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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
RAMESH SINHA, J.
Shri Om Prakash Bansal Educational And Social Welfare Trust – Appellant
Versus
Union of India – Respondent
ARBR No. 29 of 2022
Decided on : 19-12-2023
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11(6)
Fact of the Case:
The applicant sought the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, due to a dispute arising from the failure of the non-applicants to perform their part of the contract. The non-applicants invoked the bank guarantees submitted by the applicant without considering the extension of project duration due to the Covid-19 pandemic. The applicant sustained all the expenditures during the pandemic and requested the appointment of an arbitrator, but the non-applicants did not respond within the statutory time period.
Finding of the Court:
The court found that the MoU did not contain an arbitration clause, and the mechanism provided in the MoU only allowed for the resolution of disputes amicably, with the decision of the State Government being final and binding. The court dismissed the arbitration request, citing the absence of an arbitration agreement between the parties.
Issues: The main issue was the existence of an arbitration agreement between the parties, as the applicant sought the appointment of an arbitrator under Section 11(6) of the Act, while the non-applicants argued that no arbitration agreement existed.
Ratio Decidendi: The court held that the MoU did not contain an arbitration clause and only provided for a mechanism to resolve disputes amicably, with the decision of the State Government being final and binding. The court also referred to the Supreme Court's decision in Mahanadi Coalfields Ltd. & Another, emphasizing the absence of an arbitration agreement between the parties.
Final Decision: The arbitration request was dismissed by the court due to the absence of an arbitration agreement in the MoU.
ORDER :
Ramesh Sinha, J.
1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, the Act of 1996) for appointment of an arbitrator.
2. Heard Mr. Kavish Nair and Ms. Vidula Mehrotra, (through Video Conferencing) and Mr. Krishna Tandon, learned counsel for the applicant, Mr. Ramakant Mishra, learned Deputy Solicitor General for the respondent No. 1 as well as Mr. Vikram Sharma, learned Deputy Government Advocate for the State/respondents No. 2 to 4.
3. Mr. Kavish Nair, learned counsel for the applicant submits that the applicant is constrained to file the present application on account of the failure of the non-applicants to nominate and/or approve to concur with the request of the applicant for the appointment of Arbitrator; in terms of Clause 8 of the Memorandum of Understanding (for short, the MoU) executed between the parties dated 27.09.2019 for adjudicating upon the disputes between the them within the statutory period of thirty days.
4. Mr. Nair submits that the Government of India, Ministry of Rural Development (MoRD) has been implementing the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (herein referred to as DDU-GKY) for skill development of rural youths and their gainful employment since the year 2014. DDU-GKY is part of National Rural Livelihood Mission (NRLM) and this project is designed to be implemented by way of Public Private Partnership mode with the help of Project Implementation Agency (for short, the PIA). The main objective of this project is to focus on rural youth in the age group of 15 to 35 who belong to poor families and consequently help them get placed in gainful employment to earn their Livelihoods. Thus it is a very important and ambitious flagship programme launched by Government of India and implemented through the State Rural Livelihoods Mission (for short, the SRLM). For the purpose of implementation of the project detailed guidelines have been issued by Government of India in the form of Standard operating Procedures (for short, the SOP) and quality assurance framework comprising of minimum benchmarks. The project has adopted the Time Tested ERP system and financial transactions are being monitored through the public financial management system (PFM) which has been designed for tracking the fund utilization by the PIA. The applicant has been awarded two projects to be implemented in the State of Chhattisgarh and another project in the State of Bihar. As per the sanction orders, the applicant had to implement two projects in State of Chhattisgarh, one project is DDU-GKY project bearing Project Code CH2018RT2305820190410CG1010986 (for short the DDU-GKY) and another project bearing Project Code CH2018RT 2305820190410CG1010973 (for short, ROSHNI). The DDU-GKY covers rural areas namely Dhamtari, Mahasamund, Durg, Baloda Bazar Districts where as the ROSHNI project covers tribal areas like Kanker, Narayanpur, and Balrampur Districts, which are naxal affected districts. The non-applicant No. 2 approved the application submitted by the applicant and therefore, on 11.09.2019 two sanction letters were issued by them in favour of the applicant by the Development Commissioner, Chhattisgarh State Rural Livelihod Mission (DDU-GKY Cell) Raipur. From perusal of the said order, it is clear that the proposed skill development training is residential and training centre shall be located at Raipur and the trades for which the training is to be imparted are given in the chart which indlude three sectors namely IT-ITES, Electronic and hardware and capital goods for DDU-GKY project and Electronics and hardware, logistics and IT-ITES for ROSHNI project, respectively. The total duration of both the projects are 36 months. Two separate bank guarantees dated 18.09.2019 amounting to Rs. 74,70,000/- and 80,03,000/- were submitted by the applicant in favour of the Chattisgarh Gramin Aajeevika Samvardhan Samiti for both the projects DDU-GKY and ROSHNI, respectively. Soon after subm
AI
The main legal point established in the judgment is the interpretation of the existence of an arbitration agreement between the parties, as provided in the Memorandum of Understanding (MOU) under Cla....
The need for mediation before arbitration and the requirement to refer non-stale claims for arbitration.
The proper authority for resolving disputes as per the arbitration clause in the MoU should be followed before seeking arbitration under the Arbitration and Conciliation Act, 1996.
An arbitration agreement can be inferred from the parties' conduct, and objections regarding jurisdiction must adhere to the terms outlined in the agreement.
The arbitration proceedings can only be challenged on jurisdictional grounds established under the Arbitration and Conciliation Act, and timeliness in raising such challenges is critical.
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