M/S Poddar Disposal Company v. The Director

IN THE HIGH COURT AT CALCUTTA

[ CIRCUIT BENCH AT PORT BLAIR ] *** AP/2/2023 M/s Poddar Disposal Company Vs.

The Director, Directorate of Shipping Services. Ms. Anjili Nag .... for the petitioner Mr. Shatadru Chakraborty Mr. Dibesh Dwivedi .... for the respondents April 08, 2024 [SR] Item No.14 The application under section 11 of the Arbitration and Conciliation Act, 1996 is taken up for final hearing after completion of affidavits.

Learned advocate appearing for the petitioner submits that, MSTC acting as the agent of the Directorate of Shipping Services, A & N Administration, floated a Tender for sale of scrap in which the petitioner participated. The petitioner was awarded contract and was issued by a letter dated February 01, 2022 which contains an arbitration clause. She refers to clause 11 of such letter. She submits that, petitioner approached the Court under section 9 of the Arbitration and Conciliation Act, 1996 being Other Suit No.01 of 2022 which was disposed of by an order dated January 05, 2023. There, the respondent did not take the point of non-existence of an arbitration clause. She submits that, MSTC acted as an agent of the declared principal. Therefore, the principal, i.e. the Directorate of Shipping Services as the Principal and is bound by the arbitration agreement. She submits that, notice to appoint an arbitrator was issued to the respondent by a writing dated January 02, 2023 which remained un-replied to. She submits that the authority did

not agree to the appointment of the arbitrator in terms of clause 11 of the agreement.

Learned advocate appearing for the respondent submits that, there is no arbitration agreement between the parties to the proceedings. He submits that, the letter dated February 01, 2023 was issued by the MSTC and not by the respondent. The respondent cannot be bound by such letter. According to him, since there is absence of a signed arbitration agreement, the present application is not maintainable.

MSTC floated an e-tender in January 2022 where, the petitioner before the Court participated. Petitioner was declared as a successful bidder and the bid of the petitioner was accepted by a writing dated February 01, 2022 of MSTC. MSTC conducted the eTender. MSTC declared at the time of conduct of the tender that it was acting as an agent on behalf of the respondent herein. The writing dated February 01, 2022 was issued by the agent of the respondent to the petitioner. Letter was accepted by the petitioner. Both the parties herein acted on the basis of such letter. It is not the contention of the respondent herein that the MSTC acting as an agent, exceeded its jurisdiction or acted beyond its authority as agent to issue the letter dated February 01, 2022. Actions taken by as an agent, bonafide, and within the terms of the agency is binding by the Principal. Letter dated February 01, 2022 not being in excess of the authority of the agent, binds the respondent herein.

Section 7 of Arbitration and Conciliation Act 1996 requires the arbitration agreement to be in writing. It contemplates, that an arbitration agreement can come into existence by exchange of letters.

In the facts of the present case, e-Tender was floated, where, the petitioner was declared as the successful bidder. Contract was awarded by the letter dated February 01, 2022. This letter was accepted by the petitioner.

Therefore, offer and acceptance of contract was concluded by the issuance of the letter dated February 01, 2022 and acceptance thereof by the petitioner. A concluded contract came into being between the respondent as the Principal on one part and the petitioner as the buyer/purchaser, on the other part by virtue of the letter dated February 01, 2022 and its acceptance thereof by the petitioner. The letter dated February 01, 2022 contains a clause of arbitration which is as follows:- "11.

ARBITRATION: In the event of any dispute and/or difference arising between the purchaser/buyer and/or their agent/seller as to the construction, interpretation and/or execution of the contract and/or execution of the contract and/or the respective rights and liabilities of the parties, such disputes and/or differences shall be referred to the sole arbitration of the Chief Executive of the Principal for a Company registered under the Companies Act, in case of a PSUs, the Head of the Department in case of a government department. Ordinance Factory Board Units/Defence Units, who may act himself or nominate in his stead any officer subordinate to him or of MSTC being not below the rank of General Manager/Director in the Government Department who shall act as the Sole Arbitrator.

The provisions of the Indian Arbitration Act 1995, and the rules thereunder shall apply to such arbitration. The award passed by such Sole Arbitrator shall be final and shall conclusively bind on the parties." Clause 11 allows reference of disputes or differences arising between the purchasers/buyer and/or their agents/seller as to the construction, interpretation and/or execution of the contract and/or respective rights and liabilities of the parties. The arbitration, clause contemplates such disputes and differences should be referred to the sole arbitration of the Chief Executive of the Principal.

In the facts of the present case, despite the request for appointment of an arbitrator contained in the letter dated January 02, 2023, the respondent took no steps. The petitioner thereafter approached the Court under section 11 of the Arbitration and Conciliation of Act, 1996 after expiry of statutory period permitting the respondent to appoint an arbitrator in terms of the arbitration agreement.

Consequently, the respondent forfeited its right to appoint arbitrator in terms of the arbitration agreement. The claim of the petitioner is not being contested as barred by limitation. Since there exists an arbitration agreement between the parties before this Court, and since, the respondent did not appoint an Arbitrator despite the request dated January 02, 2023, it would be appropriate to appoint an arbitrator to arbitrate the disputes in terms of the clause 11 of the writing dated February 01, 2022. Mr. Gopala Binnu Kumar, learned advocate is appointed as the Arbitrator to arbitrate the disputes between the parties. The remuneration of the arbitrator as also costs and expenses of the arbitration proceedings will be fixed by the learned Arbitrator. Parties will bear the fees of the Arbitrator and the cost and expenses of the arbitration in equal portion.

AP/2/2023 is disposed of without any order as to costs. ( Debangsu Basak, J. )