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IN THE HIGH COURT OF CALCUTTA
Prakash Shrivastava, J.
West Bengal Power Development Corporation Limited - Appellant
Versus
Sical Mining Limited - Respondent
A.P. No. 555 of 2022
Decided On : 30-09-2022
Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996, Section 11 - 42.3 Arbitration of Coal Mining Agreement - Summary of Acts and Sections: Section 11, Section 12(5), Seventh Schedule, Section 14(2), Section 21 - The court discussed the appointment of the sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, and referenced Section 12(5) read with Clause 1, 2, 5, 8 and explanation 2 of seventh schedule, and Section 14(2) in light of the judgments of the Hon'ble Supreme Court. The court also highlighted the requirement of compliance with Section 21 for arbitration proceedings to commence, citing judgments from Delhi High Court and Bombay High Court.
Fact of the Case:
The applicant filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 to appoint a sole arbitrator to decide the dispute between the parties. The appointment of the sole arbitrator by the Additional Chief Secretary, Power Department, Government of West Bengal was challenged under Section 14 of the Act. The Commercial Court allowed the application and terminated the mandate of the Additional Chief Secretary. The applicant filed the present application under Section 11 of the Act, which was objected to by the respondent on the grounds of premature notice for appointment of arbitrator.
Finding of the Court:
The court dismissed the application as premature due to non-compliance with the requirement of Section 21 for notice invoking the arbitration clause. The applicant was given liberty to give due notice to the respondent, and in case of failure to appoint the sole arbitrator with consent within the stipulated time, the applicant could approach the Court with an appropriate prayer.
Issues: Premature application under Section 11 of the Act, compliance with Section 21 for notice invoking the arbitration clause.
Ratio Decidendi: The court held that compliance with Section 21 for notice invoking the arbitration clause is necessary for arbitration proceedings to commence, and failure to adhere to this requirement renders the application premature.
Final Decision: The application under Section 11 of the Act was dismissed as premature, with liberty granted to the applicant to give due notice to the respondent invoking the arbitration clause.
JUDGMENT
Prakash Shrivastava, CJ. - This application under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') has been filed to appoint the sole arbitrator to decide the dispute between the parties.
2. It is undisputed that the Coal Mining agreement dated 27th of October, 2016 was entered into between the parties which contained following arbitration clause.
'42.3 Arbitration
42.3.1 Any Dispute which is not resolved amicably by conciliation, as provided in Clause 42.2, shall be finally decided by reference to arbitration by an arbitral tribunal constituted in accordance with Clause 42.3.2. Such arbitraiton shall be held in accordance with the Arbitration and Conciliation Act, 1996. The place of such arbitration shall be Kolkata, and the language of arbitration proceedings shall be English.
42.3.2 The arbitrator shall be appointed by the Additional Chief Secretary/Principal Secretary to the Government of West Bengal, Department of Power and Non-Conventional Energy Sources.
42.3.3 The arbitral tribunal shall make a reasoned award (the 'Award'). Any Award made in any arbitration held pursuant to this Article 42 shall be final and binding on the Parties as from the date it is made, and the Mine Developer and Operator and WBPDCL agree and undertake to carry out such Award without delay.
42.3.4 The Mine Developer and Operator and WBPDCL agree that an Award may be enforced against the Mine Developer and Operator and/or WBPDCL, as the case may be, and their respective assets wherever situated.
42.3.5 This Agreement and the rights and obligations of the Parties shall remain in full force and effect, pending the Award in any arbitration proceedings hereunder.'
3. Since the dispute had arisen, therefore, invoking clause 42.3.2, the Additional Chief Secretary, Power Department vide order dated 10th of February, 2022 had appointed Sri Debidas Datta, Advisor to the Department as sole arbitrator for redressal of dispute. The said appointment came to be challenged at the instance of the applicant under Section 14 of the Act.
4. Learned Single Judge, Commercial Court vide order dated 18th of May, 2022 had allowed the application under Section 14 of the Act and after taking note of the judgments of the Hon'ble Supreme Court in the matter of TRF Limited vs. Energo Engineering Projects Limited reported in AIR 2017 SC 3889, in the matter of Bharat Broadband Network Limited vs. United Telecoms Limited reported in AIR 2019 SC 2434 and in the matter of Perkins Eastman Architects DPC and Another vs. HSCC (India) Ltd. reported in 2019 SCC OnLine SC 1517 had held that:-
'Therefore, in the light of the above discussion and series of the Hon'ble Apex Court decision holding the ground today, I am of the opinion the locus of the Additional Chief Secretary, Power Department, Government of West Bengal, empowered to appoint the Arbitrator is hit by Section 12(5) read with Clause 1, 2, 5, 8 and explanation 2 of seventh schedule as Additional Chief Secretary becomes de-jure unable to perform his function being ineligible lacking inherent jurisdiction to proceed any further and invoking Section 14(2) terminating the mandate of Additional Chief Secretary, Power Department, Government of West Bengal for the purpose of appointment of Arbitrator. Hence, it is Ordered 'the mandate of Additional Chief Secretary, Power Department, Government of West Bengal, is hereby terminated and parties are directed to take steps in appointment of arbitrators in accordance with law'.
Accordingly the instant application stands disposed off on contest without cost.'
5. After the aforesaid order, applicant has filed the present application under Section 11 of the Act.
6. Learned Counsel for the respondent has raised an objection that no notice making a request to the respondent was issued for appointment of arbitrator, therefore, the application under Section 11 is premature. To this Court, even notice under Section 21 invoking the arbitration clause has not been pointed
Compliance with Section 21 for notice invoking the arbitration clause is necessary for arbitration proceedings to commence.
The appointment of the arbitrator must be in accordance with the arbitration agreement and must satisfy the provisions of the arbitration act.
The main legal point established is the court's adherence to the narrow examination of the existence of an arbitration agreement under Section 11(6A) and the emphasis on expeditious disposal of Secti....
The existence of an arbitration clause allows a party to seek court assistance for appointing an arbitrator when no consensus exists, with other disputes to be resolved by the arbitrator.
Petition seeking appointment of Arbitrator is not sustainable in a situation where arbitration clause itself is disputed.
The main legal principle established in the judgment is the court's authority to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when a dispute arises and no arbi....
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