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Hindustan Zinc Ltd. v/s Shree R.N. Metals (India) Pvt. Ltd.


Company & Directors' Information:- HINDUSTAN ZINC LIMITED [Active] CIN = L27204RJ1966PLC001208

Company & Directors' Information:- E-METALS INDIA LIMITED [Active] CIN = L67120MP1993PLC007899

Company & Directors' Information:- SHREE R.N. METALS (INDIA) PRIVATE LIMITED [Active] CIN = U17118RJ1997PTC013602

Company & Directors' Information:- T & T METALS PRIVATE LIMITED [Active] CIN = U51109WB1996PTC079144

Company & Directors' Information:- T & T METALS PRIVATE LIMITED [Active] CIN = U51109JH1996PTC010474

Company & Directors' Information:- C R P METALS PRIVATE LIMITED [Active] CIN = U13203DL2007PTC162721

Company & Directors' Information:- G B R METALS PRIVATE LIMITED [Active] CIN = U28112TN2006PTC059316

Company & Directors' Information:- R N METALS PRIVATE LIMITED [Active] CIN = U74120TG2012PTC079808

Company & Directors' Information:- B R METALS LIMITED [Active] CIN = U27320AS1992PLC003681

Company & Directors' Information:- M P B METALS PRIVATE LIMITED [Active] CIN = U51101MH2014PTC258799

Company & Directors' Information:- D S METALS PVT LTD [Active] CIN = U27103WB1988PTC044523

Company & Directors' Information:- R S METALS PRIVATE LIMITED [Active] CIN = U27201RJ1973PTC001538

Company & Directors' Information:- C A METALS PRIVATE LIMITED [Active] CIN = U27100DL1988PTC031833

Company & Directors' Information:- S R M (INDIA) LIMITED [Active] CIN = U74899DL1994PLC059750

Company & Directors' Information:- M. P. K. METALS PRIVATE LIMITED [Active] CIN = U27107AS2009PTC009295

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- S K S METALS PRIVATE LIMITED [Active] CIN = U27100DL2009PTC194550

Company & Directors' Information:- I K METALS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U28910TG2014PTC092558

Company & Directors' Information:- R S I METALS PRIVATE LIMITED [Active] CIN = U51109UP2005PTC030888

Company & Directors' Information:- R. A. METALS PRIVATE LIMITED [Active] CIN = U28113DL2011PTC256094

Company & Directors' Information:- S R S METALS PRIVATE LIMITED [Strike Off] CIN = U27200KA1998PTC023427

Company & Directors' Information:- R B S METALS PVT LTD. [Strike Off] CIN = U28111CT1989PTC005335

Company & Directors' Information:- K S METALS PVT LTD [Active] CIN = U65921WB1988PTC043774

Company & Directors' Information:- M B METALS PRIVATE LIMITED [Strike Off] CIN = U27109PB1991PTC011541

Company & Directors' Information:- SHREE METALS PRIVATE LIMITED [Strike Off] CIN = U27300DL1971PTC005828

Company & Directors' Information:- D P METALS PVT LTD [Strike Off] CIN = U00000DL1988PTC031019

Company & Directors' Information:- U V METALS PRIVATE LIMITED [Strike Off] CIN = U15499TN1986PTC013435

Company & Directors' Information:- J N METALS PRIVATE LIMITED [Active] CIN = U28910WB2007PTC113134

Company & Directors' Information:- B S S METALS PVT LTD [Strike Off] CIN = U27109WB1990PTC048713

Company & Directors' Information:- J V METALS PRIVATE LIMITED [Active] CIN = U27109DL2004PTC127614

Company & Directors' Information:- A C L METALS PRIVATE LIMITED [Active] CIN = U27320GJ2021PTC119845

Company & Directors' Information:- G T METALS PRIVATE LIMITED [Strike Off] CIN = U27100DL2011PTC220163

Company & Directors' Information:- A J METALS PRIVATE LIMITED [Active] CIN = U74899DL1988PTC031650

Company & Directors' Information:- B V METALS PRIVATE LIMITED [Active] CIN = U27100MH1983PTC030103

Company & Directors' Information:- S J B METALS PRIVATE LIMITED [Active] CIN = U51909PB1990PTC010910

Company & Directors' Information:- S B H METALS PRIVATE LIMITED [Active] CIN = U74899DL1987PTC026766

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- N & G. METALS PRIVATE LIMITED [Active] CIN = U27300DL2007PTC168632

Company & Directors' Information:- A G METALS PRIVATE LIMITED [Converted to LLP] CIN = U74899DL1992PTC048897

Company & Directors' Information:- D C METALS PRIVATE LIMITED [Strike Off] CIN = U27200MH1998PTC117410

Company & Directors' Information:- R R ZINC PVT LTD [Strike Off] CIN = U27204CH1990PTC010221

Company & Directors' Information:- M H METALS PVT LTD [Strike Off] CIN = U27109CH1992PTC012615

Company & Directors' Information:- S K METALS PRIVATE LIMITED [Strike Off] CIN = U27110TN1979PTC007954

Company & Directors' Information:- M G METALS PRIVATE LIMITED [Not available for efiling] CIN = U99999TN1987PTC014760

Company & Directors' Information:- G N A METALS PRIVATE LIMITED [Strike Off] CIN = U93000DL2009PTC194436

Company & Directors' Information:- S M K C S METALS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U36999MH2011PTC218701

Company & Directors' Information:- S M C ZINC PRIVATE LIMITED. [Strike Off] CIN = U27310HR1995PTC032673

Company & Directors' Information:- Z E METALS PVT LTD [Strike Off] CIN = U24119HP1991PTC011866

Company & Directors' Information:- S M R METALS PVT LTD [Strike Off] CIN = U99999DL1979PTC009736

Company & Directors' Information:- S B M METALS PRIVATE LIMITED [Strike Off] CIN = U51420HR2014PTC052174

Company & Directors' Information:- A K G METALS PRIVATE LIMITED [Strike Off] CIN = U51420DL2000PTC107414

Company & Directors' Information:- C C METALS PVT LTD [Strike Off] CIN = U27109PB1993PTC013823

Company & Directors' Information:- R L G METALS PRIVATE LIMITED [Active] CIN = U27109PB2004PTC027640

Company & Directors' Information:- METALS PRIVATE LIMITED [Active] CIN = U27300MH1946PTC004882

Company & Directors' Information:- H D METALS PRIVATE LIMITED [Active] CIN = U27310MH2010PTC202262

Company & Directors' Information:- V. B. METALS PRIVATE LIMITED [Active] CIN = U27310DL2007PTC170520

Company & Directors' Information:- P J METALS PRIVATE LIMITED [Active] CIN = U28112DL2012PTC233093

Company & Directors' Information:- R J S METALS PRIVATE LIMITED [Active] CIN = U74899DL2004PTC130164

Company & Directors' Information:- P J METALS PRIVATE LIMITED [Active] CIN = U70100DL2012PTC233093

Company & Directors' Information:- J T METALS PVT LTD [Strike Off] CIN = U28997WB1976PTC030719

Company & Directors' Information:- O S METALS PRIVATE LIMITED [Strike Off] CIN = U13206RJ1999PTC015614

Company & Directors' Information:- S S K METALS PVT LTD [Strike Off] CIN = U27200MH1981PTC024739

Company & Directors' Information:- B & J METALS PRIVATE LIMITED [Strike Off] CIN = U27310DL2007PTC158620

Company & Directors' Information:- HINDUSTAN CORPORATION PRIVATE LIMITED [Dissolved] CIN = U74900KL1901PTC000424

Company & Directors' Information:- HINDUSTAN LTD. [Active] CIN = U99999MH1917PTC000472

Company & Directors' Information:- HINDUSTAN CORPORATION LIMITED [Dissolved] CIN = U99999MH1949PLC007790

Company & Directors' Information:- SHREE [Not available for efiling] CIN = U99999MH1951PLC009937

    Arbitration Application No. 26 of 2018

    Decided On, 11 April 2019

    At, High Court of Rajasthan

    By, THE HONOURABLE MR. JUSTICE ARUN BHANSALI

    For the Appellant: Shridhar Mehta, Sachin Acharya, Advocates. For the Respondent: Sanjay Nahar, Advocate.



Judgment Text


1. This application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the Act) has been filed by the applicant seeking appointment of an arbitrator for resolving the dispute between the parties.

2. It is inter alia claimed in the application that the applicant company in order to purchase high chrome grinding media balls raised several purchase orders upon the respondent company for the supply.

3. A dispute arose with regard to quality of grinding balls and payment thereof, due to which arbitration proceedings commenced with three members arbitral tribunal. The pleadings were completed and the matter was pending at the evidence stage for statement of the witnesses, on 12/12/15 all the three members of the arbitral tribunal withdrew from the office for the reasons indicated in its order dated 12/12/15.

4. An averment has been made that the applicant company sent notice to the respondent company to appoint its nominee for resolution of the dispute, though no particulars of the said notice and/or a copy thereof is available on record.

5. It is then claimed that another notice dated 6/8/18 was sent to the respondent, whereby, the applicant had named its nominee calling upon the respondent to appoint its arbitrator so that the further proceedings in arbitration can continue. It is claimed that as the respondent has failed to comply with the requirements of the notice/Act in terms of the arbitration agreement, an arbitrator may be appointed for resolving the dispute between the parties.

6. Reply to the application has been filed by the respondent. It is claimed that the proceedings are barred by limitation as the same has been filed beyond 3 years, when the right to apply accrued to the applicant. Further submissions have been made that the respondent approached the Micro & Small Enterprises Facilitation Council (the Council) by its letter dated 30/8/17 and the Council by its award dated 9/10/17 directed the applicant to pay the due amount to the respondent. Against the said award dated 9/10/17 already an application under Section 34 of the Act has been filed by the applicant, which is pending. It is submitted that the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act) have overriding effect and, therefore, the application filed by the applicant deserves to be dismissed.

7. A rejoinder to the reply has been filed by the applicant questioning the authority of the deponent of affidavit in respect of the reply. Submissions have been made that further proceedings initiated by and between the parties indicate the conduct of the respondent. Serious allegations have been made regarding the respondent obtaining an ex parte award under the MSME Act. Submissions have also been made that in view of provisions of Section 11(6-A) of the Act, the issues on merit as raised by the respondent cannot be adjudicated and the award passed by the Council is bad in law.

8. An additional affidavit has been filed by the respondent making further allegations against the applicant.

9. It is submitted by learned counsel for applicant that a perusal of the order dated 12/12/15 passed by the arbitral tribunal would reveal that it was only on account of conduct of the respondent that the members of the arbitral tribunal withdrew from the office and, therefore, the respondent cannot take advantage of his own wrong.

10. Further submissions have been made that even when the arbitrators withdraw from the office, the proceedings remain pending and it was required of the respondent to appoint new arbitrator/seek appointment of arbitrator, however it chose to approach the Council, which was mala fide and not justified.

11. A further submission has been made that applicant had raised a counter claim amounting to Rs. 5,76,10,698 and in the award passed by the Council there is neither any reference nor any adjudication pertaining to the said counter claim of the applicant and, therefore, the plea/claim to the said extent, subject to the outcome of the proceedings under Section 34 of the Act filed by the applicant against the award passed by the Council, is required to be adjudicated and the opposition by the respondent in this regard is not bona fide.

12. Further submissions were made that besides the fact that dispute raised on merit of the claim is baseless, the said aspect cannot be adjudicated by this Court in view of express provisions of Section 11(6-A) of the Act. It was prayed that the application be allowed and a sole arbitrator be appointed.

13. Learned counsel for the respondent opposed the submissions. It was submitted that the applicant was not justified in seeking reference to arbitration/appointment of arbitrator for adjudication of the dispute which already stands concluded by an award passed by the Council and as the proceedings under Section 34 of the Act against the award passed by the Council is still pending, the applicant is not entitled to seek adjudication of the dispute all over again and, therefore, the application deserves to be dismissed. The submissions made regarding counter claim were also disputed.

14. I have considered the submissions made by learned counsel for the parties and have perused the material available on record.

15. It is not in dispute that there exists an arbitration agreement between the parties; on a dispute having arisen between the parties, both the parties nominated their arbitrators and the arbitrators appointed the presiding arbitrator and proceedings were pending before the said arbitral tribunal, when the order dated 12/12/15 was passed, which reads as under:

“LANGUAGE”

16. Thereafter, it appears that both the parties did not take any steps for appointment of a fresh arbitral tribunal.

17. Though an averment has been made in para 7(5) of the application regarding the applicant sending notice in this regard, however, the averment is absolutely vague and in absence of any supporting material, the contention in this regard remains baseless. However, the respondent appears to have approached the Council by filing an application under Section 18 of the MSME Act on 13/8/17, the Council by its ex-parte order dated 9/10/17 passed the following award:

"vr% miyC/k nLrkost o rF;ksa ds vk/kkj ij lqfo/kk ifjkn }kjk vkiwfrZdrkZ ds i{k esa foyfEcr Hkqxrku dh ewy jkf"k :- 29]53]618@& ,oa ,e,l,ebZMh ,DV] 2016 dh /kkjk 16 ds varxZr ns; Hkkjrh; fjtoZ cSad dh cSad nj ls rhu xquk ekfld po`f) C;kt jkf"k :i;s 34]43]338@& dk vokWMZ tkjh djus dk fu.kZ; loZlEefr ls fy;k x;kA"

18. After passing of the said ex-parte award, the applicant filed an application under Section 34 of the Act against the award dated 9/10/2017 before the competent court and, thereafter, it appears to have dawned on the applicant to resurrect the arbitral proceedings which stood terminated on account of withdrawal from office by the arbitrators, when the notice dated 6/8/18 (Annex. 4) was issued seeking to appoint its nominee for resolution of dispute and making reference to its counter claim therein without even referring to the ex-parte award dated 9/10/17. Further, even in the application filed before this Court there is no whisper regarding the award dated 9/10/17. The present application has been filed on 17/9/18.

19. From the overall circumstances that have come on record and noticed hereinbefore, it is apparent that the present is a case of termination of mandate and substitution of arbitrator as provided under Section 15 of the Act. Section 15 of the Act reads as under:

"15. Termination of mandate and substitution of arbitrator.-- (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate--

(a) where he withdraws from office for any reason; or

(b) by or pursuant to agreement of the parties.

(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal."

20. A perusal of the above provisions in the context of present dispute would reveal that the mandate of the arbitral tribunal appointed by the parties stood terminated with their withdrawal from the office as noticed from the order dated 12/12/15 passed by the arbitral tribunal. Thereafter, under sub-section (2) of Section 15 a substituted arbitrator/tribunal could be appointed according to the rules that were applicable to the appointment of arbitrator being replaced. Apparently the applicant prior to issuance of notice dated 6/8/18 did not take any steps as required under Section 15(2) of the Act and the respondent instead of resorting to the procedure under Section 15(2) of the Act approached the Council which resulted in passing of an ex-parte award, which essentially takes care of the claim made by the respondent before the arbitrators.

21. Once the award dated 9/10/2017 has been delivered by the Council regarding which proceedings under Section 34 of the Act are pending, at the present stage, the award passed by the Council has to be taken as a binding award subject of course to the outcome of the proceedings under Section 34 of the Act and once between the point of termination of mandate of the arbitral tribunal and in seeking substitution, a subsequent event by way of an award dated 9/10/2017 has occurred, the same cannot be ignored and proceedings which would have effect of negating the award cannot be ordered to be resurrected.

22. However, the fact that a counter claim raised by the applicant before the terminated arbitral tribunal was pending and regarding which the award dated 9/10/17 is silent/does not deal with the same, the said counter claim which is essentially in the nature of a claim by the

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present applicant before the arbitral tribunal, is required to be adjudicated, as per provisions of the Act. 23. So far as the various objections raised by the respondent pertaining to the limitation and/or validity of the counter claim made and/or the decision by the Council operating as res judicata qua the counter claim raised by the applicant is concerned, in view of the express provisions of Section 11(6-A) of the Act, the same have to be adjudicated by the arbitral tribunal only and the same does not call for any adjudication by this court. 24. In view of the above discussion, the application filed by the applicant is allowed. Justice Vijay Kumar Vyas, a Former Judge of this Court residing at F-48, 6-D, Engineers Colony, Behind Swarn Garden, New Sanganer Road, Jaipur (Mobile No. 98290-66898), is appointed as a sole substitute Arbitrator to adjudicate upon the disputes between the parties to the extent as indicated above as per the Rajasthan Manual of Procedure for Alternative Dispute Resolution, 2009 as amended up to date. The above appointment is subject to the necessary disclosure being made under Section 12 of the Act.
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