W.P. (C) 5527/2012 and CM 11291/2012. Case: National Textile Corporation Ltd. Vs Union of India and Ors.. High Court of Delhi (India)
| Case Number | W.P. (C) 5527/2012 and CM 11291/2012 |
| Counsel | For Appellant: Mr. Sanjay Ghose and Mohd. Farrukh, Advocates and For Respondents: Mr. Ruchir Mishra, Advocate and Mr. Kamal Khurana, Advocate |
| Judges | Rajiv Shakdher, J. |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 11, 11(7), 16, 8; Constitution of India - Article 226; Indian Contract Act, 1872 - Section 28 |
| Judgement Date | November 22, 2012 |
| Court | High Court of Delhi (India) |
Judgment:
Rajiv Shakdher, J.
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The present writ petition has been filed to assail the notice dated 17.10.2011, issued by the Arbitrator, who is acting under the aegis of the Permanent Machinery of Arbitrators (in short PMA), established by the Govt. of India vide office Memorandum dated 22.01.2004, in respect of disputes, concerning Central Public Sector Undertakings, Banks, Trusts and/or other Government departments. The Petitioner/National Textile Corporation Ltd. (in short NTC) has, at stage of issuance of notice by the learned Arbitrator, approached this court to lay challenge to her jurisdiction to proceed further with the matter.
1.1 As per the impugned notice, the first date of hearing was fixed on 17.02.2012.
1.2 In accordance with the notice dated 17.10.2011, Respondent no. 2, which is the UCO Bank, filed its statement of claim on 17.11.2011. It appears that on 23.12.2011, the Petitioner/NTC filed its reply to the statement of claim in which several defences have been taken including the defence that the Petitioner/NTC is not a party to the arbitration proceedings. Pivoted on this basic plank, and the submission that PMA no longer exists, the Petitioner/NTC has deemed it fit to approach this Court. Briefly, this submission is made in the background of the following brief facts.
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The claimant before the Arbitrator is Respondent no. 2/UCO Bank. The statement of claim which has been filed and placed on record before this court, indicates that there are two respondents in the action filed before the Arbitrator. The first respondent, is the Union of India which is, sued through the Ministry of Textiles, Govt. of India, while the second respondent is an entity by the name of Sita Ram Mills Limited (in short SRML).
2.1 In order to appreciate the objection taken on the learned Arbitrator's jurisdiction, it would be important to examine the broad framework of the Statement of Claim filed by Respondent no. 2/UCO Bank. The essential ingredient of the Statement of Claim are as follows.
2.2 SRML was nationalized w.e.f. 01.04.1994 under the Textile Undertakings (Nationalization), Act, 1995 (in short Nationalization Act); that prior to the take over of the management of SRML, a sum of Rs. 11,70,39,000/- became due and payable by SRML to Respondent no. 2/UCO Bank; post the take over of management of SRML by the Petitioner i.e., the National Textile Company Ltd. (in short NTC) under the Textile Management Act, 1984 (in short TM Act), Respondent no. 1/Union of India (in short UOI) issued a guarantee for a sum of Rs. 1,73,00,000/- in favour of Respondent no. 2/UCO Bank: since the Petitioner / NTC did not pay the sum to Respondent no. 2/UCO Bank, a suit was filed by Respondent no. 2/UCO Bank being: Suit No. 4489/1996 in the Bombay High Court, on 21.11.1996, for recovery of a sum of Rs. 3,19,09,000/-; as the Petitioner was declared a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short SICA), the proceedings in the suit filed against the Petitioner/NTC were stayed; in terms of the provisions of the Nationalization Act the properties of SRML vested with the Government and therefore, in terms of the said Act, claims pertaining to pre and post takeover in terms of the said Act were required to be lodged with the Commissioner of Payment (in short COP) in terms of the date specified, as per the notification issued in that behalf; Respondent no. 2/UCO Bank submitted its claim with COP on 17.01.2002, which was registered, after an initial hesitation, on 04.07.2005; in pursuance of the said claim an affidavit of proof of claim dated 13.07.2005 was filed, wherein a sum of Rs. 1,05,35,86,783.47 was claimed towards pre and post take over liability under the Nationalization Act; the COP vide award dated 13.03.2006 allowed a part of the claim under Category 1 of the Nationalization Act to the tune of Rs. 70,23,025/- towards principal; the claim of Rs. 1,18,80,098/- was relegated to Category II(b) being an outstanding liability against unserviced interest; the balance claim in the sum of Rs. 103,46,83,660.47 towards interest beyond appointed date, was rejected; the claimant received a sum of Rs. 70,23,025/- by way of a cheque dated 20.03.2006; by a subsequent award dated 28.03.2007 a further sum equivalent to Rs. 89,59,609/- was awarded by the COP towards pending liability of interest till the appointed date; the said sum was received by the claimant vide cheque dated 30.03.2007; therefore, in all Respondent no. 2/UCO Bank has received a total sum of Rs. 1,59,82,634/- against the total claim of Rs. 1,05,35,86,783.47; Respondent no. 2/UCO Bank lodged its request for initiation of arbitration with Respondent no. 1/UOI vide communication dated 30.08.2004.
2.3 It is in the background of the aforementioned assertions made in the statement of claim...
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