THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY WRIT PETITION No.9571 of 2014 Dated: 01.12.2014 Between:
M/s. Indu Projects Ltd., Rep. by its Senior Manager (Legal) Mr. I. Naveen Kumar .. Petitioner and The Singareni Collieries Company Limited, Rep. by its CMD and others.
.. Respondents Counsel for the petitioner: Mr. B. Vijaysen Reddy Counsel for the respondents: The Advocate General (T.S.) The court made the following:
ORDER:
This writ petition is filed for a Mandamus to set aside proceedings in Ref.No.CRP/Sec.12/C1109G0077/2014/8210 dated 07.03.2014 of respondent No.3, whereby he has terminated the agreement entered into between the Singareni Collieries Company Limited and the petitioner for providing Technology and Operation of Kakatiya Longwall Project in Bhupalpally Area, Warangal District.
I have heard the learned counsel for both parties and perused the record.
In the manner this Court is proposing to dispose of the writ petition, it is unnecessary to record the facts in detail. It will suffice to note that an agreement was entered on 07.04.2012 between the parties for execution of the project. As per clause 3.2.1 of the agreement, commencement of coal production date from roadway development shall be effected within 16 months (including 4 months time for financial closure) of effective date, after completion of the conditions referred to in clause 3. Admittedly, the coal production could not be commenced within the stipulated time. Clause 33 of the agreement vests right in the respondents as well as the petitioner to terminate the agreement with three months prior written notice on occurrence of an event of default, as envisaged in clause 29 of the agreement. By the impugned order, respondent No.3 has terminated the agreement by invoking clause 29.1(a) i.e. delay in commencement of coal production by roadway for more than six months beyond the period specified in clause 3.2.1. The main plea on which the petitioner filed this writ petition is that no event of default on the part of the petitioner has occurred and that, therefore, the termination of contract by the respondents is unsustainable.
In the counter-affidavit, the respondents have mainly pleaded that in view of various disputed questions of fact, writ petition is not a proper remedy, more so, when the agreement provides for an alternative dispute resolution mechanism through arbitration.
At the hearing, Mr. B. Vijaysen Reddy, learned counsel for the petitioner, strenuously submitted that clause 40.1 envisages the resolution protocol and that the respondents ought not to have terminated the agreement unless the dispute between the parties was first referred to the various functionaries mentioned under sub-clauses (i), (ii) and (iii) of clause 40.1.1.
I have carefully considered this submission and I am unable to accept the same. There is nothing in the agreement, which bars termination of the agreement by either party before going through the process under clause 40 of the agreement. On the contrary, the phrase “dispute” comprehends every conceivable act by either party which is disputed by the other party and such act may include even termination as well. If the procedure under clause 40 is to be first followed as a pre-condition for termination of the agreement, clause 33 which provides for termination would not have failed to refer to such clause.
I am, therefore, of the opinion that the question whether the termination of the agreement is legal or not itself is an arbitral dispute under clause 40 of the agreement. On the facts of the case and the nature of the dispute arising between the parties under the concluded contract, I am of the opinion that it is appropriate for the parties to settle the dispute through arbitration and the writ petition is not an appropriate remedy.
For the above-mentioned reasons, without expressing any opinion on the legality or otherwise of the termination of the agreement by respondent No.3, the writ petition is dismissed with liberty to the petitioner to avail the remedy of arbitration.
As a sequel to the dismissal of the writ petition, interim order dated 28.03.2014, as extended from time to time, is vacated and W.P.M.P.No.12016 of 2014 and W.V.M.P.No.2765 of 2014 shall stand disposed of as infructuous.
C.V. NAGARJUNA REDDY, J 1st December, 2014 IBL