M/S TBEA SHENYANG TRANSFORMERS GR.CO.LTD Vs M/S ALSTOM PROJECTS INDIA LTD.
Bench: ANIL R. DAVE
Case number: ARBIT.CASE(C) No.-000008-000008 / 2014
Diary number: 30542 / 2013
Advocates: ROHIT K. SINGH Vs
Page 1
1
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
Page 2
2
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
Page 3
3
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,
Page 4
4
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
Page 5
5
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
Page 6
6
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.
Page 7
7
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.
Page 8
8
16. The Arbitration Petition is allowed in the aforesaid terms. No
costs.
……………………………J.
[Anil R. Dave]
New Delhi;
September 21, 2015.