2002 (4) TMI 865 - HC - Companies Law

Summary

Issues Involved:
1. Foreign exchange rate variation.
2. Recovery of interest on unadjusted advance beyond delivery schedule.
3. Interest on due payments delayed by TNEB beyond 15 days of receipt of material at site.
4. Extension of delivery and commissioning period without levying liquidated damages.
5. Increase in cost of Hydro-generating equipment and associated accessories by the Tamil Nadu Electricity Board.

Issue-wise Detailed Analysis:

1. Foreign Exchange Rate Variation:
The petitioner, Crompton Greaves Ltd., raised a dispute regarding the payment of foreign exchange rate variations during the execution of the contract. The respondent, Tamil Nadu Electricity Board (TNEB), rejected this claim, stating that they were not liable to pay the said amount. This issue was referred to arbitration by mutual agreement.

2. Recovery of Interest on Unadjusted Advance Beyond Delivery Schedule:
The petitioner sought recovery of interest on unadjusted advance beyond the delivery schedule. This issue was also referred to arbitration by mutual consent of both parties, as per the arbitration agreement.

3. Interest on Due Payments Delayed by TNEB Beyond 15 Days of Receipt of Material at Site:
The petitioner expressed willingness to refer the issue of interest on delayed payments by TNEB to arbitration. However, TNEB resisted this counterclaim, arguing that it was not covered under the arbitration agreement and thus could not be referred to arbitration without mutual consent.

4. Extension of Delivery and Commissioning Period Without Levying Liquidated Damages:
The petitioner sought arbitration for the extension of delivery and commissioning periods without levying liquidated damages. TNEB resisted this counterclaim on the grounds that it was not included in the original arbitration agreement.

5. Increase in Cost of Hydro-generating Equipment and Associated Accessories:
The petitioner requested arbitration for the increased cost of hydro-generating equipment and associated accessories. TNEB resisted this counterclaim, arguing that it was beyond the scope of the arbitration agreement.

Court's Analysis and Judgment:
The court noted that the arbitration agreement between the parties covered only the first two issues. The additional issues raised by the petitioner were not part of the original arbitration agreement. The Arbitral Tribunal rejected the counterclaims, stating it had no jurisdiction to entertain disputes beyond the arbitration agreement.

The court examined the relevant provisions of the Arbitration and Conciliation Act, 1996, emphasizing that an arbitration agreement must be in writing and mutually agreed upon by the parties. The court referred to precedents set by the Supreme Court, which highlighted that an arbitrator's jurisdiction is derived solely from the arbitration agreement.

The court concluded that it could not compel TNEB to refer additional disputes to arbitration under Article 226 of the Constitution of India. The court emphasized that writ petitions are not typically entertained in contractual matters, and it cannot direct the Arbitral Tribunal to adjudicate disputes without mutual consent.

Conclusion:
The writ petition was dismissed, and the court upheld that without mutual consent, the additional disputes raised by the petitioner could not be referred to arbitration. The court maintained that the Arbitral Tribunal's jurisdiction is limited to the disputes explicitly covered by the arbitration agreement.