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2023 Supreme(Jhk) 800
IN THE HIGH COURT OF JHARKHAND AT RANCHI
SHREE CHANDRASHEKHAR, J.
M/s RSSG - OT (JV) – Petitioner
Versus
Central Coalfields Limited
Arbitration Application No. 32 of 2022
Decided On : 10-02-2023
Advocate Appeared:
For the Petitioners: Ajay Kumar, Ashish Verma, Rohan Thakur.
For the Respondents: Amit Kumar Das, Swati Shalini.
Proper adherence to the in-house dispute resolution mechanism as per the agreement and the respondent's failure to respond justified the invocation of section 11(6) of the AC Act for appointment of an arbitrator.
Headnote:
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996, Section 11(6)
Fact of the Case:
The applicant sought appointment of an arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996, due to disputes arising from a contract for hiring of mobile crusher and allied machinery for coal crushing and transportation.
Finding of the Court:
The court found that the applicant had followed the in-house mechanism for dispute resolution as per the agreement, and the respondent had not responded, leading the applicant to invoke the provisions under section 11(6) of the AC Act. The court appointed an arbitrator to conduct arbitration and conciliation proceedings between the parties.
Issues: Dispute resolution mechanism under the agreement, validity of the arbitration clause, and appointment of an arbitrator under section 11(6) of the AC Act.
Ratio Decidendi: The court held that the applicant had properly followed the in-house mechanism for dispute resolution as per the agreement, and the respondent's failure to respond justified the invocation of section 11(6) of the AC Act for appointment of an arbitrator.
Final Decision: Arbitration Application No. 32 of 2022 was allowed, and an arbitrator was appointed to conduct arbitration and conciliation proceedings between the parties.
ORDER :
1. This Arbitration Application has been filed by M/s RSSG - OT (JV) through its authorized signatory Sourav Kr. Singh invoking the provisions under section 11(6) of the Arbitration and Conciliation Act, 1996 (in short AC Act) for appointment of an Arbitrator.
2. Briefly stated, pursuant to e-Tender notice dated 6th June 2018 inviting bids for “Hiring of mobile crusher, tippers, pay-loaders and allied machinery for crushing of coal into (-) 100 mm size, loading of crushed coal into tipping trucks and transporting the same to Charhi Siding for a period of 3 years and 4 months” the applicant was invited to execute the subject work in respect thereof an Agreement was signed on 26th November 2018. The applicant has pleaded that he submitted his work schedule in terms of Clause-6 of NIT but Central Coalfields Limited (in short CCL) unilaterally fixed work schedule in violation of the said Clause under NIT and imposed penalty for “short supply” by deducting a substantial amount from the running bills of the applicant.
3. The applicant has raised further grievance on account of damages levied by the CCL to the tune of Rs. 1,05,67,295.39/-. Therefore, the applicant made various communications and raised objection to the CCL for redressal of its grievances whereupon in-house committee was appointed in terms of Clause-13 of the NIT.
4. Clause-13 of the NIT provides as under:
“It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level. The contractor should make request in writing to the Engineer-in-charge for settlement of such disputes/claims within 30 (thirty) days of arising of the cause of dispute/claim failing which no disputes/claims of the contractor shall be entertained by the company. Effort shall be made to resolve the dispute in two stages. In first stage dispute shall be referred to Area CGM/GM. If difference still persists the dispute shall be referred to a committee constituted by the owner. The committee shall have one member of the rank of Director of the company who shall be chairman of the committee. If the differences still persist, the settlement of the dispute shall be resolve in the following manner: Disputes relating to the commercial contracts with Central Public Sector Enterprises/Government Departments (except Railways, Income Tax, and Customs & Excise duties)/ State Public Sector Enterprises shall be referred by either party for Arbitration to the PMA (Permanent Machinery of Arbitration) in the department of Public Enterprises. In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through Arbitration (THE ARBITRATION AND CONCILIATION ACT, 1996 as amended by AMENDMENT ACT of 2015).”
5. Mr. Ajay Kumar, the learned counsel for the applicant has drawn attention of this Court to the communications dated 27th January 2020, 13th August 2021 and 08th October 2021 to submit that in-house mechanism as provided under Clause-13 of the Agreement was resorted to and only upon failure of resolution of the dispute through in-house mechanism, the applicant has invoked the provisions under Part-II of Clause 13(A) of the Agreement for appointment of the Arbitrator.
6. In the counter-affidavit, the CCL has raised an objection that the letter dated 26th March 2022 invoking the Arbitral Clause was defective. No other objection has been raised by the CCL and the facts pleaded by the applicant as to in-house mechanism have not been controverted by the CCL.
7. Mr. Amit Kumar Das, the learned counsel for the CCL has submitted that the applicant was required to first approach the competent authority of Coal India Limited or the CMD of the CCL which step has admittedly not been taken by the applicant and, while so, the notice invoking the Arbitral Clause was defective. Mr. Ajay Kumar, the learned counsel for the a
