Asok Potsangbam, J.
1. Heard Mr. B.C. Das, learned Sr. Advocate and Mr. P.K. Roy, learned Advocate, on behalf of the appellants. Also heard Mr. B.J. Ghosh, learned G.A. on behalf of the Government respondents and Mr. A.K. Goswami, learned Sr. Advocate, on behalf of the private respondent No. 6.
2. In this writ appeal, the challenge is to the judgment and order dated 9-8-2005 passed by the learned single Judge dismissing W.P. (C) No. 4169 of 2002 and upholding the validity of the award dated 10-1 -2002 passed by the respondent No. 4. Brief facts which are necessary for disposal of this writ appeal may be noticed as hereunder.
3. The appellant is a Company dealing with the business of exploration and exploitation of oil/gas fields in various parts of the country including the North Eastern Region and the appellant-company uses liquid nitrogen for the purpose of well stimulation in its oil field operation. The respondent No. 6 is a liquid nitrogen manufacturing firm/company and through a process of selection, the respondent No. 6 was selected toi supply 450 MT of liquid nitrogen to the appellants-company under rate contract bearing No. NZR/MM/PR/CHEN/14/97-98/RCOOI dated 18-2-1998 for a period of 2yearsw.e.f. 18-2-1998 to 17-2-2000 at the fate of Rs. 15.38 per Kg. and this rate contract was subsequently extended upto 17-4-2002.
4. During the subsistence of the above rate contract, another tender was invited by the appellant-company for supply of liquid nitrogen for the period subsequent to 17-4-2002. The respondent No. 6, which participated in the tender process, quoted its price for supply of, liquid nitrogen, at, the rate of Rs. 12.54 per Kg and in view of the lower bid of the respondent No. 6 as, stated above, an amendment was made, to the, earlier order for reduction of the rate ftom. Rs. 15.38 per Kg to Rs. 12.54 per Kg by, invoking the 'Fall-Clause' of the rate contract and Fall-Clause 9.2, is the relevant Clause which runs as follows:
9.2. If any time, during the said period the contractor/supplier of his agent/principal/dealer, as the case may be, reduces the sales or offers to sell such stores to any persons/organizations including the purchaser or any Deptt. of Centrat Government or any Department of a State Government, as the case may be, at a price lower than the price chargeable under the contract/supply order, he shall forthwith notify such reduction or sale or offer of sale to the Purchase Authority who has issued this supply order and the price payable under supply order/contract for the stores supplied after the date of coming into force of such reduction or sale or offer of sale shall stand correspondingly reduced. The above stipulation will, however apply to:
(a) Exports by the contractor/supplier or
b) Sale of goods as original equipment at prices lower than the prices charged for nominal replacement.
c) Sale of goods such as drugs which have expiry dates.
5. The respondent No. 6 objected to the invocation of the Fall-Clause mainly on the ground that the Fall-Clause 9.2 was not applicable to the rate contract referred to above, in view of Sub-clause (c) of the aforesaid Fall - Clause 9.2. The case of the respondent No. 6 is that liquid nitrogen is akin and similar to drugs having expiry date inasmuch as liquid nitrogen has holding time. In support of the claim of the respondent, No. 6, an expert opinion obtained from an Asstt. Professor of Assam Engineering College was relied upon and this expert opinion was countered and disputed by another expert opinion obtained by the appellant from its Chemistry Department.
6. On 6-4-2001, the respondent No. 6 submitted a representation to the respondent No. 4 i.e. the Chairman, Industry Facilitation Council, Assam, contending, inter alia, that a sum of Rs. 12,76,190/- against 7 number of bills submitted between 29-4-i2000-to31-7-2000 was not paid and cleared by the appellant and following prayer was made in the representation:
6(i) Payment of the unpaid amount of the bills of Rs. 12,76,190.00:
(ii) Interest on delayed payment for the period from the appointed day to 31-3-2001 amounting to Rs. 1,75,554.55 (copy enclosed as Annexure-V);
(iii) Interest for the delayed payment from 1-4-2001 till the date of actual payment;
(iv) Costs and expenses pertaining to this Arbitration Proceedings;
(v) Any other award, which your Hon'ble Forum may deem fit for the benefit of this applicant.
The appellant replied on 11-7-2001 denying any pending liablity for payment to the respondent No. 6 in view,of the invocation of the Fall-Clause, as, discussed above, and consequently the claim of the respondent No. 6 became a disputed, case.
7. It is stated that Industry Facilitation Council, Assam, respondent No. 4 in this Wit appeal, after due notice to the parties, acted as an arbitrator and passed an award in its' meeting held on 10-1-2002, directing the appellant to pay a sum of Rs. 12,76,190/- being the balance payment due on supply of liquid nitrogen, Rs. 3,82,198.40 p being the compound interest (with monthly rest) upto 10-1-2002 and further compound interest (with monthly rest) till the date of actual payment. Aggrieved by the aforesaid order, the appellant filed a writ petition which was registered as W.P. (C) No. 4169 of 2002. The learned single Judge dismissed the writ petition by rejecting the plea on the point of jurisdiction of the Council, apparently on the ground that it was raised for the first time before the writ-proceeding and that the appellant-writ petitioner participated all along in the arbitral proceeding before the Council which, after consideration of all the relevant materials and aspects, passed the award. Hence, this writ appeal.
8. Mr. B.C. Das, the learned Sr. Counsel appearing for the appellants mainly confined his argument on the ground that the respondent No. 4, the Council, failed to comply with the requirement of notification dated 12-2-1999, which was issued by the Government of Assam in exercise of the powers conferred under Section 7-A of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act. 1993 (hereinafter referred to as the '1993 Act') and as such the Council had acted without jurisdiction and consequently the proceeding leading to the issuance of the order/award dated 10-1-2002 is vitiated. Mr. Das had drawn our attention to Section 7-A of the 1993 Act which reads as follows:
7A. Establishment of Industry Facilitation Council - The State Government may, by notification in the Official Gazette, establish one or more Industry Facilitation Councils at such places exercising such jurisdiction and for such areas, as may be specified in the notification.
9. In exercise of the powers conferred under Section 7-A of the 1993 Act, as extracted above, a notification was issued by the Government of Assam constituting and setting up a Industry Facilitation Council by outlining the main function of the Council in para 2 of the said notification. The notification dated 12-2-1999 under No. MI. 101/98/13, which was published In the Assam Gazette, March 24, 1999 under Part II-A is reproduced hereinbelow:
The 12th February, 1999
No. MI. 101/98/13 - In exercise of power conferred by the provision of Section 7-A of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act, 1998, the Governor of Assam is pleased to constitute/set up a Industry Facilitation Council consisting with the following members to deal with problems faced by SSI Units in receiving payment from buyers of their goods. The Council will attend the grievances of the Small Scale Industries on account of delayed payment.
1. Director of Industries and - ChairmanCommerce, Assam2. Jt. Director (S.P.J of Industries - Member Secy.& Commerce3. A representative from NEDFI - Member4. Managing Director, Assam - MemberFinancial Corpn.5. General Manager or his - Memberrepresentative, SBI6. General Manager or his - Memberrepresentative, SIDBI7. President or his - Memberrepresentative, A.A.SSIA8. President or his - Memberrepresentative, FINER9. Shri Shanti Kam Hazaika, - MemberAssam Institute of Management.The main function of the Council will be act as conciliator (Section 6(2) of the Amendment Act, 1998) to make efforts to bring conciliation between buyers and sellers and in case, conciliation cannot be reached the Council shall act as arbitrator for settling the disputes following the provisions of Arbitration and Conciliation Act, 1996.
J.P. Meena,
Commissioner & Secy. To the Govt.
of Assam Industries and Commerce
Department.
10. It is submitted by Mr. B.C. Dast, learned Sr. Counsel for the appellants that as per the aforesaid notification dated 12-2-1999, the Council is to act as a Conciliator and make all efforts to bring a conciliation between the disputing parties and only when a clear finding is recorded to the effect that no agreement could be, reached between the disputing parties in the conciliation proceeding, the Council and embark upon and act as an Arbitrator for settling the dispute between the parties by following provisions of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the '1996 Act'). In other words, any arbitral proceeding with the Council as an Arbitrator is to be preceded by Conciliation proceeding as contemplated by the aforesaid notification. It is, further, submitted that having not followed the procedures prescribed by the notification, as discussed above, the arbitral proceeding conducted by the Council and consequential award passed on 10-1-2002 is an infraction of law and accordingly the entire proceeding is vitiated.
11. In order to ascertain whether there was any conciliation proceeding prior to the arbitral proceeding conducted by the Council leading to the issuance of the order dated 10-1-2002 which was impugned in the writ petition, the learned Govt. Advocate was directed by this Court on 21-1-2009 to produce the relevant records. As directed, Mr. B.J. Ghosh, learned Govt. Advocate produced the relevant records which was allowed to be inspected by the learned Counsel appearing for the parties.
12. On perusal of the records produced by the learned Govt. Advocate, and on hearing the learned Counsel appearing for the parties, it is undoubtedly established that there was nothing on record to indicate that any attempt was ever made for conciliation by the Council leave alone drawing up any conciliation proceeding before the initiation of the arbitral proceeding which led to the issuance of order dated 10-1-2002 (Annexure-L to the writ appeal).
13. Reliance has been placed by the learned Counsel for the appellants in : AIR2000SC2281 . Haresh Dayaram Thakur v. State of Maharashtra, wherein it was held by the Apex Court that the Arbitration and Conciliation Act, 1996 deals with two types of proceedings : Arbitration Proceedings and Conciliation Proceedings. While provisions relating to arbitration provisions are contained in Part I which includes Chapters I to X, the conciliation proceedings are dealt with in Part III which includes Sections 61 - 81 and the Apex Court observed that a clear distinction is maintained in the statute between arbitration proceedings and conciliation proceedings. Sections 61 - 81 of the Arbitration and Conciliation Act, 1996 have statutorily laid down the procedures to be followed in a conciliation proceedings. Section 73 deals with settlement agreement and Section 76 deals with termination of the conciliation proceeding. In the aforesaid judgment, the Apex Court, after having discussed various provisions dealing with the conciliation proceedings, recorded its findings with regards to conciliation proceedings in para 19 of the judgment and the same is quoted herein below:
19. From the statutory provisions noted above the position is manifest that a conciliator is a person who is to assist the parties to settle the disputes between them amicably. For this purpose the conciliator is vested with wide powers to decide the procedure to be followed by him untrammelled by the procedural law like the Code of Civil Procedure or the Indian Evidence Act, 1872. When the parties are able to resolve the dispute between them by mutual agreement and it appears to the conciliator that there exists an element of settlement which may be acceptable to the parties he is to proceed in accordance with the procedure laid down in Section 73, formulate the terms of a settlement and make it over to the parties for their observations; and the ultimate step to be taken by a conciliation is to draw up a settlement in the light of the observations made by the parties to the terms formulated by him. The settlement takes shape only when the parties draw up the settlement agreement or request the conciliator to prepare the same and affix their signatures to it. Under Sub-section (3) of Section 73 the settlement agreement signed by the parties is final and binding on the parties and persons claiming under them. It follows therefore that a successful conciliation proceeding comes to an end only when the settlement agreement signed by the parties comes into existence. It is such an agreement which has the status and effect of legal sanctity of an arbitral award under Section 74.
14. Mr. A.K. Goswami, learned Sr. Counsel appearing on behalf of the respondent No. 6 vehemently opposes the plea of the appellants on the question of jurisdiction of the Council, contending that such plea not having raised before the Council, cannot be raised in the writ proceeding before the Court. The learned Counsel, further, submits that the appellants-writ petitioners having participated in the proceeding before the Council without raising a demur, the appellant cannot turn around and say that the award passed against the appellants is without jurisdiction. It is, further, submitted that the order/award dated 10-1-2002 does not suffer from any legal infirmity and that the writ petition, i.e. W.P. (C) No. 4169 of 2002 was rightly dismissed by the learned single Judge.
15. We need not burden ourselves with the citation of authorities to the proposition that question of law and question involving law can be raised at any stage of proceedings before the Court. As discussed and noticed above, the Council did not record any finding on the failure of conciliation proceedings as contemplated by the notification dated 12-2-1999 leave alone drawing up of any conciliation proceeding before embarking upon itself to act as an Arbitrator in an arbitral proceeding leading to the issuance of the order/award dated 10-1-2002 and as such we are of the opinion that the Council acted without jurisdiction and in violation of the notification dated 12-2-1999 and as such the arbitral proceeding conducted by the Council leading to the issuance of the order/award dated 10-1 -2002 is vitiated, being an infraction of the notification dated 12-2-1999.
16. In the backdrop of the discussions made above, the arbitral proceedings leading to the issuance of the order/award dated 10-1-2002 (Annexure-L to the writ appeal) is set aside and quashed and consequently the impugned judgment and order dated 9-8-2005 passed by the learned single Judge in W.P. (C) No. 4169 of 2002 is also set aside.
The Industry Facilitation Council, Assam, the respondent No. 4, is directed to consider the dispute between the parties afresh in terms of the notification dated 12-2-1999, as extracted above, and in the light of the findings recorded by this Court as above. It is made clear that the above exercise shall be completed as expeditiously as possible, preferably within a period of 4 (four) months from the date of receipt of a certified copy of this order.
17. In the result, the Writ Appeal is allowed to the extent indicated above. No order as to costs.
18. Judgment in W.A. No. 714 of 2005 is enclosed herewith for consideration of Hon'ble Mr. Justice Ranjan Gogol.
Ranjan Gogoi, J.
19. I agree.