ARB.P. 325/2021 Page 1 of 19

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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Reserved on: 8^th March, 2022

Decided on: 25^th March, 2022

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ARB.P. 325/2021

GAIL (INDIA) LIMITED

..... Petitioner

Represented by:

Mr. Sidharth Bhatnagar, Senior

Advocate with Ms. Samiksha

Godiyal, Ms. Pracheta Kar &

Mr. Aditya Sidhra, Advs.

versus

KESAR ALLOYS & METALS PRIVATE LIMITED ..... Respondent

Represented by:

Mr. Saurabh Kirpal, Senior

Advocate with Mr. Vivek Jain

& Ms. Suchitra Kumbhat,

Advs.

CORAM:

HON'BLE MS. JUSTICE MUKTA GUPTA

1.

By this petition under Section 11(6) of the Arbitration and

Conciliation Act, 1996 (in short the Act), the petitioner seeks appointment of

a sole arbitrator to adjudicate the disputes arising between the parties in

connection with the Gas Sale Agreement dated 26^th June, 2010 (in short the

GSA) for the yearly supply of 33.718 BBTUs of Regasified LNG (in short

RLNG) by GAIL to Kesar Alloys plant at Pithampur until 30^th April, 2028.

2.

According to the petitioner, in terms of Article 6.1 of the GSA, GAIL

was bound to deliver and Kesar Alloys was bound to receive the Annual

Contract Quantity of RLNG until 2028. As per Article 14 of the GSA, in

case Kesar Alloys was to take delivery of quantity of RLNG lower than the

quantity agreed under Article 6.1, the shortfall would still be charged to its

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001101

ARB.P. 325/2021 Page 2 of 19

account and Kesar Alloys would be liable to pay 90% of the agreed Annual

Contract Quantity. This obligation to pay 90% of the contracted quantity was

irrespective of the actual quantity received at the Delivery Point. According

to the petitioner, it continued to make available the agreed Annual Contract

Quantity of RLNG to Kesar Alloys at the Delivery point without any protest

or complaint from Kesar Alloys. Thereafter the petitioner raised “Pay for if

not taken” claims against Kesar Alloys for the contract years 2014 to 2019 as

Kesar Alloys defaulted in the obligation since 2014.

3.

According to the petitioner, Kesar Alloys sought to terminate the GSA

on 25^th July, 2013 unilaterally, which was not permissible under the GSA

and not accepted by the petitioner. Thus rejection of the proposal of Kesar

Alloys was communicated by the petitioner vide its letter dated 29^th July,

2013. According to the petitioner in view of the disputes arising, the

petitioner made various communications through letters and emails to Kesar

Alloys on 22^nd August, 2016; 31^st March, 2017; 12^th May, 2017; 23^rd March,

2018; 17^th December, 2018; 24^th April, 2019 and 11^th September, 2019 to

amicably resolve the disputes, however, Kesar Alloys did not respond.

Finally, GAIL issued a notice of settlement of disputes to Kesar Alloys on

18^th March, 2020 under Article 15.1 of the GSA to amicably resolve the

disputes, however no response to the same was also received and thus on 10^th

October, 2020 GAIL issued a notice of invocation of arbitration in terms of

Article 15.6 of the GSA. GAIL provided its list of three persons requesting

Kesar Alloys to appoint a sole arbitrator from the list within 30 days,

however, Kesar Alloys failed to appoint the sole arbitrator and hence the

petition.

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001101

ARB.P. 325/2021 Page 3 of 19

4.

Refuting the claim of the petitioner seeking appointment of an

arbitrator, learned counsel for the respondent says that no arbitrator can be

appointed under Section 11(6) of the Act for the reason the claim of the

petitio