National Aluminium Company Ltd. vs Subhash Infra Engineers Pvt. Ltd And Anr

3. The appellant-Company, a Government of India Digitally signed by enterprise, has issued a tender notice on 05.05.2011, ANITA MALHOTRA Date: 2019.08.23 17:12:17 IST inviting tenders for construction of Ash Pond-IV in Reason:

4. Subsequently, when the first respondent herein was not coming forward to participate in the kick off 2 C.A. @ S.L.P.(C)No.5610/17 meeting and instead addressed a letter dated 02.12.2011, vide letter dated 30.01.2012, the appellant-company informed the respondent/SIE that the contract work will be carried out, through some other agency, at the risk and cost of the respondent/SIE. Further by letter dated 06.02.2015, the appellant-company has informed the first respondent/SIE that it suffered a financial loss of Rs.4,86,61,440/-(Rupees Four Crore Eighty-Six Lakh Sixty-One Thousand Four Hundred and Forty Only). The respondent/SIE was directed to deposit the said amount otherwise the appellant will be forced to invoke Arbitration Clause as per Clause 22 of NIT and Clause 87 of the General Conditions of Contract. Then, the first respondent/SIE has disputed the claim made by the appellant, on the ground that there is no binding contract, that came into existence between the parties, as such, the demand is illegal and unjustified. A letter dated 28.02.2015 was communicated to that effect, to the appellant.

6. The appellant herein, having regard to terms and conditions of contract, invoked the arbitration clause, by proceeding dated 02.09.2015 and appointed the second respondent Shri C.R. Pradhan, who was the Former Chairman(CMD) of the Company, as an arbitrator. The learned arbitrator initiated the proceeding by issuing notice dated 07.09.2015, asking the appellant, as well as the first respondent to attend the preliminary meeting on 09.10.2015 at Bhubaneswar.

8. Against the order of the Trial Court, refusing to grant injunction orders, the first respondent approached the District Court. The Appellate Court i.e the Additional District Judge, Gurgaon, vide order dated 25.01.2016, allowed the appeal and granted the injunction, restraining the second respondent-arbitrator from proceeding further, pursuant to notice dated 07.09.2015. When the appellant herein has questioned such order by way of Civil Revision No. 2471 of 2016, before the High Court of Punjab and Haryana at Chandigarh, the same is dismissed vide order dated 22.10.2016. Hence this appeal by way of Special Leave.

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15. As we are of the view that the order passed by the Additional District Judge and the High Court are not in conformity with the law on the subject and are contrary to judgment of this Court as referred above, the impugned order is liable to be set aside by vacating the injunction orders.

17. For the aforesaid reasons, we allow this Civil Appeal and set aside the impugned order dated 22.10.2016 passed in C.R. No.2471 of 2016, by the High Court of Delhi. Further we also quash the appointment of second respondent, as an Arbitrator.

19. We also make it clear that if the first respondent disputes the jurisdiction of the arbitrator, it is open for it to file appropriate application before the arbitrator under Section 16 of the Act. If any such application is filed, same is to be decided on its own merits in accordance with law, uninfluenced by, any of the observations and findings recorded by this Court.

20. We direct the Registry to communicate a copy of this order to Hon’ble Mr. Justice M.L. Mehta.

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