The single judge bench of the Jharkhand High Court held that under Section 21 of the Arbitration and Conciliation Act, a cause of action shall arise for giving notice to the other party for appointment of an arbitrator wherever the parties have reached a bottleneck. Further, the court is required to look is the existence of the arbitration Clause – nothing more nothing less while examining an application under section 11(6) of Arbitration and Conciliation Act, 1996 (in short, AC Act).
Brief facts
The factual matrix of the case is that the parties came to an agreement and it contained a provision for settlement of disputes. Furthermore, a dispute arose among the parties, and the CCL was requested to resolve the issues via letters. However, there was no response from CCL. Then, the applicant company again issued a legal notice seeking a resolution of dispute through arbitration as per Clause 13A of the Conditions of Contract. At this stage, the CCL invited the applicant-Company for conciliation meetings as per Clause 13. This is the case set up by the applicant-Company that a conciliation meeting brought the parties a dead-end and, therefore, a notice under section 21 of the AC Act was issued. Later on, the CCL did not adhere to the settlement of dispute mechanism and instead called a second meeting for conciliation at the Director’s level which also failed. Then, the present arbitration application is filed seeking the appointment of a sole arbitrator by the Court in the exercise of the powers under section 11(6) of the Arbitration and Conciliation Act, 1996.
Observations of the Court
The Hon’ble Court observed that under Clause 13, the Contractor shall, within thirty days of the cause of dispute or claim emerging, submit a written request for the issue to be settled to the Engineer-In-Charge. Additionally, it stipulated that two stages of dispute resolution should be conducted. In the instant case, the first stage of dispute resolution failed and the second stage which was conciliation also failed.
It was furthermore observed that under Section 21 of the Arbitration and Conciliation Act, a cause of action shall arise for giving notice to the other party for the appointment of an arbitrator wherever the parties have reached a bottleneck.
The court noted that the existence of Clause 13A is not in dispute and applicability of the Clause 13A is also not disputed. Prima facie, it also appears that the dispute raised by the applicant-Company is arbitrable.
It was furthermore noted that under section 11(6) of the AC Act, all that the Court is required to look at is the existence of the arbitration Clause – nothing more nothing less. The court relied upon the judgment titled N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Based on these considerations, the court requested Hon'ble Justice Prakash Tatia, a former Chief Justice of Jharkhand High Court to act as the arbitral Tribunal in the present case.
The decision of the court
With this, the court allowed the application.
Case Title: Sainik Mining and Allied Services Limited V. Central Coalfields Limited
Coram: Hon’ble Mr. Justice Shree Chandrashekhar
Case No: Arbitration Application No. 4 of 2024
Advocate for the Appellant: Mr. Sumeet Gadodia, Advocate : Ms. Shilpi Gadodia, Advocate : Mr. Prakhar Harit, Advocate : Ms. Shruti Shekhar, Advocate : Mr. K. Hari, Advocate : Mr. Nillohit Choubey, Advocate
Advocate for the Respondent: Dr. Ashok Kumar Singh, Advocate : Mr. Rajveer Singh, Advocate
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