THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY A.A.NO.187 OF 2010 ORDER This application has been taken out under Section 11(6) of the Arbitration and Conciliation Act, 1996 and Scheme for Appointment of Arbitrators seeking appointment of an arbitrator to resolve the disputes between the parties relatable to the agreement for hiring of trucks and trailors for transportation of various materials to locations and notification of award for transportation of out-stationed material through trailors. The averments in the application in brief are: The respondent issued a tender No.RA/MM/TPT/SC-02/2005- 06/1 (hereinafter referred to as “Rajahmundry Contract”) for providing service of hiring trucks and trailers for transportation of materials. The applicant had submitted its bid on 24-09-2005. The applicant came to be declared as L1 tenderer and the respondent awarded 60% of the work. A contract came to be entered between the parties on 27-2- 2006. As per the contract, the applicant would be paid freight charges as per the schedule of rates mentioned under Clause 58.1 and 58.2 of the contract. The applicant supplied the vehicles as per the contract rates till 20-2-2008. Subsequently, he stopped supplying the vehicles on the ground that the rate quoted was required to be increased. Notification of Award (for short ‘NOA’) came to be issued by the respondent on 5-9- 2008. As per NOA, the respondent agreed enhancement of rates at 30% with regard to transportation of out-stationed material through trailors. The applicant supplied the trailors. When the applicant placed bills at the enhanced rate basing on notification of award, the respondent refused to pay the enhanced amount. Hence, he applicant raised disputes for settlement of the same. The claims raised by the applicant are as follows: 1. Refund of liquidated damages 2. Enhancement of Rajahmundry contract rates With 30% enhancement 3. Work done but not paid under NOA dated 5-9-2008 4. Cost of arbitration & Miscellaneous expenditure 5. Interest @ 24% p.a. Accordingly, the applicant issued notice to the respondent to refer the above referred claims to the arbitrator. The respondent considered the claims and appointed the arbitrator and referred to only two claims of the applicant. Dissatisfied with not referring the other three claims, the applicant has approached this Court. Notice to the respondent came to be ordered on 24-12-2010. The respondent entered appearance and filed counter-affidavit. It is stated in the counter-affidavit that pursuant to the NOA, the applicant has not executed the agreement nor deposited security deposit and therefore, the enhanced rate indicated in NOA has not been given effect to. For better understanding of the plea of the respondent, I deem it appropriate to refer paragraph Nos.5 to 7 of the counter-affidavit, which reads as hereunder: “I submit that in view of the urgency involved in the matter and the fact that petitioner happened to be the successful bidder in the contract finalized by the head quarters of ONGC for transportation of materials through trailers, the respondent sent proposal dated 5-9-2008 for awarding the said short term contract for transportation of materials through trailers to the petitioner. As per the said proposal the petitioner has to deposit an amount of Rs.1,92,750/- towards security deposit within (15) days from the date of the said proposal and sign a detailed agreement. However, petitioner has neither conveyed its acceptance to the said proposal nor deposited the security deposit amount. It did not sign the detailed agreement as required by the said proposal. Therefore, the said proposal remained as a proposal only and did not fructify into a valid contract. Thus the short term contract contemplated by the respondent did not materialize, as such the 30% enhanced rates envisaged in the said contract have not come into force. I submit that after 5-9-2008, the petitioner executed some jobs and transported material to various destinations. However petitioner raised bill for the said work at the rates offered in the proposal dated 5-9- 2008, which has never become contract for the reasons already stated supra. Therefore, the respondent paid the said bills as per the terms and the rates agreed in the contract, dated 27-2-2006, which is the only contract that was in force at that time under which the petitioner is bound to execute the jobs at the rates mentioned therein. While so, the petitioner issued notice disputing the imposition of liquidated damages and demanding 30% enhanced rates under the contract dated 27-2-2006 and demanded for appointment of arbitrator as per the arbitration clause provided in the contract dated 27-2-2006,if ONGC is not agreeable to settle the said claims. By office order dated 29- 12-2009, the respondent appointed Justice P.L.N.Sharma (Retd) as the Sole Arbitrator to adjudicate the disputes raised by the petitioner regarding imposition of liquidated damages and payment of 30% enhanced rate as a preliminary issue that whether such dispute is arbitrable in the teeth of the contract conditions not providing for the same.” Heard the learned counsel appearing for the parties. Learned counsel appearing for the applicant submits that the applicant supplied the trailers after the respondent agreed to enhance the rate by 30% under NOA and the respondent permitted the petitioner to transport the material and that itself is sufficient to infer that terms indicated therein have been acted upon. A further submission has been made that the original agreement has not been superseded by NOA. What is stated in NOA is only with regard to enhancement of hire charges relating to trailors. The other conditions stipulated in the original agreement in respect of the trucks etc., have not been modified. Learned counsel took me to the note appended to the NOA in support of his submissions. The note appended to the NOA reads as hereunder: “Scope of work: Scope of work and terms and conditions shall be as per existing contract concluded at asset level, Rajahmundry excluding the scope of work for transportation of outstation material through trucks. Period of Contract: The period of contract shall be w.e.f. 5.9.2008 upto 26-12-2008 (or) upto the finalization of the long them contract being finalized by HQ.MM Deptt whichever is earlier. Security deposit: Please submit security deposit for an amount of Rs.1,92,750/- within 15 days from the date of NOA in the form of DD/performance bank guarantee (As per prescribed proforma of tender document) on Non-Judicial stamp paper worth of Rs.100/- in the name of issuing bank.” Learned counsel for the applicant has placed reliance on the judgment of the Apex Court in “Unissi (India) Private Limited v. Post Graduate Institute of Medical Education and Research[1]” in support of his submissions. Per contra, learned counsel for the respondent submits that the applicant has not furnished security deposit of Rs.1,92,750/- and that itself indicates that NOA has not been given effect to in which case referring the dispute with regard to 30% enhancement does not arise. The applicant submitted five claims before the respondent for adjudication. Claim No.1 relates to refund of liquidated damages, claim No.2 relates to enhancement of Rajahmundry contract rates with 30% enhancement, claim No.3 relates to work done but not paid under NOA dated 5-9-2008, claim No.4 relates to cost of arbitration & miscellaneous expenditure and claim No.5 relates to interest @ 24% p.a. Claim Nos.4 and 5 are incidental to the arbitration proceedings. Clause No.3 relates to the enhancement of higher charges as contemplated in NOA. NOA is not in super-session of the original agreement. It relates to enhancement of hire charges in respect of trailors. There is no alteration of the terms and conditions stipulated in the original agreement. This is explicit from the note appended to NOA. NOA relates to enhancement of hire charges in respect of supply of trailors. The original agreement has been referred to in the NOA. Therefore, claim No.3 is also required to be adjudicated upon by the arbitrator. Since the arbitrator has been appointed with regard to other claims, I deem it appropriate to refer claim Nos.3 to 5 also to the same arbitrator. Accordingly, the arbitration application is disposed of. Justice P.L.N.Sharma (retired), who has already been appointed as arbitrator, has to consider claim Nos.3 to 5 of the applicant and adjudicate thereupon. The respondent is at liberty to raise objection with regard to maintainability of claim Nos.3 to 5. ___________________________ B.SESHASAYANA REDDY,J rkk Dated: 16-6-2011 [1] (2009) 1 Supreme Court Cases 107