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Judgment
R.Raghunandan Rao, J
One M/s.Voltech Projects (P) Ltd., had participated in a tender, called by the applicant, on 22.08.2007, for the work of supply and instillation of galvanized cable support, racks and trays for interplant cable tunnels/trestles/trenchers and was declared as the lowest bidder. Subsequently, the bid of M/s.Voltech Projects (P) Ltd was accepted by the applicant, for a sum of Rs.11,96,42,162.50/- by way of a letter of acceptance dated 12.02.2008. Thereafter, M/s.Voltech Projects (P) Ltd., sought deviations in the letter of acceptance. After receiving this request, another letter of acceptance, dated 25.02.2008, was issued, setting out the terms of the contract and requiring the said M/s.Voltech Projects (P) Ltd., to execute a formal agreement. Further, the applicant also contends that in any event, the notice inviting tenders issued on 22.08.2007 incorporated a clause that the general conditions of contract, technical specifications and General specifications of contract would constitute a part of the notice inviting tenders.
M/s.Voltech Projects (P) Ltd., instead of entering into the formal agreement and commencing work, had sought to enter into correspondence. The applicant had then held a meeting with the M/s.Voltech Projects (P) Ltd., on 05.04.2008 to resolve these issues. As this meeting did not result in any positive result, a notice dated 19.04.2008 was issued by the applicant, to M/s.Voltech Projects (P) Ltd., proposing to terminate the contract at the risk and cost of M/s.Voltech Projects (P) Ltd. M/s.Voltech Projects (P) Ltd., replied to this notice and took the stand, in its reply dated 24.04.2008, that as there was no concluded contract, the question of terminating the contract and the liability of cost and risk would not arise. Thereafter, the applicant terminated the contract by a letter dated 06.05.2008. After the said termination, fresh bids were invited for the same work and M/s.Rohini Industrial Electrical Pvt. Ltd., and M/s Cosmic Power Systems Pvt. Ltd. were entrusted the said work, on the basis of the bids made by them. As these bids entailed further expenditure, over and above, the amount fixed in the earlier bid, the applicant issued a notice dated 07.02.2011 to M/s.Voltech Projects (P) Ltd., to make good the loss of Rs.2,09,66,304.63/- with interest at the rate of 18% from 30.07.2008. The applicant apart from raising this demand had also invoked the arbitration clause 28.1 contained in the General conditions of contract. These letters are said to have been avoided by M/s.Voltech Projects (P) Ltd., and the notice was returned with an endorsement “left without instructions”.
The applicant also by a letter dated 21.06.2011, appointed a former Judge of the Hon’ble High Court of Andhra Pradesh as its nominee arbitrator. The applicant with a view to ascertain the correct address of M/s.Voltech Projects (P) Ltd., had approached the Registrar of Companies, and had sent a notice dated 23.12.2011 to the changed address obtained from the Registrar of companies. The previous communications of 07.02.2011 and 21.06.2011 were enclosed with this notice. The applicant thereafter received a letter dated 27.03.2012 stating that M/s.Voltech Projects (P) Ltd., had amalgamated into M/s. GET Power Pvt. Ltd., w.e.f 1.04.2010. M/s.GET Power Pvt. Ltd., by another letter dated 18.04.2012, requested for all the earlier correspondence which was made available through a letter dated 02.05.2012. After receipt of the earlier correspondence, M/s. GET Power Pvt. Ltd. by a letter dated 10.10.2012 suggested resolution of dispute. As there was no further movement, the applicant by letter dated 31.12.2012 and 08.04.2013 again requested the M/s. GET Power Pvt. Ltd., to appoint its nominee arbitrator. However, M/s. GET Power Pvt. Ltd., filed an Arbitration Application bearing S.R.No.3288 of 2013 seeking a declaration that the arbitration clause contained in General conditions of contract is not binding on it. This application was withdrawn on 21.06.2013.
As M/s. GET Power Pvt. Ltd., which is the respondent herein had not come forward for constituting the Arbitral Tribunal, the applicant has now approached this Court, by way of the present Arbitration Application under Section 11 of the Arbitration and Conciliation Act, 1996. The notice of this application was sought to be served on the respondent by the applicant. However, personal notice sent to the respondent on 29.06.2019 was returned with the noting of “addressee left without instructions”. Thereupon, the applicant filed I.A.No.1 of 2019 seeking substituted service. This Court, by an order dated 30.07.2021, had permitted the applicant to take out substituted service, by issuing the notice to the respondent, by way of publication in Indian Express Newspaper, Chennai Edition. As this publication could not be carried out, this Court by an order dated 28.04.2022 had directed fresh publication to be taken on in the same newspaper. Subsequently, by an order dated 30.06.2022, the time granted in the order dated 28.04.2022 was extended by a further period of four weeks. The applicant has filed a memo of proof of service dated 25.07.2022, attaching the newspaper in which publication of notice has been carried out. Despite service of notice, there has been no appearance on the part of the respondent and the matter is being taken up on the basis of the material available before this court.
Clause 28.2 of the General conditions of contract stipulates that all disputes which are not covered under clause 28.1, arising between the parties out of or relating to the construction, meaning and operation or effect of the contract or the breach thereof shall be settled by Arbitration before the Arbitral Tribunal, consisting of three arbitrators. The parties being entitled to appoint one arbitrator each and the said two arbitrators to appoint the 3rd arbitrator who shall be the presiding arbitrator. The present dispute does not appear to fall within clause 28.1.
M/s. Voltech Projects (P) Ltd., which had originally been declared the successful bidder, has merged into M/s. GET Power Pvt. Ltd. Upon such merger, all the rights and liabilities of M/s. Voltech Projects (P) Ltd., would be applicable to M/s. GET Power Pvt. Ltd. Consequently, M/s. GET Power Pvt. Ltd., steps into the shoes of M/s. Voltech Projects (P) Ltd., and is rightly arrayed as the respondent in this application.
The contention of the respondent appears to be that the arbitration clause contained in the general conditions of contract would not be applicable as there was no concluded contract between the respondent and the applicant. The contention of the applicant is that the terms of the invitation to offer bids, under the tender notification of 22.08.2007 stipulated that the General conditions of contract would be applicable and are to be read as part of the notification. The respondent by participating in the tender process has accepted these conditions of contract and as such, they would be binding on the respondent also. The lack of formal agreement would not relieve the respondent from the General conditions of the agreement and as such, the arbitration agreement is valid and binding.
The question of whether the arbitration agreement is binding on the respondent or not is a question that can definitely be gone into by the Arbitral Tribunal itself. In such a situation, it would be appropriate to allow this application as the ingredients set out in section 11 of the Arbitration and conciliation Act, 1996 are fulfilled.
Accordingly, this Arbitration Application is allowed and Hon’ble Sri Justice C.Y.Somayajulu, Former Judge, erstwhile High Court of Andhra Pradesh, Flat No.301 & 302, 4th floor, Sanali Residency, Near Hotel Katriya, Somajiguda, Hyderabad-82, is appointed as an Arbitrator on behalf of the respondent. It is informed that the Arbitrator nominated by the applicant has passed away. Hence, it would be open to the applicant to appoint another Arbitrator in the place of the deceased Arbitrator, within a period of three weeks from the date of receipt of this order and intimate the said appointment to the learned Arbitrator, appointed by this Court and the respondent herein.
Needless to say, the learned Arbitrators shall choose the 3rd Arbitrator who shall be presiding Arbitrator of the Arbitral Tribunal. It is left open to the Arbitral Tribunal to fix the fees of the Arbitrators in accordance with the provision of the Arbitration and Conciliation Act, 1996 and to conduct the arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996, in relation to the claim of the applicant, arising out of the contract referable to the notice inviting tender, 22.08.2007 and the related documents and to the letters of acceptance of 13.02.2008 and 29.02.2008. There shall be no order as to costs.
Miscellaneous petitions, pending if any, shall stand closed.