*1* nms.151.10.ss.2491.09.930.sxw kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.151 OF 2010 WITH SUMMONS FOR JUDGMENT NO.492 OF 2009 IN SUMMARY SUIT NO.2491 OF 2009 WITH SUMMARY SUIT NO.2491 OF 2009 Srkay Infra Equipments Pvt.Ltd.. ..Plaintiff -versus- Gammon India Ltd.. ..Defendant ............ Mr.Sanjay Jain i/by V.Mistry & Company, for the Plaintiff. Mr.Birendra Saraf a/w Ms.A.N.Sawant i/by M.M.Legal Associates, for the Defendant. ............ CORAM : S.C.DHARMADHIKARI, J. Date : 12th December, 2011. P.C.: 1 This Notice of Motion is filed by the Defendant and it seeks a relief that the disputes between the Plaintiff and the Defendant arising out of the Agreements being first contract dated 20.10.2006, amended contract dated 23.04.2007 and the second contract dated 28.02.2007 which is subject matter of Summary Suit No.2491/2009 be referred to Arbitration. Direction is also sought to the parties to appoint an Arbitrator in terms of the said agreements to resolve the disputes and to stay all further proceedings in this Summary Suit. The Deputy Legal Manager and the Constituted Attorney of the Defendant in the affidavit in support of *2* nms.151.10.ss.2491.09.930.sxw this Notice of Motion states that the work order/contract dated 20.10.2006 referred to as the First Contract was executed and the Defendant agreed to hire two Excavators from the Plaintiff on the terms and conditions more particularly enumerated therein for its Koyali Ratlam Pipeline Project. 2 It is then stated that this First Contract was amended as the Defendant agreed to hire one Rock Breaker from the Plaintiff for the consideration and on the terms and conditions enumerated in the letter dated 23.04.2007 as well as on the terms and conditions enumerated in the first contract. Reliance is placed on the amended contract/ letter dated 23.04.2007. Thereafter, by the work order/ contract dated 20.03.2007 the Defendant agreed to hire one Wheel Loader from the Plaintiff on the terms and conditions more particularly enumerated therein for their same project. It is stated that the second contract dated 20.03.2007 as also the first contract together with the amended one contains the arbitration clause to refer the disputes and differences between parties to the sole arbitration of an officer to be nominated by the Managing Director of the Defendant, other than concerned with the said Agreements. It is in these circumstances, it is prayed that the disputes in the Summary Suit be referred to the arbitration in terms of the arbitral agreement. 3 It is contended by Mr.Saraf, appearing in support of this motion, that a petition for winding up of the Defendant was filed. That petition was resisted on account of various disputes raised and which were found to be bonafide. The Company Court made a conditional order in Company Petition No.16/2009 on 02.05.2009 directing the Defendant to deposit in this Court a sum of Rs.15 lacs and thereafter, permitting the Plaintiff to file a suit. It is submitted that against the order passed by the learned Single Judge on this Company Petition, an appeal being Appeal *3* nms.151.10.ss.2491.09.930.sxw No.263/2009 was preferred which appeal came to be decided on 14.11.2011. Both orders of the learned Single Judge as also that of the Appellate Court do not constitute waiver of right conferred by section 8 of the Arbitration and Conciliation Act, 1996 on the Defendant. Section 8 of the Arbitration and Conciliation Act, 1996 is absolute. Once ingredients thereof are satisfied, then, this Court shall have to refer the disputes to arbitration. There is no question of reading the order passed by the learned Single Judge in the Company Petition and confirmation thereof by the Division Bench as being waiver of a right to apply for reference of disputes to the Arbitral Tribunal. Mr.Saraf submits that at no stage it was the contention of the Plaintiff that the Defendants have placed their first statement of defence before this Court. The Summary Suits have been filed in which the appearances/ Vakalatnamas are filed because of service of writ of summons. Thereafter, the Defendant has done nothing save and except moving the instant Notice of Motion. For all these reasons and going by the law laid down by the Honourable Supreme Court in the case of Rashtriya Ispat Nigam Ltd. and another v/s Verma Transport Company reported in (2006) 7 SCC 275, this Court should proceed to grant the relief as prayed. 4 On the other hand, Mr.Jain, learned counsel appearing for the Plaintiff, invites my attention to the allegations in the plaint. He submits that the Plaintiff is dealing in various Earth Moving Equipments such as Hydraulic Excavator and other equipments and provides the same on hire and rental basis. Upon inquiry made to the Plaintiff for hiring the Excavators, Wheel Loader and 8 Tonnes capacity Pick & Carry Crane, the Defendant considered the offer of the Plaintiff contained in the letter dated 20.02.2006 and communicated its acceptance on 21.09.2006 firstly for hiring 02 Excavators at Godhra site. The Defendant informed that a *4* nms.151.10.ss.2491.09.930.sxw formal work order will be issued by the site office. Thus, the contract was arrived at and which is termed as First Contract in the plaint and this is also known as “Excavator Contract”. The Plaintiff states in the plaint that the Defendant requested for fitment of one Rock Breaker to be fitted to an Excavator hired under the First Contract. The Plaintiff accordingly supplied the Rock Breaker on and from 28.02.2007 and recorded the agreement by its letter dated 23.03.2007 and the Defendant confirmed the same by letter dated 23.04.2007. This distinct contract is known as Rock Breaker Contract. Thereafter, for Wheel Loader, offer was made and the Defendant accepted that offer. There was contract arrived at for Wheel Loader and that is known as Second Contract or DUPL Wheel Loader Contract. Mr.Jain submits that these contracts must be seen in proper context and in the light of the offer letters and their acceptance. It may that as far as the Excavators are concerned, there is work order and the work order contains the arbitration agreement. However, for the Rock Breaker Contract, the letter in that behalf refers to the original offer and not to the work order. Mr.Jain, therefore, submits that this is not an amendment to the original work order, therefore, all terms and conditions including appointment of the Arbitrator in terms of the first work order is not referred in the Rock Breaker Contract. That is distinct and different and Arbitration in disputes thereunder is not contemplated by parties. Third question is of supplying of Wheel Loader. There is distinct work order and that work order may contain an arbitration agreement between the parties, but that would go to support the argument that for Rock Breaker contract there was no such work order or acceptance of the work order, but it refers to a distinct contract or to the letter of hire. In these circumstances, once entire subject matter is incapable of being decided by arbitration, then, the ingredients of section 8 are not satisfied. *5* nms.151.10.ss.2491.09.930.sxw 5 Mr.Jain submits that even in reply to the notice prior to institution of the suit, so also, when the Company Petition was disposed of, the Defendant did not raise a plea that the agreement between parties contains a Dispute Resolution Mechanism and particularly by arbitration. Thus, they have given up their contentions and once they are so given up and all that they are agreed is to abide by the orders passed by the Company Judge, then, a conclusion is inevitable that the Plaintiff was to file a suit for recovery which suit is filed and the Defendant cannot be permitted to resile from the stand taken in earlier proceedings. In these circumstances, the motion deserves to be dismissed. 6 With the assistance of the learned counsel appearing for the parties, I have perused the plaint and annexures thereto, so also, the Notice of Motion and annexures to the affidavit in support thereof. 7 The suit is filed by the Plaintiff for an order and decree in the sum of Rs.14,65,171/- as per the particulars of claim Annexure BB to the plaint. The cause of action in the suit is on the basis that the Plaintiffs have to recover from the Defendants under the contracts referred to in the plaint diverse sums arising out of the bills raised by the Plaintiffs on the Defendants. There are part payments made and after accounting for the same, the payment for balance amount has not been made driving the Plaintiffs to file and institute this suit. The suit refers to in paragraph 6 the First Contract arising out of the offer made on 20.02.2006 and its acceptance on 21.09.2006. That is pertaining to the composite offer for supply of two Excavators, two Wheel Loaders and two 8 tonnes capacity Pick & Carry Cranes. On receipt of that offer, what the Defendants intimated is that the offer is acceptable, but on the terms and conditions enumerated in the letter dated 21.09.2006. It was also intimated that a formal work order will be issued by the site office after the equipments *6* nms.151.10.ss.2491.09.930.sxw are received at site. Thereafter, the contract being Reference No.GIL/ PHPL/ACC/ EQP/005 /2006 dated 20.10.2006 referring to hiring of two Tata Hitachi Excavators has been executed and the same is duly signed by the Defendants through their Senior Manager (Pipelines) and it is also accepted by the Plaintiffs and that contains an arbitration clause. Subsequently, the discussions between parties have been referred to in letter dated 23.03.2007 and in that letter what the Plaintiffs state is that the discussions pertain to supply of one Rock Breaker Attachment and which is fitted on the machine i.e. Tata Hitachi Excavator. The Rock Breaker was to be fitted to the existing equipments and the terms and conditions of its use were agreed by the parties and that is how this letter of the Plaintiffs reads that the suitable amendment to the contract dated 20.10.2006 would be made to incorporate the fitting of this Rock Breaker so that the billing can be done accordingly. It is in response thereto that on 23.04.2007 the Defendants make a reference to their hiring orders and the agreement to supply the Rock Breaker Attachment suitable for the Excavator. All other terms and conditions of the order remained unchanged. 8 To my mind, this is a clear reference of the contract between parties for supply of Excavators and what is to be fitted thereto was Rock Breaker and the Rock Breaker was considered to be part of the said work and that is how both letters must be read. Then there is offer made for Wheel Loader. That offer made on 07.11.2006 has been accepted on 10.11.2006 by the Defendants and even in relation thereto the work order was executed. Once this work order which is executed and duly signed contains an arbitration agreement, then, a conclusion is inevitable that the first contract was amended after supply and fitment of Rock Breaker and there is a distinct contract with regard to the supply of Wheel Loader. *7* nms.151.10.ss.2491.09.930.sxw Both contracts contain arbitration agreement. 9 It is in these circumstances that I am unable to accept the argument of Mr.Jain that the Rock Breaker Contract is a distinct agreement and contract between the parties and there is no arbitral agreement as far as that supply of Rock Breaker is concerned. The Rock Breaker fitment is nothing but an attachment or fitment to the existing Excavators. Once it is taken to be amendment to the First Contract and without altering in any manner the terms and conditions of the same and both contracts contain arbitration agreement, then, it is clear that the disputes between parties must go to arbitration if other conditions stipulated by section 8 of the Arbitration and Conciliation Act, 1996 are satisfied. 10 It is not the argument of Mr.Jain that the Notice of Motion which is filed seeking to refer the disputes to arbitration is not accompanied by the arbitration agreement or duly certified copy thereof. It is not contention that the action for recovery is not brought before this Court. All that has been argued is that even if the party like the Defendant who has not submitted its first statement on substance of the dispute in the Summary Suit, yet going by orders of the learned Company Judge and that of the Division Bench disposing of the appeal, both refer to filing of suit for recovery by the Petitioner/ Plaintiff against the Defendant and the Defendant being permitted to raise all defences therein after complying with precondition of deposit of Rs.15 lacs in this Court, it is not open to the Defendants to urge to the contrary and particularly raise a plea that the suit for recovery is not remedy for the Petitioner/Plaintiff. It may be that the order of the learned Single Judge while disposing of the Company Petition directs that a civil suit be filed. It may be that while confirming that arrangement what has been observed by the Division Bench in Appeal *8* nms.151.10.ss.2491.09.930.sxw No.263/2009 decided on 14.11.2011 is that there is Summons for Judgment already taken out and is pending and that the Summary Suit is already on the file of this Court and that Summons for Judgment should be disposed of without being influenced by the observations of the learned Single Judge and while disposing of the Summons for Judgment, appropriate orders should be made with regard to the amount deposited in this Court. How by all this and without anything more, it can be said that these orders constitute waiver of the right conferred by section 8 of the Arbitration and Conciliation Act, 1996, is not at all clarified. It may be that the Defendant has not pointed out the arbitration agreement between parties while resisting the petition for winding up and also while arguing the appeal. However, it must be noted that when a petition for winding up is resisted on the ground that there is bonafide and valid defence on merits, so also, it being not proceedings for recovery of sums, that could not be construed as the Defendant filing its first statement of defence in this Summary Suit. Equally, while arguing the appeal on the point of whether the learned Single Judge’s conclusion is proper or not and assailing the direction to deposit Rs.15 lacs, it would not be necessary for the Appellant to point out and for the Division Bench to consider as to what mode or what proceedings should be instituted for recovery. All that the order refers to is existing proceedings, namely, the suit and there is nothing in the order which would indicate that the Defendant has waived its right to seek reference of the disputes in the suit to arbitration. Once it is undisputed that as far as the Summary Suit is concerned, the Defendant has not filed its first statement on the substance of the disputes, then, by these orders there is no question of inferring a waiver of this right by the Defendant. 11 It in such circumstances that I am of the opinion that the *9* nms.151.10.ss.2491.09.930.sxw judgment in Sukanya Holdings (P) Ltd. v/s Jayesh H. Pandya and another reported in (2003) 5 SCC 531, would be inapplicable to the facts of present case. Once both contracts are containing an arbitration clause and both Plaintiffs and Defendants are parties thereto and when Rock Breaker contract is nothing but an amendment to the first contract, then, the arbitration agreement would cover the entire disputes between the parties. Equally, on the principle of waiver the law is clear. The waiver of right on the part of Defendant must be gathered from the fact situation in the case. In the case before the Honourable Supreme Court in Rashtriya Ispat Nigam Ltd. (supra), the Court passed an ad-interim ex-parte order and the Appellants were bound to respond to the notice issued by the Court. While doing so, they raised a specific plea of bar of the suit in view of the existence of an arbitration agreement. Having regard to the provisions of the Arbitration and Conciliation Act, 1996, the Appellants therein had shown their unequivocal intention to question the maintainability of the suit on the aforementioned ground. The Appellants therein did not submit themselves to the jurisdiction of the Court and they did not waive their right. As has been already held by the Honourable Supreme Court, right to have dispute settled by the arbitration which has been conferred by the agreement of parties should not be deprived by technical pleas. In these circumstances that I am of the view that the contentions of Mr.Jain cannot be accepted. 12 As a result of the above discussion, the Notice of Motion succeeds and it is allowed in terms of prayer clause (a), but with clarification that merely because the arbitration agreement contains stipulation that the Arbitrator to be nominated by the Managing Director of the Defendant shall act as Arbitrator and that too as sole Arbitrator, the Plaintiff is not precluded from raising a plea of bias and/or such other *10* nms.151.10.ss.2491.09.930.sxw plea so as to resist the constitution of the Arbitral Tribunal and all contentions of both sides in that behalf are kept open. 13 Mr.Saraf states that the Arbitral Tribunal will be constituted within a period of three weeks from the date of receipt of an authenticated copy of this order. 14 At this stage, the parties invite my attention to the order of the Division Bench and it is requested that I should give appropriate direction with regard to the amount of Rs.15 lacs which is deposited by the Defendant in this Court and which is lying to the credit of the suit. It is prayed that since the Summons for Judgment and the Summary Suit would not survive in the light of the order passed on the Notice of Motion, this Court should make appropriate order regarding the same. 15 Mr.Jain would argue that let this sum be kept as such till disposal of the arbitration proceedings. 16 Mr.Saraf would argue that this matter be left to the Court under section 9 of the Arbitration and Conciliation Act, 1996 or is best left to the Arbitrator to exercise his powers under section 17. 17 Since the Arbitral Tribunal is yet to be constituted, the interest of justice would be served, if it is directed that without prejudice to the rights and contentions of both parties, the amount deposited in this Court shall remain invested as such until orders to the contrary are obtained and thereafter, the same would abide by the directions of the competent court/ Arbitral Tribunal. 18 Needless to clarify that the Summary Suit and the Summons for Judgment also stand disposed of. No order as to costs. Refund of the Court fees as per rules. (S.C. Dharmadhikari, J)