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2023 Supreme(Online)(KER) 19457
HIGH COURT OF KERALA
AMIT RAWAL, J
OFFSHORE INFRASTRUCTURES LIMITED
– Appellant
Versus
BHARAT PETROLEUM CORPORATION LIMITED – Respondent
AR 217 2022
RAJIV ABRAHAM, GEORGE SATISH MOHAN, Gopikrishnan Nambiar, M K.JOHN MATHAI(K/413/1984), JOSON MANAVALAN(J-526), KURYAN THOMAS(K/131/2003), PAULOSE C. ABRAHAM(MAH/58/2006), RAJA KANNAN(K/356/2008), DOMINIC ANTONY(K/634/2013)
The court reiterated that disputes under a contract with an arbitration clause must be resolved through the designated arbitration process, reflecting the binding nature of such agreements.
Headnote:
Arbitration - Contract Dispute - Arbitration and Conciliation Act, 1996 (Section 1) - Summary: The court referenced Section 1 of the Arbitration and Conciliation Act, 1996, understanding arbitration as a mechanism to resolve disputes. The court highlighted the binding nature of arbitration under the contract and decided to appoint an independent arbitrator for resolution.
Fact of the Case:
A contractor successfully executed a project but faced deductions due to alleged delays. After submitting a final bill, disputes arose which prompted the contractor to seek arbitration per the contract's provision.
Issues: Whether the dispute concerning deductions made by the respondent should be referred to arbitration as per the contract terms.
Ratio Decidendi: The presence of a clear arbitration clause necessitates referral to arbitration when disputes arise, especially when one party fails to respond to requests for resolution.
Final Decision: The court appointed an independent arbitrator to resolve the dispute.
O R D E R
Petitioner, applicant is Offshore Infrastructure Ltd, a company incorporated under the Companies Act engaged in the business of executing Mechanical construction, Electrical and Instrumentation works Civil and Structural works etc. Pursuant to the tender invited by the respondent for the work of Fabrication and Erection of Double Deck Floating Roof Crude Tank at STF, Puthuvypeen, petitioner was successful and was awarded the work for a sum of Rs.13,43,84,850/- vide purchase order Annexure-1.
2. It is alleged that the planned progress of the work was irretrievably disrupted due to the reason attributed to the respondent and was completed only on 17.10.2018 whereby the petitioner, applicant submitted a final bill on 10.5.2019 for an amount of Rs.1,29,75,899/- along with no claim certificate but no action was taken thereon and attempt was made to make the deductions. Ultimately, on 3.4.2021 invoice of Rs.8,41,54,842 was issued.
3. It is contended that clause 91 of the general conditions of the contract contains the resolution of dispute by an arbitrator. Petitioner vide communication dated 6.6.2022 vide Annexure 7 requested the respondent to resolve the dispute through arbitration but the same was replied by making allegation. In these circumstances, petitioner has approached this Court.
4. On the other hand, learned counsel appearing for the respondent submitted that the work was not completed on time and it is on account of that fact, deductions were made. There was no fault of the respondent in execution of the work. It was basically a willful attempt on behalf of the petitioner to delay the execution of the work. However do not deny the existence of clause 91 contained in the general conditions of the contract.
5. I have heard the learned counsel for the parties and appraised the paper book. Clause 91 of the general conditions of the contract reads as under:
91: Arbitration Any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set off of BPCL against the Contractor or regarding any right, liability, act, omission on account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the sole Arbitration of the concerned Director (herein after named as Director) of the BPCL or of some officer of the BPCL who may be nominated by the concerned Director. The Contractor will not be entitled to raise any objection to any such arbitrator on the ground that the arbitrator is an Officer of the BPCL or that he has dealt with the matters to which the contract relates or that in the course of his duties as an Officer of the BPCL he had expressed views on all or any other matters in dispute or difference. In the event of the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Director as aforesaid at the time of such transfer, vacation of office Or inability to act may In the discretion of the Director designate another person to act as arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings not withstanding his transfer or vacation or office as an Officer of the BPCL if the Director does not designate another person to act as arbitrator on such transfer, vacation of office or inability of original arbitrator. Such persons shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Director or a person nominated by such Director of the BPCL as aforesaid shall act as arbitrator, hereunder. The award of the arbitrator so appointed shall be final conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration and Condillation Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder for the t
