Mpd Industries Pvt Ltd Through Its Authorized Signatory Debasis Bhattacharjee Vs. Steel Authority of India Limited Through Its Chairman and Anr - Court Judgment

IN THE HIGH COURT OF JHARKHAND AT RANCHI Arbitration Application No. 24 of 2017 ….... MPD Industries Pvt. Ltd., Indore (Madhya Pradesh) Through its Authorised Signatory Debasis Bhattacharjee, Baghbazar, Kolkata. --- --- Petitioner Versus 1. Steel Authority of India Limited through its Chairman 2. Executive Director, SAIL Refractory Unit (SRU) Indira Gandhi Marg, District Bokaro. --- --- Respondents --- CORAM : The Hon’ble Mr. Justice Aparesh Kumar Singh --- For the Petitioner : Mr. Bibhash Sinha, Adv. For the Respondents : Mr. Vijay Kant Dubey, Adv. --- 11/05.01.2018 Pursuant to the orders passed by this Court on 15 th September 2017 and 8th December 2017, the proposed Arbitrator namely Hon'ble Mrs. Justice Jaya Roy (Retd.), Former Judge of this Court has submitted a declaration which is at Flag-Z being letter dated 3 rd January 2018. Learned counsel for the parties submit that the appointment of proposed Arbitrator can formally be made for adjudication of the dispute between the parties. For better appreciation the orders dated 15 th September 2017 and 8th December 2017 are extracted herein below :- “5/15.9.2017 Heard learned counsel for the parties. Petitioner approached this Court for appointment of an independent Arbitrator in the present application under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996 invoking the arbitration clause 21 under the General Commercial Terms and Conditions for purchase, SAIL PI which is read with Clause 12 of the purchase order dated 3rd October, 2011. The respondents were asked to file counter affidavit by order dated 11th August, 2017. The order dated 11th August, 2017 is reproduced hereunder for better appreciation of the issue at hand. “The Applicant seeks appointment of an independent Arbitrator after the Arbitrator appointed by the Respondents vide letter dated 4.4.2014(Annexure-6), Sri M.P.Sahu, GM(MM), Steel Authority of India Limited, Bokaro Steel Plant has tendered his resignation vide Annexure-9, letter dated 2.5.2017. Learned counsel for the Applicant has referred to Clause 12 of the purchase order dated 3.10.2011 read with Clause 21 of the General Commercial Terms and Conditions for Purchase, SAIL P1 where under the dispute between the parties are referable for arbitration. Learned counsel for the Applicant submits that under this provision, the opposite parties had appointed an arbitrator who was an employee of SAIL. However in view of Section 12 of the Amended Act 3 of 2016 incorporated -2- in the Arbitration and Conciliation Act, 1996, on the resignation of the erstwhile arbitrator, an independent arbitrator is to be appointed now. Respondents have failed to act despite notice dated 9.5.2017, Annexure-10. That is why the applicant has approached this Court. Learned counsel for the Respondents prays for and is allowed 2 weeks time to file counter affidavit in the matter positively. List this case accordingly.” The respondents have filed counter affidavit stating that by letter dated 26th April, 2017 learned Arbitrator recused himself on the allegation of partiality on the part of applicant. The respondents have adverted in reply to the averments made in the petition in relation to the merits of the dispute as well. Apart from that, respondent at para-29 have stated that they have proposed three names vide letter dated 9th August, 2017 contained in Memo no. SRU/Law/05/201779 to the applicant for appointment of sole Arbitrator but, till date the petitioner had not responded. Learned counsel for the respondents intends to convey that out of three names proposed as Arbitrator, two are employees of Bokaro Steel Plant while the third is a Retired Judicial Officer. Learned counsel for the petitioner has while responding to the allegation of partiality as being the reason for recusal of the erstwhile Arbitrator referred to letter dated 26th April, 2017 (Annexure-8) and contended that the arbitration proceeding had been lingering on flimsy pretext for several dates when the representative of the petitioner-company had to appear either at Bokaro Steel City or at Durgapur without any effective progress in the proceedings. Besides that, learned Arbitrator was an employee of the respondent-company itself. He however submits that in view of the Arbitration and Conciliation Amendment Act 3 of 2016 also, an independent Arbitrator is required to be appointed after termination of the Arbitral Tribunal. Learned counsel for the petitioner has referred to the judgment of Delhi High Court in the case of Ratna Infrastructure Projects Pvt. Ltd. Vrs. Meja Urja Nigam Private Limited (MUNPL) passed in Arbitration Petition no. 537 of 2016 dated 11th April, 2017, whereunder, it has been held that Section 12(5) of the Amendment Act, 2015 would apply in cases where parties have agreed to be governed by the statutory modifications/reenactment thereof and the Rules made under the Act, 1996. The sublime principle behind incorporating such a neutrality clause has been explained in the judgment rendered by the Hon'ble Supreme Court in the case of Voestalpine Schienen GMBH Vrs. Delhi Metro Rail Corporation Limited reported in (2017) 4 SCC665 para15 to 25. Learned counsel for the petitioner has also relied upon order dated 3.2.2017 passed in Arbitration Application No. 20 of 2016 and Arbitration Application No. 24 of 2016 where, under the default procedure, fresh Tribunal comprising independent arbitrator have been constituted by this Court. The judgment rendered by the Hon'ble Supreme Court in the case of Union of -3- India and others Vrs. Uttar Pradesh State Bridge Corporation Limited reported in (2015) 2 SCC52at para 16, 17,19, 20 have also been profitably quoted, which serve as a guidance in the matter of appointment of fresh panel of arbitrator. Therefore, respondents have lost opportunity to appoint an independent Arbitrator of their own after having failed to respond within 30 days to the notice dated 9th May, 2017. This Court may therefore appoint an independent Arbitrator to adjudicate the dispute between the parties. Letter dated 9th August, 2017 (Annexure-A) enclosed to the counter affidavit proposing three names on the part of the respondent has been issued after filing of the arbitration application and cannot be taken into account. I have considered the submission of learned counsel for the parties and considered the factual matrix of the case noted above including the judgments referred to hereinabove. Considering the fact that the arbitration clause 21 applicable to the case of the parties envisages application of all statutory modifications to the Original Act of 1996 and moreover in view of the Amendment Act 3 of 2016 incorporating the neutrality Clause under Section 12 thereof, the dispute between the parties has to be adjudicated by an independent Arbitrator not being an employee of respondents, the respondents cannot be permitted to nominate a fresh Arbitrator of their choice having failed to respond to notice dated 9th May, 2017 (Annexure-10) served by the petitioner upon them, within time. In such circumstances, this Court proposes to appoint Hon'ble Mr. Justice D. N Prasad, Former Judge of Jharkhand High Court to act as an independent Arbitrator to adjudicate the dispute between the parties. In terms of Section 12 of the Amendment Act 3 of 2016 incorporated in the Arbitration and Conciliation Act, 1996, the proposed Arbitrator is required to submit a declaration. Learned Registrar General of this Court shall communicate the order to the proposed Arbitrator for submission of such a declaration within a period of 2 weeks from the date of receipt of a copy of this order. Let the case appear accordingly on 6th October, 2017 as an unfixed case under the same heading.” “10/8.12.2017 By order dated 15th September, 2017, this Court had proposed to appoint Hon'ble Mr. Justice D.N. Prasad (Retd.), Former Judge of this Court to act as an Arbitrator to adjudicate the dispute between the parties. However, proposed Arbitrator has through his letter dated 29th November, 2017 expressed his inability to act as an Arbitrator in the instant case. I, therefore, propose to appoint Hon'ble Mrs. Justice Jaya Roy (Retd.), Former Judge of this Court as an Arbitrator to adjudicate the dispute between the parties. Learned Registrar General of this Court shall communicate the instant order along with the order dated 15th September, 2017 to the proposed Arbitrator for submission of a declaration in terms of Section 12(1) of the Arbitration and Conciliation Act, 1996 as amended by Act no. 3 of 2006 within a period of 3 weeks. Let the case appear on 5th January, 2018 as an unfixed case under the same heading. -4- It will be open for the parties also to submit such a declaration from the proposed Arbitrator by the next date.” In view of the declaration furnished by the proposed Arbitrator, I hereby appoint Hon'ble Mrs. Justice Jaya Roy (Retd.), Former Judge of this Court as an Arbitrator to adjudicate the dispute between the parties. The learned Arbitrator would be at liberty to lay down her fees and other expenses required for conduct of the proceedings however keeping into account the ceiling prescribed under Schedule-IV of the Act of 1996 as amended. Learned Arbitrator would proceed to conclude the reference in expeditious manner also keeping in mind the statutory mandate prescribed under Section 29-A of the Act of 1996. Learned Registrar General shall transmit the copy of the instant order along with the entire pleadings to the learned Arbitrator forthwith. This application stands disposed of. (Aparesh Kumar Singh, J.) Shamim/