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2025 Supreme(Ori) 190
IN THE HIGH COURT OF ORISSA AT CUTTACK
HARISH TANDON, CJ.
Sendoz Commercial Private Limited - Appellant
Versus
IREL (India) Limited - Respondent
ARBP No. 40 of 2024
Decided On : 15-07-2025
Advocate Appeared:
For the Appellant : Sreejit Mohanty
For the Respondent: Ipsit Aurobindo Acharya
The court emphasized that non-acceptance of a quality test report does not bar the initiation of arbitration; limitation for claims arises only upon definitive rejections dictated by binding test results.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Appointment of arbitrator - Dispute concerning supply of coal arising from breach of contract due to rejection of goods for not meeting specifications - Petitioner alleges wrongful withholding of payment despite a favorable test report; application for arbitrator appointment filed after notice under Section 21 - Court found no ex-facie time-bar to claim; affirmed validity of the arbitration agreement and rejected limitation defense. (Paras 1, 6, 20, 22)
(B) Arbitration Agreement - Independence and impartiality - Court reiterated principles regarding unilateral appointment of arbitrators; emphasized the necessity of equal treatment in appointment to avoid justiciable doubts on impartiality. (Paras 14, 15, 19)
Facts of the case:
Petitioner won a tender for coal supply to a Government entity, complied with contract terms, including security deposit, but faced contract breach due to rejection of delivered coal based on GCV not meeting specifications. Dispute arose following formal response regarding testing disputes and consequent payment refusals.
Findings of Court:
Arbitration application allowed, with appointment of C.R. Dash as arbitrator to resolve disputes, to be completed under the statutory time frame.
Issues: Was the claim time-barred? Was the rejection of coal legitimate based on specifications?
Ratio Decidendi: The Court held that the rejection of goods does not commence limitation until the formal test report dictates; disputes are referrable to arbitration since claims are not ex-facie time-barred.
Result: Application for appointment of an arbitrator allowed.
| Table of Content |
|---|
| 1. parties engaged in arbitration over coal supply dispute. (Para 1 , 2 , 3 , 4 , 5) |
| 2. petitioner applies for arbitrator appointment under section 11(6). (Para 6 , 8 , 12) |
| 3. opposite party argues limitation and waiver of claims. (Para 7 , 16 , 21) |
| 4. requirement of tests and dispute resolution under the agreement. (Para 9 , 10) |
| 5. court assesses applicability of limitation to arbitration claims. (Para 13 , 14 , 15 , 18 , 19) |
| 6. court finds claims not ex-facie time-barred, arbitration allowed. (Para 22) |
| 7. appointment of arbitrator and order of disposition. (Para 23 , 24) |
JUDGMENT :
HARISH TANDON, CJ.
1. An application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 is taken out by the petitioner for appointment of an arbitrator upon invoking the arbitration agreement entered into by and between the parties for supply of the coals after the petitioner having adjudged as a successful bidder in the notice inviting tender floated by the opposite party.
2. Shorn of unnecessary details, the opposite party being a Government of India undertaking floated an e-tender for supply of 8000 MT of coal of a specified quality to Odisha Sands Complex at Matikhala, Chhatrapur in Ganjam District of Odisha on 18.11.2019. Pursuant to the said tender, the petitioner participated by depositing the earnest money and was subsequently declared as a successful bidder. The purchase order was issued for supply of the aforementioned quantity of coal with Gross Calorific Value (GCV) of 2800 to 3400 Kcal/kg in staggered manner within four months from the date of issuance of the said purchase order. The purchase order further stipulated the deposit of an amount equal to 5% of the total value of the contract as security deposit in the form of irrevocable Bank guarantee which in fact was duly complied with.
3. The petitioner supplied the coal on diverse dates and raised the invoices in terms of the price agreed upon and the payment was also released by the opposite party from time to time. The dispute arose on supply of 4044.52 MT of coal amounting to Rs.1,83,57,886/- on 22.02.2020 when the opposite party through an e-mail dated 25.02.2020 rejected the said lot as the GCV of the coal did not meet the required specifications.
4. The genesis of the dispute between the parties originated on the rejection of the said lots as the coal does not contain the requisite specifications in terms of the agreement entered into between the parties and its invocation by the petitioner which led the adjudication to be made through an arbitral process.
5. The notice inviting tender floated by the opposite parties contained the general terms and conditions of an agreement encompassing various terms and conditions including an arbitration agreement in the event of a dispute having arisen between the parties in relation to supply of the coal. It further imbibed within itself a manner of testing of the materials so supplied postulating the mechanism of drawing sample with further stipulation to have such sample tested in any Government Laboratory in the event the parties are not ad idem on the test report of the laboratory chosen by the opposite party. Since the GCV found by the opposite party does not meet the specification, the sample was drawn by the opposite party to be tested in the laboratory of the opposite party, the petitioner invoked the clause relating thereto for drawing a sample to be tested in any Government Laboratory. Several correspondences were exchanged between the parties for drawing sample and ultimately the sample was drawn in presence of the representative of the petitioner and the opposite party and sent to the National Meteorological Laboratory (NML), Jamshedpur on 14.08.2020. There was a complete silence on the part of the opposite party on the report submitted by the said Government Laboratory until 25.09.2020. When the representative of the opposite party verbally communicated to the petitioner that the report of the Government La
