Calcutta High Court
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Calcutta High Court: While deciding a review petition, Debangsu Basak, J. held that the court while exercising powers under Section 11 of the Arbitration and Conciliation Act, 1996 cannot substitute arbitration agreement with conduct of parties.

Facts of the Case

The respondent filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator after a dispute arose between the parties regarding the execution of the work as per Clause 13 of the work order issued by the applicant in favor of respondent.

On the direction of the Supreme Court, the applicant filed a review petition as he could not place relevant judgement before the High Court when the impugned order was passed for which he filed Special Leave Petition before the Supreme Court.

Contention of the Parties

The Applicant contended that there was no arbitration agreement between the parties and merely because the applicant did not dispute the same at the relevant stage, the Court couldn't have appointed the arbitrator.

The respondent contended that since the applicant did not dispute the arbitration agreement in its pleadings, therefore, it was a consent order, and it cannot be allowed to take a different stand now. Moreover, the applicant has submitted to the jurisdiction of the Arbitration Tribunal as he filed the counter claim and also, filed an application under Section 16 of the Arbitration and Conciliation Act, 1996.

The respondent also contended that if there is a dispute regarding the existence of arbitration agreement, the same shall be determined by the Arbitration Tribunal.

Observation and Analysis:

The Court observed that as per Clause 13, the option of arbitration was only available to government enterprises and since the respondent is not a government enterprise, it cannot avail the same remedy.

Relying on Pravin Electricals (P) Ltd. v. Galaxy Infra and Engineering (P) Ltd., (2021) 5 SCC 671, the Court held that “…the fundamental basis for referring the parties to arbitration being an arbitration agreement in writing between them, never existed between the parties for the applicant herein to waive or acquiesce any of its rights.”

The Court also observed that the Court while exercising powers under Section 11 of the Arbitration and Conciliation Act, 1996 is bound to examine the existence of the arbitration agreement and if it is not possible for the court “to weed out manifestly and ex-facie non-existent and invalid arbitration agreements and non-arbitrable disputes” then only it can refer the issue related to existence of arbitration agreement to the arbitrator for determination as a preliminary issue.

The Court held that in absence of the agreement, the Court cannot refer the parties to arbitration merely because the respondent did not raise objections.

[Eastern Coalfields Ltd. v. RREPL-KIPL (JV), 2022 SCC OnLine Cal 2350]


*Ritu Singh, Editorial Assistant has put this report together.

Case BriefsSupreme Court

Supreme Court: In a case where the bench of Ajay Rastogi and Abhay S. Oka, JJ was deciding an issue relating to Bihar Public Works Contracts Disputes, the bench has held that if any of the provisions of the Bihar Public Works Contracts Disputes Arbitration Tribunal Act, 2008 are in conflict with the Arbitration and Conciliation Act, 1996, the 2008 Act shall prevail to the extent of the conflict.

Relevant Provisions under the 2008 Act

Under Section 9 (1) of the 2008 Act, when any dispute arises between the parties to the contract, irrespective of the fact whether such contract does or does not contain an arbitration clause, either party can refer the dispute in writing in the prescribed form to the Arbitration Tribunal. The dispute can be referred within one year from the date on which the dispute has arisen.

Section 22 of the 2008 Act starts with a non-obstante clause which provides that notwithstanding anything contained in any other law, rule, order, scheme, or contract, any dispute as defined under section (e) of Section 2 shall be regulated by the provisions of the 2008 Act in the absence of an arbitration clause in the agreement.

In view of Section 8 of the 2008 Act, if any of the provisions of the 2008 Act are in conflict with the 1996 Act, the latter shall prevail to the extent of the conflict.

Analysis

In the case at hand, there was no arbitration clause in the agreement between the parties. The respondent, in the present case it was argued, did not refer the dispute to the Arbitration Tribunal within one year from the date on which the dispute had arisen as provided under Section 9(1) of the 2008 Act. The Arbitration Tribunal had condoned the delay.

Considering the provisions of both the Acts and also the facts of the case at hand, the Court observed that as there is no arbitration clause in the agreement between the parties, the provisions of the 1996 Act will have no application and the reference to the Arbitration Tribunal will be governed by the 2008 Act.

As the 2008 Act provides for a specific period of limitation, Article 137 of the schedule in the 1963 Act will not apply.

Further, under Section 18 of the 2008 Act, the Arbitration Tribunal has the power to condone the delay. Therefore, under Article 136 of the Constitution of India, the Court refused to interfere with the award on the ground that the reference was barred by limitation.

[Bihar Industrial Area Development Authority v. Rama Kant Singh, 2022 SCC OnLine SC 320, decided on 15.03.2022]


*Judgment by: Justice Abhay S. Oka


Counsels

For appellants: Senior Advocate Rajiv Dutta