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2025 Supreme(Telangana) 285
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K. LAKSHMAN, J.
M/s Sri Laxmi Ganapathi Constructions - Appellant
Versus
M/s Singareni Collieries Company Limited - Respondent
Arbitration Application No.177 Of 2024
Decided On : 02-05-2025
Advocate Appeared:
For the Appellant : M RAMA KRISHNA
For the Respondent: P SRI HARSHA REDDY SC FOR SINGARENI COLLIERIES CO LTD
The court held that disputes arising from a contract with an arbitration clause are arbitrable, and the issue of limitation is for the arbitrator to decide.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(5) and 11(6) - Application for appointment of sole Arbitrator - Disputes arose from a contract for coal transportation - Applicant alleged breach of contract due to non-supply of coal - Respondent contended that applicant failed to meet contractual obligations - Court found disputes arbitrable and not manifestly time-barred - Application allowed appointing an Arbitrator. (Paras 2, 20)
(B) Limitation - The court clarified that the issue of limitation regarding claims is for the arbitral Tribunal to decide, and the referral Court should only examine whether the application was filed within the limitation period. (Paras 11, 12)
(C) Arbitration Clause - The court emphasized the importance of the arbitration clause in the agreement and the necessity for disputes to be resolved through arbitration as per the agreed terms. (Paras 15, 18)
Facts of the case:
The applicant entered into a contract with the respondent for coal transportation, which was abruptly halted by the respondent, leading to claims for damages and a request for arbitration. The applicant alleged non-compliance by the respondent, while the respondent claimed the applicant failed to fulfill contractual obligations.
Findings of Court:
The court found that there were disputes between the parties that were arbitrable and that the application for arbitration was not time-barred.
Issues: The main issues included whether the application was barred by limitation and whether the disputes were arbitrable under the agreement.
Ratio Decidendi: The court ruled that the existence of an arbitration clause necessitated the referral of disputes to arbitration, and the issue of limitation should be determined by the arbitrator.
Result: Application allowed, and an Arbitrator was appointed.
ORDER :
K. LAKSHMAN, J.
Heard Mr. M. Rama Krishna, learned counsel for the applicant and Mr. P. Sri Harsha Reddy, learned counsel for the respondent.
2. This application is filed under Section - 11 (5) & (6) of the Arbitration and Conciliation Act, 1996 (for short ‘Act, 1996’), to appoint a sole Arbitrator to adjudicate the disputes/claims between the applicant and the respondent.
3. CONTENTIONS OF THE APPLICANT
i) The respondent - M/s. Singareni Collieries Company Limited (SCCL) floated Tender Enquiry No.E141800480, dated 19.02.2019 for transportation of Coal from KTK-6 Incline & KLP Mine to KTK-5 CHP, Bhupalapally Area on weight basis for a period of two (02) years.
ii) The applicant - M/s. Sri Laxmi Ganapathi Constructions, Warangal, participated in the said Tender and stood as successful bidder. Therefore, the respondent has awarded the said work vide Work Order No.7600007834, dated 24.06.2019. They have also entered into an Agreement dated 30.07.2019 on the specific terms and conditions mentioned therein. The work was commenced from 24.06.2019 and it is going to expire by 23.06.2021.
iii) The said contract is based on the quantity of the coal provided to the applicant on the rates prescribed under the said contract. But, from the beginning of the contract, the respondent did not provide the minimum quantity of coal for transportation causing immense loss to the applicant.
iv) The respondent has abruptly stopped providing coal for transportation to the applicant. The respondent neither sent any communication nor assigned any reason for stopping the allocation of coal abruptly. Therefore, the applicant had submitted a letter dated 04.09.2020 to restore the contract and comply with the terms of the work order and agreement. The applicant also addressed several letters to the respondent demanding to settle the said dispute by paying dues and restore the original contract. There was no response from the respondent.
v) Since there was no response from the respondent to settle the dispute by way of negotiations, in the month of October, 2022, the respondent orally informed the applicant that they would not restore the contract and pay the forfeited amount on the ground that there is no explicit provision in the purchase order for refunding of forfeited and recovered amount. Therefore, the applicant has issued legal notice to the respondent demanding an amount of Rs.7,47,97,089/- towards damages for breach of contract along with forfeited amount of Rs.48,09,060/- within fifteen (15) days from the date of receipt of the said notice or in the alternative initiate arbitration proceedings for adjudication of disputes raised by the applicant within thirty (30) days. Despite receiving and acknowledging the said legal notice, there was no response from the respondent. Therefore, the applicant filed the present application seeking appointment of arbitrator to adjudicate the disputes.
4. CONTENTIONS OF THE RESPONDENT
i) The respondent had filed counter admitting about the contract entered between the parties on 30.07.2019 and that the same is for a period of two (02) years. According to the respondent, the applicant has commenced the work on 03.07.2019. From the date of commencement of the contract, the applicant did not work smoothly, created lot of inconvenience to the Mines Authorities of respondent company by not deploying required number of trucks for transportation of coal as per Clause No.5.9 of the work order.
ii) The applicant has to transport 533 Tons per day from KTK- 6 and 800 Tons per day from KLP Mine. The applicant did not provide sufficient number of Lorries at KTK-6 and KLP Mine due to which coal was dumped at those places every day instead of transporting to the KTK-5 CHP that hampered the production badly. The SCCL failed to supply Coal to its customers and the contract was ended on 31.03.2020 due to non-transport of targeted production from KTK-6 and KLP Mine.
iii) The contract was closed early by SCCL on 31.03.2020 as there was no
