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2025 Supreme(Telangana) 300
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K. LAKSHMAN, J.
M/s. GRN Constructions Private Limited. - Appellant
Versus
The Singareni Collieries Company Limited. - Respondent
Arbitration Applicaton No.276 Of 2024
Decided On : 02-05-2025
Advocate Appeared:
For the Appellant : D NARENDRA REDDY DEGAPUDI
For the Respondent: P SRI HARSHA REDDY SC FOR SINGARENI COLLIERIES CO LTD
Disputes arising from a contract are arbitrable, and issues of limitation must be determined by the arbitrator, not the court.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(5) and (6) - Appointment of sole arbitrator - Disputes arose from a tender and subsequent claims regarding costs of explosives - Applicant sought arbitration after payment under protest - Respondents contended application was barred by limitation - Court held disputes are arbitrable and limitation issues should be determined by the arbitrator. (Paras 16, 24)
(B) Arbitration Clause - The clause requires disputes to be settled within 120 days through arbitration - Court found unilateral appointment of arbitrator by respondents invalid as per precedent. (Paras 19, 22)
Facts of the case:
The Applicant, a mining contractor, was awarded a contract by the Respondent company. Disputes arose regarding payment claims and costs of explosives, leading to the Applicant seeking arbitration after making payments under protest. (Paras 3-6)
Findings of Court:
The court found that the disputes are arbitrable and appointed a retired judge as the sole arbitrator, rejecting the respondents' limitation argument. (Paras 24)
Issues: Whether the application for arbitration was barred by limitation and the validity of the arbitration clause. (Paras 8, 22)
Ratio Decidendi: The court ruled that limitation issues should be resolved by the arbitrator, and the unilateral appointment of an arbitrator by the respondents was invalid. (Paras 16, 19)
Result: Application allowed; sole arbitrator appointed.
ORDER :
K. LAKSHMAN, J.
Heard Sri D.Narendra Reddy, learned counsel for the Applicant, and Sri P. Sri Harsha Reddy, learned counsel for the Respondents.
2. The present Arbitration Application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act, 1996’) for appointment of a sole arbitrator to adjudicate the disputes between the parties as contemplated under Clause 1.21 of the Firm Order dated 19.09.2016 issued by respondents in favour of the Applicant.
FACTS:-
3. 1st respondent is a company engaged in coal mining activities. Applicant is also a company engaged in mining contracts. 1st respondent has issued a tender vide Enquiry No. E121800072 dated 13.05.2016 for the work of selective extraction of 63.182 LBCM coal in Pit-III (Part-A) and Pit-I (Part-B) with Surface Miner Technology including loading, transportation and dumping at Koyagudem OC-II, Yellandu area to be completed in 36 months. The Applicant has participated in the process and was declared as successful bidder. Thereafter, 1st respondent has issued Firm Order No. 7600006595 dated 19.09.2016. The total value of the work awarded to the Applicant was Rs.52,64,39,070.17 (exclusive of Service Tax). In terms of the Order dated 19.09.2016, the Applicant furnished the Performance Security in the form of the Bank Guarantee for Rs. 79.00 Lakhs. The Applicant completed execution of the work and signed various statements pertaining to the Final Bill No.70 (Oct-21), such as coal quantity, calculation of diesel price variation etc, Pursuant to which, 3rd respondent vide letter dated 11.03.2021 informed the Applicant that net payable amount under Final Bill No.70 after necessary deductions is arrived at Rs.89,83,833.69 and recommended for payment. In terms of the said Order, the Applicant submitted Tax Invoice for Rs.92,58,448.69, inclusive of GST to enable the respondents to release Final Bill amount to it.
4. Vide letter dated 19.04.2021, 3rd respondent informed the Applicant to submit GST Invoices as Rs. 14,48,509/- with respect to the Final Bill and confirmed the excess payment paid by SCCL of Rs. Rs.1,45,68,717/-, 2nd respondent also requested the Applicant to sign Final Bill and to submit invoices as per Telangana Goods and Services Act, 2017 ( GST Act). 2nd respondent has also issued a revised calculation vide letter dated 02.05.2021 revising the negative bill amount to Rs.1,41,81,824.73. The Applicant had submitted Tax Invoices dated 31.03.2021 for Rs.17,09,241.41 and a credit note dated 31.03.2021 for Rs.1,67,34,552/- and also a credit note for Rs.92,58,449/-. Vide letter dated 12.05.2021, Applicant requested the respondents to furnish a copy of letter dated 23.02.2021 which was referred in the letter dated 25.04.2021 to the respondent. Vide letters dated 20.04.2024 and 25.06.2024 of the respondents demanded an amount of Rs. 1,83,64,150/- for settlement of Final Bill from the Applicant. Respondents also informed the Applicant that if the Applicant fails to pay the said amount, it will invoke Bank Guarantee and recover the bills pertaining to other works executed by the Applicant. Respondents also demanded for extending validity of the Performance of Bank Guarantee. Vide letter dated 22.04.2024, the Applicant objected to the said claim made by the respondent No.2 made in the letter dated 20.04.2024.
5. Applicant has again demanded the respondents to furnish a copy of demand letter dated 23.02.2021. Vide letter dated 06.06.2024, 2nd respondent gave break up for Rs.1,83,64,150/- which shows that an amount of Rs.1,41,81,825/- is recoverable towards Final Bill amount of Rs.25,52,728/- towards GST at the rate of 18% on Rs.1,41,81,825/- and Rs.32,78,390/- recoverable towards costs of explosives. Vide letter dated 08.06.2024, the Applicant objected claim of the respondents as being unjustified and contrary to the terms of NIT. 2nd respondent had issued a letter dated 19.06.2024 to the General Manager, Bellampally area of SCCL, withou
