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IN THE HIGH COURT OF JHARKHAND AT RANCHI
RAJESH SHANKAR, J.
M/s. KD Foods through its proprietor Smt. Gayatri Devi – Appellant
Versus
The Union of India through the General Manager, East Central Railway, Hajipur, District- Vaishali (Bihar) – Respondent
W.P.(C) No. 3275 of 2022
Decided on : 07-09-2022
Arbitration - Termination of Catering/Vending Stall Contract - Article 19.1 of Master License Agreement - Section 11 of the Arbitration and Conciliation Act, 1996
Fact of the Case:
The petitioner sought to quash the termination letter of a catering/vending stall contract and requested arbitration. The respondent terminated the contract due to non-payment of license fee and asked for immediate removal of the stall structure. The petitioner argued that the dispute should be resolved through arbitration as per Article 19.1 of the Master License Agreement.
Finding of the Court:
The court found that the petitioner had not invoked the arbitration clause and directly filed a writ petition, bypassing the detailed procedure for appointing an arbitrator provided in Section 11 of the Arbitration and Conciliation Act, 1996. The court dismissed the writ petition but allowed the petitioner to seek alternative recourse.
Issues: 1. Whether the dispute should be referred to arbitration as per the Master License Agreement. 2. Whether the petitioner's failure to invoke the arbitration clause affected the court's jurisdiction.
Ratio Decidendi: The court held that the petitioner's failure to follow the detailed procedure for appointing an arbitrator under Section 11 of the Act affected the court's jurisdiction to entertain the writ petition. The court emphasized the need for parties to adhere to the arbitration process outlined in the Act.
Final Decision: The writ petition was dismissed, but the petitioner was granted liberty to seek alternative recourse as provided under the law.
JUDGMENT :
The present writ petition has been filed for quashing letter no. C.724/CV/DHN/2022 dated 31.03.2022 (Annexure-14 to the writ petition) issued by the Senior Divisional Commercial Manager, East Central Railway, Dhanbad (the respondent no. 4) whereby the said respondent has intimated the petitioner that the contract of catering/vending of Stall No.-2 situated at platform no. 1 of Dhanbad Railway Station (hereinafter referred as the said Stall) has been terminated by the competent authority forfeiting its security deposit of Rs.40,000/- due to non-payment of due license fee since 31.10.2021 and has asked the petitioner to remove structure of the said catering/vending stall immediately. Further prayer has been made for directing the respondents to appoint an arbitrator within one month to resolve the dispute and the operation of the letter dated 31.03.2022 may be stayed till passing of the award by the arbitrator.
2. Learned counsel for the petitioner submits that the respondent no.4 issued notice inviting applications for grant of license for the said Stall under Special Minor Unit (SMU) for Scheduled Caste (women) category for a period of 5 years. Pursuant to the said notice, the petitioner applied for allotment of the said Stall whereupon the same was allotted to it and a letter of acceptance to that effect was issued by the Divisional Railway Manager (C), East Central Railway, Dhanbad on 02.11.2018. Thereafter, an agreement was executed between the petitioner as “Licensee” and the respondent no. 4 as “Railway” on 14.10.2019. The period of the agreement was mentioned as 05.02.2019 to 04.02.2024. The petitioner sent letter to the respondent no. 4 on 06.08.2020 stating that though the contract was for the period from 05.02.2019 to 04.02.2024, however the said stall was opened on 06.09.2019 and as such the period/tenure mentioned in the agreement dated 14.10.2019 should be effective from the opening date of the said Stall i.e. 06.09.2019. Moreover, the petitioner also requested to correct the wrongly mentioned amount of license fee in the said agreement as Rs.2,54,788/- instead of Rs. 2,11,000/-. The respondent no. 4 issued letter dated 17.11.2020 to the petitioner informing that letter dated 28.10.2019 was already sent to it regarding correction of license fee. Moreover, the clarification regarding commencement date of catering stall as mentioned in the agreement was also sent to the petitioner vide letter dated 24.02.2020. The petitioner was further directed to deposit the licence fee of Rs.2,54,788/-for second year within seven days. The petitioner deposited an amount of Rs.28,525/- on 17.12.2021 with respect to catering license fee for the period from 01.05.2021 to 31.07.2021. The Divisional Railway Manager (C) issued notice to the petitioner vide letter dated 18.02.2022 for non-deposition of license fee for the period from 01.11.2021 to 31.10.2022 with respect to operation and maintenance of catering stall at Dhanbad station with an advice to deposit the due license fee with effect from 01.11.2021 onwards as per the agreement signed by the petitioner within 7 days failing which necessary action was to be taken as deemed fit including termination of contract and forfeiture of security money, but it failed to deposit the same. The petitioner deposited catering license fee of Rs.42,092/- for the period from 01.08.2021 to 31.10.2021 vide receipt dated 16.03.2022. However, the respondent no.4 vide order dated 31.03.2022, terminated the petitioner’s contract of catering/vending stall and forfeited the security money of Rs.40,000/- deposited by it due to non-payment of license fee after 31.10.2021. It was also asked to remove the structure of catering/vending stall immediately.
3. Learned counsel for the petitioner, in course of argument, refers to Article 19.1 of Master License Agreement dated 14.10.2019 executed between the petitioner and the respondent no. 4 and submits that in case of any dispute arising between the parti
Parties must adhere to the detailed procedure for appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, before seeking court intervention.
The court held that an arbitral award compelling the renewal of a determinable contract is legally unsustainable and suffers from patent illegality under Section 34 of the Arbitration and Conciliatio....
Unilateral appointment of arbitrators is impermissible under the Arbitration and Conciliation Act, ensuring independence and impartiality in arbitrator selection.
The court's jurisdiction under Section 11(6) of the A&C Act is limited to determining the existence of an arbitration agreement, while issues of limitation and other contentious disputes are to be de....
The court emphasized that the jurisdiction for the petitions lay in Delhi, and the respondent's unilateral appointment procedure for arbitrators was impermissible under the law.
The court upheld the arbitrator's decision on breach of contract, illegality of termination, and grant of damages, while denying the claim for interest.
The designation of a venue for arbitration also constitutes the seat, thus excluding jurisdiction of other courts as per party autonomy principles.
The petitioner, as a commission vendor, has no legal right to assert that he can continue to act as a commission agent from the stall located at Platform no. 1 and to assail the decision of the respo....
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