Orissa High Court
M/S. Hindustan Copper Ltd vs State Of Odisha & Others ....... Opp. ... on 28 February, 2024
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.16423 of 2014
M/s. Hindustan Copper Ltd. ....... Petitioner
-Versus-
State of Odisha & others ....... Opp. Parties
For Petitioner : Mr. G. Mukherji,
Senior Advocate
For Opp. Party Nos.1 & 2 : Mr. T. Pattanaik,
Addl. Govt. Advocate
For Opp. Party No.3 : Mr. M. Mishra,
Senior Advocate
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CORAM: JUSTICE SANJAY KUMAR MISHRA
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Date of Hearing: 24.01.2024 Date of Judgment: 28.02.2024
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S.K. Mishra, J. The Petitioner, which is a Government of India
Enterprise, incorporated and registered under the Companies Act,
1956, and has its operation in the State of Madhya Pradesh, has
preferred the present Writ Petition challenging the letter dated
30th July, 2014/1st August, 2014 of the Director of Industries-
cum-Chairman, MSEFC, Odisha. Vide the said communication,
the General Manager of the Petitioner-Company was intimated
that appointment of another Arbitrator by the Petitioner-Company
is illegal and beyond law, as the matter has already been referred
to the Micro and Small Enterprise Facilitation Council, shortly,
'MSEFC', and the proceeding is going on before the MSEFC.
2. The brief background facts which led to filing of the
present Writ Petition, is that the Petitioner-Company, in order to
run its unit, requires chilled cast iron grinding media balls,
shortly, hereinafter 'cast iron balls'. The Opposite Party No.3
showed interest to supply the said materials to the present
Petitioner. As such, the Petitioner-Company issued purchase
order dated 21.10.2000 for supply of materials. The conditions
contained in the said purchase order formed the contract between
the parties as the Opposite Party No.3 made supplies pursuant to
the said purchase order. The purchase orders were time bound
and the supplier, i.e. present Opposite Party No.3, was obliged to
make the supplies within the stipulated dates failing which, it was
liable to pay compensatory costs to the Petitioner-Company. Vide
clause 20.0 of the said contract, there was an arbitration clause
which provided for resolving any dispute, that may arise out of
the contract. Subsequently, the Petitioner placed order for supply
of cast iron balls of 80 mm diameter. However, the Opposite Party
No.3 could not supply the materials in due time for which the
W.P.(C) No.16423 of 2014 Page 2 of 24
Petitioner-Company could not process the same in time and
sustained huge loss. Such loss was occasioned as the cast iron
balls were an integral part in the process of extraction of the
metal from the ores, without which the process of extraction came
to a grinding halt.
3. The Petitioner-Company could not meet its targets and
obligations to supply finished products to its consumers and as
such, payments due to it were withheld. As a consequence
thereof, the Petitioner could not make the payments in time.
There was some delay in making the payments even though some
payments were being made in the interregnum and the same is
attributable to the delay caused in supply of goods by the
Opposite Party No.3. Hence, the question of payment of interest
for delay in making the payments does not arise as the delay, if
any, was attributable to the Opposite Party No.3, who could not
supply the materials in due time. Rather, it would be the Opposite
Party No.3, who would be liable to indemnify the Petitioner for
damages caused due to the lapses on its part by delaying the
process of supplying the materials.
4. It is further case of the Petitioner, that without
inspection of the cast iron balls, the payments could not have
W.P.(C) No.16423 of 2014 Page 3 of 24
been made by the Petitioner. The delay in supply of the cast iron
balls disturbed the entire production schedule of the Petitioner,
thereby causing it further loss. However, it was mutually agreed
between the parties that the Petitioner would not press for such
losses if interest for delay in payment is not claimed by the
Opposite Party No.3. The Opposite Party No.3, without honouring
the contracts and the express understanding arrived upon at the
time of finalization of the accounts, in conscious violation of the
contract as well as its undertakings, approached the MSEFC
under the Provision of the Micro, Small and Medium Enterprises
Development Act, 2006, shortly, hereinafter 'MSMED Act', instead
of approaching the Petitioner for appointment of Conciliator as per
the provisions under the MSMED Act, though it is mandatory to
issue notice under Section 21 of the Arbitration & Conciliation
Act, 1996, shortly, hereinafter '1996 Act'. As per Section 18(3) of
the MSMED Act, 2006, the provisions of the 1996 Act will apply to
the proceeding under the MSMED Act, 2006. Hence, non issuance
of a notice under Section 21 of the 1996 Act renders the entire
proceeding vulnerable and untenable in law.
5. It is further case of the Petitioner that the present
Opposite Party No. 3 has also chosen to approach the MSEFC
much beyond the stipulated period of limitation, as the claim
W.P.(C) No.16423 of 2014 Page 4 of 24
itself is hopelessly barred by time. However, surprisingly where a
suit for recovery would be barred by law on the ground of
limitation, a claim under a special statute has been entertained.
This very fact raises a shadow of illegality and bias against the
MSEFC, which somehow or the other wants to brush aside all
statutory mandates and proceed with the merit of the dispute.
The MSEFC, upon receipt of this illegal and unfounded claim of
the Opposite Party No.3, proceeded to issue notice dated
13.09.2011 calling upon the Petitioner to appear and file its
written statement. Such notice was issued mechanically by the
Council without application of mind. Also Council failed to notice
as to whether the mandatory prerequisites were fulfilled and as to
whether the claim was within the stipulated period of limitation
and / or whether the same was barred by provisions of any law.
6. It is further case of the Petitioner that, the parties to the
said contract have, by their consent, confined jurisdiction of any
dispute arising out of the said agreement to be adjudicated by the
District Court of Balaghat, Madhya Pradesh. As per Clause-30 of
the said agreement, any disputes or differences between them
could be referred to the sole arbitrator, who shall be the
Chairman-cum-Managing Director of the Petitioner-Company and
any dispute arising out of the contract, the jurisdiction would be
W.P.(C) No.16423 of 2014 Page 5 of 24
within the District Court, Balaghat (M.P). The MSEFC, Cuttack,
lacks inherent jurisdiction to enter into and decide the dispute, if
any, raised by the Opposite Party No.3 and prima facie it has no
jurisdiction to deal with the said dispute. Law is well settled that
when the parties to the contract chose to submit particular
jurisdiction, only the Court at that place shall have the
jurisdiction to deal with the dispute. In the circumstance, the
Petitioner was being constrained to approach this Court in W.P(C)
No.10374 of 2011 assailing the maintainability of the proceeding
before the MSEFC. However, the said Writ Petition was disposed
of vide order dated 12.05.2011 directing the Petitioner to move
before the MSEFC, who would decide the question of
maintainability. In view of the such observation made by this
Court in W.P.(C) No.10374 of 2011, the Petitioner approached the
Council and filed a preliminary objection under Section-16 of the
Arbitration & Conciliation Act, 1996 on various grounds urging
before the Council that it has no jurisdiction to adjudicate the
dispute. Such a petition being filed, the Council, without hearing
the same, verbally opined that the question of jurisdiction would
only be gone into at the stage of final order and directed for filing
of the written statement. The issue that neither of the parties was
amenable to the jurisdiction of the Council, i.e. one being within
W.P.(C) No.16423 of 2014 Page 6 of 24
the jurisdiction of the West Bengal and the other of Madhya
Pradesh, also was not considered by the Council and was of no
consequence to it. On the said date, the learned counsel for the
Petitioner as well as the representative of the Petitioner- Company
appeared before the MSEFC and sought for an order on the
ground of jurisdiction upon the application filed by it under
Section 16 of the 1996 Act filed before the Council. The Council,
contrary to the observation made by this Court in W.P(C)
No.10374 of 2011, stated that it shall not pass any order as to the
issue of jurisdiction and issued illegal ultimatum to the Petitioner
to file its written statement in the matter at the cost of allowing
the claims of the Opposite Party No.3. The Petitioner categorically
urged before the MSEFC that it could not file its written statement
in view of the lack of jurisdiction of the Council to adjudicate the
dispute and also in view of the settled principle of law that an
objection to jurisdiction cannot be taken after filing of written
statement.
7. It is further stand of the Petitioner that law is well settled
that claim and counter claim of the parties shall be adjudicated in
one forum which cannot be bifurcated to different forums. As the
Petitioner is a large scale industry, it has no scope to raise its
claim for adjudication along with the claims of the Respondent
W.P.(C) No.16423 of 2014 Page 7 of 24
before MSEFC. The claims of the Respondent before the Council
give rise to the right of the Petitioner to lodge its claim.
Accordingly, a request was made to the MSEFC to refer the claims
of both the parties to an independent Arbitrator so as to enable
the Petitioner to lodge its claim/counter claim so that both the
claims and counter claims shall be adjudicated in one forum. But
the MSEFC prolonged the said prayer of the Petitioner till the date
of filing of the present Writ Petition. On the persistent plea of the
Petitioner, the MSEFC referred the dispute to the General
Manager, District Industries Centre, Rourkela, for conciliation. In
the conciliation proceeding, when the Petitioner tried to put forth
its claim, the Opposite Party No.3 refused to acknowledge the
same and insisted for delayed payment and not the claims of the
Petitioner-Company. However, due to the obstinacy of the
Opposite Party No.3, the conciliation proceeding failed and a
failure report was submitted by the Conciliator on 07.02.2014.
The Petitioner, having no other alternative, approached the
competent authority i.e. Chairman-Cum-Managing Director of the
Company, as per the contract to appoint the Arbitrator to
adjudicate the disputes between the parties being competent
under the contract as well as 1996 Act by himself and/or refer the
dispute to the Arbitrator appointed by him. On being so
W.P.(C) No.16423 of 2014 Page 8 of 24
approached, the Chairman-Cum-Managing Director of the
Company constituted an Arbitral Tribunal. Being noticed, the
Opposite Party No.3 participated in the arbitration proceedings,
which is also being held in Malanjkhand. When the matter stood
thus, all of a sudden, without any application or any hearing or
even the matter being heard by the MSEFC, the Director of
Industries, who is also the Chairman of the MSEFC, issued a
letter dated 01.08.2014 to the Petitioner-Company declaring the
ongoing arbitration proceeding in Malanjkhand, District Balaghat,
to be illegal. The Petitioner was surprised to get such a
communication as it is not known how the MSEFC and/or its
Chairman became aware of the proceedings at Malanjkhand
and/or how they assumed jurisdiction to adjudicate on the
legality of the said proceeding and at whose behest such
communication was made to the Petitioner and such an order has
been passed without any reference to the Petitioner.
8. It is further case of the Petitioner that against such
communication dated 03.01.2014, to terminate the arbitration
proceeding between the parties in Malanjkhand, Madhya Pradesh,
the Opposite Party No.3-company moved before the District
Judge, Cuttack, in ARBP No.72 of 2014, which is still pending
adjudication. In the said application, the self same relief was
W.P.(C) No.16423 of 2014 Page 9 of 24
prayed for and the District Judge has already given a prima facie
finding vide order dated 16.05.2014 that the proceedings before it
were without jurisdiction. When the Opposite Party No.3-
Company could not get the relief from the Court below, the
Director of Industries has now come to the aid of the Opposite
Party No.3 by misusing his official capacity and issued the said
illegal letter to the Petitioner dated 01.08.2014, which has been
impugned in the present Writ Petition.
9. On being noticed, the Opposite Party No.3 i.e. M/s. Utkal
Moulders, has filed a detailed counter affidavit. Regarding the
maintainability of the writ petition, a stand has been taken therein
that the petitioner has concealed the material facts deliberately
from this Hon'ble court which has a material bearing on the facts
and result of the present writ petition. It has also been stated that
the petitioner has not approached this Court with clean hands as
he has taken the recourse of forum haunting which is not at all
permissible. Before approaching this Court the petitioner has
already approached the Court of District Judge, Cuttack for the
self same relief. But the same had not been brought to the
knowledge of this Court. The said petition was filed prior to the
filing of the present writ petition and is still pending for disposal.
It has also been stated that the petitioner has failed to avail
W.P.(C) No.16423 of 2014 Page 10 of 24
alternative remedy which it should have availed before
approaching this Court.
10. Apart from the above noted maitainability points, in the
counter affidavit it has been stated that there has been
relationship of supplier and buyer between Opposite party No.3
which is a small scale industry and the petitioner which is a large
public sector Govt. of India enterprise. The Petitioner company
requires caste iron alloyed grinding media balls for its
concentration plant at Malanjkhand(M.P) for milling the ore for
which tenders were invited from various suppliers for supplying
the goods. The opposite party No.3 participated in the said tender
and being found eligible, orders were placed from time to time. The
opposite party became entitled to claim interest in respect of the
supplies made against 8 purchase orders for making payment
beyond the agreed dates under the Interest on Delayed Payments
To Small Scale and Ancillary Industrial Undertakings Act,1993, in
short IDP Act,1993. Therefore, the Opposite party No.3 filed its
claim of interest before Industrial Facilitation Council shortly, IFC
under the IDP Act,1993. However, the IDP Act,1993 was replaced
by the new Act i.e. The Micro, Small and Medium Enterprise
Development Act, 2006, in short MSMED Act,2006 w.e.f.
W.P.(C) No.16423 of 2014 Page 11 of 24
02.10.2006 and the claim of interest filed under IDP Act,1993
were taken up for adjudication under MSMED Act, 2006.
11. The Opposite Party No.3 supplied materials in terms of
the purchase order in time but payment was not made in agreed
time for which the Opposite Party No.3 gave a notice on
22.09.2004 to the petitioner claiming interest and filed a claim
before IFC on 02.11.2004 under IDP Act which was registered as
IFC Case No. 7 of 2005. Thereafter, the Opposite party No.3 was
asked to re-submit its claim under MSMED Act by MSEFC vide
letter dated 08.09.2010 and accordingly, the Opposite party No.3
submitted its claim under MSMED Act on 25.09.2010. The claim
was numbered as MSEFC Case No. 15 of 2010.
12. It has further been stated that, the petitioner placed
three purchase orders which were completed. But due to delayed
payment, the Opposite party No.3 gave a notice to the petitioner
for claiming interest on 26.08.2004 and subsequently filed its
claim before IFC on 21.09.2004 under IDP Act, 1993 in IFC Case
No. 9 of 2005. After re-submitting his claim under MSMED Act it
was renumbered as MSEFC Case No. 16 of 2010. The Opposite
Party No.3 completed another two orders in time, but due to delay
in payments the Opposite party No.3 gave a notice to the
W.P.(C) No.16423 of 2014 Page 12 of 24
petitioner on 06.03.2006 claiming interest and filed its claim
before IFC on 28.03.2006 under IDP Act which was renumbered
under MSMED Act as MSEFC Case No.13 of 11.
13. The Opposite Party No.3 filed another case before MSEFC
i.e. MSEFC Case No. 3 0f 2011, for recovery of interest due to late
payment pertaining to two purchase orders in which notice was
issued by MSEFC to the Petitioner to file written statement within
15 days. The petitioner preferred W.P(C) No. 10374 of 2011
challenging the jurisdiction of MSEFC bearing all the cases going
on before MSEFC for claim of interest under IDP Act, 1993 and
under MSMED Act, 2006 and the same was disposed of by the
Division Bench of this Court on 12.05.2011. Thereafter, the
petitioner filed a preliminary objection raising all the issues
relating to jurisdiction before the MSEFC on 17.10.2011,
12.09.2011 and 09.12.2011 in respect of all the cases as per the
direction of this Court.
14. The MSEFC, after issuing notices to both parties, heard
the matter in its meeting held on 15.03.2012. After considering all
preliminary objections of the petitioner, in its meeting held on
09.04.2012, the MSEFC passed an order on 09.04.2012 rejecting
the preliminary objection filed by the present petitioner and also
ordered to make an amicable settlement with the Opposite Party
W.P.(C) No.16423 of 2014 Page 13 of 24
No.3. The said order dtd. 09.04.2012 was passed in all the four
cases. The petitioner challenged the said order as to the
jurisdiction of MSEFC by filing 4 separate ARBP petitions No. 82
of 2012, 83 of 2012, 84 of 2012 and 85 of 2012 before the District,
Judge, Cuttack on 04.05.2012. Still then the petitioner claimed
before the Council and submitted in its meeting held on
04.06.2013 that, it has not received the order of the Council.
However, the Council further passed an order dated 09.11.2013
for amicable settlement and conciliation.
The petitioner attended the conciliation meeting through
its representatives. The conciliation meeting was held on
27.11.2013 in which the Opposite Party No.3 offered 5% discount
on the amount payable to it under IDP Act/ MSMED Act. The
petitioner did not make any counter offer and tone and tenor of
their representatives was not of conciliation and amicable
settlement. The representatives of the petitioner also threatened
the Opposite Party No.3 that they would start several cases
against the Opposite Party No.3 to create pressure for withdrawal
of claims before MSEFC which was also mentioned on record
before Chairman, MSEFC, Cuttack, Orissa vide letter dated
28.11.2013. In the next conciliation meeting, which was held on
07.02.2014 before Conciliator, General Manager of DIC, Rourkela,
W.P.(C) No.16423 of 2014 Page 14 of 24
the petitioner offered only simple interest for delayed period, but
not interest as payable under IDP Act/ MSMED Act. Therefore, the
conciliation was rejected by the Opposite Party No.3 and the
failure of conciliation was also communicated to Chairman,
MSEFC, with a request to proceed for arbitral proceedings.
15. It is the stand of Opposite Party No.3 that, meanwhile the
petitioner, without waiting for the conciliation meeting to be held
on 07.02.2014, appointed its own sole arbitrator, Sri S.S.Patil
(DGM, Concentration) vide its letter dated 03.01.2014 without
any dispute in hand. The Petitioner never gave any notice, as
required under Section 21 of Arbitration Act, 1996, to Opposite
Party No.3 communicating any dispute or the nature of dispute.
Thus, the appointment of arbitrator is non est in law.
It is further stand of Opposite Party No.3 that, the
appointment of sole arbitrator, Sri.S.S. Patil by the petitioner is
completely and hopelessly barred by limitation.The supplies were
completed in the years 1991-1992 and 2000-2004 and never ever
there was any dispute except the dispute for payment of interest
on delayed payments for supplies made beyond the appointed day.
It has also been stated that the parallel arbitral proceedings
started by the petitioner are illegal and against the law of the land.
It has been averred by the Opposite party No.3 that, in view of
W.P.(C) No.16423 of 2014 Page 15 of 24
overriding provisions of special statue, the proceedings under IDP
Act/ MSMED Act will prevail in derogation to the contractual
clause of arbitration provided in the purchase order. It has also
been stated in the Counter that the issue has already been
decided by the Hon'ble Supreme Court in the matter of Modern
Industries, Rourkela Vs. Steel Authority India Ltd. & others.
16. In response to the counter affidavit, a rejoinder affidavit
has been filed by the petitioner enclosing thereto voluminous
documents not only to oppose the stand of Opposite party but also
to justify the prayer made in the writ petition. It has been stated
therein that, as there is no evidence to support the allegations
made in counter affidavit, such allegations are false, misleading
and out of context. Submissions made in counter affidavit
containing allegations against the petitioner such as fraud, forum
haunting, concealment of facts and applicability of new IDP Act
nowhere deal with the validity of the latter dated 01.08.2014
which is the sole point of contention involved in this writ petition.
Thus, the said letter should be quashed. It has also been stated
by the petitioner that, MSME Act does not provide the power and
jurisdiction to the Opposite party No.3 to declare appointment of
an Arbitrator of an ongoing arbitration proceeding as illegal.
W.P.(C) No.16423 of 2014 Page 16 of 24
17. It has also been disclosed in the rejoinder affidavit that,
the opposite party No.3 had challenged the appointment of
arbitrator before the District Judge, Cuttack, in ARBP No.
72/2014 and the interim prayer of the Opposite Party No.3 was to
stay the proceeding before sole arbitrator, which was rejected vide
letter dated 03.01.2014 and the ARBP No. 72/2014 was dismissed
by the District Judge, Cuttack, vide order dated 09.03.2015. The
Opposite Paarty No.3 challenged the said order dated 09.03.2015
before this Court in ARBA No. 13 of 2015 and the same was also
dismissed vide order dated 27.09.2019. Further, the Opposite
Party No.3 approached the Supreme Court in SLP(C) No.2019 of
2020 in which notice was issued and the petitioner also appeared
and filed its reply. As the matter is pending before the Hon'ble
Supreme Court, the impugned letter dated 01.08.2014 issued by
the Opposite Party 2 declaring the appointment of the sole
arbitrator as bad amounts to overreaching the proceedings before
the Supreme Court and deserves to be quashed. It has also been
stated that the Opposite Party No.3 also participated in the
arbitration proceeding before the sole arbitrator and filed defence
statement therein. Therefore, any contest to the jurisdiction of the
arbitrator pursuant to such submissions is not permissible as per
the requirements of the Act, 1996.
W.P.(C) No.16423 of 2014 Page 17 of 24
18. It has also been stated in the Rejoidner that the Opposite
Party No.3 has averred in the counter affidavit that, in the writ
petition, the petitioner challenged the letter dated 01.08.2014
issued by Opposite Party No.2 during the pendency of an
arbitration proceeding before the Ld. Sole arbitrator, where as the
Petitioner challenged the jurisdiction of MSEFC to entertain the
claim of the Opposite Party No.3, both the reliefs being drastically
different as well as erroneous and out of context, liable to be
quashed.
19. In reply to the allegation made by the Opposite Party No.3
in its counter affidavit that, the petitioner did not avail alternative
remedy available to him before approaching the writ court, it has
been stated that, the Opposite Party No.3 failed to mention
specifically which alternative remedy was available, but not
availed by the petitioner. It has further been stated by the
petitioner that, the Opposite Party No.3 nowhere disclosed the
underlying dispute between the parties that is subject to
arbitration before the Sole Arbitrator arose due to Opposite Party
No.3's failure to supply cast iron balls of 80mm diameter to the
petitioner within the contractually agreed time due to which the
petitioner sustained huge losses. It is the stand of the petitioner
that the allegation of Opposite Party No.3 regarding delayed
W.P.(C) No.16423 of 2014 Page 18 of 24
payment is that the payments were released only after due
inspection of the goods that were delivered. It has also been
mentioned by the petitioner in the rejoinder affidavit that, the
petitioner was neither informed about a meeting to be held on
15.03.2012 nor was any notice regarding the same issued to it.
It is the case of the petitioner that, the issuance of the
impugned letter dated 01.08.2014 was clearly in violation of
direction of District Court as well as this Court. So also
submissions were made by the Opposite party No.3 in counter
affidavit are frivolous and should not be entertained by this Court.
20. Mr. Mukherji, learned Senior Counsel for the
Petitioner submitted that the coordinate Bench while issuing
notice to the Opposite Parties, vide order dated 25.11.2014
passed in I.A. No.14485 of 2014, stayed the operation of the
impugned order as at Annexure-9. The Opposite Party No.3, not
only appeared before the sole Arbitrator but also filed an
application on 08.08.2014 under Section 16 of the Arbitration and
Conciliation Act, 1996 challenging the jurisdiction of the sole
Arbitrator. The said objection filed by the Opposite Party No.3 was
rejected by the sole Arbitrator vide order dated 08.08.2014.
Thereafter, the Opposite Party No.3 moved before the District
Judge, Cuttack, by filing an application under Section 9(ii)(e) and
W.P.(C) No.16423 of 2014 Page 19 of 24
Section 42 of the Act, 1996 read with Section 18 of the MSMED
Act, 2006 to declare the appointment of the sole Arbitrator made
by the Petitioner, vide its letter dated 03.01.2014 as null and void
and to stay operation of the said letter and pass an interim order
prohibiting the sole Arbitrator from proceeding with the
Arbitration with other consequential benefits. The same was
rejected vide order dated 09.03.2015.
The said order passed by the District Judge, Cuttack, on
09.03.2015 in ARBP No.72 of 2014 was challenged before this
Court on 13.04.2015 in ARBA No.13 of 2015 which was
ultimately dismissed on 27.09.2019 with an observation that it is
open for the present Opposite Party No.3 (Appellant in ARBA
No.13 of 2015) to take resort to the provision under Section 17 of
the Arbitration and Conciliation Act, 1996.
21. Mr. Mukherji further submitted that the said order dated
27.09.2019 passed in ARBA No.13 of 2015 was challenged by the
Opposite Party No.3 before the apex Court, which was registered
as SLP (C) No.20196 of 2020. However, vide order dated
07.08.2023, the SLP was also dismissed. Mr. Mukherji further
submitted that the said issue as to appointment of sole Arbitrator
by his client has attained finality after dismissal of the SLP.
W.P.(C) No.16423 of 2014 Page 20 of 24
Due to the stay order passed by this Court in the present
Writ Petition, the Arbitrator appointed by his client proceeded on
merit and the parties to the said Arbitration Proceeding i.e. the
present Opposite Party No. 3 so also the Petitioner participated in
the said proceeding. He further submitted that despite
challenging the initiation of Arbitration Proceeding at the instance
of the Petitioner-Company, the Opposite Party No.3 participated
in the Arbitration Proceeding before the sole Arbitrator and the
parties thereto filed their respective pleadings. However, at the
stage of cross-examination of the witnesses, the Arbitration
proceeding got stalled due to retirement of the learned Arbitrator
in the year 2017.Hence, the impugned communication as at
Annexure-9 deserves to be set aside.
22. In response to the said submission made by Mr.
Mukharji, learned Senior Counsel, Mr. Mishra learned Senior
Counsel, who represents Opposite Party No.3, submitted that
after retirement of the sole Arbitrator, who was an officer of the
Petitioner-Company, was given extension by way of contractual
appointment. Thereafter, on completion of contractual
appointment period, one Mr. Bikash Mishra, Advocate has been
appointed as the sole Arbitrator by the Petitioner-Company, who
noticed the Petitioner as well as the Opposite Party No.3
W.P.(C) No.16423 of 2014 Page 21 of 24
intimating both the parties to remain present on the date fixed i.e.
on 27.01.2024 either physically or virtually. Mr. Mishra further
submitted that on being so noticed, his client i.e. present
Opposite Party No.3, wrote a letter to the Sole Arbitrator on
20.01.2024 and it was sent through mail indicating therein that
the appointment of the sole Arbitrator by the Chairman-cum-
Managing Director of the Petitioner-Company and fixing of
hearing date is not agreeable as the same is contrary to the
provisions of the amended Arbitration and Conciliation Act and
various judgments of the Apex Court. Mr. Mishra, learned Senior
Counsel further submitted that vide the said letter dated
20.01.2024, the learned Arbitrator was intimated that his client
will not be in a position to participate in the proceeding fixed to
27.01.2024, vide which a request was made to the learned
Arbitrator to defer the proceeding for a further period of four
weeks. Mr. Mishra relying on the judgments of the apex Court
reported in (2020) 20 SCC 760 (Perkins Eastman Architects
DPC an Another Vs. HSCC (India) Limited), (2023) 6 SCC 401
(Gujarat State Civil Supplies Corporation Ltd. Vs. Mahakali
foods Private Limited and another), judgment of the Kerala
High Court reported in AIR ONLINE 2023 KER 512 (Shreyas
Marketing Vs. Micro & Small Enterprises Facilitation Council)
W.P.(C) No.16423 of 2014 Page 22 of 24
and drawing attention of this Court to the communication dated
20.01.2024 made by his client to the sole Arbitrator, which was
filed along with a memo on 24.01.2024, submitted that since the
Arbitration proceeding at the instance of the present Petitioner is
going on, wherein his client has rightly raised the issue regarding
legality of appointment of Arbitrator made by the Petitioner-
Company contrary to the provisions of amended Arbitration and
Conciliation Act, 1996 so also contrary to the settled position of
law, he has no objection if the impugned communication made by
the Committee dated 01.08.2014, as at Annexure-9, is set aside
giving liberty to his client to challenge the appointment of the
new Arbitrator as the sole Arbitrator by the Chairman-cum-
Managing Director of the Petitioner-Company at appropriate stage
before appropriate forum.
23. In view of the submissions made by the learned Counsel
for the Parties so also the background facts as detailed above, this
Court is inclined to set aside the impugned communication dated
01.08.2014, as at Annexure-9, made by the Director of Industries-
cum-Chairman, MSEFC, Odisha. Accordingly, the said
communication dated 01.08.2014 is hereby set aside.
W.P.(C) No.16423 of 2014 Page 23 of 24
Needless to mention here that since the Arbitration
Proceeding at the instance of the Petitioner-Company in terms of
the contract between it and Opposite Party No.03 is on and both
the parties to the said Arbitration proceeding have participated
before the sole Arbitrator and present Opposite Party No.3 has
raised the issue regarding competency of the sole Arbitrator
newly appointed by the Petitioner-Company, the parties to the
present lis may approach the appropriate forum at appropriate
stage in accordance with law, if so advised.
24. Accordingly, the Writ Petition stands allowed and
disposed of. No order as to cost.
................................
S.K. MISHRA, J.
Orissa High Court, Cuttack The 28th February 2024/Prasant Signature Not Verified Digitally Signed Signed by: PRASANT KUMAR PRADHAN Designation: Secretary Reason: Authentication Location: High Court of Orissa, Cuttack. Date: 29-Feb-2024 17:53:28 W.P.(C) No.16423 of 2014 Page 24 of 24