Jharkhand High Court
M/S. Vaidya Industries vs The Director on 1 July, 2025
Author: Rajesh Shankar
Bench: Rajesh Shankar
2025:JHHC:17243-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 6 of 2025
M/s. Vaidya Industries, a proprietorship Firm represented through its
duly authorized signatory, namely, Mr. Kirti Kumar Bisen, S/O Yadavrao
Bisen, aged about 43 years, R/O Near Royal Publuc School, Gujrati
Colony, Plot No. 09, Ganeshpur Bhandara, Maharashtra, Pin-441904
... ... Appellant
Versus
The Director, Women Child Development & Social Security Department,
Directorate of Social Welfare, Government of Jharkhand having its
office at 2nd Floor Engineering Hostel, Sector III, P.O. + P.S.-Dhurwa,
Ranchi - 834004 (Jharkhand) ... Respondent
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CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Appellant : Mr. Praveen Chandra, Advocate.
Mr. Atul Rai, Advocate.
For the Respondent : Mr. Ashok Kumar Yadav, Sr. S.C.-I.
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C.A.V. On: 26.06.2025 Pronounced On: 1.7.2025
Per M.S. Ramachandra Rao, C.J.
This Commercial Appeal is filed under Section 37 (2) of the Arbitration and Conciliation Act, 1996 read with Section 10 (3) of the Commercial Court's Act, 2015 challenging the order dt. 29.06.2024 passed by the sole Arbitrator, Justice Tapen Sen (retd.) allowing an application under Section 16 of the Arbitration and Conciliation Act, 1996 filed before him by the respondent herein and holding that the arbitral proceeding is not maintainable.
The Background facts
2. The respondent invited a tender through a bid document No.GEM/2019/B/196937 dt. 04.03.2019 for procurement of smart phones as per certain technical specifications. The said tender was floated on the Govt. e-Market place.
3. As per the tender, the bid end date/time was 23.03.2019 at 14:00 hours.
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4. The appellant submitted bid as an authorized seller of Vivo smart- phone and filed the bid by mentioning a model Vivo-Y8li.
5. The bid cycle mentioned in the said bid was valid for 90 days from the date of publication i.e. 03.06.2019.
6. According to the appellant, the bid was extended unilaterally by the respondent number of times.
7. It is also contended by the appellant that the financial bid by reverse auction took place on 26.06.2019, wherein, the appellant was declared as L-I bidder and a Contract No. GEMC-511687738597247 dt. 10.07.2019 was generated by Government e-Market place.
8. Since 4 to 5 months' time had taken place between the submission of the bid and the final issuance of contract order, the particular model item quoted for supply by appellant at the time of the bid submission was not available with the appellant, since the manufacture of the said model, according to the appellant, had been stopped by the Vivo company.
9. According to the appellant, he then informed the respondent that it would be offering the upgraded version of the quoted model i.e. Vivo 9 series model-Vivo 1908 (Y90), which was better than the previously offered model and which would also qualify the technical specifications of the bid document dt. 04.03.2019.
10. The appellant also contended that vide Annexure-5, dt. 24.07.2019 the respondent had directed the appellant to sign the Service Level Agreement (SLA) and submit the performance bank guarantee.
11. According to the appellant, the said agreement was signed between the parties on 13.08.2019 (but in fact, the photo-copy thereof
-2 of 7- 2025:JHHC:17243-DB filed by the appellant as Annexure-10 series contains only the signature of the appellant's representative and not that of the respondent.)
12. However, it appears that the respondent insisted that the appellant should supply only the model originally offered i.e. Vivo Y8li and did not agree to take the upgraded model of Vivo 9 series. Much correspondence transpired between the parties in this regard.
13. Ultimately, the appellant's account was disabled on 12.10.2019 by the GeM officials and it was debarred. Thereafter, the said order was modified on 08.11.2019 by GeM and the period of debarment of the appellant was reduced from 1 year to 90 days.
14. It appears that the respondent intimated that the contract between the parties had been cancelled vide Annexure-23, dt. 27.12.2019.
15. The appellant then invoked the provision for arbitration and issued a notice under Section 21 of the Act to the respondent for appointment of an Arbitrator on 14.01.2020.
Arb.Application No.03 of 2020 and orders therein
16. Thereafter the appellant also filed an application Arb.Application No. 03 of 2020 under Section 11(6) before this Court for appointment of an Arbitrator.
17. The said application was allowed on 28.04.2022 taking note of the contention of the counsel for the respondent that it was a fit case for referring the dispute between the parties to an Arbitrator, and Justice Amitav K. Gupta was initially appointed as an arbitrator.
18. Later, the said order was modified on 01.12.2022 and Justice Tapen Sen was substituted as an Arbitrator in the place of Justice Amitav K. Gupta (Retd.).
-3 of 7- 2025:JHHC:17243-DB The claims made by appellant before the Arbitrator
19. Seven claims were raised before the learned Arbitrator by the appellant:-
"19. CLAIM OF THE PETITIONER:
CLAIM (i) Loss of Profit on the order: Rs 4,28,26,980. CLAIM (ii) Interest on total financial expenses (Loss of Profit on order + Performance Bank Guarantee forfeiture amount) from 05.11.2020 to 16.05.2022 @ 24% Rs.2,08,94,818.
CLAIM (iii) Performance Bank Guarantee encashed by Respondent illegally and fraudulently: Rs1,23,81,950. CLAIM (iv) Loss of Business and Loss of Revenue due to blocking of funds and illegal blacklisting of the Petitioner: Rs 1,00,00,000.
CLAIM (v) Cost of Litigation: Rs 25,00,000. CLAIM (vi) GeM charges paid after successful bid (0.5 % of tender value): Rs 14,61,070 CLAIM (vii) Bank Guarantee charges levied by Bank for issuing Performance Bank Guarantee including stamp duty: Rs 3,56,431."
The application under section 16 filed before the Arbitrator by the respondent
20. Thereafter, the respondent moved an application on 11.05.2023 under Section 16 before the learned Arbitrator challenging the jurisdiction of the arbitral Tribunal to deal with the matter.
21. The Arbitrator, in the impugned order dt. 29.6.2024 noted that a final decision was taken by the Government not to accept the proposal submitted by the appellant and to go in for a re-tender/fresh tender for procuring the smart phones under the 'Poshan Abhiyan'.
22. He also recorded that even the Service Level Agreement between the parties was signed only by the appellant and the signature of the respondent was missing.
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23. He therefore held that the respondent-department did not wish to procure smart phones from the appellant and he did not have plenary power/plenary jurisdiction to compel one or either of the parties to do something, which was not the subject matter of the tender.
24. He thus held that he did not wish to continue the arbitration proceedings any further.
The Instant Appeal
25. Challenging the same, this appeal is filed.
26. Admittedly, the learned Arbitrator had been appointed through the order passed by this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 in Arbitration Application No.03 of 2020 on 28.04.2022, as modified on 01.12.2022, after the respondent gave consent for adjudicating the claims referred to (Supra) by arbitration,.
27. When the respondent had specifically agreed for the arbitration before this Court in the Arb.Application No. 03 of 2020, it was precluded by principle of res judicata from filing the application on 11.05.2023 under Section 16 stating that the arbitral Tribunal had no jurisdiction to deal with the matter.
28. Moreover, the arbitrator seems to have misdirected himself in the impugned order by presuming that the dispute is as to "whether other models offered by the appellant should be accepted by the respondent or not ?". This is not what he was supposed to adjudicate in the arbitration.
29. The claims made by the appellant before him ( referred at para 17 supra) require adjudication by him, but without referring to any of these claims, we are shocked that the arbitrator took the view that he would not
-5 of 7- 2025:JHHC:17243-DB continue the arbitration on the ground that the respondent is not willing to accept the new model cell-phones offered by the appellant.
30. We are even more shocked by his finding in Para 17 that the Service Level Agreement filed by the appellant before him was signed only by the appellant and the signature of the Government authorities was missing because such a plea was not raised in the Arbitration application No. 03 of 2020 by the respondent and they had readily agreed for arbitration. They are therefore estopped from contending that there is no arbitration clause binding between the parties on the ground that the Service Level Agreement was not signed by their representative.
31. Moreover, it is admitted fact that on the GeM portal, State entities which issue tenders, and bidders who participate, both are bound by the terms and conditions specified by the said portal which includes an "arbitration clause".
32. The Arbitration clause is No. 16 as per the General terms and conditions at GeM 3.0 (version 1.11), which has been filed at page 110 and which mentions the arbitration clause at page 135 of the paper book. This clause binds both parties.
33. Therefore, the respondent cannot be permitted to contend that merely because its signature is not there in the Service Level Agreement, the arbitration clause will not apply, more so, when it had agreed for arbitration before this Court in the Arbitration application No. 03 of 2020.
34. We strongly deprecate the conduct of the respondent before the Arbitrator.
35. For the aforesaid reasons, we hold that the learned Arbitrator gravely erred in allowing the application under Section 16 of the
-6 of 7- 2025:JHHC:17243-DB Arbitration and Conciliation Act, 1996 filed by the respondent before him, and that his order suffers from a patent error of law and jurisdiction warranting interference by this Court under Section 37 of the Arbitration and Conciliation Act, 1996.
36. Therefore, the Appeal is allowed; the impugned order dt.29.06.2024 passed by the sole Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996, is set aside. The respondent is directed to pay a cost of Rs.2,00,000/- (Rupees Two lakhs) to the appellant within 6 weeks.
(M. S. Ramachandra Rao, C.J.) (Rajesh Shankar, J.) APK
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