M/S. Kd Foods Through Its ... vs The Union Of India Through The ...
2022 Latest Caselaw 3547 Jhar

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          IN THE HIGH COURT OF JHARKHAND AT RANCHI
                           W.P.(C) No. 3275 of 2022
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M/s. KD Foods through its proprietor Smt. Gayatri Devi ... ... Petitioner Versus

1. The Union of India through the General Manager, East Central Railway, Hajipur, District- Vaishali (Bihar)

2. The Chief Commercial Manager, East Central Railway, Hajipur, District- Vaishali (Bihar)

3. The Chief Commercial Manager, Catering, East Central Railway, Hajipur, District- Vaishali (Bihar)

4. The Senior Divisional Commercial Manager, East Central Railway, Dhanbad .... ... Respondents CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR For the Petitioner : Mr. Vijay Kumar Sinha, Advocate For the Respondents : Mr. Prashant Kumar Singh, Advocate

Order No. 04 Dated: 07.09.2022

The present writ petition has been filed for quashing letter no. C.724/CV/DHN/2022 dated 31.03.2022 (Annexure-14 to the writ petition) issued by the Senior Divisional Commercial Manager, East Central Railway, Dhanbad (the respondent no. 4) whereby the said respondent has intimated the petitioner that the contract of catering/vending of Stall No.-2 situated at platform no. 1 of Dhanbad Railway Station (hereinafter referred as the said Stall) has been terminated by the competent authority forfeiting its security deposit of Rs.40,000/- due to non-payment of due license fee since 31.10.2021 and has asked the petitioner to remove structure of the said catering/vending stall immediately. Further prayer has been made for directing the respondents to appoint an arbitrator within one month to resolve the dispute and the operation of the letter dated 31.03.2022 may be stayed till passing of the award by the arbitrator.

2. Learned counsel for the petitioner submits that the respondent no.4 issued notice inviting applications for grant of license for the said Stall under Special Minor Unit (SMU) for Scheduled Caste (women) category for a period of 5 years. Pursuant to the said notice, the petitioner applied for allotment of the said Stall whereupon the same was allotted to it and a letter of acceptance to that effect was issued by the Divisional Railway Manager (C), East Central Railway, Dhanbad on 02.11.2018. Thereafter, an agreement was executed between the petitioner as "Licensee" and the

respondent no. 4 as "Railway" on 14.10.2019. The period of the agreement was mentioned as 05.02.2019 to 04.02.2024. The petitioner sent letter to the respondent no. 4 on 06.08.2020 stating that though the contract was for the period from 05.02.2019 to 04.02.2024, however the said stall was opened on 06.09.2019 and as such the period/tenure mentioned in the agreement dated 14.10.2019 should be effective from the opening date of the said Stall i.e. 06.09.2019. Moreover, the petitioner also requested to correct the wrongly mentioned amount of license fee in the said agreement as Rs.2,54,788/- instead of Rs. 2,11,000/-. The respondent no. 4 issued letter dated 17.11.2020 to the petitioner informing that letter dated 28.10.2019 was already sent to it regarding correction of license fee. Moreover, the clarification regarding commencement date of catering stall as mentioned in the agreement was also sent to the petitioner vide letter dated 24.02.2020. The petitioner was further directed to deposit the licence fee of Rs.2,54,788/-for second year within seven days. The petitioner deposited an amount of Rs.28,525/- on 17.12.2021 with respect to catering license fee for the period from 01.05.2021 to 31.07.2021. The Divisional Railway Manager (C) issued notice to the petitioner vide letter dated 18.02.2022 for non-deposition of license fee for the period from 01.11.2021 to 31.10.2022 with respect to operation and maintenance of catering stall at Dhanbad station with an advice to deposit the due license fee with effect from 01.11.2021 onwards as per the agreement signed by the petitioner within 7 days failing which necessary action was to be taken as deemed fit including termination of contract and forfeiture of security money, but it failed to deposit the same. The petitioner deposited catering license fee of Rs.42,092/- for the period from 01.08.2021 to 31.10.2021 vide receipt dated 16.03.2022. However, the respondent no.4 vide order dated 31.03.2022, terminated the petitioner's contract of catering/vending stall and forfeited the security money of Rs.40,000/- deposited by it due to non-payment of license fee after 31.10.2021. It was also asked to remove the structure of catering/vending stall immediately.

3. Learned counsel for the petitioner, in course of argument, refers to Article 19.1 of Master License Agreement dated 14.10.2019 executed between the petitioner and the respondent no. 4 and submits that in case

of any dispute arising between the parties, the same is required to be resolved in terms of the General Conditions of Contract for works of Railways and as per the provisions of the Arbitration and Conciliation Act, 1996 (in short, "the Act,1996) as amended from time to time and the rules framed thereunder. The main grievance of the petitioner is that since a dispute between the parties has arisen, the respondent no. 4 should have referred the said dispute for arbitration in terms with the said Article of Master License Agreement dated 14.10.2019 instead of prematurely terminating the contract/agreement. Learned counsel for the petitioner also refers to the order dated 03.11.2014 passed by learned Division Bench of this Court in L.P.A. No. 372 of 2014 (Adarsh Arun Balmuchu @ A.A. Balmuchu Vs. Union of India & Ors.) and other analogous cases and submits that this Court exercising the writ jurisdiction may refer the dispute between the parties for arbitration in terms with Article 19.1 of the agreement dated 14.10.2019 as well as may restrain the respondents from removing the petitioner's catering/vending stall as has been directed by the respondent no. 4 vide impugned order dated 31.03.2022. Learned counsel for the petitioner, in support of his submission, also puts reliance on order dated 15.02.2018 passed by a co-ordinate Bench of this Court in W.P.(C) No. 678 of 2009 (R.K.Devi Vs. Union of India and Others).

4. Opposing the said submission of learned counsel for the petitioner, Mr. Prashant Kumar Singh, learned counsel appearing on behalf of the respondents, submits that if the petitioner intended that the dispute between the parties should have been referred to arbitration under Article 19.1 of the Master License Agreement dated 14.10.2019, it was required to expressly invoke the said clause and if the respondents had not taken any further step in this regard, it should have taken recourse of Section 11(5) of the Act, 1996. It is further submitted that no ratio has been laid down in both the orders referred by the learned counsel for the petitioner, rather the same have been passed in special facts and circumstance of the said cases.

5. Heard learned counsel for the parties and perused the content of the writ petition.

6. Learned counsel for the petitioner has assiduously contended that

Article 19.1 of the Master License Agreement dated 14.10.2019 provides for dispute redressal mechanism which speaks of resolving the dispute in terms with General Conditions of Contract for works of Railways as well as under the provisions of the Act, 1996 and therefore the same may be referred for arbitration following the aforesaid orders passed by different Benches of this Court.

7. I have carefully gone through the order dated 03.11.2014 passed by the learned Division Bench of this Court in L.P.A. No. 372 of 2014 and other analogous cases, the relevant paragraphs of which read as under:

"4. We have heard learned counsel appearing for the respondents- Union of India, who has submitted that no error has been committed by the learned single judge in deciding the writ petitions, preferred by the respective petitioners, who are appellants herein. It is also submitted by the learned counsel for the respondents that he has already stated in paragraph no. 6 of the respective counter affidavits, filed in writ petitions that the writ petitions are based upon the so called breach of contract and hence, the dispute may be referred to the Arbitrator, as per the said clause of agreement. Thus, learned counsel for the respondents has submitted that he has no objection if the dispute is referred to the learned Arbitrator.

5. In view of the aforesaid limited submissions, made by the learned counsel for both the sides, the parties to these Letters Patent Appeals are ready and willing to go before the learned Arbitrator for resolving their disputes, as per the clause of agreement. Meanwhile, till the applications for interim relief are heard by the learned Arbitrator, the existing license fees shall be paid by these appellants to the respondents for their catering units, which are installed at Chakradharpur Railway Station. Their electricity and water connection shall also be continued during this period and these appellants are allowed to operate their catering units till their applications for interim relief are disposed of by the learned Arbitrator.

6. Thus, the matters are referred to the learned Arbitrator to be appointed as per the clause of the agreement, as stated in paragraph no. 6 of the respective counter affidavits, filed by Mr. A.K. Haldhar, Senior Divisional Commercial Manager, South Eastern Railway, Chakradharpur Division at Chakradharpur, District- Singhbhum (West), Jharkhand in the writ petitions. The learned Arbitrator, to be appointed, shall decide the disputes in between the parties, referred to in the writ petitions as also in these Letters Patent Appeals, at the earliest, preferably within a period of six months from the date of commencement of arbitration proceedings. If any application is preferred by the appellants for interim relief, the same shall also be decided at the earliest, in accordance with law, rules, regulations, government policy and on the basis of the evidences on record, independent to the observations, made by the learned single judge in the impugned orders to the writ petitions. Both the parties to this litigation have assured to cooperate the hearing before the learned Arbitrator and not to ask for unnecessary adjournments."

7. In view of the above directions, these Letters Patent Appeals are hereby allowed. The observations made by the learned Single Judge in the orders, passed in the writ petitions, shall not come in the way of deciding the disputes by the learned Arbitrator. The

observations of the learned Single Judge, made in the impugned orders, shall not be given effect to, while deciding the disputes by the learned Arbitrator. The learned Arbitrator will decide the disputes between the parties independently in accordance with law, rules, regulations, government policy, applicable to the parties, and on the basis of the evidences on record.

8. With the aforesaid observations, these Letters Patent Appeals are hereby disposed of. Consequent thereto, all the interlocutory applications also stand disposed of."

8. It would thus be evident that in the said case, the learned Division Bench had referred the matter for arbitration on the basis of agreement of both the sides. Moreover, in the case of R.K Devi Vs. Union of India & Others [W.P.(C) No. 678 of 2009], order dated 15.02.2018 has also been passed by a co-ordinate Bench of this Court on the agreement of counsel for both parties as would be evident from paragraph-3 of the same. However, in the present case, learned counsel for the respondents has not accepted the contention of the petitioner for referring the matter for arbitration. Thus, the facts and circumstance of the present case is not similar to the cases cited by learned counsel for the petitioner.

9. Section 11 of the Act, 1996 provides the detailed procedure for referring any dispute to arbitration which reads as under:-

"11. Appointment of arbitrators.--

(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in sub-section (3) applies and--

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court;

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court.

(6) Where, under an appointment procedure agreed upon by the parties,--

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub- section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.

(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.

(7) A decision on a matter entrusted by sub-section (4) or sub- section (5) or sub-section (6) to the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision.

(8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of section 12, and have due regard to--

(a) any qualifications required for the arbitrator by the agreement of the parties; and

(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Supreme Court or the person or institution designated by that Court may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10)The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6), to it.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or subsection (6) to the Chief Justices of different High Courts or their designates, different High Courts or their designates, the High Court or its designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.

(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the "Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "Supreme Court"; and

(b) Where the matters referred to in sub-sections (4), (5), (6), (7),

(8) and sub-section (10) arise in any other arbitration, the reference to "the Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "High Court" within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court.

(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case maybe, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party. (14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule. Explanation.--For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution."

10. Thus, it is apparently clear that the party who wants to resolve the dispute through arbitration is required to make such request to the other party and if the parties fail to agree on a procedure for appointing the arbitrator, any of the parties may request the Supreme Court or, as the case may be, the concerned High Court or any person or any institution designated by such Court to take the necessary measure and the appointment of arbitrator shall be made accordingly upon such request of a party.

11. In the present case, the petitioner has not yet invoked the arbitration clause i.e. Article 19.1 of the Master License Agreement dated 14.10.2019 by serving any letter/application to the respondent no.4 for appointment of arbitrator, rather has preferred the present writ petition by merely relying upon the aforesaid two orders passed by different Benches of this Court. In view of the aforesaid fact, this Court finds that the petitioner itself has not yet opted for the procedure to get dispute referred for arbitration by making application to the respondent no.4 and has directly invoked the extraordinary writ jurisdiction. Thus, the present writ petition filed for referring the matter for arbitration cannot be entertained since detailed procedure for appointment of arbitrator has already been provided in section 11 of the Act, 1996.

12. So far as the prayer of the petitioner for interim protection is

concerned, it would be relevant to refer the judgment dated 08.08.2017 rendered by learned Division Bench of this Court in L.P.A. No. 506 of 2016 (The Union of India & Others Vs. Senbo Engineering Limited & Others) wherein after referring the relevant judgments of the Hon'ble Supreme Court, it has specifically been held that when the parties are relegated to learned Arbitrator, stay ought not to have been granted by the learned Single Judge for encashment of the bank guarantee. It has further been held in the said case that the affected party has all the remedies before the learned Arbitrator and if it succeeds in arbitration proceeding, the amount can be returned by the other party-Union of India.

13. Under the aforesaid facts and circumstance, this Court is not inclined to entertain the present writ petition and the same is accordingly dismissed. The petitioner is however at liberty to take appropriate alternative recourse as provided under law for redressal of its grievance.

(Rajesh Shankar, J.) Ritesh/AFR