications for various engineering installations. The respondent is a contractor for Indian Oil Corporation Limited, engaging in works for the said Corporation at its various places of operations. The applicant had undertaken, amongst others, two works at Paradeep and Angul in Orissa as a sub-contractor of the respondent. In that connection, the respondent had placed a work order dated 10.02.2011 for the work of “BORE cast-in-situ piles of 600mm dia” at Paradeep and another work order dated 20.08.2011 for construction of JSPL, Angul, for mobilizing, erection and dismantling of rig installation of 600 mm dia bore cast-in-situ piles. It is pleaded that both the works were completed and handed over to the respondent by 30.09.2011.
3. It is the case of the applicant that there is an arbitration clause being Condition No.19 in the work order dated 20.08.2011 and that in respect of the work order dated 10.02.2011, terms and conditions were not fully supplied by the respondent and some pages were missing. While the second work order contains all pages, including the page containing arbitration clause, in the first work order dated 10.02.2011, pages relating to arbitration clauses were not appended and, therefore, it has to be taken that there is an arbitration clause in both the work orders.
4. It is stated that for the works at Angul site, an amount of Rs.9,41,285/-and for Paradeep site, an amount of Rs.21,04,461/-were required to be reimbursed on account of service tax. However, the respondent did not pay the entire amount due under the service tax component and kept an amount of Rs.21,45,362/-pending. Accordingly, a registered legal notice dated 20.04.2015 was issued and in response, the respondent, by reply notice dated 26.04.2015, denied the liability to make payment and accordingly, a registered rejoinder notice dated 22.05.2015 was issued by the applicant and in the said rejoinder notice, the applicant invoked arbitration clause and demanded appointment of arbitrator.
5. An affidavit was filed by the respondent raising preliminary objections about the maintainability of the application contending that in relation to work order dated 10.02.2011, there was no arbitration clause and that the claim for the amount of Rs.20,45,362/-is raised jointly for both the work orders. It is also pleaded that this Court does not have jurisdiction to entertain the application as no part of cause of action had arisen at Visakhapatnam within the jurisdiction of this Court as in terms of clause 18 of the work order dated 20.08.2011, all disputes shall be deemed to have arisen in project site, i.e., in the State of Orissa. It is also pleaded that the claim is barred by limitation as recourse to law was not taken within a period of three years from 30.09.2011 and that the application was filed only on 09.11.2015. It is also stated that the applicant never invoked arbitration clause as the demand for arbitration is to be made with the competent authority, i.e., the Chairman-cum-Manging Director of the respondent and, therefore, there was no question of failure to appoint arbitrator on the part of the respondent.
6. With regard to the factual aspects, amongst others, it is denied that the applicant had executed both the works completely within the stipulated time. It is also denied that amount of Rs.21,04,462/-and Rs.9,41,286/-under the subject work orders remained due from the respondent towards service tax component or that there remained an amount of Rs.21,45,262/-to be paid to the applicant. It is categorically denied that some page
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