INTERNATIONAL COMMERCE LIMITED Vs. STEEL AUTHORITY OF INDIA

JUDGEMENT

(1.) In this application under Section 11(6) of the Arbitration and Conciliation Act , 1996 as amended by the Act no.3 of 2016 (hereinafter referred to as "the Act of 1996"), the petitioner has prayed for appointment of a Sole Arbitrator to adjudicate the disputes between the parties relating to the work order dated August 27, 2012 as mentioned hereinafter.

(2.) Shorn of detail, the facts relevant for deciding this application are that in response to a notice inviting tender dated May 11, 2012 issued by the respondent no.1 the petitioner company submitted an offer to recover, remove and lift Unprocessed Iron Scrap and Steels Scrap (UPIS) from the slag bank area of the Durgapur Steel Plant of the respondent (hereinafter referred to as "the said steel plant"). The petitioner became the H-1 bidder and the respondent issued a work order dated August 27, 2012 to the petitioner. The terms and conditions of the said work order were governed by the "SAIL S1-General Terms and Conditions of Sale Through Tender from Plants and Units of SAIL (except CEO)", which is hereinafter referred to as "the said GCC". Clause 38 of the said GCC provides that all disputes and differences of any kind whatsoever arising out of or in connection with or concerning the said work order shall be referred to by the parties for conciliation before a Conciliatory Forum Body comprising a nominee of each of the parties. On failure of the conciliation, the disputes and differences between the parties would be referred to a Sole Arbitrator for his decision. Clause 39 of the said GCC contemplates that all disputes and differences arising between the parties relating to the said work order shall be referred to a Sole Arbitrator to be appointed by the Managing Director of the Steel Plant/Head of Unit (SAIL). Before appointing the Sole Arbitrator, the Managing Director of the Steel Plant/Head of Unit (SAIL) shall nominate three names out of which the contractor/customer shall give his consent for one of them for appointment as the Sole Arbitrator, failing which after 30 days of the issuance of the letter notifying the three names, Managing Director of the Steel Plant/Head of Unit (SAIL) shall appoint one of the three notified persons as the Sole Arbitrator. As per the terms and conditions envisaged in the said tender the petitioner was required to and they deposited earnest money of Rs.70 lakh with the respondent. The petitioner further furnished a bank guarantee of Rs.2.30 crore to the respondent as security deposit.

(3.) The petitioner claim to have performed all obligations under the said work order, but the respondent not only failed to pay their outstanding dues but also invoked the bank guarantee furnished by the petitioner as security deposit. Thus, by a letter dated October 24, 2017 the petitioner requested the respondent to constitute a conciliatory body in accordance with Clause 38 of the GCC. The parties, however, could not reach any amicable settlement of their disputes and the conciliation process failed. Thereafter, the petitioner invoked Clause 39 of the said GCC and by a letter dated February 14, 2018 requested the Chief Executive Officer (in short, "the CEO") of the said steel plant, being the Head of the Unit to nominate three names so that they can give consent for appointment of one of them as the Sole Arbitrator. The CEO of the said steel plant nominated three persons, who had retired from their respective services with the respondent three years before the date of nomination. By a letter dated April 28, 2018 the Assistant General Manager (law) of the respondent forwarded to the petitioner the copies of the three written disclosures sent by the said three persons nominated by the CEO of the said steel plant. The petitioner, however, raised objection to the nomination of the said three persons by the CEO of the said steel plant on the ground that are the ex-employees of the respondent. By a letter dated June 23, 2018 the respondent refused to accept the objection raised by the petitioner. One of the said three persons nominated by the CEO of the said steel plant in his detailed disclosure stated that he was working as a consultant of Iron and Steel Sector Skill Council and N.S.D.C and he is frequently working at Durgapur Steel Plant. Thus, by a letter dated July 13, 2018 the respondent informed the petitioner that the CEO of the said steel plant is approaching another retired officer for his detailed disclosure. By a letter dated June 29, 2018 the petitioner requested the Assistant General Manager (Law) of the said steel plant to nominate fresh persons as per the provisions of the Act of 1996 or to permit them to file an application before this Court. Thereafter, some further correspondence appear to have been exchanged between the parties.