Pioneer Carbide Pvt. Ltd & Anr vs . Union Of India & Ors
2022 Latest Caselaw 243 Meg

     Serial No.02
     Regular List

                      HIGH COURT OF MEGHALAYA
                          AT SHILLONG
WA No.9/2022 with
MC (WA) No.7/2022
MC (WA) No.8/2022
                                                  Date of Order: 26.05.2022
Pioneer Carbide Pvt. Ltd & anr              Vs.        Union of India & ors
Coram:
          Hon'ble Mr. Justice Sanjib Banerjee, Chief Justice
          Hon'ble Mr. Justice W. Diengdoh, Judge

Appearance:
For the Appellants              : Mr. K. Paul, Sr.Adv with
                                  Mr. S. Chanda, Adv
                                  Ms. B. Kharwanlang, Adv
For the Respondents             : Dr. N. Mozika, ASG with

Ms. K. Gurung, Adv

i) Whether approved for reporting in Yes/No Law journals etc.:

ii) Whether approved for publication in press: Yes/No

JUDGMENT: (per the Hon'ble, the Chief Justice) (Oral) The appeal is directed against a judgment and order of April 5,

2022 passed on the appellants' petition under Article 226 of the

Constitution.

2. In view of the fair stands taken by the parties at this stage, it may

not be necessary to record the grievance with which the appellants

approached this Court. It may only be noticed that the appellants had made

an offer pursuant to a notice inviting tender and claim that the selection

was required to be on reverse auction basis; but that such procedure may

not have been followed. The immediate grievance that prompted the

appellants to approach this Court was the invocation of a risk purchase

clause and the attempt by the Bhilai Steel Plant of Steel Authority of India

Limited (SAIL) to take measures for recovering the perceived loss from

the bills and payments due to the appellants in respect of other unrelated

contracts.

3. The writ petition was dismissed on the ground that there was an

alternative remedy available. The principal ground raised in the appeal is

whether an authority answering to the description of "the State" under

Article 12 of the Constitution may act arbitrarily even in a contractual

matter without the affected party having a right of recourse to Article 226

of the Constitution. In the context of the stands taken by the parties, it may

not be necessary to dwell on such aspect of the matter. However, the issue

is left open for future consideration in an appropriate case. Suffice it to say

that the mere existence of an arbitration agreement between the two parties

may not, by itself, be a ground to not receive a petition under Article 226

of the Constitution. This is because arbitration is only procedural and it

implies only that instead of regular mechanism of a suit the disputes

between the parties to an arbitration agreement are decided by a consensual

forum. The existence of an arbitration agreement is no more defence than

a State or other authority asserting that the disputes made the subject-

matter of the petition under Article 226 of the Constitution may be more

conveniently dealt with in an appropriately constituted civil suit.

4. As far as the present case is concerned, the proposed matrix

contract contains a clause for conciliation between the parties and, upon

the conciliation failing, for the disputes to be carried to arbitration. The

arbitration agreement which was proposed to be incorporated in the matrix

contract provided for the employer, SAIL, to nominate the arbitrator.

However, in terms of the Arbitration and Conciliation Act, 1996 as it

stands today, such right of nomination is no longer valid.

5. It is, however, asserted by the appellants that the clause or

clauses pertaining to the conciliation proceedings and arbitration may not

be applicable since no valid contract had been entered into between the

parties. Without prejudice to such contention, the parties have agreed that

a conciliator would be appointed on either side for the disputes that have

arisen to be resolved through such process. In the unlikely event that the

conciliation fails, the appellants and SAIL will nominate an arbitrator each

for the two nominees to decide on the third arbitrator and constitute the

arbitral tribunal to deal with the disputes that have arisen between the first

appellant and SAIL.

6. It is fairly submitted on behalf of the respondents herein that no

recovery measures will be pursued against the first appellant till the

conclusion of the conciliation proceedings and without leave of the arbitral

tribunal once the same is set up.

7. Accordingly, the parties are left to work out their remedies in

accordance with the submission as recorded hereinabove. This order is

completely without prejudice to the rights and contentions of the parties

and none of the observations herein should affect the conciliation or the

possible arbitral reference.

8. Nothing in this order will preclude the parties from bringing any

appropriate application before the arbitral tribunal in accordance with law.

9. WA No.9 of 2022, MC (WA) No.7 of 2022 and MC (WA) No.8

of 2022 are disposed of.

10. There will be no order as to costs.

       (W. Diengdoh)                                  (Sanjib Banerjee)
           Judge                                        Chief Justice

Meghalaya
26.05.2022
"Lam DR-PS"