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TMI Blog2007 (9) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as TNPWD). 3. The facts, relevant for the disposal of this petition, are as follows: On 1st December, 1997, an agreement (hereinafter referred to as the main contract) was signed between Tahal and TNPWD, with DHV and two other concerns, namely, Lahmeyer International of Germany and Consulting Engineering Services (India) Ltd., as sub - consultants, for providing management consultancy and technical assistance services for the Tamil Nadu Water Resources Consolidation Project. Subsequently, in March, 1998, a further sub-consultancy agreement (hereinafter referred to as the sub-contract) was signed between Tahal and DHV for providing services in respect of the main contract, scope whereof was defined in the conditions of both the said agreements. 4. As per clause 1.10 of the special conditions of the main contract, TNPWD had agreed to bear the Income tax liabilities on payments to be made by it to the consultant, sub-consultants and their personnel. DHV was to receive all the payments through Tahal, being the principal consultant. The contract was duly performed and DHV received all payments in respect of the invoices raised by them for the services re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the arbitration agreement qua them as no payment was received by DHV directly from TNPWD; (ii) the claim of DHV is barred by limitation inasmuch as the main contract was over on 31st March, 2002 and (iii) there was no cause of action to file the petition because whatever Income tax was to be deducted on payments to Tahal - the principal consultant, was duly deposited with the State Bank of India and requisite details were filed with the Income tax department. 8. I have heard learned counsel for the parties. As noted above, the objection of the respondents to the appointment of Arbitrator is mainly two-fold viz. (i) after the completion of the main contract in March/April, 2002 and on final payment on 30th January, 2003, the contract came to an end and, therefore, there was no valid arbitration agreement in existence and (ii) the claim of the DHV is stale and barred by limitation. 9. In support of the proposition that the entire tax obligation under the contract has been duly discharged, learned counsel for the TNPWD invited my attention to some correspondence with the Income tax authorities, wherein the rate at which Income tax was to be deducted on payment under the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim was a dead one; or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the arbitral tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces; (b) any equipment, materials and supplies brought into India by the Consultants or Sub-consultants for the purpose of carrying out the Services and which after having been bought into such territories will be subsequently withdrawn there from by them; (c) any equipment imported for the purpose of carrying out the Services and paid for out of funds provided by the client and which is treated as property of the client. (d) any property brought into India by the Consultants, any sub-consultants, the Personnel of either of them (other than Indian nationals or permanent residents of India), or the eligible dependants of such Personnel for their personal use and which will subsequently be withdrawn there from by them upon their respective departure from India, provided that: (1) the consultants, sub-consultants and personnel and their eligible dependants, shall follow the usual customs procedures of the Government in importing property into India; and (2) If the consultants, sub-consultants or personnel, or their eligible dependants, do not withdraw but dispose of any property in India country upon which customs duties and taxes have been exempted, the consultants, sub-con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exists between the parties. 15. Clause 8.2 of the main contract provides for the right to arbitration and reads as follows: 8.2 Right to Arbitration Any dispute between the parties as to matters arising pursuant to this contract which cannot be settled amicably within thirty (30) days after receipt by one Party of the other Party's request for such amicable settlement, may be submitted by either Party for arbitration in accordance with the following provisions: xxx xxx xxx 16. The arbitration agreement is in clear terms and brings within its ambit any dispute between the parties as to matters arising pursuant to the main contract which cannot be settled amicably. Admittedly, the liability to pay the taxes flows from the contract and not otherwise. Having found that it was obligatory upon TNPWD to discharge the tax liability in respect of the payments made to the sub-consultants and DHV being a signatory to the main contract, I am of the opinion that claim made by DHV in respect of the Income tax dues would fall within the ambit of the arbitration agreement between the parties. 17. As regards the question as to whether the said claim can be said to be stale in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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