The High Court · 2025

Order

Heard Mr. M. Rama Krishna, leamed counsel lor t[re: applicant and Mr. P Sri Ilarsha Reddy, learned counsei for the responrlcnt.

2. 'Ihis rpplication is filed under Section - l1 (5) & (6) of the Arbitratron an<l Conciliation Act, 1996 (for short 'Act. 1996'), to appoint a sole r\r'bitrator to adjudicate the disputes/claims br,:tween the applican t and tl re respondent.

3. CON TENTIONS OF THE APPLICAN'I i) 1'he re spondent - M/s. Singareni Collieries Compar:y Limited (SCCL) floaterl Tender Enquiry No.E141800480, dated 19.02.2019 for transporlation of Coal from KTK-6 Incline & Kl-I'Minc to KTK-5 CFIP, Bhupalapally Area on weight basis for a period o1 two (02) years.

l The applicant - M/s. Sri Laxmi Ganapathi Constructions, Warangr,rl, parl icipated in the said Tender and stood as successful bidder. There ble, the respondent has awarded the said 'work vide Work C)rder |1o.7600007834, dated 24.06.2019. 'Iher. have also 2 2 KL,J Arb.Appl.No. I 77 of 2024 entered into an Agreement dated 30.01 .2019 on the specific terms and conditions mentioned therein. The work was commenced from

24.06.2019 and it is going to expire by 23.06.2021 . iiD The said contract is based on the quantity of the coal provided to the applicant on the rates prescribed under the said contract. But, from the beginning of the contract, the respondent did not provide the minimum quantity of coal for transportation causing immense loss to the applicant. iv) The respondent has abruptly stopped providing coal for transportation to the applicant. The respondent neither sent any communication nor assigned any reason for stopping the allocation of I coal abruptly. Therefore, the applicant had submitted a letter dated

04.09.2020 to restore the contract and comply with the terms of the work order and agreement. The applicant also addressed several letters to the respondent demanding to settle the said dispute by paying dues and restore the original contract. There was no response from the respondent. v) Since there was no response from the respondent to settle the dispute by way of negotiations, in the month of October, 2022' the 3 Kt-,J Arb.Appl.N, r. 1 77 of 2024 respondent orall)' informed the applicant that they \4'oul(l tlot restore the conlract and pay the forfeited amount on the grouud ttrat there is no explicit provision in the purchase order for refirnding of forfeited and recovered amount. Therefore, the applicant has is:;ued legal notice to the respondent demanding an amount of Rs.1 ,2 7 ,97 ,,0891- towards damages lor breach of contract along with tbrfeited amount of Rs.48,0'),060i- rvithin fifteen (15) days from the date of receipt of the said notice or in the altemative initiate arbitration proce:dings for adjudication of disputes raised by the applicant within thirty (30) days. Despite receiving and acknowledging the said legal notice, there was no resp,rnse fi,rm the respondent. Therefore, the applicarrt hlcd the present application seeking appointment of arbitrator to adj,.rfliga1g th. disputes 4 CONIENTIONS OF THERESPONDENT i) The respondent had filed counter admitting about the contract entere I between the parties on 30.07.2019 and tha t the same is for a period of two (02) years. According to the rcspondent, the applicarLt has commenced the work on 03.07 .2019. From I he date of commerrcemen - of the contract, the applicant did not work smoothly, .:t I II / i E|] 4 KL,J Arb.ApPl.No.l 77 of 2024 created lot of inconvenience to the Mines Authorities of respondent company by not deploying required number of trucks for transportation of coal as per Clause No'5.9 of the work order' ii) The applicant has to transport 533 Tons per day from KTK- 6 and 800 Tons per day from KLP Mine. The applicant did not provide sufficient number of Lorries at KTK-6 and KLP Mine due to which coal was dumped at those places every day instead of transporting to the KTK-5 CHP that hampered the production badly' The SCCL failed to suppty Coal to its customers and the contract was ended on 3l.O3.ZO2O due to non-transport of targeted production from KTK-6 and KLP Mine. iii) The contract was closed early by SCCL on 3l'03'2020 as there was no coal linkage provided in financial year202l-22 by SCCL for admitting coal. The applicant applied for release of Security Deposit (SD)/EMD. The applicant performance could not meet the requirement of the Company and not satisfactory' Keeping in view the pre-closure of the contract period and in a sympathetic way' the SD/EMD amount was released and paid to the applicant' { 5 K L,J Arb.Appl.\ o. I 77 of 2024 i u) De spite the requests made by the respondent to deploy sufficienl nunrber of lorries at I(TK-6 and Kl,P rninr: to avoid dumping of coal, the applicant did not do so. The r easons for stoppap.e of tl c contract vide pwchase order dated, 24.0(:.2019 was intirnatr:d to th: applicant orally. v) The SD/EMD amount of Rs.10.00 lakhs was released and paid to the applicant vide cheque No.636435 dated 29.0t,.2020 i.e., before ,:ornpie -ion of contract period upon submission o f application dated 11.05.2020 by the applicant, as such, the allegaton of the applicant that she had no official communication resc nding the contrac'. is lalse and baseless. The present application is not maintainable, The applicant did not follow the plocedure laid down under tle agre ernent and did not file the present application within 120 days on failure of negotiations. The present a1;plication is hopelessly bar red by limitation. Therefore, there are no disputes between the apolicant and the respondent to adjudicate 5 Both learned counsel for the applicant and respondent made their subnrissio ns extensively. ,l 6 ,. KL,J Arb.Appl.No. I 77 of 2024 ANALYSIS AND FINDINGS OF THE COURT:

6. The aforesaid rival submissions would reveal that the respondent is opposing the present application on the following grounds: i. The present application is barred by limitation; ii. The applicant did not follow the procedure laid down under Clause - 10 of the work order dated 24'06'2019 and the agreement bond dated 30.07.2019;

7. There is no dispute that the respondent has issued tender dated 19.02.2019 for transportation of coal from KTK-6 Incline and KLP Mine to KTK-5 CFIP, Bhupalapalli on weight basis for a period of two (02) years. The applicant participated in the said tender and stood as successful bidder. The respondent has issued work order dated24.06.2019, and both the applicant and respondent have entered into an agreement on 30.07.2019 on the specific terms agreed therein' According to the applicant, it has commenced the work from

24.06.2019, whereas, according to the respondent, the applicant has commenced the work from 03.07.2019' L : .: .i., 1 KI ,J Alb.Appl.Nc,.l 77 of 2024

8. It is the specific contention of the applicant that it has execute(l tl.re ra ork strictly in accordance with the agreenlent dated

30.07.2Ct19. Ar cording to the respondent, the applicant did not deploy sufhciert nunrt,el of trucks for transportation of coal at KIK-6 and KLP Mine to a.,oid dumping of coal. The performa.nce of c,rrilract by the appl Lcant cr'uld not meet the requirement of the responr.lent. The applicant did rot provide the loaders as required at the i:espective mlnes. 'I'here fbre, the respondent has closed the co ntract on

31.03.2020 itse 1,

9. r\s cli;cussed above, the agreement is dated 30.07 2019 and thc last tra)/tncr t was made on 29.06.2020. The respondctl t has also paid the SD/Ill4D amount of Rs.10.00 lakhs to 1he apltlicant vlde cheque bearing No.636435, dated. 29.06.2020. Accordirrg to the applicanr, thc r espondent stopped providing coal u,ithout assigning any reas(lns and u,ithout issuing any notice. The applicant submitted a i l letter dated 04.)9.2020 to the respondent with a request t,:r provide coal and no[ tc stop the same abruptly. The applicant a]so issued similar letters <lated,20.10.2021 and 30.12.2021. l/ide lefter dated. l7 .09.2022, the respondent replied to the applicant that the rr.:spondent E KL,J Arb.Appl.No. 177 of 2024 withheld/forfeited an amount of Rs.48,09,060/- as per the terms and conditions of respective purchase orders and there is no explicit provision in the said purchase orders' for refunding the forfeited./recovered amount. Therefore, vide notic e dated, 08.04.2024, the applicant requested the Chairman and Managing Director of the respondent to intervene/pay an amount of Rs.7 ,47 ,97,089/- towards damages for the breach of contract along with the forfeited amount of Rs.48,09,060/-. Despite receiving and acknowledging the said notice, there was no response from the respondent.

10. In the light of the aforesaid submission, it is relevant to note that in Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited.r, the Hon'ble Supreme Court held that the High Courl being the referral Court may refuse to refer to arbitration only in rare and exceptional cases where claims are manifestly time barred. I l In NTPC Ltd., v. SPML Infra Ltd.2, the Apex Court clarified that while the limitation for filing under Section 1 1 of the Act, 1996 is three (03) years under Article - 137 of the Limitation '. 1zo2 t.1 s scc l:s '. (zozi) z scl. tqo , I Kt,,J Arb.Appl.Nc. I 77 of 2024 Act, the issue cf whether the underlying claims are timc barred is for the arbil'al Tribunal to decide.

12.. ln r\slam Ismail Khan Deshmukh v. Asap Fluitls Private Limitedr placi rg reliance on its earlier judgments, in paragraph No.43, ir -flue*.fudge Bench of the Apex Court held tl,at while determir ing issr re of limitation in the exercise of powers undr:r Section - 11 (6) o1'the A,ct, 1996, referral Couft must only conduct a limited enquiry for ttr: purpose of examining whether Section - 11 (6) application has been fited within the limitation period of :hree (03) years or nol-. ,\t this stage, it would not be proper for the relerral Court to indulg: in an intricate evidentiary enquiry into tht: question of whether the claims raised by the petitioner are time-barecl and such a determination must be left to the decision of the arbitrator'. It further held that in a sr:cnario where the referral Courl is able to d,.scern the frivolity in the titigation on the basis of bare minirnum ple,adings, it would be incor rect to assume or doubt that the Arbitral Tribunal would n,:rt be able to arrive at the same inference, especir,Llly when r. lzozs; r l;cc so: \l 10 KL,J Arb.Appl.No. I 77 of 2024 they are equipped with the power to undertake an extensive examination of the pleadings and evidence adduced before them.

13. In the light of the aforesaid principle laid down by the Apex Cour1, coming to the facts of the present case, as discussed above, the applicant and the respondent have entered into the agreement dated

30.07 .2019, and it is for a period of two (02) years. According to the applicant,, the respondent stopped providing coal abruptly without any reasons and without issuing any notice. Therefore, the applicant has submitted a letter dated,04.09.2020 to the respondent to provide coal. The respondent did not provide the coal. Even according to the respondent, the contract was closed by it on 31.03.2020 and it has paid the SD/EMD amount vide cheque No.636435, dated,29.06.2020. The applicant had submitted letters dated 20.10.2021 and 30.12.2021 to the respondent with a request to provide coal, negotiate and settle the disputes. Vide lelter dated 17.09.2022, the respondent informed the applicant that it has withheld/forfeited the said amount of Rs.48,09,060/- as per the terms and conditions of the purchase orders and there is no explicit provision in the said purchase orders for refunding the forfeited/recovered amount. Even in the counter filed , 11 K]-,J Arb.Appf No.111 of2024 by the respon(lent, it is specifically mentioned that the rsasons for stoppage of the contract vide pwchase order dated 24.06.2019 was intimate,d 1s f[,: applicant orally. Therefore, there is continuous cause of action. 'l-lre applicant filed the present application on 19.07.2024. Thus, it cannr:l be termed as manifestly time barred. Evcn the aspect of delay/lirritalion can be considered by the Arbitrator himself. In the light of the afcresaid discussion, this Court is of the consirlered view that the presenl application is not manifestly time barred an<l it is not a rare and exceptional case to dismiss the present appiication. 1,1. As discussed above, there are disputes bei.ween the applicarrt and tlre respondent with regard to the followirlg asl)ects: i) Arcording to the applicant, it has commencecl the work frcn 24.06.2019, whereas according to the r::spondent, tlrt, applicant has commenced the work from ()3 07.2019; ii) According to the respondent, the applicant dic not work sroothly and created lot of inconvenience tc the mine au horities of the respondent by not cleployin,,; required nu nber of trucks for transportation of coal as per Clause Nc .5.9 of the work order; r-! t2 i,....1. KL,J Arb.Appl.No. I 77 of 2024 iiD Performance of the applicant could not meet the requirement of the Company and not satisfactory; and iv) Applicant did not provide the loaders as required at the respective mines etc. Therefore, the said aspects are factual aspects, arbitral disputes which the Arbitrator has to consider. Thus, this Court is of the considered view that there are disputes between the applicant and the respondent and the same are arbitrable in nature.

15. With regard to the contention of the respondent that the applicant did not follow the procedure laid down in Clause - 10 of the Purchase Order, it is relevant to extract the same which is as under: ..I0. ARBITRATION: Normally all disputes should be settled by negotiations between the Company and the concerned paflies. In case any dispute / difference is not settled through negotiations, the respective parties can seek remedy through Arbitration only by invoking the same within 120 days of raising of dispute. No disputes shall be referred to civil courts other than/through Arbitration. ) 13 KI.,J Arb.Appl.Nrr. I 77 of 2024 (a) In rase of any dispute Sole Arbitrator shall be appointed from the list of 3 judicial oftlcers rnairrtained by SCCL duly following the provisions t,f Arbitration and conciliation act l99b as amended from time to time: The list of such namcs shal be lorwarded to the party as and when the partr requests for resolving the dispute. Such ludi:ial Officer as chosen by thc party will be appointed by the Chairman & Managing Director to aljudicate the dispute as a Sole Arbitrator. The Arb trator so appointed shall conduct the proc cedings in accordance with the Arbitration & Con:iliation Act, 1996 as amended lrom timc trr tinre and pass a reasoned award. Both the parties shor ld bear the cost ofthe arbitration equally. (b) if the Sole Arbitrator appointed by the Chaimran & ManiLging Director of the Singareni Collieries Corn rany Limited is unable to continue as ar1 Arbilrator for any reasons to be recorded in rvriting and t re Chairman& Managing Director of Singareni Colli:ries Company Limited thinks fit lbr appo ntment of a new Arbitrator in the place of existrng Arbitrator, he is having a power to do sc,. Such neu,Arbitrator shall be appointed follou.ing the srLme procedure as contemplated in (a) above. (c) As arrd r.vhen such new Arbitrator is appointed. he can either continue the arbitration proceedings fiom _l t4 KL,J Arb.Appl.No. I 77 of 2024 (d) the stage where the earlier Arbitrator discontinued his proceedings or altematively the new Arbitrator may start proceedings de novo if the circumstances warrant him to do so. Failing to invoke Arbitration Clause within 120 days of dispute (from the date of the raising of the dispute) it is deemed that there is no dispute between the parties. No disputes shall be entertained in any form and on any mafter pertaining to contract after expiry of 120 days of the period. (e, The expenses payable to the Sole Arbitrator shall be governed by the Arbitration & Conciliation Act, 1996 as amended from time to time and shall be borne equally by both parties to the dispute."

16. As per the said clause, in case any dispute/difference is not settled through negotiations, the respective parties can seek remedy through Arbitration only by invoking the same within 120 days of raising of dispute. No dispute shall be referred to Civil Courts other than through Arbitration.

17. As discussed above, the respondent stopped supply ofcoal to the applicant. According to the respondent, it has informed the reasons to the applicant orally. According to the applicant, the l5 K L.J Arb.Appl.N r.177 of 2024 responrlent dit not inform the applicant about stoppagc of coal and withoul assigrling any reasons and without issuing rrotice, the responclent stcpped supply of coal to the applicant. The refore, the applica.rt has 6 iven a letter dated 04.09.2020 to the responr.lent with a request to provide coal and restore the contract. Despite ret:eiving and acknowledginp the said letter and so also the notice dated C8.04.2024, there v,as no response from the respondent. 'Ihe applicant has submitt,3d two nlore letters dated 20.10.2021 and 30.12.202i with similar requesr and the applicant also requested the resl'rondent to settle/resolve the disputes. The respondent has sent k:tter dated

17.09.21)22 to the applicant stating that there is no explicit provision to refund the forfirited amount. However, the said aspect is ar arbitrable dispute md it ir. for the Arbitrator to consider the sarne 1ll. This Court being referral Court has to see the er,.istence of agreem€,nl and arbitration clause. In the present case, tJrere is an ; agreement and arbitration clause. Other aspects will be conr;idered by the Arbi trator \ \ 1!). In tte light of the aforesaid discussion, this Court is of the considered vievr that there are disputes between the applicalt and the l6 KL,J Arb.Appl.No. 177 of 2024 respondent which are arbitrable in nature to be adjudicated by an Arbitrator.

20. The present arbitration application is accordingly allowed, and Sri Justice M. Seetharama Murti, Former Judge, High Court of Andhra Pradesh at Amaravati, R/o Flat No.602, 'A' Block, White House Apartments, H.No.8-2-67412 & 24, Road No.13, Banjara Hills, costs. As a sequel thereto, miscellaneous applications, if any, pending in the Arbitration Application shall stand closed. //TRUE COPY// Sd/- K. SRINIVASA RAO JOINT REGISTRAR SE FFICER To,

1. Sri Justice M. Seetharama Murti, Former Judge, High Court of Andhra Pradesh at Amaravati, R/o Flat No.602, 'A Block, White House Apartments, H.No.8-2-67 412 & 2A, Road No.13, Banjara Hills, Hyderabad' Telangana State 500 034 (Mobile # 9440405308 & email ld: msramamurti@gmail com) (By Special Messenger) (Along with a Copy of affidavit and material papers) I

2. Ore CC to SRI M RAMA KRISHNA, Advocate [OPUC] 3 Ore CC to SRI P SRI HARSHA REDDY (SC FOR SINGARET'Il COLLIERIES co LrD) I()PUCI

4. Tin'o CD Crtpies ADK/kam ,,' HIGH COUFIT DATED:02l0S12O2S \ \ ORDER ARBAPPL.No.177 ot 2024 ?a- ,:- '. //,., .. si4i e j" .L I H^J: ?M ,'',1/ ALLOWING'I'HE ARBAPPL WITHOI,'T COSTS I /z