1999 (11) TMI 807 - HC - Companies Law

Summary

Issues:
1. Contractual dispute regarding the supply and performance of a Black Liquor Evaporator plant.
2. Allegations of underperformance and failure to rectify defects.
3. Dispute over the necessity to convert the plant from tubular to plate type.
4. Request for interim relief to prevent engagement of another agency for plant rectification.

Analysis:
1. The petitioner entered into a contract with the respondent for the supply of a Black Liquor Evaporator plant used in paper manufacturing. The petitioner claims the plant was delivered, installed, and commissioned, but the respondent alleges underperformance without giving sufficient opportunity for improvement. The petitioner expressed readiness to rectify any defects and improve plant performance, invoking the arbitration clause of the contract.

2. The petitioner argues that the respondent's engagement of another agency for plant rectification may prevent them from carrying out necessary repairs in the future. The petitioner seeks interim measures to either restrain the respondent from engaging another agency or appoint independent experts to assess and suggest corrective actions. Additionally, a dispute arises regarding the necessity of converting the plant from tubular to plate type for performance enhancement.

3. The respondent contends that they have already paid a significant amount of the contract cost and have repeatedly requested the petitioner to rectify defects, including switching to plate type. The respondent has engaged a new agency for plant improvement and ordered necessary spares. Reference is made to contractual clauses obligating the petitioner for repairs and replacements in case of underperformance.

4. The Court, after considering both parties' submissions and contractual provisions, concludes that the arbitrators should determine the merits of the contentions during arbitration proceedings. The Court finds no prima facie case for interim protection as the contract provides for repairs by the petitioner, which have not been carried out. The petitioner's failure to demonstrate irreparable injury or a specific enforceable right under the Specific Relief Act leads to the dismissal of the petition for interim relief under section 9 of the Arbitration & Conciliation Act, 1996.

5. The Court clarifies that its observations do not affect the arbitrators' proceedings or decisions, allowing the petitioner to seek interim directions from the arbitrators if necessary. The judgment emphasizes the need for arbitration to resolve the contractual disputes and determine the responsibilities for plant performance and rectification as per the contract terms.