Jharkhand High Court
M/S Electromech Engineers vs The State Of Jharkhand on 10 May, 2024
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arbitration Application No. 31 of 2023
M/s Electromech Engineers, a partnership firm, through one of its partner,
Mr. Kamal Kumar Lunkar, S/o Mr. Shanti Lal Lunkar, having its office at
C-10, City Centre, Sector-4, PO & PS-Sector-4, District-Bokaro
... ... Petitioner
Versus
The State of Jharkhand, through the Director, Directorate of Food and
Consumer Affairs, having its office at Ground Floor, Engineers Hostel, HEC,
Sector-III, Dhurwa, District-Ranchi ... ... Respondent
CORAM: HON'BLE THE ACTING CHIEF JUSTICE
For the Petitioner : Mr. Rahul Lamba, Advocate
: Mr. Nilesh Modi, Advocate
For the Respondent : Mr. Anish Kumar Mishra, AC to Sr. SC-I
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Order No. 9/Dated: 10th May 2024
Through this Arbitration Application, M/s Electromech
Engineering invokes section 11(6) of the Arbitration and Conciliation Act
for appointment of an arbitrator for resolution of the dispute in accordance
with provisions of the Arbitration and Conciliation Act, 1996 (in short, AC
Act).
2. The objection raised to the maintainability of this arbitration
application is that no formal agreement was signed between the parties after
the award of contract in favor of the petitioner-Firm. On the other hand, the
petitioner-Firm has pleaded that it was called for rate negotiation being the
L-1 bidder and about 51 days after the reverse auction the bid offered by the
petitioner-Firm was accepted on 18th May 2023 for supply of sugar and it
was called for executing a formal agreement. Mr. Rahul Lamba, the learned
counsel for the petitioner-Firm refers to "Unissi (India) Private Limited" v.
Post Graduate Institute of Medical Education and Research" (2009) 1 SCC
107 to submit that on similar facts the Hon'ble Supreme Court did not
approve the objection based on the ground that no formal agreement was
executed and that the arbitration clause did not come into existence. The
1 Arbitration Application No. 31 of 2023
learned counsel for the petitioner-Firm laid stress on the observations made
in paragraph no. 19 of the reported judgment. It was held that once the offer
by "Unissi (India) Private Limited" was accepted and the said company
acted upon it, the objection that the arbitration agreement did not exist
cannot be accepted.
3. Section 2(b) read with section 7 of the AC Act provides that
(a) an arbitration agreement shall be in writing contained in a document and
signed by the parties or (b) an exchange of letters, telex, telegrams etc.
which provide a record of the agreement or (c) any exchange of statements
of claim and defence in which the existence of the agreement is alleged by
one party and not denied by the other. The petitioner-Firm pleaded that on
receiving the communication dated 18th May 2023 it requested the
respondents for re-tendering due to rise in price of sugar in last 77 days. The
request of the petitioner-Firm was not accepted and bank guarantee
furnished by it was forfeited under Clause 8.20 of the terms of the NIT; the
petitioner-Firm was also put under black list category.
4. The learned counsel for the petitioner-Firm submits that by
invoking a clause 8.20 the respondent-Directorate of Food and Consumer
Affairs acted under the provisions in the NIT and, therefore, it cannot shy
away from clause 14 which provides for resolution of dispute in accordance
with the AC Act.
5. This submission is bereft of substance. The resort to clause 8.20
pertains to a stipulation that the final result of the reverse e-auction shall be
binding on the bidder and the failure of the bidder to accept the award of
contract shall result in the forfeiture of the EMD and black listing from
future participation for a period of three years. Whereas, clause 14 which
refers to arbitration can be invoked had the petitioner-Firm acted pursuant
to award of work. The judgment in "Unissi (India) Private Limited." turns
on its in own facts. The Unissi (India) Private Limited had accepted the
tender offer and acted upon it. The petitioner-Firm did not accept the offer
of award of contract and thus incurred the consequences under the NIT.
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A reference by the learned counsel for the petitioner-Firm to clause 8.25 that
the terms and conditions, letter, email acceptance offer etc. shall constitute
the contract between the seller and buyer is clearly misconceived. The
expression "shall constitute the contract between the seller and buyer" is
referable to signing of the contract between the parties whereafter all
previous communications, invitation of bids, amendments issued prior to
signing of contract etc. shall form part of the contract between the parties.
This arbitration application is clearly not maintainable and the remedy for
the petitioner-Firm lies before the civil Court.
6. Arbitration Application No. 31 of 2023 is dismissed.
(Shree Chandrashekhar, A.C.J.)
Amit
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