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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA  

CIVIL ORIGINAL JURISDICTION  

ARBITRATION PETITION NO. 8 OF 2014  

M/s. TBEA Shenyang Transformers  Group Co. Ltd. …Petitioner

Versus

M/s. Alstom Projects India Ltd. …Respondent

J U D G M E N T

ANIL R. DAVE, J.

1.  This is a petition under the provisions of Section 11(6) of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as

“the Act”).  

2. By virtue of this  petition, the petitioner company, incorporated

in Republic of China, has prayed that an Arbitrator be appointed

so as to arbitrate the dispute which the petitioner  company is

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having  with  the  respondent  company,  incorporated  under  the

provisions of the Companies Act, 1956, in India.  

3. According to the learned counsel appearing for the petitioner

company, the petitioner company had entered into a contract on

24.12.2007  with  the  respondent  company  for  supply  of

Transformers and certain other electrical equipments which were

necessary for the purpose of setting up Transformers.  The said

Transformers  were  to  be  supplied  for  Chuzachen  Project  at

Sikkim.  

4. According  to  the  respondent  company,  there  were  some

defects in the material supplied by the petitioner company and

when the said defects were brought to the notice of the petitioner

company,  the  petitioner  company  had  agreed  to  replace  the

defective parts.  It is pertinent to note that a bank guarantee had

also been furnished by the petitioner company to the respondent

company  which  was  to  be  invoked  in  certain  circumstances.

According  to  the  learned  counsel  appearing  for  the  petitioner

company,  though there was no reason for invocation of the bank

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guarantee,  without  giving  any  intimation  to  the  petitioner

company, the respondent company invoked the bank guarantee

on 22.06.2013.  

5. In  the  aforestated  circumstances,  the  petitioner  company

was constrained to file an application under Section 9 of the Act

in the District Court at Vadodra, State of Gujarat, but the said

application had been dismissed on 02.09.2013.   

6. Being aggrieved by the order, whereby an application under

Section 9 of the Act had been rejected, the petitioner company

had approached the High Court of Gujarat at Ahmedabad.  The

said appeal filed before the High Court had also been dismissed

on 27.09.2013 and being aggrieved by the order passed by the

High Court dismissing the appeal, the petitioner had filed Special

Leave Petition  before this Court which had also been dismissed

on 07.10.2013 as this Court did not find any infirmity in the order

of the High Court.  

7. In view of the aforestated background, mainly on account of

invocation  of  the  bank  guarantee,  the  petitioner  company,

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according to the learned counsel appearing for the petitioner, has

approached this Court for appointment of an Arbitrator as per the

provisions of Section 11(6) of the Act.  

8. The learned counsel  appearing for  the petitioner-company

mainly submitted that by invoking the bank guarantee without

any justifiable reason and without giving any prior intimation to

the  petitioner  company,  the  respondent  company  committed

breach of the terms of the contract.  The learned counsel also

drew my attention to the contents of the contract entered into

between the  parties  on 24.12.2007 and submitted that  in  the

aforesaid circumstances an Arbitrator be appointed by this Court

so that the dispute which has arisen between the parties can be

resolved by way of arbitration under the provisions of the Act.   

9. On the other hand, the learned counsel appearing for the

respondent-company submitted that, in fact, there is no dispute

between the parties and there is no reason for appointment of an

Arbitrator.  He submitted that the application filed under Section 9

of the Act by the petitioner company had been rejected and the

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said order of rejection had been confirmed not only by the High

Court, but also by this Court.  The fact that no interim protection

was  granted  denotes  that  there  was  no  dispute  which  would

require appointment of an arbitrator. He further submitted that by

invoking  the  bank  guarantee  and  by  encashing  the  amount

payable  to  the  respondent  company, the  issue  with  regard  to

invocation  of  the  bank guarantee  has  become infructuous and

there  cannot  be  any  dispute  on  the  said  subject.  Thus,  the

learned counsel appearing for the respondent submitted that this

is not a case where an Arbitrator should be appointed as per the

provisions of the Act.  

10. Upon hearing the learned counsel for the parties and going

through the provisions of  the contract,  I  am of the view, that

there  is  a  dispute  between  the  parties  which  requires  to  be

resolved by an Arbitrator under the provisions of the Act.  

11. There is no dispute to the effect that there is a clause with

regard to arbitration in the contract which had been entered into

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between  the  parties  on  24.12.2007.   The  arbitration  clause

incorporated in the contract reads as under:  

“33.0 Arbitration.

33.1  Where any dispute is not resolved as provided  for  in  the  preceding  clause  32.1 then  such  dispute  shall  be  referred  to  and settled  by  arbitration  under  and  in accordance with the provisions of  the rules applicable in land of Law.  The Award shall be final  and  binding  upon  the  Supplier  and Purchaser.  The place of arbitration shall be Paris.  

33.2 During  settlement  of  disputes  and arbitration  proceedings,  unless  otherwise agreed in writing both Supplier and Purchaser shall be obliged to carry out their respective obligations under the Contract.”

12. As there was a dispute with regard to quality of  material

supplied, some letters were exchanged between the parties and

the  representatives  of  both  the  parties  had  also  met  for  the

purpose of resolving their disputes but unfortunately, the disputes

with  regard  to  quality  of  the  material  supplied  could  not  be

resolved and ultimately the respondent company had to invoke

the bank guarantee.

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13. In  the  aforestated  circumstances,  it  cannot  be  said  that

there  is  no  dispute  between  the  parties  and  therefore,  in  my

opinion,  an  Arbitrator  is  required  to  be  appointed  as  per  the

provisions of Section 11(6) of the Act.  

14. In  view of  the aforestated  circumstances,  Mr. Justice  A.P.

Shah,  former  Chief  Justice  of  High  Court  of  Delhi,  having  his

office  at  F-15,  Hauz  Khas  Enclave,  New  Delhi-110016,  is

appointed as an arbitrator and the place of arbitration shall be

Delhi.   Remuneration to be paid shall  be fixed by the learned

Arbitrator.  The parties to the litigation have agreed to the above

appointment and they have also agreed that they would request

the  learned  Arbitrator  to  complete  the  arbitral  proceedings

preferably  within  six  months  and  they  shall  extend  their

cooperation to the learned Arbitrator so that the proceedings can

be concluded at an early date.

15. Intimation of  this  order be forwarded to the learned Sole

Arbitrator by the Registry of this Court.

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16. The Arbitration Petition is allowed in the aforesaid terms. No

costs.

……………………………J.

                                                           [Anil R. Dave]  

New Delhi;

September 21, 2015.