Jharkhand High Court
M/S Bgr Mining And Infra Pvt. Ltd vs Bharat Coking Coal Limited on 11 December, 2023
Author: Sanjaya Kumar Mishra
Bench: Sanjaya Kumar Mishra
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Arb. Application No.10 of 2023
M/s BGR Mining and Infra Pvt. Ltd, a Company registered under the
Companies Act, 1956, having its registered office at 8-2-596/R, Road
No. 10, Banjara Hills, P.O. and P.S. Banjara Hills, District Hyderabad-
500034 (Andhra Pradesh), through its Project Manager-cum-Authorized
Signatory namely, Sai Teja Nellore, aged about 35 years, C/o Nellore
Viajaya Sai Reddy, resident of Flat No. 302, A Block, Fortune Exotica,
Road No. 69, Nandagiri Hills, Greater Hyderabad (M. Corp), Hyderabad,
P.O. & P.S. Hyderabad, District Hyderabad, Telangana , PIN- 500033
... ... Applicant
Versus
1. Bharat Coking Coal Limited,
A Public Sector Undertaking incorporated under the Indian
Companies Act, 1956, through its Chairman cum Managing Director,
having its registered office at Koyla Bhawan, Koyla Nagar, Dhanbad-
826005 P.O. BCCL Township, P.W. Koyla Nagar and District
Dhanbad (Jharkhand).
2. General Manager, Contract Management Cell,
Central Coalfields Limited, having its office Darbhanga House, P.O.
G.P.O., P.S. Kotwali, District Ranchi, PIN 834001, (Jharkhand).
... ... ... ... Respondents
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CORAM: SRI SANJAYA KUMAR MISHRA, C.J.
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For the Applicant: Mr. Sumeet Gadodia, Advocate For the Respondents: Mr. Amit Kumar Das, Advocate
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Reserved on: 28.07.2023 Pronounced on: 11.12.2023
1) In this application under Sub-section 6 of Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act" for brevity), read with Section 10 of the Commercial Courts Act, 2015, the petitioner, a registered company, has prayed to refer the matter to Arbitration by appointing an arbitrator with reference to dispute arising out of the agreement dated 09.08.2018.
2) The petitioner is a company incorporated under the Companies Act, 1956. The opposite party Bharat Coking Coal Limited (hereinafter referred to as "the BCCL" for brevity) is a private sector undertaking 2 Arb. Application No. 10 of 2023 incorporated under the same companies Act engaged in mining of coal and allied activities. The petitioner is primarily engaged in business of Developing and Operating mines with the core expertise being OB removal, mineral extraction and transportation, etc.
3) A E-tender dated 12.02.2018 was issued by the BCCL for execution for the work "Hiring of HEMM for removal of OB, extraction and transportation of Coal from IV(T), IV(B), III(T), III(B) seams of NC Patch II of Kuya OCP of Bastacaolla Area, BCCL". The petitioner submitted its bid and was selected to execute the work. A letter of acceptance was communicated on 15.05.2018, i.e., Annexure-3 to the writ petition. An agreement was also entered into between them on 09.08.2018 for the aforesaid work which contained in arbitration clause. A work order was issued by the BCCL in favour of the petitioner on 18.09.2018 for executing the aforesaid work of removal of 317.17 lakh cum of In-situ OB, etc.
4) It is the case of the petitioner that during the execution of the present work, the petitioner informed the BCCL vide letter dated 24.11.2021 that in spite of taking appropriate measures in doing the Dewatering operations with the requisite pumps, accumulation of water from the Catchment Area of the total project was being gathered at NC Patch and inrush of water from surface drain was taking place due to abnormal heavy rainfall in the last week of September 2021. Such facts caused hindrance in execution of the work as a 2nd Seam was not able to respond. As a result, coaling operations had to be stopped till the water was removed. Thereafter the petitioner wrote several request letters to the BCCL to arrange for identifying the inadvertent entry of water, for arrangement of pumps at their end free power for the additional pumps etc. It is further stated that in spite of receipt of such request, the BCCL did not bother to reply. Again on 12.03.2022, 3 Arb. Application No. 10 of 2023 the petitioner apprised the BCCL regarding the accumulation of water in the working patch and thereafter several correspondences have been made. Relying upon Clause 13-A of the conditions of contract under the Tender Document, the petitioner would claim that since there has been a dispute between them, the matter may be referred to arbitration. The petitioner requested the BCCL to refer the matter to arbitration, but as yet, no step has been taken. Hence, this application.
5) Counter affidavit has been filed by the BCCL. The main plea they have taken is that Clause 13 of the NIT dated 12.02.2018 deals with the mechanism / procedure for redressal of the dispute between the parties. The same is reproduced below:
"Clause 13. Settlement of Disputes It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level.
The contractor should make request in writing to the Engineer- in-charge for settlement of such disputes/ claims within 30 (thirty) days of arising of the cause of dispute/claim failing which no disputes/ claims of the contractor shall be entertained by the company.
Effort shall be made to resolve the dispute in two stages:
In first stage dispute shall be referred to Area CGM, GM. If difference still persist the dispute shall be referred to a committee constituted by the owner. The committee shall have one member of the rank of Director of the company who shall be chairman of the committee.
If differences still persist, the settlement of the dispute shall be resolve in the following manner:
Disputes relating to the commercial contracts with Central Public Sector Enterprises Govt. Departments (except Railways, Income Tax, Customs & excise duties)/State Public Sector Enterprises shall be referred by either party for Arbitration to
4 Arb. Application No. 10 of 2023 the PMA (Permanent Machinery of Arbitration) in the department of Public Enterprises.
In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through Arbitration (THE ARBITRATION AND CONCILIATION ACT, 1996 as amended by AMENDMENT ACT of 2015).
Clause 13 A. Settlement of Disputes through Arbitration If the parties fail to resolve the disputes/differences by in house mechanism, then, depending on the position of the case, either the employer/owner of the contractor shall give notice to other party to refer the matter to arbitration instead of directly approaching Court. The contractor shall, however, be entitled to invoke arbitration clause only after exhausting the remedy available under the clause 13.
In case of parties other than Govt. agencies, the rederessal of disputes/differences shall be sought through Sole Arbitration as under.
Sole Arbitration:
In the even of any question, dispute or difference arising under these terms & conditions or any condition contained in this contract or interpretation of the terms of, or in connection with this Contract (except as to any matter the decision of which is specially provided for by these conditions, the same shall be referred to the sole arbitration of a person, appointed to be the arbitrator by the Competent Authority of CIL/CMD of Subsidiary Company (As the case may be) The award of the arbitrator shall be final and binding on the parties of this Contract.
(a) In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his/her award being set aside by the court for any reason, it shall be lawful for the Competent Authority of CIL/CMD of Subsidiary Company (as the case may be) to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid.
(b) It is further a term of this contract that no person other than the person appointed by the Competent Authority of CIL/CMD of Subsidiary Company (As the case may be) as aforesaid should act as arbitrator and that, if for any reason that is not possible, the matter is not to be referred to Arbitration at all. Subject as aforesaid, Arbitration and Conciliation Act, 1996 as amended by Amendment Act of
5 Arb. Application No. 10 of 2023 2015 and the rules thereunder and any statutory modification thereof for the time being in force shall be deemed to apply to the Arbitration proceedings under this clause. The venue of arbitration shall be the place from which the contract is issued.
Applicable Law: The contracts shall be interpreted in accordance with the laws of the Union of India.
Contracts with Partnership firm/ Joint Venture/Consortium:
The Partnership firm/Joint Venture/Consortium is required to submit written consent of all the partners to above arbitration clause at the time of submission of bid. "
6) Thus, the BCCL relying upon Clause 13 and 13-A, would assert that before invoking Clause 13-A of the NIT, the mechanism under Clause 13 has to be exhausted by the parties for settlement of dispute. It is further pleaded that Clause 13-A can be invoked only if the parties fail to resolve the dispute/differences by in-house mechanism, then depending on the position of the case, either the employer/ owner or the contractor shall give notice to the other party to refer the matter to arbitration instead of directly approaching the Court. The contractor shall, however, be entitled to invoke arbitration clause only after exhausting the remedy available under the Clause 13.
7) Thus, it is not disputed by the respondent-BCCL that there was an agreement between the parties and in case of dispute, it can be referred to arbitration. What is disputed is, the procedure adopted by the petitioner. The learned counsel for the respondent would submit that for invoking Clause 13-A of the NIT, the condition precedent is that the party needs to adopt the dispute resolution mechanism, at first, as provided under Clause 13. Only in case where there has been a failure of the dispute resolution mechanism and that no dispute could be resolved, the matter can be referred to the arbitration.
6 Arb. Application No. 10 of 2023
8) The learned counsel for the petitioner, however, would rely upon the case of Visa International Ltd vs. Continental Resources (USA) Ltd, (2009) 2 SCC 55 : 2008 SCC OnLine SC 1802 and would submit that similar question arose in that reported case also and in paragraph 34 the Hon'ble Supreme Court has decided that the parties have agreed that the disputes arising out of the agreement which cannot be settled amicably, can be finally settled in accordance with the provisions of Arbitration and Conciliation Act, 1996. The Act not only provides procedure for the purpose of involving appointment of an arbitrator but also comprehensively provides as to the jurisdiction of Arbitration Tribunal and conduct of arbitral proceedings, such as, determination of rules of procedure; place of arbitration, etc. and for making arbitral award and termination of proceedings. Thus, it is clear that in the absence of a dispute between the parties on the date of said agreement and in view of the language of the said clause, the parties intended to refer the dispute to the arbitration.
9) Thus, this Court is of the opinion that all the ingredients required for invoking Sub-section 6 of Section 11 of the Act are fulfilled in this case. There is an agreement between the parties to refer the matter to arbitration. Secondly, there is a dispute between them regarding the execution of the work. The agreement provides for referring the matter to conciliation and only in case of failure of conciliation or the dispute resolution mechanism, it is to be referred to the arbitration. But, in view of the authoritative pronouncement of the Hon'ble Supreme Court as cited above, we are of the opinion that even in such case if there is no action on the part of the BCCL itself to refer the matter to conciliation, the petitioner is at liberty to invoke the provision of Sub-section 6 of Section 11 of the Act and, therefore, the arbitration application is allowed.
7 Arb. Application No. 10 of 2023
10) In course of hearing, both the learned counsel appearing for the parties would agree upon appointment of Sri Vijay Kumar Sharma, a retired District Judge, as the sole Arbitrator.
11) Hence, Sri Vijay Kumar Sharma, retired District Judge, is hereby, appointed as the Sole Arbitrator to preside over the Arbitral Tribunal and arbitrate the dispute between the parties. Learned Arbitrator would be free to lay down the fees and other expenses towards conduct of the arbitration proceedings, however keeping into account the ceiling prescribed under Schedule IV of the Act of 1996 as amended. Learned Arbitrator would endeavor to conclude the proceedings expeditiously, also taking into regard the mandate of the Legislature under Section 29-A of the Act of 1996.
12) Let a photocopy of the entire pleadings along with copy of the entire order sheet be sent to the learned Arbitrator by the Registry.
13) There shall be no orders as to costs.
14) Pending Interlocutory Applications, if any, stand disposed of.
15) Urgent Certified copies as per Rules.
(Sanjaya Kumar Mishra, C.J.) A.F.R. MM/-