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2017 Supreme(Del) 1783
IN THE HIGH COURT OF DELHI AT NEW DELHI
HIMA KOHLI, SANGITA DHINGRA SEHGAL, JJ.
In the matter of:
M/s Hindustan Steelworks Construction Limited - Appellant
Versus
M/s NTPC Ltd. Kahalgaon Super Thermal Power Station - Respondent
FAO (OS) (COMM) 19 of 2017
Decided On : 30-05-2017
Advocate Appeared:
For the Appellant : Mr. Paramjit S. Patwalia, Mr. G. Umapathy, Mr. Leo D. Rozario, Mr. Aditya Singh
For the Respondent: Mr. I.S. Alag, Mr. J.S. Lamba, Mr. P. Vishvanathan
Headnote:
Arbitration and Conciliation Act, 1996 - Section 34, 37 - Claims - Counter-claims - Arbitrator - Appointment - NTPC had proceeded to take steps to encash the bank guarantee offered by the HSCL - HSCL had sought interim relief by filing a petition - Bank guarantee had been encashed before the interim order came to be passed - Three occasions had arisen for the NTPC to raise an objection with regard to non-availability of any remedy - Disputes arising out of the Letters of Award executed between the appellant and the respondents - NTPC has been unreasonably thwarting all attempts on the part of the HSCL to seek legal recourse - No legal sanctity can be attached to the OM that was issued by the Govt - Insistence on the part of the NTPC that the HSCL cannot invoke the A&C Act for relief is an attempt to prevent it from seeking legal recourse in accordance with the law - Sole Arbitrator was appointed to adjudicate upon all the claims - Counter claims were raised by the parties - Sole Arbitrator is requested to commence the proceedings from the point of completion of pleadings of the claims/counter claims - If admission/denial of documents was conducted before the learned Arbitrator under the PMA, then from that stage - Parties shall appear before the learned Sole Arbitrator - Appeal is disposed of.
Hima Kohli, J.
1. The appellant/Hindustan Steelworks Constructions Limited (in short, ‘the appellant/HSCL’), a Public Sector Company, has filed the present appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (in short, ‘the A&C Act’) against the judgment and order dated 7.2.2016 passed by the learned Single Judge in OMP (COMM) No.411/2016, dismissing its petition under Section 34 of the A&C Act, praying inter alia for setting aside an order dated 11.2.2015 passed by the Appellate Authority in an appeal preferred by the respondent/NTPC against Awards dated 10.4.2012 and 10.5.2012 made by the learned Arbitrator appointed under the Permanent Machinery for Arbitration (in short ‘the PMA’), an alternate dispute redressal mechanism devised by the Government.
2. Several rounds of litigations have taken place between the parties before the impugned order came to be passed. For gaining a proper perspective on the issues raised by learned counsels for the parties, it is considered necessary to briefly narrate the relevant facts. In the years 2003-2004, two contracts in connection with the construction of the Kahalgaon Super Thermal Power Project situated in District Bhagalpur, Bihar were awarded by the respondent/NTPC to the appellant/HSCL under two separate Letters of Award, one dated 31.7.2003 and the other dated 3.2.2004 (in short ‘the LOA’). The first LOA provided for settlement of disputes between the parties in para 22.1.0, as below :
“22.0.0 SETTLEMENT OF DISPUTES -
22.1.0 It is specifically agreed that all differences and disputes between the parties arising out of the contract shall be settled by the process of settlement and arbitration as specified in clause 56.0 of General Conditions of Contract for Civil Works. The provisions of Arbitration & Conciliation Act, 1996 shall apply to the arbitration proceedings.”
3. The second LOA dated 3.2.2004 provided for settlement of disputes in the following manner :
“22.0.0 SETTLEMENT OF DISPUTES
22.1.0 It is specifically agreed that all disputes or differences whatsoever arising out of this Contract between the parties whether during the progress of the work or after its completion, shall be settled in accordance with the stipulations of Memorandum No. 3/5/93-PMA dated 30/06/93 of Govt. of India, Ministry of Industry, Deptt. of Public Enterprises.”
4. In the course of undertaking the construction work, disputes and differences arose between the parties and the respondent/NTPC cancelled the contract awarded to the appellant/HSCL in part on seven occasions and finally on 24.11.2010, on the ground that it had failed to complete the work within the contractual period. The said disputes were referred to the Joint Secretary, Government of India appointed as an Arbitrator under the PMA, who pronounced two Awards dated 10.4.2012 and 10.5.2012, partly allowing the claims raised by the appellant/HSCL and dismissing the counter claims of the respondent/NTPC in entirety.
5. During the pendency of the arbitration proceedings, the respondent/NTPC invoked the bank guarantee furnished by the appellant/HSCL. Aggrieved by the said invocation, the appellant/HSCL filed a petition on the original side of this Court under Section 9 of the A&C Act for restraining the respondent from encashing the bank guarantee (OMP 567/2010). Vide order dated 28.09.2010, an ex parte ad interim injunction was granted in favour of the appellant, restraining the respondent from encashing the bank guarantees in respect of the LOA’s dated 31.07.2003 and 03.02.2004. But, on the very next date, i.e., on 19.10.2010, a counsel had appeared on behalf of the respondent/NTPC and stated that even before the interim order came to be passed, the bank guarantees in question had been encashed on 25.09.2010, thus making the Section 9 petition infructuous. At that, counsel for the appellant/HSCL had sought directions to the respondent/NTPC to secure the sums reflected by the bank guarantee during the pendency of the arbitratio
