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2023 DIGILAW 158 (JHR)

RSSG - OT (JV) v. Central Coalfields Limited

2023-02-10

SHREE CHANDRASHEKHAR

body2023
ORDER : 1. This Arbitration Application has been filed by M/s RSSG - OT (JV) through its authorized signatory Sourav Kr. Singh invoking the provisions under section 11(6) of the Arbitration and Conciliation Act, 1996 (in short AC Act) for appointment of an Arbitrator. 2. Briefly stated, pursuant to e-Tender notice dated 6th June 2018 inviting bids for “Hiring of mobile crusher, tippers, pay-loaders and allied machinery for crushing of coal into (-) 100 mm size, loading of crushed coal into tipping trucks and transporting the same to Charhi Siding for a period of 3 years and 4 months” the applicant was invited to execute the subject work in respect thereof an Agreement was signed on 26th November 2018. The applicant has pleaded that he submitted his work schedule in terms of Clause-6 of NIT but Central Coalfields Limited (in short CCL) unilaterally fixed work schedule in violation of the said Clause under NIT and imposed penalty for “short supply” by deducting a substantial amount from the running bills of the applicant. 3. The applicant has raised further grievance on account of damages levied by the CCL to the tune of Rs. 1,05,67,295.39/-. Therefore, the applicant made various communications and raised objection to the CCL for redressal of its grievances whereupon in-house committee was appointed in terms of Clause-13 of the NIT. 4. Clause-13 of the NIT provides as under: “It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level. The contractor should make request in writing to the Engineer-in-charge for settlement of such disputes/claims within 30 (thirty) days of arising of the cause of dispute/claim failing which no disputes/claims of the contractor shall be entertained by the company. Effort shall be made to resolve the dispute in two stages. In first stage dispute shall be referred to Area CGM/GM. If difference still persists the dispute shall be referred to a committee constituted by the owner. The committee shall have one member of the rank of Director of the company who shall be chairman of the committee. Effort shall be made to resolve the dispute in two stages. In first stage dispute shall be referred to Area CGM/GM. If difference still persists the dispute shall be referred to a committee constituted by the owner. The committee shall have one member of the rank of Director of the company who shall be chairman of the committee. If the differences still persist, the settlement of the dispute shall be resolve in the following manner: Disputes relating to the commercial contracts with Central Public Sector Enterprises/Government Departments (except Railways, Income Tax, and Customs & Excise duties)/ State Public Sector Enterprises shall be referred by either party for Arbitration to the PMA (Permanent Machinery of Arbitration) in the department of Public Enterprises. In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through Arbitration (THE ARBITRATION AND CONCILIATION ACT, 1996 as amended by AMENDMENT ACT of 2015).” 5. Mr. Ajay Kumar, the learned counsel for the applicant has drawn attention of this Court to the communications dated 27th January 2020, 13th August 2021 and 08th October 2021 to submit that in-house mechanism as provided under Clause-13 of the Agreement was resorted to and only upon failure of resolution of the dispute through in-house mechanism, the applicant has invoked the provisions under Part-II of Clause 13(A) of the Agreement for appointment of the Arbitrator. 6. In the counter-affidavit, the CCL has raised an objection that the letter dated 26th March 2022 invoking the Arbitral Clause was defective. No other objection has been raised by the CCL and the facts pleaded by the applicant as to in-house mechanism have not been controverted by the CCL. 7. Mr. Amit Kumar Das, the learned counsel for the CCL has submitted that the applicant was required to first approach the competent authority of Coal India Limited or the CMD of the CCL which step has admittedly not been taken by the applicant and, while so, the notice invoking the Arbitral Clause was defective. Mr. Ajay Kumar, the learned counsel for the applicant has in response submitted that in the Agreement signed between the parties dated 26th November 2018 the General Manager, Hazaribagh Area of Charhi has entered the contract on behalf of the CCL and, therefore, the objection so raised by the CCL is just a ploy to avoid appointment of the Arbitrator. 8. Ajay Kumar, the learned counsel for the applicant has in response submitted that in the Agreement signed between the parties dated 26th November 2018 the General Manager, Hazaribagh Area of Charhi has entered the contract on behalf of the CCL and, therefore, the objection so raised by the CCL is just a ploy to avoid appointment of the Arbitrator. 8. The learned counsel for the applicant has also referred to Perkins Eastman Architects DPC vs. HSCC, (2020) 20 SCC 760 , whereunder paragraph no. 20 of the reported judgment the Hon'ble Supreme Court has held as under: “20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Ltd. vs. Energo Engg. Projects Ltd. (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72, where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases.........” 9. In view of the aforesaid facts and circumstances in the case, this Court is of the opinion that in-house mechanism as laid down under Clause-13 for the settlement of dispute between the parties has been resorted to by the applicant. It is also apparent from the materials on record that the applicant has taken the route as indicated under Clause-13 and 13(A) of the Agreement dated 26th November 2018 for invoking the Arbitration Clause for appointment of the Arbitrator. However, the CCL has not responded to the same and, therefore, the applicant has invoked the provisions under section 11(6) of the AC Act. There is no dispute as to arbitrarility of the dispute raised by the applicant. However, the CCL has not responded to the same and, therefore, the applicant has invoked the provisions under section 11(6) of the AC Act. There is no dispute as to arbitrarility of the dispute raised by the applicant. It is also not disputed that the Arbitration Clause contained under the Agreement dated 26th November 2018 is a valid Clause for arbitration and the dispute raised by the applicant falls within the scope of the Arbitration Clause. 10. Having regard to the aforesaid facts and circumstances in the case, Mr. S. K. Satpathy, a former Principal Secretary to the Government of Jharkhand (Mobile No. 9572629132) is appointed as the Arbitrator to conduct arbitration and conciliation proceedings between the parties in terms of the AC Act or as mutually agreed upon between the parties. 11. The parties shall approach the learned Arbitral Tribunal within a period of four weeks. 12. Arbitration Application No. 32 of 2022 is allowed.