R R CONSTRUCTIONS Vs. MADHUKON PROJECTS LIMITED

JUDGEMENT

(1.) M/S. Sri R.R. Construction, Madurai, Tamilnadu, a partnership firm, filed this application under Section 11(2), (5) & (6) of the Arbitration and Conciliation Act, 1996 (for brevity, 'the Act of 1996'), seeking appointment of an Arbitrator to resolve its claim for a sum of Rs.1,77,10,791/-, along with interest thereon from 18.11.2009, raised against M/s. Madhucon Projects Limited, Hyderabad.

(2.) The case of the applicant firm is that the respondent company was awarded work by the National Highways Authority of India in relation to the four-laning, widening and strengthening of the existing NH-45 B from KM 130+800 to KM 264+500 in the 'Madurai to Tuticorin' section in the State of Tamilnadu. The respondent company, in turn, awarded a sub-contract on 03.05.2007 to the applicant firm in relation to the road works between KM 138+800 and KM 160+000.

(3.) Disputes having arisen in relation to this sub-contract in the context of payments allegedly due to the applicant firm, it addressed letter dated 06.03.2009 explaining its financial difficulties and requesting the respondent company to clear its bills so that it could complete the work. However, by letter dated 14.05.2009, the respondent company terminated the contract citing the failure of the applicant firm to complete the project within time. The applicant firm claimed that it submitted its final bill on 18.11.2009 to the respondent company for a sum of Rs.1,56,08,617/- but by letter dated 20.05.2010, the respondent company disputed the same and asked the applicant firm to resubmit its bill. Despite exchange of correspondence, there was no amicable settlement of the issue and the applicant firm finally got addressed legal notice dated 22.08.2012 to the respondent company calling upon it to clear its dues of Rs.1,63,57,160/-, with accrued interest thereon @ 8% per annum from 18.11.2009, within fifteen days, failing which it threatened to take appropriate legal action against the respondent company and its assets. As there was no response to this legal notice, the applicant firm addressed letter dated 04.02.2013 to the respondent company invoking the arbitration clause in the sub-contract dated 03.05.2007 and informing the respondent company that it had decided to appoint a third-party Arbitrator, viz., Sri P.Velu, Chief Engineer (Retired), PWD, Tamilnadu, and that he had consented to accept the assignment. The applicant firm requested the respondent company to accept its nomination and inform its consent forthwith so that arbitration proceedings could be commenced without further delay.