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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
ARUP KUMAR GOSWAMI, J.
M/s. Global Agency, represented by its Managing Partner – Appellant
Versus
The General Manager, South Central Railway and another - Respondents
Arbitration Application No.110 of 2018
Decided on : 01-10-2021
Arbitration and Conciliation Act, 1996 - Section 11(5) and (6) - Tender notice - Appointment of a sole arbitrator - Respondents on for contract work of mechanized cleaning including pest control & rag picking up to home signal at TPTY Railway Station for years applicant participated and in such tender process being successful contract was awarded to it by way of Letter of Acceptance for contract value of Subsequent thereto an agreement was entered into on - Period of contract was for months commencing from It was extended for months from by a letter - Contract however was completed on.
Finding of the court :
Hon’ble Supreme Court had observed that intention of legislature is crystal clear that court should and need only look into one aspect which is existence of an arbitration agreement - What are factors for deciding as to whether there is an arbitration agreement is next question - Resolution to that is simple in that it needs to be seen if agreement contains a clause which provides for arbitration pertaining to disputes which have arisen between parties to agreement - At it was observed that scope of power Section 11(6) of Act 1996 was considered in decisions in Ltd reported and said position continued till amendment was brought about in year - It was emphasized that after amendment all that courts need to see is whether an arbitration agreement exists nothing more nothing less.
Result : Application Allowed.
JUDGMENT :
Heard Mr. Prasad Rao Vemulapalli, learned counsel for the applicant as well as Mr. P. Bhaskar, learned counsel for the respondents.
2. By this application filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for short, “the Act of 1996”) read with the Scheme for Appointment of Arbitrator, 2000, the applicant prays for appointment of a sole arbitrator to resolve the disputes between the parties that had arisen in connection with Agreement No.24/16.07.205 dated 09.10.2005.
3. Pursuant to a tender notice issued by the respondents on 28.04.2015 for the contract work of mechanized cleaning including pest control (anti-fly and other insects) & rag picking upto home signal at TPTY Railway Station for 2 years, i.e. 2015-2017, the applicant participated and in such tender process, being successful, contract was awarded to it by way of Letter of Acceptance dated 09.07.2015 for the contract value of Rs.3,21,80,397/-. Subsequent thereto, an agreement was entered into on 09.10.2015. The period of contract was for 24 months commencing from 16.07.2015 to 15.07.2017. It was extended for 2 months from 16.07.2017 to 15.09.2017 by a letter dated 08.07.2017. The contract, however, was completed on 31.08.2017.
4. A subsidiary agreement was entered into by the applicant and the respondents on 13.05.2016, by which value of the contract was reduced to Rs.2,81,68,244/- from Rs.3,21,80,397/-.
5. It is the case of the applicant that since an amount of Rs.32.00 lakh was lying with the respondents by way of securities and as the applicant was doing similar works for other zonal railways, because of apprehension of the said amounts being forfeited, the fear of termination of the agreement and similar coercive acts in respect of other ongoing works, it was compelled to sign the subsidiary agreement and, therefore, such subsidiary agreement was executed by it under financial duress and not out of its free volition. Accordingly, by a letter dated 01.07.2017, the circumstances under which the subsidiary agreement was executed, was notified to the respondents. By a letter dated 05.04.2018, the applicant invoked arbitration clause as per clauses 63 and 64 of the General Conditions of Contract, which was incorporated under clause 39 of the agreement dated 09.10.2015. In the said letter dated 05.04.2018, three claims were raised by the applicant, which are as follows:
Claim No.2: The amount of penalties imposed without any basis time to time during the currency of the contract amounting to Rs.63,26,643/- (Rupees sixty three lakhs twenty six thousand six hundred and forty three only).
Claim No.3: Variation in labour wage index published by the union ministry of Labour from the date of award to the date of completion as applicable to this contract and the same will be quantified at the time of submission of detailed Claim statement.”
6. Accordingly, request was made for constitution of an arbitral Tribunal consisting of a sole arbitrator or a panel of arbitrators.
7. No response having come, the applicant has approached this Court by filing this application.
8. In the counter-affidavit filed by the respondents, no dispute is raised with regard to the existence of the arbitration agreement. The plea taken for dismissal of the arbitration application on the ground of non-maintainability is that the applicant had given a ‘no claim certificate’. It is stated that the subsidiary agreement was signed by the applicant without any protest or objection. The letter dated 01.07.2017 giving reasons for signing the subsidiary agreement was also addressed after one year of signing of the subsidiary agreement on 13.05.2016. The pleas that the applicant was under
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