Telangana High Court M/S. Vs Lignite Power Pvt. Ltd. vs M/S Totale Global Private Ltd.. on 3 June, 2024 THE HONOURABLE SRI JUSTICE B. VIJAYSEN REDDY ARBITRATION APPLICATION No.205 of 2023 ORDER: This application is filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') to appoint a sole arbitrator in terms of Clause 16 of the Work Order bearing No.VSLPL/WO/2122/061 dated 17.03.2022 to adjudicate the disputes/claims disputes between the applicant and the respondent. 2. It is stated that the applicant is engaged in the business of production, collection and distribution of electricity through its lignite based plant in Gurha, Bikaner, Rajasthan. The respondent is engaged in the manufacture of refractory monolithic and precast prefired shapes and refractory engineering and installation services having its registered office at Srilalitha Apartment, 71 C New Avadi Road, Kilpauk, Chennai 600010, Tamil Nadu. 3. It is submitted that the applicant intended to purchase refractories for their power plant. The applicant entered into negotiations with the respondent on 30.06.2022 and in pursuance thereof, the applicant issued Work Order VSLPPL/WO/2122/061 on 17.03.2022 for supply, application and dryout of Refractories Works having a work order value of Rs.5,90,00,932/ including 2 GST. The applicant along with the respondent conducted a joint inspection for the conclusion of the actual requirement of refractory and anchors and on mutually agreed terms and conditions. Consequently, the Minutes of Meeting was signed and an amended work 0rder dated 10.05.2022 bearing No.VSLPPL/WO/2122/0611 was issued to the respondent having a work order value of Rs.6,74,60,647/ including GST to be completed by 25.05.2022. 4. It is the case of the applicant that despite repeated requests, the respondent failed to complete the jobs within the agreed period and jobs were completed only on 07.06.2022, thereby, delaying the plant startup by seven (7) days. Furthermore, there were material deviations, quality issues and poor workmanship in the supplies provided by the respondent. The applicant made timely payments to the respondent in terms of the Work order and as per clause 5 of the work order, liquidated damages would be imposed for any delay in supplies beyond 31.05.2022. 5. It is submitted that after the boilers were delivered, the lightup of the boilers was done as permitted by the respondent and immediately after the lightup, a heavy flue gas leakage was observed from the RHS loop seal and the refractory fell in the 35meter cyclone area. Due to the leakage, the plant had to be stopped again. During the inspection, it was found that the 3 refractory was not applied in the leaking area and clearance was given by the respondent without completing the job as per the terms of the work order. It is stated that due to the deficiency in service and poor workmanship of the respondent, the applicant had to face damages in the refractory again on 25.05.2023, which subsequently led to the temporary shutdown of the plant for further repairs from 28.05.2023 to 11.06.2023 causing them huge losses as the supplies provided by the respondent could not even sustain the warranty period of twelve (12) months. 6. It is submitted that as per the letter dated 05.06.2023, the applicant invoked the warranty clause as given in the work order intimating the respondent regarding the damages in the refractory lining and requested the respondent to get the damages fixed. The respondent completely disregarding the fact revoked the warranty clause by letter dated 19.06.2023. In the above circumstances, disputes arose between the applicant and the respondent and as no response was forthcoming from the respondent, the applicant was constrained to invoke arbitration contained in Clause 18 of the work order. 7. It is submitted that applicant issued arbitration notice through their counsel, which was received by the respondent on 10.7.2023, nominating Mr. Tariq Khan, Registrar, International 4 Arbitration and Mediation Centre (IAMC), Hyderabad, as the sole arbitrator to settle the disputes between the parties. The applicant called upon the respondent to confirm the appointment of Mr. Tariq Khan within 15 days from the date of the receipt of the notice. The notice was served on the respondent on 10.07.23 vide registered post. However, there was no response from the respondent, pursuant to the said notice, as such, the applicant approached this Court invoking Clauses 18 and 19 of the Work Order dated 17.03.2022 for appointment of an arbitrator. 8.