F. Harley & Co. Pvt. Ltd. vs Steel Authority Of India Ltd.

The Court : From the affidavit of service filed on behalf of the petitioner it appears that a copy of this application was forwarded to the respondent by

Speed Post with A/d and the postal authority has returned the envelope with an endorsement “Refusedâ€. Accordingly, this application is taken up

for hearing in the absence of the respondent. Let, the said affidavit of service be kept on record.

This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, as amended by Act 3 of 2016 (in short “the Act of 1996â€)

for appointment of an arbitrator to adjudicate the disputes raised by the petitioner against the respondent, relating to the contract dated February 19,

2009 and the General Conditions of Contract of 2008 issued by the respondent. Under the said contract the petitioner was to execute certain works at

one of the Steel plants of the respondent namely, IISCO Steel Plant, Burnpur. Clause 10.1 of the contract contained the arbitration agreement which

is, for the sake of convenience, extracted below:

“Arbitration (Reference GCC Clause 6) Any disputes, differences, whatsoever, arising between the parties out of or relating to the construction,

meaning, scope, operation or effect of this Contract shall be settled between the Employer and the Contractor amicably. If, however, the Employer

and the Contractor are not able to resolve their disputes / differences amicably as aforesaid the said disputes / differences shall be settled by

conciliation, failing which, through Arbitration.

Conciliation shall be resorted to prior to invoking Arbitration. The applicable rules for Conciliation proceedings shall be that of “SCOPE forum of

Conciliation and Arbitration†(SCFA). The Arbitration Clause is to be invoked by the parties to the Contract only on failure of conciliation

proceedings to amicably settle the disputes.

The arbitration shall be governed and regulated in all respect according to the laws of India and the Arbitration proceedings shall be regulated and

governed by Indian Arbitration and Conciliation Act 1996 (ICA). The language of arbitration shall be English. The Arbitration shall be conducted as

Adhoc Arbitration, where an impartial Arbitrator would be appointed by the Managing Director of the SAIL, ISP. The venue shall be the Burnpur.

During the pendency of the conciliation or Arbitrations proceedings both the parties shall continue to perform their contractual obligations.

The arbitral tribunal shall give reasons for its award. The tribunal shall apportion the cost of arbitration between the parties, the award rendered in any

arbitration hereunder shall be final and binding upon the parties. The parties agree that neither party shall have any right to commence or maintain any

suit or legal proceeding concerning any dispute under this agreement until the dispute has been determined in accordance with the arbitration

proceeding provided for herein and then only to enforce or facilitate the execution of an award rendered in such arbitration. The court of Asansol,

West Bengal, India (with exclusion of all other courts) shall have exclusive jurisdiction over all matter of dispute.â€​

The petitioner claims that after it executed the contract between the parties the respondent failed to make payment of its certain dues. Therefore,

disputes and differences arose between the parties, which were to be adjudicated as per clause 10.1 of General Conditions of Contract mentioned

above. By a letter dated July 18, 2017 the petitioner informed the Managing Director of the respondent of the particulars of the disputes arisen

between the parties and sought for conciliation of such disputes through the SCOPE, New Delhi. The petitioner even approached the SCOPE for

initiation of the conciliation proceeding and it was also ready to pay the fees charged by SCOPE for concealing the disputes between the parties. The

respondent, however, did not evince any intention to participate in the conciliation proceeding before the SCOPE. Accordingly, the conciliation

proceeding contemplated under clause 10.1 of the said General Conditions of Contract failed.

The only agreed procedure for adjudication of the disputes is by way of arbitration, under the Act of 1996, as contemplated in clause 10.1 of the said

General Conditions of Contract. By a letter dated September 20, 2017 the petitioner requested the Managing Director of the respondent, the appointing

authority, to appoint an impartial arbitrator for adjudication of the disputes between the parties relating to the said contract dated February 19, 2009.

The Managing Director of the respondent received the said letter dated September 20, 2017 but did not appoint any arbitrator as requested by the

petitioner.

Since the respondent has failed to appoint an arbitrator in terms of clause 10.1 of the said General Conditions of Contract the petitioner filed this

application seeking for appointment of an arbitrator to adjudicate the disputes arisen between the parties relating to the said contract dated February

19, 2009. The respondent has not disputed the existence of the arbitral agreement between the parties contained in clause 10.1 of the said General

Conditions of Contract. As held by the Hon’ble Supreme Court in the case of M/s. Duro Felguera, S.A. vs. M/s. Gangavaran Port Ltd.; reported

in 2017 (12) SCALE 433,in view of insertion of sub-section (6A) in section 11 of the Act of 1996, when there is no dispute between the parties with

regard to the existence of the arbitration agreement this application succeeds.

In an unreported decision dated November 02, 2017 in A.P. No. 922 of 2017 (M/s. P.K. Thakur & Co.â€"vs-SAIL) this Court dealt with a similar

application, under Section 11(6) of the Act of 1996, containing the same arbitration agreement between the respondent herein and another contractor

and allowed the said application by appointing a sole arbitrator. The respondent in the said application carried the said order dated November 23, 2017

before the Hon’ble Supreme Court in S.L.P.(C)No. 5767/2018 (SAIL-vs- P.K. Thakur & Co.). By an order dated March 23, 2018 the

Hon’ble Supreme Court was pleased not to interfere with the said order dated November 02, 2017 passed by this Court, except to substitute the

arbitrator.

For all the reasons as aforesaid, this application also succeeds. Accordingly, Justice Tapan Kumar Dutt, a former Judge of this Court is appointed as

the sole arbitrator for adjudication of the disputes between the parties herein. The arbitrator shall be free to fix his remuneration and engage the

necessary staff/personnel for conducting the arbitral proceeding. With the above direction the application, AP No.263 of 2018 stands disposed of.

There shall, however, be no order as to costs.