Back
2004 Supreme(Del) 158
High Court Of Delhi
INTERSTATE EQUIPMENT (INDIA) PRIVATE LIMITED - Appellant
Versus
BHARAT ALUMINUM COMPANY LIMITED - Respondent
CIV.SUIT 2687 of 1988
Decided On : 03/03/2004
Devinder Singh, H.L.TIKKU, YASHMIT KAUR
The main legal point established is the determination of territorial jurisdiction and the applicability of the Arbitration Act 1940 or the Arbitration and Conciliation Act 1996.
Headnote:
Arbitration Agreement - Territorial Jurisdiction - Arbitration Act 1940, Arbitration and Conciliation Act 1996 - The court held that the territorial jurisdiction to entertain and decide the present proceeding lies with the Delhi Courts. The new Arbitration Act, 1996 is applicable to the facts and circumstances of the case. The court appointed a retired Chief Justice as the sole arbitrator to adjudicate and decide the disputes arising between the parties.
Fact of the Case:
The respondent invited tenders for an aerial Ropeway System. The petitioner submitted a tender from New Delhi and was awarded the work. Due to project suspension, the petitioner requested payment and arbitration. The respondent contended that the arbitration agreement was void and challenged the territorial jurisdiction of the court.
Finding of the Court:
The court found that the cause of action arose in part in New Delhi, granting territorial jurisdiction to the Delhi Courts. The new Arbitration Act, 1996 is applicable, and the court appointed a retired Chief Justice as the sole arbitrator.
Issues: Territorial jurisdiction, validity of the arbitration agreement, applicability of the Arbitration Act 1940 or the Arbitration and Conciliation Act 1996.
Ratio Decidendi: The court applied the principles of contract law, communication of acceptance, and the Civil Procedure Code to determine territorial jurisdiction. It interpreted Section 85 of the Arbitration and Conciliation Act 1996 to decide the applicability of the new Act. The court also considered the parties' agreement on the application of the Arbitration Act 1940 or any statutory modification.
Final Decision: The court held that the Delhi Courts have territorial jurisdiction, and the new Arbitration Act, 1996 is applicable. It appointed a retired Chief Justice as the sole arbitrator to adjudicate the disputes between the parties.
( 1 ) THE respondent invited tenders by issuing a Notice Inviting Tender (NIT) dated 30. 9. 1982 for design, manufacture, erection, testing and commissioning of "aerial Ropeway System" for the Gandhamardan Bauxite Mines in Orissa.
( 2 ) IT is specifically stated in the petition that the said tender was invited at New Delhi. The tender submitted by the petitioner as against the aforesaid Notice Inviting tender from New Delhi was received by the respondent at New Delhi and by a letter of acceptance dated 13. 10. 1983 sent by the respondent from New Delhi, the respondent awarded the aforesaid work on turnkey basis to the petitioner. On receipt of the said letter the petitioner also wrote to the respondent at their office at New Delhi acknowledging the letter of acceptance dated 13. 10. 1983 sent from New Delhi stating that the bank guarantee as sought for would be furnished. However, due to certain agitation by tribals of the locality, namely, at Paikual the field activities of the project had to be stopped. Finally by a letter dated 29. 2. 1988 the petitioner informed the respondent about the financial implications as a result of the suspension of the project work and requested for an ad hoc payment of Rs. 50 lacs as interim relief and to issue necessary directions to Deputy General Manager to resolve the issues. On 12. 6. 1988, another letter was written by the petitioner to the respondent addressed to the Chairman cum Managing Director at New Delhi informing that it was more than three years since the project had been stalled. The petitioner requested the respondent to release the payment or in the alternative to agree to refer the above dispute for arbitration and to suggest the name of the sole arbitrator. As no response was received by the petitioner from the respondent as against the aforesaid letter, another letter was written by the petitioner to the respondent at New Delhi suggesting the name of Hon ble Mr. Justice H. L. Anand (Retd. Judge) as the sole arbitrator or in the alternative Mr. A. N. Banerjee, Ex-Chairman of Balco and also stating that in case of any objection, the respondent should inform the petitioner within 15 days. On 31. 8. 1988, a reply dated 16. 9. 1988 was received from the respondent to the petitioner s letter stating that they would intimate their view by first half of September 1988. However, no further response was received from the respondent thereafter and accordingly the present petition was filed by the petitioner under Section 20 of the Arbitration Act.
( 3 ) WHILE filing this petition, the petitioner has relied upon the clauses in the contract relating to settlement of disputes. The said clauses include the clause wherein it is provided that all disputes or differences of any kind whatsoever arising, out of or in connection with the contract whether during the progress of the works or after their completion and whether before or after the determination of the contract, would be referred to arbitration of the contractor and the sole arbitrator shall be officer of the company in case the claims in question are below Rs. 50,000/- and where the claim in question exceeds Rs. 50,000/- the arbitrator shall be appointed as per Indian Arbitration Act 1940 as modified from time to time. Clause 9. 2. 3. 1. 3 further provides that subject as aforesaid Indian Arbitration Act, 1940 and the Rules thereunder and any enactment or statutory modification thereof for the time being in force shall apply to the arbitration proceedings under the clause. It is also provided that the venue of arbitration proceedings shall be the Administrative Officers of the Korba/ratnagiri Projects. Although the said agreement also includes a clause regarding court of jurisdiction, but the said clause was left unfilled in the agreement between the parties.
( 4 ) AS against the aforesaid petition filed by the petitioner, a reply is filed by the respondent contending, inter alia, that the arbitration agreem
