Indian Kanoon - Search engine for Indian Law

4. Since, the parties are Central Public Sector Enterprises, the arbitration clause in the contract dated 13.11.1991 was substituted by an arbitration agreement, as per the draft annexed to the Office Memorandum (hereafter 'OM') dated 22.01.2004, for resolution of their disputes through PMA. The said arbitration agreement reads as under:-

"In the event of any dispute or differences relating to the interpretation and application of the provisions of the contracts, such dispute or difference shall be referred by either party for Arbitration to the Sole Arbitrator in the Department of Public. Enterprises to be nominated by the Secretary to the Government of Indian In-Charge of the Department of Public Enterprises. The Arbitration and Conciliation Act, 1996 shall not be applicable to arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by such award may make a future reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law & Justice, Government of India. Upon such reference the dispute shall be decided by the Law Secretary or the Special Secretary / Additional Secretary, when so authorized by the Law Secretary whose decision shall bind the Parties finally and conclusively. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator. "

8. SAIL contended that the appellate award dated 16.04.2012 passed by the Appellate Authority was patently arbitrary, illegal, perverse and not based on any material as the said award ignored the pleadings of the parties, provisions of the contract, evidence produced, submissions and arguments made before the Sole Arbitrator and the finding of facts returned by the Sole Arbitrator in the award dated 16.05.2011.

9. EPIL contended that in line with the scheme of the PMA and the arbitration clause, the dispute between the parties was referred to a Sole Arbitrator and any appeal challenging the award of the Sole Arbitrator could only be filed before the Law Secretary/Special Secretary/Additional Secretary, Ministry of Law & Justice, Government of India. It was further contended that as per Clause X of the OM dated 22.01.2004 the "decision of the Law Secretary/Special Secretary/Additional Secretary shall bind the parties finally and conclusively"; therefore no further appeal was permissible in terms of the OM dated 22.01.2004 and, accordingly, the petition was not maintainable.

"28. So far as the part in the arbitration clause in the said agreement regarding the non-applicability of the Act of 1996 is concerned, we consider that it is void and the parties cannot by themselves exclude the statue itself which is being drafted by the Legislature to look after the arbitration matters."

In the circumstances, SAIL's grievenace that the arbitration agreement under the PMA excludes judicial review does not survive as recourse to courts, albeit, to a limited extent would be available.

14. I am not inclined to accept this contention, first and foremost for the reason that this challenge has not been laid in the petition; SAIL has not challenged the PMA and/or the provision of a two tier arbitration procedure in its petition. Secondly, this is contrary to SAIL's conduct in other proceedings. In another case - W.P. (C) No.7970/2012, which also relates to arbitration proceedings under the PMA in respect of disputes with EPIL, SAIL had preferred an appeal against an award made by an arbitrator before the Appellate Authority and has pressed for its right to the appellate remedy provided under the PMA, before this court.