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.

JUDGMENT

1. The applicant has filed this Arbitration Application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996") seeking appointment of an Arbitrator.

2. It is pleaded in the Arbitration Application that the respondent-non-applicant approved the application of the applicant under Deen Dayal Upadhyaya Grameen Kaushalya Yojana (hereinafter referred to as "the Scheme") to act as Project Implementation Agency (hereinafter referred to as "the PIA") for training a target of 2300 rural poor youth. On 21.03.2018 a sanction letter was issued by the respondent sanctioning the Skilled Development Project for a duration of 36 months for a total approved cost of Rs.25,44,35,140/-. A Memorandum of Understanding (MoU) was executed between the applicant and the respondent on 15.06.2018. It is also pleaded in the Arbitration Application that the respondent has issued a show cause notice dated 29.04.2019 to the applicant. A reply to which was filed by the applicant on 02.05.2019 and the respondent without issuing a 30 days notice as contemplated in the Agreement, terminated the Project vide its letter dated 01.10.2019.

3. The applicant filed an appeal to the General Manager, Chief Executive Officer and the Chairman of the respondent, which was dismissed on 12.12.2019. The applicant, thereafter, moved an application under Section 9 of the Act of 1996 before the Commercial Court on 14.05.2020, which was ultimately dismissed by the Commercial Court. The applicant thereafter vide letters dated 20.12.2019 and 20.06.2020 issued notice invoking the arbitration clause.

4. It is contended by the counsel for the applicant that there is a clause in the Agreement, the heading of which was 'Arbitration and Applicable Laws', as per which, all claims and disputes arising in connection with this MoU were to be resolved amicably and thereafter, were to be referred to the Board of Directors and later to the Empowered Committee of Ministry of Rural Development, Government of India, whose decision shall be final and binding on all parties. It is also contended that there is an arbitration clause and this clause is hit by the judgment of Perkins Eastman Architects DPC & Anr. Versus HSCC (India) Ltd.: AIR 2020 SC 59. Counsel for the applicant has placed reliance on Surya Wires Private Limited Versus Gujarat Livelihood Promotion Company Limited: R/Petn. under Arbitration Act No.107 of 2021 decided by the Gujarat High Court on 18.02.2022.

5. It is contended that in a similar type of dispute, High Court of Gujarat has appointed an Arbitrator. It is also contended that terminology used in Clause 9 i.e. any controversy, claim or dispute arising in connection with this MoU, and which cannot be resolved amicably shall be referred to the Board of Directors, would imply that it is an Arbitration Clause. In this regard, counsel for the applicant has placed reliance on Punjab State & Ors. Versus Dina Nath & Ors.: AIR 2007 SC 2157.

6. Reply to the Arbitration Application has been filed on behalf of the respondent wherein it is mentioned that the applicant had after taking money from the respondent, not started the Training Programme and after giving him notice and imposing penalty, his Contract was terminated and since he had not complied with the terms and conditions of the Contract, his performance guarantee was also forfeited. It is also stated in the reply that the Commercial Court has dismissed the application filed under Section 9 of the Act of 1996 as the applicant could not establish prima facie case, irreparable loss and balance of convenience in his favour. Counsel for the respondent has placed reliance on HRD Corporation (Marcus Oil And Chemical Division) Versus Gail (India) Limited (Formerly Gas Authority of India Ltd.): Civil Appeal No.11126 of 2017 decided by the Apex Court on 31.08.2017.

7. I have considered the contentions and have carefully perused the record.

8. From the pleadings and documents annexed, it