Arbitration: Appointment of Arbitrator Mandated Where Agreement Exists and Dispute is Civil.

Jai Maa Saraswati Contractors Pvt. Ltd. (Petitioner) filed a request case under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator for a dispute with the Bihar State Food and Civil Supplies Corporation Ltd. (Respondent No. 2).

An agreement dated April 15, 2015, was executed between the Petitioner and Respondent No. 4, entrusting the Petitioner with the custody and bailment of foodgrains and essential commodities during transport.

The Petitioner claimed to have fulfilled its contractual obligations but a dispute arose regarding the payment of transportation bills.

On February 4, 2016, the Petitioner requested payment of all transportation bills, but the District Manager (Respondent No. 4) sanctioned payment with deductions.

Aggrieved by non-payment, the Petitioner filed CWJC No. 23122 of 2018, which was disposed of on August 20, 2019, granting the Petitioner liberty to agitate grievances under Clause 17 of the agreement.

The Respondents failed to appoint a sole arbitrator as requested by the Petitioner.

The Respondents, in their counter-affidavit, stated that the Petitioner was blacklisted via memo No. 709 dated January 18, 2016, for violating clauses 2(d) and 2(e) of the agreement.

They also contended that the Petitioner had not challenged this order for nine years as per Clause 17, and that the present petition was not maintainable as the Petitioner's appeal was pending before the competent authority of BSFC, Patna.

Whether there is a legal impediment to the adjudication of the dispute by an arbitrator.

Whether an arbitrator should be appointed for the adjudication of disputes arising out of the agreement dated April 15, 2015, between the parties.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, which governs the power of a High Court to appoint an arbitrator in cases where the parties fail to agree on an arbitrator or follow the agreed-upon procedure.

The arbitration agreement, as contained in Clause 17 of the agreement dated April 15, 2015, provided for the reference of disputes to the sole arbitration of the CMD/Managing Director of the Bihar State Food & Civil Supplies Corporation Ltd. or a person nominated by them, with the decision being final and binding.

Clause 17 also stated that the provisions of the Arbitration and Conciliation Act, 1996, and rules framed thereunder, along with statutory modifications, would apply to the arbitration proceedings.

The Court found no legal impediment to the adjudication of the civil dispute by an arbitrator, especially since the Petitioner had exhausted the available channels for dispute resolution.

The existence of an arbitration agreement in Clause 17 of the agreement dated April 15, 2015, clearly mandated arbitration for "all disputes arising under or in pursuance of this agreement".

While the Respondents asserted that the Petitioner had been blacklisted and had not challenged the order for nine years, this, along with the issue of limitation, was considered a plea to be raised and decided by the learned Arbitrator.

The Court recognized that the specific nature of the disputes, including the allegations of blacklisting and non-payment, fell within the scope of the arbitration clause.

Therefore, consistent with the consensus of both parties, the appointment of an arbitrator was deemed appropriate under Section 11(6) of the 1996 Act.

Accordingly, with the consensus of both parties, Hon’ble Mr. Justice Samarendra Pratap Singh, former Judge of the Patna High Court, was appointed as the Arbitrator to adjudicate all disputes arising out of the agreement between the parties.

All pleas and issues raised on merits, including the issue of limitation, were left open for the learned Arbitrator to consider and decide.

The Arbitrator is entitled to fees as per the Schedule of the Act, and the hearing is to be expedited with the parties undertaking to cooperate.

The Request Petition stands disposed of in these terms.