Indian Kanoon - Search engine for Indian Law

6. Arbitration Clause

(i) The CPSEs will ensure inclusion of a clause in all the existing and future commercial contracts between CPSEs, inter-se and CPSEs and Government Departments/Organizations as under:-

"In the event of any dispute or difference relating to the interpretation and application of the provisions of commercial contract(s) between Central Public Sector Enterprise (CPSEs)/Port Trusts inter se and also between CPSEs and Government Departments/Organizations (excluding disputes concerning Railways, Income Tax, Customs & Excise Departments), such dispute or difference shall be taken up by either party for resolution through AMRCD as mentioned in DPE OM No. 4(1)2013-DPE(GM)/FTS- 1835 dated 22.05.2018".

8. All the administrative Ministries/Departments concerned with Central Public Sector Enterprises / Port Trusts etc. are requested to bring these guidelines to the notice of all CPSEs under their administrative control for strict compliance."

A joint reading of the aforesaid Clauses of the Office Memorandum give an impression that an in-house redressal mechanism was sought to be created by the State for resolution of disputes or differences relating to commercial contracts between public sector enterprises. The Office Memorandum, however, does not appear to have any statutory force and is in the nature of an administrative instruction to public sector undertakings. Learned counsel for the HSWCL has strenuously argued that the aforesaid administrative instruction was required to be strictly adhered to by all public sector undertakings including KoPT and departure therefrom was necessarily prohibited. Although strict compliance is envisaged in clause (8) of the Office Memorandum, no express prohibition upon public sector enterprises to directly approach the courts of law to resolve disputes has been rightly engrafted therein. Furthermore, neither the terms of the Office Memorandum nor the in-house disputes redressal mechanism created therein could take away the right of a party to invoke the terms of a contract, namely, the termination clause. The parties may or may not be justified in doing so. However, its right to terminate the contract cannot be eclipsed by the terms of the Office Memorandum. To do so, would deny a legal entity to remedies under the law of the land which is impermissible in law. On the other hand, the terms of the Office Memorandum may entitle the aggrieved party to knock the doors of the AMRCD before challenging the alleged unlawful termination in court of law. It may be apposite to bear in mind that the existence of a similar in-house mechanism and award passed by it was held by the Apex Court not to operate as an absolute embargo to access to justice in Northern Coalfields Ltd. Vs Heavy Engg. Corpn. Ltd. [(2016) 8 SCC 685]. In the said report the Court held: