Bombay High Court
M/S Sunflag Iron And Steel Co. Ltd. ... vs M/S Vedanta Ltd. Andheri (East), Mumbai on 3 November, 2025
2025:BHC-NAG:11330
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
Civil Application (CAO) No. 1125 of 2025
in
Misc. Civil Application (ARBN) No. 67 of 2022
(disposed of on 17/02/2023)
M/s Sunflag Iron and Steel Co. Ltd. Nagpur
Versus
M/s Vedanta Limited, Mumbai
Office Notes, Office Memoranda of Court's or Judge's Order
Coram, appearances, Court's Orders
or directions and Registrar's order
Shri A.C. Dharmadhikari, Advocate for the applicant.
Shri A.A. Naik, Senior Advocate assisted by Shri A.R. Deshpande,
Advocate for the non-applicant.
CORAM : NIVEDITA P. MEHTA, J.
Reserved on : 16th October, 2025.
Pronounced on : 3rd November, 2025.
The original Respondent in MCA (Arbitration) No. 67 of
2022, has moved the present application seeking clarification of the order
dated 17th February, 2023 passed by this Court on an application under
Section 11(6) of the Arbitration and Conciliation Act, 1996, for
appointment of an arbitrator.
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2. By the order dated 17th February, 2023, this Court, after due
consideration of the submissions advanced by both parties, appointed
Hon'ble Mr. Justice A.B. Chaudhary (Retd.), Former Judge of this Court,
as the sole arbitrator for adjudication of disputes between the parties. The
said order dated 17th February, 2023 reads as follows :
"The application seeks appointment of an arbitrator. On
7.10.2022, the following order was passed.
"The purchase order dated 12.11.2020 (page 23) as its
stand amended by the amendment dated 17.11.2020 (page
22) contains an arbitration clause vide clause No.15 (page
27) which is not disputed by Mr. Jaiswal, learned counsel
for the non-applicant. He however, disputes the execution
of the second purchase order also dated 12.11.2020 (page
29), which also contains an arbitration clause vide clause
No.15 (page 34) and seeks time to place on record his
submission, considering which lis the matter on
14.10.2022."
There are two purchase orders, the first is dated
12.11.2020 bearing no. 4700141851 (pg.22) and the other also
of the same date bearing no. 4700141856.
2] Mr. Jaiswal, learned counsel for the non-applicant does
not dispute the execution of both these purchase orders. It is
his contention that the first purchase order is a concluded
contract, and therefore, he has no objection for appointment of
an arbitrator considering that the dispute exist and in view of
the arbitration clause No.15 contained therein (pg.27). In so
far as the second purchase order is concerned, it is contended
that it is not a concluded contract as an amended purchase
order, as well as the letter of credit was not received.
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3] A perusal of clause (1) of the general terms and
conditions of this purchase order, indicates that it shall
constitute contract between the parties and in case the
acceptance is not received within two days, there shall be a
deemed acceptance.
4] Mr. Jaiswal, learned counsel for the non-applicant has
been unable to point out to me any clause in this purchase
order, which makes it dependent upon the receipt of the letter
of credit as a primary condition for the contract to be
concluded, considering which I do not see any justification in
the said contention.
5] Since the Clause 15 in both the purchase orders
contemplates a sole arbitrator to be nominated by the
company, the same would clearly be covered by the mandate of
Section 12(2) of the Arbitration & Conciliation Act, resulting
in the requirement to appoint a sole arbitrator by this Court,
considering which Justice A.B.Choudhari, Former Judge of this
Court is hereby appointed as an arbitrator to decide the dispute
between the parties.
6] The parties shall appear before him on 26.2.2023 and
present a copy of this order, prior to which the processing
charges shall be first deposited in this Court, without which a
copy of the order will not be issued.
7] The application is disposed of accordingly."
3. The Respondent now contends that the observations in
paragraphs 3 and 4 of the said order may prejudice its case before the
Learned Arbitrator and, therefore, seeks clarification of the same.
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4. The Respondent asserts that it had raised preliminary
objections to the Section 11 application, contending inter alia:
(a) that the purchase order bearing No. 4700141851 ("Amona PO")
was not a concluded contract, and therefore, disputes arising
therefrom cannot be referred to arbitration; and
(b) that receipt of the Letter of Credit (LC) was a condition
precedent to the conclusion of the contract between the parties.
5. It is argued by the Respondent that this Court, while passing
the order dated 17th February 2023, observed that Clause 1 of the General
Terms and Conditions of the Purchase Order provides that the same shall
constitute a contract between the parties and, in the absence of acceptance
within two days, deemed acceptance shall ensue. The applicant further
submits that the Court observed that no clause in the purchase order
makes the contract contingent upon receipt of the Letter of Credit.
6. It is, therefore, Respondent's apprehension that these
observations may influence the decision of the Learned Arbitrator while
deciding the disputes on merits. The Respondent submits that it has
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already filed an application under Section 16 of the Arbitration and
Conciliation Act, 1996, challenging the jurisdiction of the Arbitrator on
similar grounds, and that the said application has resulted in framing of
preliminary issues regarding the existence of the contract.
7. The learned Senior Counsel for the respondent argued that
this Court has inherent powers to clarify its orders in case any ambiguity
arises. He further submitted that the respondent is not seeking to set aside
or modify the order; rather, a limited observation is sought to the effect
that the learned Arbitrator shall not take into consideration the findings
recorded in paragraphs 3 and 4 of the order in a manner prejudicial to the
respondent's objections. The learned Senior Counsel placed heavy reliance
on paragraphs 164 to 169 of the judgment titled Interplay between
Arbitration Agreements under the Arbitration and Conciliation Act, 1996
and the Stamp Act, 1899, In Re, reported in (2024) 6 SCC 1. The relevant
paragraphs are reproduced as under:
"164. The 2015 Amendment Act has laid down different parameters for
judicial review under Section 8 and Section 11. Where Section 8 requires
the referral court to look into the prima facie existence of a valid
arbitration agreement, Section 11 confines the court's jurisdiction to the
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examination of the existence of an arbitration agreement. Although the
object and purpose behind both Sections 8 and 11 is to compel parties to
abide by their contractual understanding, the scope of power of the
referral courts under the said provisions is intended to be different. The
same is also evident from the fact that Section 37 of the Arbitration Act
allows an appeal from the order of an Arbitral Tribunal refusing to refer
the parties to arbitration under Section 8, but not from Section 11. Thus,
the 2015 Amendment Act has legislatively overruled the dictum of Patel
Engineering where it was held that Section 8 and Section 11 are
complementary in nature. Accordingly, the two provisions cannot be
read as laying down a similar standard.
165. The legislature confined the scope of reference under
Section 11(6-A) to the examination of the existence of an arbitration
agreement. The use of the term "examination" in itself connotes that the
scope of the power is limited to a prima facie determination. Since the
Arbitration Act is a self-contained code, the requirement of "existence"
of an arbitration agreement draws effect from Section 7 of the
Arbitration Act. In Duro Felguera, this Court held that the Referral
Courts only need to consider one aspect to determine the existence of an
arbitration agreement - whether the underlying contract contains an
arbitration agreement which provides for arbitration pertaining to the
disputes which have arisen between the parties to the agreement.
Therefore, the scope of examination under Section 11(6-A) should be
confined to the existence of an arbitration agreement on the basis of
Section 7. Similarly, the validity of an arbitration agreement, in view of
Section 7, should be restricted to the requirement of formal validity such
as the requirement that the agreement be in writing. This interpretation
also gives true effect to the doctrine of competence-competence by
leaving the issue of substantive existence and validity of an arbitration
agreement to be decided by Arbitral Tribunal under Section 16. We
accordingly clarify the position of law laid down in Vidya Drolia in the
context of Section 8 and Section 11 of the Arbitration Act.
166. The burden of proving the existence of arbitration
agreement generally lies on the party seeking to rely on such agreement.
In jurisdictions such as India, which accept the doctrine of competence-
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competence, only prima facie proof of the existence of an arbitration
agreement must be adduced before the Referral Court. The Referral
Court is not the appropriate forum to conduct a mini-trial by allowing
the parties to adduce the evidence in regard to the existence or validity
of an arbitration agreement. The determination of the existence and
validity of an arbitration agreement on the basis of evidence ought to be
left to the Arbitral Tribunal. This position of law can also be gauged
from the plain language of the statute.
167. Section 11(6A) uses the expression "examination of the
existence of an arbitration agreement." The purport of using the word
"examination" connotes that the legislature intends that the Referral
Court has to inspect or scrutinize the dealings between the parties for
the existence of an arbitration agreement. Moreover, the expression
"examination" does not connote or imply a laborious or contested
inquiry. On the other hand, Section 16 provides that the arbitral
tribunal can "rule" on its jurisdiction, including the existence and
validity of an arbitration agreement. A "ruling" connotes adjudication of
disputes after admitting evidence from the parties. Therefore, it is
evident that the Referral Court is only required to examine the existence
of arbitration agreements, whereas the Arbitral Tribunal ought to rule
on its jurisdiction, including the issues pertaining to the existence and
validity of an arbitration agreement. A similar view was adopted by this
Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.149
168. In Shin-Etsu, this Court was called upon to determine the
nature of adjudication contemplated by unamended Section 45 of the
Arbitration Act when the objection with regards to the arbitration
agreement being "null and void, inoperative or incapable of being
performed" is raised before a judicial authority. Writing for the majority,
Justice B N Srikrishna held that Section 45 does not require the judicial
authority to give a final determination. The court observed that: (SCC
p.267, para 74)
"74. There are distinct advantages in veering to the view that
Section 45 does not require a final determinative finding by the
court. First, under the Rules of Arbitration of the International
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Chamber of Commerce (as in force with effect from 1-1-1998), as
in the present case, invariably the Arbitral Tribunal is vested with
the power to rule upon its own jurisdiction. Even if the Court
takes the view that the arbitral agreement is not vitiated or that it
is not invalid, inoperative or unenforceable, based upon purely a
prima facie view, nothing prevents the arbitrator from trying the
issue fully and rendering a final decision thereupon. If the
arbitrator finds the agreement valid, there is no problem as the
arbitration will proceed and the award will be made. However, if
the arbitrator finds the agreement invalid, inoperative or void, this
means that the party who wanted to proceed for arbitration was
given an opportunity of proceeding to arbitration, and the
arbitrator after fully trying the issue has found that there is no
scope for arbitration. Since the arbitrator's finding would not be
an enforceable award, there is no need to take recourse to the
judicial intercession available under Section 48(1)(a) of the Act."
169. When the referral court renders a prima facie opinion,
neither the Arbitral Tribunal, nor the court enforcing the arbitral award
will be bound by such a prima facie view. If a prima facie view as to the
existence of an arbitration agreement is taken by the referral court, it still
allows the Arbitral Tribunal to examine the issue in-depth. Such a legal
approach will help the Referral Court in weeding out prima facie non-
existent arbitration agreements. It will also protect the jurisdictional
competence of the Arbitral Tribunals to decide on issues pertaining to
the existence and validity of an arbitration agreement."
8. It is, therefore, urged that a clarification by this Court is
necessary to ensure that the observations made in paragraphs 3 and 4 of
the order dated 17.02.2023 do not prejudice the Arbitrator's independent
adjudication.
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9. Per contra, the Learned Counsel for the Applicant opposes the
present application and inter alia submits that:
(i) The present application is not maintainable as this Court
lacks jurisdiction to entertain it;
(ii) The application is a dilatory tactic aimed at obstructing
the expeditious continuation of the arbitration proceedings and
defeating the purpose of the Arbitration and Conciliation Act, 1996;
(iii) The application is, in substance, a review petition
camouflaged as a clarification application;
(iv) The Respondent had an efficacious statutory remedy
against the order dated 17th February 2023, but failed to avail the
same within the prescribed limitation period; and
(v) The application has been filed after an inordinate delay of
over two years and at a stage when the arbitration proceedings have
reached the stage of evidence of the Respondent's witnesses.
10. It is further submitted that the Act of 1996 contains no
provision empowering this Court to "clarify" an order once pronounced.
On merits, it is contended that this Court, while passing the order dated
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17th February 2023, had duly considered the documents and submissions
of both parties and rendered its observations upon due satisfaction before
appointing the Learned Arbitrator.
11. Reliance is placed upon the order of the Hon'ble Supreme
Court by the Learned Counsel for Applicant in Miscellaneous Application
Nos. 548-549 of 2018 in C.A. No. 5924 of 2005 (decided on 12 th
September 2018), holding that an application for clarification is, in effect,
an application for review in disguise. In the said order, reference is made to
the judgment in Delhi Administration v. Gurdeep Singh Uban [(2000) 7
SCC 296], wherein it was held that the Court should not entertain
applications styled as clarifications or modifications when, in substance,
they seek review of an earlier order.
12. Upon hearing Learned counsel for both sides, the following
points arise for consideration:
A. Whether the present application seeking clarification
of the order dated 17th February, 2023 is maintainable in law? and
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B. Whether any clarification is warranted in respect of
the observations contained in paragraphs 3 and 4 of the said
order?
13. Having heard both sides and perused the record, it is evident
that while deciding the Section 11(6) application, this Court had
"examined" whether there existed an arbitration agreement and a
concluded contract between the parties. Upon such examination, the
Court held that Clause 1 of the General Terms and Conditions of the
Purchase Order constituted a contract and that no clause making it
contingent upon receipt of the Letter of Credit was pointed out.
14. It is settled law that the scope of inquiry under Section 11(6)
of the Arbitration and Conciliation Act, 1996 is confined to determining
the existence of a valid arbitration agreement and a prima facie contractual
relationship between the parties.
15. A holistic reading of the order dated 17th February, 2023
shows that the observations therein are based on examination of
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documents on record and after duly considering the arguments of the
parties.
16. As regards the argument advanced by the learned Senior
Counsel for the respondent that this Court has inherent powers to clarify
any ambiguity in its order, and his reliance on the judgment in Interplay
(supra), it is clear that the Hon'ble Supreme Court has unambiguously
held that the scope of examination under Section 11(6A) of the
Arbitration and Conciliation Act, 1996, is confined only to the existence
of an arbitration agreement.
17. The learned Senior Counsel has placed heavy reliance on the
expression "examination of the existence of an arbitration agreement" and
has contended that the observations made in paragraphs 3 and 4 of this
Court's order might prejudice the respondent's case before the learned
Arbitral Tribunal.
18. In my considered view, this Court, in paragraphs 3 and 4 of
the order, has rightly examined, within its scope, the existence of an
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arbitration agreement. The observations therein merely indicate need for
reference of disputes for arbitration. The language of the order, clearly and
unequivocally demonstrates that this Court has only exercised its powers
viz., to examine the existence of the arbitration agreement, as
contemplated under Section 11(6A) of the Act.
19. Accordingly, the observations made in paragraphs 3 and 4
cannot be said to warrant any interference. If, in the facts and
circumstances of the case, the same are sought to be modified or clarified
in the manner suggested by the respondent, such an exercise would, in
effect, amount to a review of the order, which is impermissible in present
facts and circumstances.
20. It is now well settled that the scope of enquiry under Section
11 of the Arbitration and Conciliation Act, 1996, is limited. In my
opinion, this Court has rightly exercised its jurisdiction under Section 11
without any transgression thereof.
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21. Therefore, while it is not in dispute that this Court possesses
inherent powers to clarify its orders, I am of the view that neither the
observations in paragraphs 3 and 4, nor the order as a whole, warrant any
clarification as prayed for by the respondent.
22. Furthermore, the arbitration proceedings have already
progressed substantially and reached the stage of evidence. The present
application has been filed after an unexplained delay of over two years.
Even during the joint application under Section 29A of the Act filed on
9th May, 2025 for extension of time to complete the arbitration, no such
grievance was raised.
23. The only reason now cited, that the need for clarification arose
during recording of evidence cannot be accepted. The application appears
to be an attempt to reopen an order which has attained finality and to
delay the arbitral proceedings.
24. The observation by the Hon'ble Supreme Court vide order
passed in Miscellaneous Application Nos. 548-549 of 2018 in C.A. No.
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5924 of 2005 (decided on 12th September 2018) based on judgment in
Delhi Administration (supra) squarely apply. The present application for
clarification is nothing but an attempt to seek review and such application
cannot be permitted when it is, in substance, a review application in
disguise.
25. In view of the above discussion, I find that the present
application seeking clarification of the order dated 17 th February, 2023 is
not maintainable; and no clarification is warranted, as the earlier
observations were made on due consideration and evaluation of the
documents filed on record and contentions of the parties.
Accordingly, the present application, being devoid of merits, is
rejected.
[NIVEDITA P. MEHTA, J.]
Signed by: Mr. S.K. NAIR
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Designation: PS To Honourable Judge
Date: 03/11/2025 15:52:37
