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SUPREME COURT OF INDIA
UDAY UMESH LALIT, INDU MALHOTRA, JJ.
Giriraj Garg - Appellant
Versus
Coal India Ltd. and Others - Respondents
Civil Appeal No. 1695 of 2019 (Arising Out of SLP (Civil) No. 28693 of 2018)
Decided On : 15-02-2019
Facts of Case:
Coal Distribution Scheme. Single Judge vide impugned Order rejected Arbitration Application on the ground that disputes relate to different transactions entered into between parties, under the 2007 Scheme. Sale orders did not contain an arbitration clause. It was held that even though 2007 Scheme contains arbitration clause, none of individual sale orders make reference to applicability of terms and conditions of 2007 Scheme to sale orders. Hence, arbitration clause could not be incorporated by reference. Aggrieved by the Order, Appellant has filed present Appeal.
Findings of Court:
Single Judge in impugned Order has erroneously taken view that an arbitration clause would not stand incorporated in individual sale orders entered into by Respondent No. 2 - Coal Company and Appellant. Individual sale orders emanate out of the 2007 Scheme. Sale orders specifically state that they would be governed by guidelines, circulars, office orders, notices, instructions, relevant law etc. issued from time to time by Coal India Limited or Bharat Coking Coal Limited etc. As a consequence, arbitration clause (i.e. Clause 11.12) in 2007 Scheme would stand incorporated in sale orders issued there under.
Result : Appeal allowed.
JUDGMENT :
INDU MALHOTRA, J.
Leave granted.
1. The present Civil Appeal arises out of an Order dated 21/18.05.2018 passed by a learned Single Judge of the Jharkhand High Court at Ranchi, in Arbitration Application No. 11 of 2016. The Appellant filed an Application u/S. 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "1996 Act") for appointment of an independent arbitrator to adjudicate the disputes that had arisen between the Petitioner and Respondent No. 2.
2. The factual matrix of the present case, briefly stated, is as under:
2.1. Respondent No. 1 issued the 2007 Scheme, whereby coal distribution would be conducted through e-Auction, with a view to provide access to coal for buyers, who were not able to source coal through the available institutional mechanism. This system would provide an equal opportunity to purchase coal through a single-window service to all intending buyers, and facilitate country wide access to booking coal online for all sections of coal buyers, through a simple, transparent system.
Clause 11.12 of the 2007 Scheme contains an arbitration clause which reads as under -
"11.12 In the event of any dispute, Bidder/Buyer is necessarily required to represent in writing to the General Manager (Sales and Marketing) of the concerned Coal Company, who would deal with the same in a period of 1 month from such representation. Thereafter, if required the matter be determined by the Director-In Charge of Marketing of the concerned Coal Company. Any interpretation of this Clause will be subject to clarification by CIL, which will be deemed as firm and final. All disputes arising out of this scheme or in relation thereto in any form whatsoever shall be dealt exclusively by way of arbitration in terms of the Arbitration and Conciliation Act, 1996. The arbitration shall be conducted at Kolkata at a place to be notified by CIL. The arbitrator shall be appointed by the Chairman and Managing Director, CIL upon written request in this behalf. The award rendered by the arbitrator shall be final and binding on the parties. (The place of arbitration and nomination of arbitrator be varied appropriately in view of the Coal Company involved).
(emphasis supplied)
2.2. From 2012 to 2015, the Appellant, being a registered buyer as per the Terms and Conditions of the 2007 Scheme, participated in the e-Auction for purchase of coal for several sale orders issued under the 2007 Scheme.
2.3. The Appellant was declared successful with respect to various coal orders. Sale orders were issued in favour of the Appellant, pursuant to which he deposited the Earnest Money Deposit (hereinafter referred to as "EDM") and the coal value as per Clause 2.5 and 5.2 of the 2007 Scheme respectively.
2.4. As per Clause 7.2 of the 2007 Scheme, a period of 45 days was allowed to the Appellant from the date of issue of the delivery order, to lift the coal. The Appellant for certain reasons was unable to lift the booked quantity of coal.
2.5. Respondent No. 1 considered this to be a breach of the Terms and Conditions of the 2007 Scheme, and forfeited the EMD deposited by the Appellant under Clause 9.2 of the 2007 Scheme.
2.6. As a consequence, disputes arose between the parties. The Appellant served a Notice dated 21.03.2016 invoking the arbitration Clause 11.12 under the 2007 Scheme.
The Respondents failed to appoint an arbitrator as per Clause 11.12 of the 2007 Scheme.
2.7. The Appellant was therefore constrained to file an Application u/S. 11 before the Jharkhand High Court at Ranchi, for appointment of an independent arbitrator.
2.8. The learned Single Judge vide impugned Order dated 21/18.05.2018 rejected the Application on the ground that the disputes relate to different transactions entered into between the parties, under the 2007 Scheme. The sale orders did not contain an arbitration clause. It was held that even though the 2007 Scheme contains an arbitration clause, none of the individual sale orders make reference to the applica
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