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IN THE HIGH COURT AT CALCUTTA
SABYASACHI BHATTACHARYYA, J.
Mala Roy & Others – Petitioners
Versus
M/s. Jai Balaji Industries Limited – Respondent
A.P. No. 152 Of 2021
Decided On : 02-07-2024
Arbitration - Dispute Resolution - Arbitration and Conciliation Act, 1996 - Sections 11, 21 - The court interpreted the arbitration clause broadly, allowing for disputes arising out of the agreement to be referred to arbitration, emphasizing the intention of the parties to resolve issues through arbitration.
Fact of the Case:
The petitioners entered into an agreement with the respondent for the sale of iron-ore, which included a repayment schedule. Disputes arose when the respondent failed to issue purchase orders and make payments as agreed, leading the petitioners to invoke arbitration.
Finding of the Court:
The court found that the arbitration clause was valid and encompassed all disputes arising from the agreement, including those related to its validity. The issues of limitation and cause of action were also deemed arguable, warranting arbitration.
Issues: 1. Whether the present dispute falls within the ambit of the Arbitration Clause; 2. Whether the claim is ex facie time-barred; 3. Whether the petitioner has any cause of action to refer to arbitration.
Ratio Decidendi: The court held that the arbitration clause should be interpreted broadly to include all disputes arising out of the agreement, and that the existence of a force majeure clause and the nature of the claims justified a reference to arbitration.
Result: The application under Section 11 of the Arbitration and Conciliation Act, 1996 is allowed, appointing an arbitrator to resolve the disputes.
JUDGMENT :
(Sabyasachi Bhattacharyya, J.) :
1. The present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, “the 1996 Act”) arises out of the disputes between the parties in connection with an Agreement for Settlement dated May 12, 2013. The petitioners/creditors, pursuant to purchase orders of iron-ore and fines placed by the respondent/debtor, had sold such materials to the respondent. Subsequently, an amount became due by way of sale price. The parties decided to resolve the issues by adjustment of the debts and agreed to a repayment schedule by the Agreement-in-question for realization of dues of the petitioner to the tune of Rs. 1,90,36,023/-.
2. Clause 9 of the Agreement contains the repayment schedule which has five (05) components.
3. In sub-clause (a), the debtor/respondent was to pay an amount of Rs. 25,00,000/- at the time of signing of the agreement.
4. In sub-clause (b), it was stipulated that post-dated account payee cheques of Rs. 20,00,000/- each would be handed over by the debtor to the creditor.
5. As per Clause (c), five separate purchase orders of one rake each of a particular size of iron-ore would be placed to the creditor/petitioner by the debtor/respondent.
6. In sub-clause (d), it was provided that the said five cheques would be presented to the Bank one by one by the creditor, each on the date of actual loading of each rake.
7. Sub-clause (e) mentions that a sum of Rs. 50,10,171/- payable by one M/s. Emars Mining and Construction Pvt. Ltd. to the respondent/debtor would be adjusted by the debtor against the dues payable to the creditor in terms of the agreement to be entered into between M/s. Emars Mining and Construction Pvt. Ltd. and the debtor/respondent.
8. The petitioners claim that due to closure of mining operations during the period between May 16, 2013 (soon after the agreement) and the later part of the year 2019, in view of the prevalent Government Orders and restrictions regarding direct purchase which were beyond the control of the petitioner, iron-ore could not be supplied by the petitioners in terms of the agreement.
9. On December 7, 2019, the petitioner requested the respondent to issue purchase orders as per the agreement and make payment of the balance amount by issuing post-dated cheques. The respondent refused to do so, thereby giving rise to the dispute between the parties.
10. On July 15, 2020, the petitioners communicated in writing to the respondent for a mutual discussion to resolve the disputes in terms of the agreement. The same having failed even after repeated correspondence, the petitioner invoked the Arbitration Clause in the Agreement vide a Notice under Section 21 of the 1996 Act dated May 12, 2013, naming an Arbitrator.
11. The respondent denied the allegations and disputed that any arbitrable dispute exists between the parties by replies dated September 8, 2020 and September 30, 2020, sent in response to the petitioners’ letters dated July 15, 2020 and August 17, 2020 as well as September 9, 2020.
12. Learned counsel for the petitioners submits that in the agreement, in Clause 12, a force majeure provision was included, which, inter alia, stated that neither party would be liable for any breach of the agreement for reasons beyond the control and capacity of the creditor/petitioner if the production and/or despatch would have been sustained, delayed and/or not enforced in time due to the bar or rules or act of any regulatory bodies/Government Authorities, etc. The petitioner seeks to take advantage of the said clause and contend that it was not possible for the petitioner to act on the agreement before December, 2019.
13. It is next argued that although there might have been a minor error in the Arbitration Clause, that is, Clause 13 inasmuch as it referred to the validity of the agreement as the subject-matter of the probable dispute, the language of the same, if read comprehensively, indicates that any disp
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