w w w . L a w y e r S e r v i c e s . i n

GR Green Life Energy Pvt. Ltd. v/s Leitwind Shriram Manufacturing Pvt. Ltd.

Company & Directors' Information:- K ENERGY COMPANY LIMITED [Active] CIN = U40100CT2007PLC020433

Company & Directors' Information:- U R ENERGY (INDIA) PRIVATE LIMITED [Active] CIN = U40108GJ2011PTC067834

Company & Directors' Information:- ENERGY INDIA LIMITED [Strike Off] CIN = U74899DL1998PLC096211

Company & Directors' Information:- J D MANUFACTURING CO PVT LTD [Active] CIN = U51909WB1996PTC079825

Company & Directors' Information:- U S G ENERGY PRIVATE LIMITED [Active] CIN = U29307TZ2005PTC012414

Company & Directors' Information:- A & T ENERGY PRIVATE LIMITED [Strike Off] CIN = U40106GJ2012PTC070207

Company & Directors' Information:- A T E MANUFACTURING CO PRIVATE LIMITED [Amalgamated] CIN = U28999GJ1973PTC002296

Company & Directors' Information:- GREEN 4 LIFE ENERGY PRIVATE LIMITED [Active] CIN = U40106DL2012PTC230899

Company & Directors' Information:- V A R ENERGY INDIA PRIVATE LIMITED [Strike Off] CIN = U40300TG2014PTC095926

Company & Directors' Information:- M K D ENERGY PRIVATE LIMITED [Active] CIN = U31908UP2015PTC070501

Company & Directors' Information:- C I T L ENERGY PRIVATE LIMITED [Strike Off] CIN = U40108TG2010PTC066844

Company & Directors' Information:- C R B ENERGY PRIVATE LIMITED [Active] CIN = U40108TG2010PTC066845

Company & Directors' Information:- J S ENERGY PRIVATE LIMITED [Active] CIN = U45202HP2006PTC030006

Company & Directors' Information:- T V G ENERGY PRIVATE LIMITED [Strike Off] CIN = U52100UP2014PTC066243

Company & Directors' Information:- J T & T GREEN ENERGY PRIVATE LIMITED [Strike Off] CIN = U40106PN2011PTC138621

Company & Directors' Information:- J T & T GREEN ENERGY PRIVATE LIMITED [Strike Off] CIN = U40106PN2011PTC140072

Company & Directors' Information:- D R R ENERGY PRIVATE LIMITED [Active] CIN = U40102TN2009PTC073741

Company & Directors' Information:- R M ENERGY PRIVATE LIMITED [Strike Off] CIN = U40108MH2003PTC142881

Company & Directors' Information:- A. S. R. ENERGY PRIVATE LIMITED [Strike Off] CIN = U40105TG2008PTC056907

Company & Directors' Information:- K & H ENERGY PRIVATE LIMITED [Strike Off] CIN = U40109AP2012PTC079162

Company & Directors' Information:- S & G ENERGY PRIVATE LIMITED [Strike Off] CIN = U31101CH2010PTC032133

Company & Directors' Information:- D M ENERGY PRIVATE LIMITED [Strike Off] CIN = U40107DL2010PTC199110

Company & Directors' Information:- S K S ENERGY PRIVATE LIMITED [Strike Off] CIN = U40108DL2003PTC119741

Company & Directors' Information:- T AND F ENERGY PRIVATE LIMITED [Active] CIN = U40100MP2011PTC026065

Company & Directors' Information:- R J ENERGY PRIVATE LIMITED [Active] CIN = U40100GJ2009PTC056990

Company & Directors' Information:- I ENERGY PRIVATE LIMITED [Active] CIN = U40100GJ2009PTC058473

    Civil Appeal No.692 of 2021 (Arising Out of SLP (C) No. 16027 of 2020)

    Decided On, 22 February 2021

    At, Supreme Court of India



Judgment Text

Leave granted.1. The present Civil Appeal has been filed by the Appellant-Contractor to challenge the Order dated 16.09.2020 passed on an Application filed under Section 11 of the Arbitration and Conciliation Act, 1996 by the Madras High Court in Original Petition No. 300 of 2019.2. The Appellant and the Respondent had entered into a Development Agreement dated 10.02.2014 to set up a Wind Farm Project in Sangli District in Maharashtra, which contained an arbitration clause.Clause 20 of the Agreement reads as :“20. Governing Law and Jurisdiction and Service of Process….c) All disputes, differences and claims or any non-payment concerning the project work hereby created and / or touching this presents, arising out of or in relation to anything contained herein shall be referred to arbitration to be held at Chennai, under the provisions of Arbitration and Conciliation Act, 1996 (inforce from time to time). The arbitration panel shall consist of three arbitrators, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint the presiding arbitrator. The parties here to shall duly observe any interim award/s or direction/s of the arbitration tribunal and the award in pursuance to arbitration shall be final and binding on the parties hereto. The arbitration proceedings shall be in English language.”3. Disputes arose between the parties with respect to claims raised by the Appellant-Contractor, which led to issuance of a legal notice dated 21.04.2018 seeking payment of outstanding dues of Rs. 3,26,08,545/-.4. The Respondent vide letter dated 21.01.2019 rejected the allegations in the notice, and contended that the Contractor had failed to provide services as agreed under the Development Agreement. It was further contended that the Appellant-Contractor was liable to refund an amount of Rs.10,26,00,000/- with Interest @ 15% p.a., and pay liquidated damages of Rs. 1,54,00,000/- to the Respondent-Company.The Respondent invoked arbitration under Clause 20 of the Agreement, and nominated its arbitrator, with a request to the Appellant herein to make nomination of its arbitrator.5. On 18.03.2019, the Respondent herein filed a Petition under Section 11(6) of the 1996 Act before the High Court of Madras, wherein it was prayed that the Court may appoint an arbitrator on behalf of the Appellant in terms of Clause 20 of the Development Agreement, since the Contractor had failed to do so.6. Subsequently, the Appellant-Contractor, registered itself under the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”), and filed an application for resolution of disputes before the Facilitation Council, Pune established under the MSMED Act.7. In the meanwhile, the Petition under Section 11 was taken up for hearing before the High Court, wherein it was observed that there is no provision under the MSMED Act for reference of counter-claims to the Facilitation Council, and adjudication thereof. Sections 15 to 18 of the MSMED Act provide for reference of disputes with respect to claims made by a supplier / contractor registered under the MSMED Act. Even though Section 24 of the MSMED Act gives overriding effect to the MSMED Act, it would not be applicable in this case, since there is no provision under this Act to deal with counter-claims filed against the supplier-contractor.The High Court took the view that since there is no provision for raising counter-claims under the MSMED Act, and the parties had in the Development Agreement dated 10.02.2014 agreed to refer all their disputes under the 1996 Act, it was a fit case for appointment of the arbitrator. The arbitration agreement provided for a three-member tribunal. The Applicant (Respondent herein) had already nominated its arbitrator, the Contractor was directed to appoint an arbitrator. On such nomination, the two arbitrators would appoint the presiding arbitrator.8. The Appellant-Contractor challenged the aforesaid Order dated 16.09.2020 before this Court vide Special Leave Petition (C) No. 16027 of 2020.During the course of the proceedings, the parties have agreed to have their disputes adjudicated under the Arbitration & Conciliation Act, 1996 by a Court-appointed Sole Arbitrator.In view of the statement made by the Counsel for both parties on instructions, Clause 20 of the Development Agreement dated 10.02.2014 stands superseded to the extent that the arbitration will be conducted by a three-member tribunal.We appoint Justice K. Kannan, former Judge of the Madras High Court, as the Sole Arbitrator to adjudicate on all the claims and counter claims made by the parties arising out of the Development Agreement dated 10.02.2014. The arbitration will be conducted in accordance with the Arbitration and Conciliation Act, 1996. The arbitral proceedings shall be conducted by the Madras High Court Arbitration Centre in accordance with its Rules.The appointment of the Sole Arbitrator is subject to the Declarations to be made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration. The Sole Arbitrator will be paid fees as per the Schedule of the Madras High Court Arbitration Centre (Administrative Cost and A

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rbitrators’ Fees) Rules, 2017.A copy of this Order be despatched to the Madras High Court Arbitration Centre, and Justice K. Kannan (Retd.) at the following address :“Justice K. Kannan3/11, Lakshmi Colony,North Crescent, T. NagarChennai - 600017Mob: +91-9780008145”9. In view of the aforesaid directions, the Application filed by the Appellant- Contractor under the MSMED Act, registered as MSFEC Case No.MH/26/M/PNE/02000 on 22.10.2020, will stand closed by the Facilitation Council, Pune.10. The Appeal is disposed of in the aforesaid terms. Pending applications, if any, stand disposed.