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2025 Supreme(Jhk) 2109
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Tarlok Singh Chauhan, C.J.
Prakash Roadlines Corporation Ltd. - Petitioner
Versus
NTPC Limited, through its Chairman-cum-Managing Director - Respondent
Arbitration Application No. 20 of 2025
Decided On : 27-08-2025
Advocate Appeared:
For the Petitioner:Mr. Sumeet Gadodia, Mr. Prakhar Harit, Advocate Mr. Ashutosh Agarwal, Ms. Shruti Shekhar, Ms. Nidhi Lal, Advocate
For the Respondent:Mr. Prashant Pallav, Advocate
Conciliation prior to arbitration is encouraged but not mandatory under the Arbitration and Conciliation Act, 1996, permitting parties to invoke arbitration despite ongoing disputes.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Petition for appointment of an arbitrator - Disputes arose from a Purchase Order for coal mining work - Respondent's termination of contract deemed arbitrary; pre-arbitration mediation not mandatory - Petition allowed for appointment of arbitrator. (Paras 1, 19, 23)
Facts of the case:
The petitioner sought arbitration for disputes related to a coal mining contract with the respondent, alleging termination was arbitrary and without proper grounds, having commenced work per the agreement, and facing hindrances from local personnel. (Paras 1-12)
Findings of Court:
The court found the respondent's termination operation as arbitrary, granting the petitioner's request to appoint an arbitrator to settle the disputes. (Para 23)
Issues: The key issues addressed were the legality of the contract termination by the respondent and the procedural necessity of pre-arbitration mediation per the contract terms. (Paras 19-21)
Ratio Decidendi: The court ruled that while conciliation is encouraged, it is not mandatory prior to arbitration, and the existence of disputes permits invocation of arbitration without prior resolution efforts. (Paras 19-21)
Result: Application allowed for the appointment of an arbitrator.
| Table of Content |
|---|
| 1. factual background of arbitration application (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 2. counter affidavit arguments presented by the respondent (Para 15 , 17) |
| 3. court's analysis on maintainability and arbitration (Para 18 , 19 , 20 , 21 , 22) |
| 4. court's conclusion and order for appointment of arbitrator (Para 23 , 24 , 25 , 26 , 27) |
JUDGMENT :
1. This petitioner has filed this arbitration application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (as amended) (in short “the Act”) for appointment of an arbitrator to resolve the disputes arising out of an agreement being Purchase Order No.4000277672-108- 1040 dated 27.04.2022 entered by and between the petitioner and the respondent-NTPC Ltd.
Case of the petitioner
2. The respondent published a Notice Inviting Tender (NIT) vide Tender Reference No.NTPC/SCC-Coal Mining (Ranchi)/9900235955 dated 23.03.2022 for the work of “Loading, Transportation, Unloading and Wagon loading of coal from surface coal yard of Pakri Barwadih Coal Mining Project (PBCMP) to Banadag Railway Siding Hazaribagh including maintenance of Banadag Siding & Associated Miscellaneous Works for an Interim Period of 03 (Three) Months.”
3. The petitioner participated in the said NIT and on being declared the lowest tenderer, a Letter of Intent dated 27.04.2022 was issued to the petitioner for the work in question. Pursuant thereto, an agreement vide Purchase Order No. 4000277672-108-1040 dated 27.04.2022 was entered into. The duration of the service period was from 10.05.2022 to 09.08.2022.
4. The petitioner immediately commenced the work in question on 10.05.2022 itself, however, on 11.05.2022, the work was being hindered by the local people at the worksite with the sole intention to create disturbance in execution of the work. Therefore, the petitioner through its employee filed a complaint before the Hazaribagh Police which was registered as Katkamdag P.S. Case No. 82 of 2022 dated 11.05.2022 under Sections 147 , 148, 149, 341, 323, 384, 427 and 504 of the IPC .
5. Despite hindrances, the petitioner continued the work until 12.05.2022 as shown by the Weighment Reports, however, the respondent issued a letter alleging that the petitioner had not mobilized resources at the worksite and directed the petitioner to commence the work within 24 hours, failing which action under Clause 10 (Suspension/Termination of the Purchase Order) would be taken.
6. The petitioner immediately through its email dated 12.05.2022 replied that it has already mobilized and commenced the work in question since 10.05.2022 itself.
7. Without considering such reply by the petitioner, the respondent- authority issued a Termination Letter on 12.05.2022 (Annexure 6) citing fundamental breach due to non-mobilization, failure to start work within 15 days, and non-fulfillment of condition precedent under the Purchase Order.
8. This arbitrary action of the respondent compelled the petitioner to file an application under Section 9 of the Arbitration and Conciliation Act, 1996 being A.P. No.292 of 2022 and the Calcutta High Court, before whom the application had been filed, vide order dated 19.05.2022 held that termination was prima facie illegal, arbitrary and mala fide, being contrary to the contract, however, since the matter was not under its jurisdiction, the Court refrained from striking down the termination and adjourned the matter for possible resolution. The application is still pending before the Calcutta High Court.
9. After the aforesaid order dated 19.05.2022, the petitioner repeatedly submitted representations before the respondent expressing its readiness to continue the work. One such representation was made on 25.07.2022 (Annexure 8).
10. The respondent vide its letter dated 28.07.2022 (Annexure 9) informed the petitioner that the contract has already been terminated on 12.05.2022 and, therefore, the petitioner’s request to continue the work under the terminated contract was not
