Supreme Court of India
M/S Tbea Shenyang Transformers … vs M/S Alstom Projects India Ltd on 21 September, 2015Author: A R Dave
Bench: Anil R. Dave
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION PETITION NO. 8 OF 2014
M/s. TBEA Shenyang Transformers
Group Co. Ltd. …Petitioner
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
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 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 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, 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
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 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 between the
parties on 24.12.2007. The arbitration clause incorporated in the contract
reads as under:
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.
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.
16. The Arbitration Petition is allowed in the aforesaid terms. No costs.
[Anil R. Dave]
September 21, 2015.