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M/s. Zillion Infraprojects Pvt Ltd, Rep. by its Authorised Representative, New Delhi v/s Bharat Heavy Electricals Limited, Power Sector Southern Region, Chennai

    Arb. O.P. No. 426 of 2021

    Decided On, 29 July 2021

    At, High Court of Judicature at Madras


    For the Petitioner: S. Vijay Kumar, Advocate. For the Respondent: Chethan Sagar, Advocate.

Judgment Text

(Prayer: Original Petition has been filed under Section 11 (4) & (6) of the Arbitration and Conciliation Act, 1996, to appoint an Arbitrator to hear and decide the disputes between the parties arising out of LOI through Fax bearing No.BHEL:PSSR:SCT:1319, dated 11/16.3.2009.)

1. This Arbitration Original Petition has been filed to appoint an Arbitrator to hear and decide the disputes between the parties arising out of LOI through Fax bearing No.BHEL:PSSR:SCT:1319, dated 7/7/2009.

2. Heard Mr.S.Vijayakumar, learned counsel for the petitioner and Mr.Chethan Sagar, learned counsel for the respondent.

3. The respondent had issued a notice inviting Tender, for handling of site stores/storage yard, transportation to site of work, erecting, testing & commissioning of complete Boiler structures, pressure parts, etc. The date of contract is 6/11/2007. The period of completion is originally eight months. The work was completed only on 30/9/2010. The petitioner claimed extra expenses of Rs.7,27,066 and again laid a claim on 14/11/2013 for a sum of Rs.9,90,53,560/- (Rupees Nine crores ninety lakhs fifty three thousand five hundred and sixty only). However the respondent had rejected the claim of the petitioner, by letter, dated 26/6/2014, on various grounds. Thereafter, the petitioner, made a representation to the respondent for making the payment towards claim and dispute. Again the petitioner was invited for negotiation by the respondent, on 9/4/2015. Negotiation had continued till 6/10/2016. In the year 2018, the petitioner Company went on liquidation and thereafter, the appointment of Interim Resolution Professional was confirmed as Resolution Professional (RP) by the Tribunal on 22/4/2019. After the appointment of Interim Resolution Professional, Committee of Creditors was formed and steps were taken for resuming talks with the respondent. Though the petitioner has sent a letter, dated 9/3/2021 calling upon the respondent to nominate an Arbitrator, no steps have been taken by the respondent. Hence the petitioner has come forward with the present Arbitration Original Petition.

4. Counter affidavit was filed by the respondent, wherein it is stated that the maintenance period/guarantee period of the Contract stood completed on 13/2/2012. The arbitration clause ought to have been invoked within three years from the said date, present Arbitration Original Petition and the claims made by the petitioner are clearly barred by limitation.

5. It is further stated in the counter affidavit that the scope of work was completed and all payment obligations were fulfilled by the respondent. After seven years, all of a sudden, the petitioner has invoked the arbitration clause, contained in the Contract, vide, its letter, dated 9/3/2021, is clearly barred by limitation.

6. It is the further contention that this claim is only with regard to the damages when the claim itself is repudiated and rejected in the year 2014 invoking arbitration in the year 2021 would not be permissible and the claim is hopelessly barred.

7. The main submission of the learned counsel for the petitioner is that the petitioner has a claim of Rs.9,90,53,560/- against outstanding bills and claims against the respondent for the work done as per the contract and the same is not yet paid by the respondent.

8. From the materials available on record, it is clear that the factors of of rejection of claims was informed to the petitioner, vide respondent’s letter, dated 26/6/2014. Appointment of an Arbitrator is sought for to enter into the reference with regard to the dispute said to have been arisen in respect of the damages payable by the respondent. It is not disputed by the petitioner that the final bill has already settled as early as on 26/11/2014. What was sought to be agitated is only for damages. The claim for damages was rejected in the year 2014 itself. Though there are subsequent correspondence, inviting the petitioner for negotiation, mere exchange of correspondence and negotiation will not automatically extend the period of limitation. The rejection was admittedly made in the year 2014. Therefore, any such claim or damages ought to have been made within three years from the date of rejection.

9. The Hon’ble Supreme Court, in a judgment of UTTARKHAND PURV SAINIK, KALYAN NIGAM LIMITED Vs. NORTHERN COAL FIELD LIMITED (2020) 2 SCC –455), has held that the limitation is a mixed question of fact and law. The issue of limitation being a jurisdictional issue, can be decided by the Tribunal, under Section 16 of the Act.

10. In the judgment of the Hon’ble Apex Court in SECUNDERABAD CANTONMENT BOARD Vs. B.RAMACHANDRAIAH & SONS (Civil Appeal Nos.900-902 of 2021) dated 15/3/2021, considering the various judgments includi

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ng the UTTARAKHAND PURV SAINIK, KALYAN NIGAM LIMITED, has held that Application under Section 11 of the Act, themselves being hopelessly time barred, no arbitrator could have been appointed by the High Court. 11. In view of the decision rendered by the Hon’ble Supreme Court, in SECUNDERABAD CANTONMENT BOARD Vs. B.RAMACHANDRAIAH & SONS, this Court is of the considered view that appointing an arbitrator in this instant Arb.O.P., is nothing but a futile exercise. Accordingly, this Arbitration Original Petition is dismissed.