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2023 Supreme(Online)(KER) 29225
HIGH COURT OF KERALA
AMIT RAWAL, J
OFFSHORE INFRASTRUCTURES LIMITED
– Appellant
Versus
BHARAT PETROLEUM CORPORATION LIMITED – Respondent
AR 218 2022
RAJIV ABRAHAM, GEORGE SATISH MOHAN, Gopikrishnan Nambiar, M K.JOHN MATHAI, JOSON MANAVALAN, KURYAN THOMAS, PAULOSE C. ABRAHAM, RAJA KANNAN, DOMINIC ANTONY
The court upheld the arbitration clause, affirming the parties' obligation to resolve disputes through arbitration as stipulated in their contract.
Headnote:
Arbitration - Dispute Resolution - Arbitration and Conciliation Act, 1996 Sections - The court recognized the validity of the arbitration clause under contract conditions, emphasizing the procedural aspects of arbitration, including appointment of an arbitrator and jurisdictional stipulations, leading to the appointment of a sole arbitrator.
Fact of the Case:
The petitioner, a company awarded a contract for construction work, submitted a final bill which was not addressed by the respondent, prompting a request for arbitration as per the contract's arbitration clause due to the unresolved dispute over payments.
Issues: Whether the dispute between the parties should be referred to arbitration based on the terms outlined in the contract, and the appointment of an arbitrator.
Ratio Decidendi: The presence of a clear arbitration clause in the contract obliges the parties to resolve disputes through arbitration, reinforcing the principle of party autonomy in arbitration agreements under the Arbitration and Conciliation Act.
Final Decision: The court appointed a sole arbitrator to resolve the dispute between the parties.
O R D E R
Petitioner, applicant is Offshore Infrastructure Ltd, 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 Tankage Works (Part A) for Acrylic Acid and OXO Alcohol Units for Propylene Derivative Petrochemical Project, petitioner was successful and awarded work for a sum of Rs.23,56,89,970/-. Execution of the work was completed on 30.12.2019 and thereafter the final bill was submitted for Rs.8,10,77,927/- but no action was taken.
2. It is contended that clause 91A of the general conditions of the contract contains the resolution of dispute by an arbitrator. Petitioner vide communication dated 12.7.2022 ,Annexure 4, requested the respondent to resolve the dispute through arbitration but the claim so sought was rejected. In these circumstances, petitioner has approached this Court.
3. On the other hand, learned counsel appearing for the respondent submitted that the work was not completed in time and it is on account of that fact, deductions were made. There was no fault on the part applicant in execution of the work. It was basically a willful attempt to delay the execution of the work. However do not deny the existence of clause 91A contained in the general conditions of the contract.
4. I have heard the learned counsel for the parties and appraised the paper book. Clause 91A of the general conditions of the contract reads as under:
91 A: Arbitration a) Any dispute or difference of any nature whatsoever, any claim, cross-claim, counter-claim or set off of the Company against the Contractor or regarding any right, liability, act, omission or account of any of the parties hereto arising out of or in relation to this agreement shall be referred to and finally resolved by Sole Arbitrator, who shall be appointed by Director (Refinery) of BPCL as per the procedure given in sub-clause (b)
given herein below.
b) Procedure for appointing the sole arbitrator: A party wishing to commence an arbitration (the "Claimant") shall file with the Director (Refinery) of BPCL a Notice of Arbitration which shall comprise:
i. a demand that the dispute be referred to arbitration;
ii. a reference to the arbitration clause or the arbitration agreement that is invoked and a copy of it; iii. a reference to the contract out of or in relation to which the dispute arises and where possible, a copy of it; iv. a brief statement describing the nature and circumstances of the dispute, specifying the relief claimed and, where possible, an initial quantification of the claim amount.
v. any other details which the claimant wishes to refer and rely upon. Upon receipt of the above notice of arbitration, the Director (Refinery) of BPCL shall appoint the Sole Arbitrator as per the provisions of the Arbitration and Conciliation Act, 1996 .
c) The venue of arbitration shall be Mumbai (in case of Mumbai Refinery) or Kochi (in case of Kochi Refinery). 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 & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the rules made thereunder for the time being in force shall apply to the arbitration proceedings under this clause.
d) The arbitrator shall have power to order and direct either of the parties to abide by, observe and perform all such directions as the arbitrator may think fit having regard to the matters in difference Le dispute, before him. The arbitrator shall have all summary powers and may take such evidence oral and/or documentary, as the arbitrator in the absolute discretion thinks fit and shall be entitled to exercise all powers under the Indian Arbitration & Conciliation Act 1996 including admission of any affidavit as evidence concerning the matter in difference i.e. dispute before him.
e) The part
