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2020 Supreme(Del) 570

IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
Abb India Limited - Appellant
Versus
Bharat Heavy Electricals Limited - Respondent
Original Miscellaneous Petition(T) (Comm ) No. 48 of 2020; Interlocutory Application No. 7876 of 2020
Decided On : 02-11-2020

Advocates Appeared:
Mohna M Lal, Advocate, Geetali Talukdar, Advocate, Debasis Modak, Advocate, Atul Shanker Mathur, Advocate, Prabal Mehrotra, Advocate, Umang Katariya, Advocate, A. Muraleedharan, Advocate

Headnote:

ARBITRATION - APPOINTMENT OF ARBITRATOR - SUBSTITUTE ARBITRATOR - SECTION 12(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - APPLICABILITY - ARBITRATION CLAUSE MAKING THE PROVISIONS OF THE ARBITRATION AND CONCILIATION ACT, 1996 OR STATUTORY MODIFICATIONS OR RE-ENACTMENTS THEREOF AND THE RULES MADE THEREUNDER AND FOR THE TIME BEING IN FORCE APPLICABLE TO THE ARBITRAL PROCEEDINGS - WHETHER SECTION 12(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996, AS AMENDED BY SECTION 8 OF THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015 WOULD APPLY TO THE FACTS OF THE CASE - HELD, NO.

Fact of the Case:

In connection with three Letters of Award, dated 4th November, 2009, whereunder work was awarded, to the petitioner by the respondent, disputes arose. Clause 33.1 of the General Commercial Terms and Conditions (hereinafter referred to as "GCC"), governing the relationship between the petitioner and the respondent, provided for resolution of such disputes, and read thus: "33.1 In the event of any dispute or difference arising out of the execution of the Order/Contract or the respective rights and liabilities of the parties or in relation to interpretation of any provision by the Seller/Contract in any manner touching upon the Order/Contract, such dispute of difference shall (except as to any matters, the decision of which is specifically provided for therein) be referred to the arbitration of the person appointed by the competent authority of the Purchaser. Subject as aforesaid, the provisions of the Arbitration and Conciliation Act, 1996 (India) or statutory modifications or re-enactments thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause."

Finding of the Court:

The court held that Section 12(5) of the Arbitration and Conciliation Act, 1996, as amended by Section 8 of the Arbitration and Conciliation (Amendment) Act, 2015 would not apply to the facts of the case. The court relied on the judgment of the Supreme Court in S.P. Singla Constructions (P). Ltd. v. State of Himachal Pradesh, (2019) 2 SCC 488, wherein it was held that the provisions of the Amendment Act, 2015 shall not apply to the arbitral proceedings commenced before 23rd October, 2015, unless the parties otherwise agree. In the present case, the arbitral proceedings had commenced in 2013, much prior to 23rd October, 2015. Therefore, Section 12(5) of the Arbitration and Conciliation Act, 1996, as amended by the Amendment Act, 2015, would not apply.

Issues: Whether Section 12(5) of the Arbitration and Conciliation Act, 1996, as amended by Section 8 of the Arbitration and Conciliation (Amendment) Act, 2015 would apply to the facts of the case.

Ratio Decidendi: The court held that the provisions of the Amendment Act, 2015 shall not apply to the arbitral proceedings commenced before 23rd October, 2015, unless the parties otherwise agree. In the present case, the arbitral proceedings had commenced in 2013, much prior to 23rd October, 2015. Therefore, Section 12(5) of the Arbitration and Conciliation Act, 1996, as amended by the Amendment Act, 2015, would not apply.

Final Decision: The petition was dismissed, with no orders as to costs.

JUDGMENT

C. Hari Shankar, J. - This petition, under Section 14(1)(a) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act"), seeks a declaration that the mandate of Mr. A. Muraleedharan, Advocate, who was appointed as sole arbitrator by the respondent, to arbitrate on the disputes between the petitioner and respondent, stands terminated de jure, and also calls on this Court to appoint a substitute arbitrator, to continue with the arbitral proceedings.

2. The issue in controversy is purely legal in nature. No detailed allusion to facts is, therefore, necessary.

3. In connection with three Letters of Award, dated 4th November, 2009, whereunder work was awarded, to the petitioner by the respondent, disputes arose. Clause 33.1 of the General Commercial Terms and Conditions (hereinafter referred to as "GCC"), governing the relationship between the petitioner and the respondent, provided for resolution of such disputes, and read thus:

    "33.1 In the event of any dispute or difference arising out of the execution of the Order/Contract or the respective rights and liabilities of the parties or in relation to interpretation of any provision by the Seller/Contract in any manner touching upon the Order/Contract, such dispute of difference shall (except as to any matters, the decision of which is specifically provided for therein) be referred to the arbitration of the person appointed by the competent authority of the Purchaser.

      Subject as aforesaid, the provisions of the Arbitration and Conciliation Act, 1996 (India) or statutory modifications or re-enactments thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this clause."

      4. The Senior Deputy General Manager (hereinafter referred to as "the Senior DGM") in the office of the respondent wrote, on 14th March, 2014, to the Executive Director of the respondent (who was the "competent authority" within the meaning of Clause 33.1 of the GCC), alleging defaults on the petitioner''s part, and calling on the Executive Director (hereinafter referred to as "ED") to appoint an arbitrator to adjudicate the claims of the respondent. A copy of the letter was marked to the petitioner, as "counter party". The petitioner, vide response dated 15th March, 2014, denied the allegations. The ED of the respondent, thereupon, appointed Mr. Varinder Pandhi, Ex ED (HEEP) of the respondent as the sole arbitrator, to arbitrate on the dispute. Mr. Pandhi accepted the assignment, vide letter dated 22nd April, 2014, whereafter Statement of Claim was filed, by the respondent, before Mr. Pandhi on 4th June, 2014, claiming Rs. 7,38,61,975.43, along with interest, from the petitioner. The petitioner filed a counterclaim, for Rs. 1,08,42,788/-, along with interest.

      5. Proceedings commenced before Mr. Pandhi, and continued, till, vide e-mail dated 2nd May, 2017, Mr. Pandhi circulated, to the petitioner and respondent, "final issues", framed by him. It is alleged that the e-mail did not bear the signatures of Mr. Pandhi. The petitioner responded, vide e-mail dated 5th May, 2017, addressed to Mr. Pandhi, pointing out that the issues, as agreed between the petitioner and respondent, had not been incorporated in the list of issues framed by him. Mr. Pandhi was, therefore, requested to incorporate the said issues.

      6. Mr. Pandhi responded only vide e-mail dated 16th April, 2018, stating that the issues framed were filed, and requesting the parties to fix a convenient date of hearing.

      7. Apparently, after 16th April, 2018, there was no communication, whatsoever, from Mr. Pandhi, despite communications from the petitioner, to him, on 20th April, 2018, 23rd April, 2018 and 19th August, 2019, and from the respondent on 18th July, 2018, 7th January, 2019 and 4th May, 2019. In these circumstances, the petitioner submits that the mandate of Mr. Pandhi, as sole arbitrator, stood terminated de facto, under Section 14(1)(a) of the 1996 Act.

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