Dismissed

Power Grid Corporation of India Limited v. M/S Sethi Construction Company

Rajasthan HC5 Apr 2019SAW/197/2019

Case brief

AI extract

What is this about?

This special leave appeal challenged the dismissal of a writ petition wherein the High Court dismissed the State Electricity Division's challenge to the appointment and notice by a sole arbitrator under the principle of kompetenz-kompetenz, holding judicial intervention impermissible.

What did the court decide?

The appeal and stay application are dismissed. The arbitrator shall decide on the competence/agitation pursuant to the liberty granted.

Power Grid Corporation of India Limited Vs M/S Sethi… — Arbitration | Rajasthan HC (2019)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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D.B. Special Appeal (Writ) No.197/2019

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With

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D.B. Civil Misc. Stay Application No.1675/2019

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S.B. Civil Writ Petition No.16258/2018

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Power Grid Corporation Of India Limited, Head Office B-9, Kutub Institutional Area, Katwariya Sarai, New Delhi-110016 Through Its Manager (C And M) B-4/184, Chitrakoot Scheme, Near Pratap Stadium, Jaipur

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Versus

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M/s Sethi Construction Company, C-53, Sethi Colony, Agra Road, Jaipur Through Its Authorized Signatory Anil Kumar Sethi.

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Arbitral Tribunal Of Shri Sukhjinder Singh Sole Arbitrator, 401, Akshat Meadows, Sirsi Road, Hathoj Mor, Jaipur

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----Respondents

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For Appellant(s) : Mr. R.N. Mathur, Senior Counsel, with Mr. Prateek Sharma

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HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR

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Judgment

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Per Hon’ble Mr. Justice Mohamad Rafiq:

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05/04/2019

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This appeal seeks to challenge judgment of learned Single Judge dated 16.11.2018 by which writ petition filed by petitionerappellant Power Grid Corporation of India Limited has been dismissed. The petitioner-appellant in the aforesaid writ petition challenged the notice dated 01.05.2018, served on the petitionerappellant by the Arbitral Tribunal consisting of sole Arbitrator Mr.

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(2 of 4)

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[SAW-197/2019]

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Sukhjinder Singh. Challenge was also made to notice dated 03.07.2018 issued by the Arbitral Tribunal asking the petitionerappellant to appear on 13.07.2018.

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It was alleged that the appointment of the sole Arbitrator has not been made in conformity with the clause 69 of the General Terms and Conditions of the Contract between the parties, which was the arbitration clause. The said arbitration clause provides that the aggrieved party as claimant shall serve a notice of his/their disagreement/dispute having arisen on the opposite party (respondent) calling upon the latter to nominate his/their nominee as arbitrator within one month of the date of such notice and that in the event of failure in nominating arbitrator by the respondent within 30 days of the notice by the claimant, the arbitrator nominated by the claimant shall become the sole arbitrator. If, however, both the parties nominate one arbitrator each, i.e., contractor nominates one person to act as arbitrator and Power Grid nominate one arbitrator. As required under Indian Arbitration Act, 1940, both the arbitrators shall appoint umpire, before entering into the reference of disagreement/disputes before the two arbitrators enter into the reference.

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The facts of the case reveal that the claimant-respondent submitted a list of claims and sent a notice to the petitionerappellant vide letter dated 0.05.2018 calling upon them to nominate the arbitrator from their side as per Clause 69.1 of the General Terms and Conditions of Contract between the parties but the petitioner-appellant did not respond to the same within thirty days and thereafter the claimant-respondent nominated Mr. Sukhjinder Singh as the sole Arbitrator. The claimant-respondent then submitted its list of disputes before the sole Arbitrator on

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(3 of 4)

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[SAW-197/2019]

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12.06.2018. The sole Arbitrator then served upon the petitionerappellant notice dated 03.07.2018 calling upon it to appear before him on 13.07.2018.

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The learned Single Judge, relying on the judgment of the Constitution Bench of the Supreme Court in SBP & Co. Vs. Patel Engineering Ltd. & Another – (2005) 8 SCC 618 , dismissed the writ petition. Hence this appeal.

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Mr. R.N. Mathur, learned Senior Counsel appearing for the petitioner-appellant, has reiterated the same arguments, which were advanced before the learned Single Judge. We are, however, not persuaded to take a different view of the matter. The claimantrespondent in a detailed letter/notice sent to the petitionerappellant raised number of disputes which had arisen between them in respect of LOA (Letter of Acceptance) and also notified to them in nomination of Mr. Sukhjinder Singh, the Arbitrator from their side. The petitioner-appellant failed to nominate its Arbitrator in accordance with Clause 69 of the General Terms and Conditions of the Contract. It is therefore the sole Arbitrator issued notice to the petitioner-appellant calling upon them in view of the law laid down by the Supreme Court in SBP & Co. , supra, wherein it was held that any order passed by the Arbitral Tribunal cannot be assailed by the High Court under Article 226 or 227 of the Constitution of India and such intervention by the High Court is not permissible. The law in this behalf is laid down in para 45 of the report.

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The Supreme Court in a recent decision in State of West Bengal Vs. Sarkar and Sarkar – (2018) 12 SCC 736, while considering its aforesaid judgment in SBP & Co, supra, has noted that Section 16 is said to be recognition of the principle

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(4 of 4)

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[SAW-197/2019]

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Kompetenz-Kompetenz. The fact that Arbitral Tribunal has competence to rule on its own jurisdiction and to define the contours of its jurisdiction, only means that when such issues arise before it, the Tribunal can, and possibly, ought to decide them.

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In the present case, the sole Arbitrator has been appointed without recourse to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. He can therefore rule, with reference to Section 16 of the Act of 1996, on his own jurisdiction.

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In the result, we do not find any infirmity in the order of the learned Single Judge. However, we leave it open to the appellant to agitate the question with regard to the competence of the arbitral tribunal including about the validity of its appointment in accordance with the provisions of Section 16 of the Arbitration and Conciliation Act, 1996 on the first available opportunity while raising a plea thereabout in their statement of defence. It goes without saying that the arbitrator obviously shall decide that question in the manner he may deem fit.

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With that liberty, the appeal stands dismissed. This also disposes of stay application.

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(GOVERDHAN BARDHAR),J

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(MOHAMMAD RAFIQ),J

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//Jaiman//62

Power Grid Corporation of India Limited v. M/S Sethi Construction Company

Case brief

What is this about?

What did the court decide?

Power Grid Corporation of India Limited v. M/S Sethi Construction Company

Case brief

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What did the court decide?

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