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2022 DIGILAW 136 (MEG)

Pioneer Carbide Pvt. Ltd v. Union of India

2022-05-26

SANJIB BANERJEE, W.DIENGDOH

body2022
JUDGMENT Sanjib Banerjee, CJ. - The appeal is directed against a judgment and order of April 5, 2022 passed on the appellants' petition under Article 226 of the Constitution. 2. In view of the fair stands taken by the parties at this stage, it may not be necessary to record the grievance with which the appellants approached this Court. It may only be noticed that the appellants had made an offer pursuant to a notice inviting tender and claim that the selection was required to be on reverse auction basis; but that such procedure may not have been followed. The immediate grievance that prompted the appellants to approach this Court was the invocation of a risk purchase clause and the attempt by the Bhilai Steel Plant of Steel Authority of India Limited (SAIL) to take measures for recovering the perceived loss from the bills and payments due to the appellants in respect of other unrelated contracts. 3. The writ petition was dismissed on the ground that there was an alternative remedy available. The principal ground raised in the appeal is whether an authority answering to the description of 'the State' under Article 12 of the Constitution may act arbitrarily even in a contractual matter without the affected party having a right of recourse to Article 226 of the Constitution. In the context of the stands taken by the parties, it may not be necessary to dwell on such aspect of the matter. However, the issue is left open for future consideration in an appropriate case. Suffice it to say that the mere existence of an arbitration agreement between the two parties may not, by itself, be a ground to not receive a petition under Article 226 of the Constitution. This is because arbitration is only procedural and it implies only that instead of regular mechanism of a suit the disputes between the parties to an arbitration agreement are decided by a consensual forum. The existence of an arbitration agreement is no more defence than a State or other authority asserting that the disputes made the subject-matter of the petition under Article 226 of the Constitution may be more conveniently dealt with in an appropriately constituted civil suit. 4. The existence of an arbitration agreement is no more defence than a State or other authority asserting that the disputes made the subject-matter of the petition under Article 226 of the Constitution may be more conveniently dealt with in an appropriately constituted civil suit. 4. As far as the present case is concerned, the proposed matrix contract contains a clause for conciliation between the parties and, upon the conciliation failing, for the disputes to be carried to arbitration. The arbitration agreement which was proposed to be incorporated in the matrix contract provided for the employer, SAIL, to nominate the arbitrator. However, in terms of the Arbitration and Conciliation Act, 1996 as it stands today, such right of nomination is no longer valid. 5. It is, however, asserted by the appellants that the clause or clauses pertaining to the conciliation proceedings and arbitration may not be applicable since no valid contract had been entered into between the parties. Without prejudice to such contention, the parties have agreed that a conciliator would be appointed on either side for the disputes that have arisen to be resolved through such process. In the unlikely event that the conciliation fails, the appellants and SAIL will nominate an arbitrator each for the two nominees to decide on the third arbitrator and constitute the arbitral tribunal to deal with the disputes that have arisen between the first appellant and SAIL. 6. It is fairly submitted on behalf of the respondents herein that no recovery measures will be pursued against the first appellant till the conclusion of the conciliation proceedings and without leave of the arbitral tribunal once the same is set up. 7. Accordingly, the parties are left to work out their remedies in accordance with the submission as recorded hereinabove. This order is completely without prejudice to the rights and contentions of the parties and none of the observations herein should affect the conciliation or the possible arbitral reference. 8. Nothing in this order will preclude the parties from bringing any appropriate application before the arbitral tribunal in accordance with law. 9. WA No.9 of 2022, MC (WA) No.7 of 2022 and MC (WA) No.8 of 2022 are disposed of. 10. There will be no order as to costs.