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IN THE HIGH COURT OF JHARKHAND AT RANCHI
HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
M/s Rites Limited and Ors. - Petitioners
Versus
The State of Jharkhand and ors. - Opposite Parties
W.P.(C) No.3303 of 2018
Decided On : 16-02-2024
[ARBITRATION] - [DISPUTE RESOLUTION BETWEEN GOVERNMENT ENTITIES] - [Arbitration and Conciliation Act, 1996; Indian Electricity Act, 1910] - [The court discussed the applicability of the Arbitration and Conciliation Act, 1996 in the context of disputes arising from agreements between government entities. It highlighted that the Permanent Machinery of Arbitration established by the Government was outside the purview of the Arbitration Act, 1940 and now the 1996 Act. The court emphasized the need for a statutory framework for arbitration to ensure enforceability of awards, leading to the decision to appoint a sole arbitrator under the 1996 Act to resolve the disputes effectively.]
Fact of the Case:
The petitioner, a Government of India Undertaking, entered into ten agreements with Jharkhand Urja Vikas Nigam Limited (JUVNL) for electrification work. Disputes arose during the execution of the contracts, leading to arbitration proceedings under a Permanent Machinery of Arbitration. An award was passed, which was later challenged by JUVNL in a commercial court, resulting in dismissal of the challenge. The petitioner sought a writ for the appointment of a sole arbitrator due to the lack of effective remedies.
Finding of the Court:
The court found that the Permanent Machinery of Arbitration was not governed by the Arbitration and Conciliation Act, 1996, rendering its awards unenforceable. It recognized the need for a fresh arbitration process under the statutory framework to resolve the disputes effectively, as the previous arbitration did not provide a conclusive resolution.
Issues: Whether the disputes arising from the agreements could be referred to arbitration under the Arbitration and Conciliation Act, 1996, and whether the Permanent Machinery of Arbitration was a valid mechanism for dispute resolution.
Ratio Decidendi: The court held that the Permanent Machinery of Arbitration was outside the statutory framework of the Arbitration and Conciliation Act, 1996, and thus, any award made under it was not enforceable. The court emphasized the necessity of a statutory arbitration process to ensure legal remedies for disputes between government entities.
Final Decision: The court allowed the writ petition and directed that all disputes arising from the agreements between the petitioner and JUVNL be referred to Hon'ble Mr. Justice Vineet Saran, a retired Judge of the Supreme Court, for adjudication under the Arbitration and Conciliation Act, 1996.
JUDGMENT :
HON’BLE MR. JUSTICE SANJAY KUMAR DWIVEDI
Heard Mr. Vikas Pandey, the learned counsel assisted by Mr. Sanjay Kumar Prasad, Mr. Piyush Poddar and Mr. Janak Kumar Mishra, the learned counsels, appearing on behalf of the petitioner and Mr. Mrinal Kanti Roy, the learned counsel appearing on behalf of the respondent-Jharkhand Urja Vikas Nigam Limited (JUVNL).
2. The prayer in this petition has been made to appoint impartial sole-arbitrator with regard to 10-agreements being no.01 to 10/RE/JSEB/03-04 all dated 16.03.2004 entered between the RITES Limited, a Government of India Undertaking and Jharkhand State Electricity Board [now, Jharkhand Urja Vikas Nigam Limited (JUVNL)].
3. Mr. Vikas Pandey, the learned counsel appearing on behalf of the petitioner submits that the petitioner is a Government of India Undertaking under the Ministry of Railways and a Government Company and all its Directors and most of its share-holders are citizens of India. He further submits that Jharkhand State Electricity Board (JSEB) is a Body constituted under the Indian Electricity Act, 1910 and is a Department of Government of Jharkhand, engaged in business of generation and distribution of electricity in the State of Jharkhand. He further submits that Jharkhand State Electricity Board floated tender for electrification of 4923 villages under 5(five) packages by Tender Notice No.123/PR/JSEB/03. He submits that the petitioner was found the lowest bidder and as such on due deliberation and negotiation, the whole work of electrification was awarded to it by 10 work orders mentioned in paragraph no.9 of the writ petition. He submits that after negotiation a draft contract agreement for all packages were prepared, however, when that contract was being examined, it was found that arbitration clause is not there, and therefore, a request was made by the petitioner to include permanent machinery of arbitration for resolution of dispute, and accordingly, the arbitration clause was also inserted in the agreement and finally, the final agreement was entered into between the parties, wherein the arbitration clause was also made. He submits that so far agreement nos.1 to 10 are concerned, all the agreements were on the same and similar terms and conditions. He submits that in course of execution of the contract work some dispute and differences arose between the parties, and accordingly, the RITES Limited and others by letter dated 16.09.2005 invoked the arbitration clause and requested the Secretary, Department of Public Enterprise, Government of India to appoint the Arbitrator for redressal of their genuine grievance. Pursuant to that, Dr. Geeta Rawat was appointed as sole Arbitrator who entered into the Reference and called upon the parties to file their written statement. He submits that both the parties had filed their written statements. He further submits that respondent-JUVNL has also filed their counter claim which has been disclosed in paragraph no.16 of the writ petition. He submits that both the parties were effectively participated in the said arbitration proceeding and after hearing both the sides, the Award Dated 19.01.2011 was passed by the sole-Arbitrator namely Dr. Geeta Rawat allowing some of the claim of the petitioner and not allowing some of the claim. The counter claim of the respondent-JUVNL was rejected. He further submits that the said award was challenged by the petitioner before the appellate authority and the appellate authority by the order dated 19.09.2011 had allowed the appeal and enhanced the awarded amount to the tune of about Rs.231 crores. He submits that after the appellate authority award, the JUVNL moved before the learned Commercial Court invoking Section 34 of the Arbitration and Conciliation Act, 1996 by way of filing Miscellaneous Case No.16 of 2011 challenged the award as well as the appellate authority order whi
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