The Calcutta High Court has held that an Arbitration Clause contained in auction governing schemes applies to all such disputes unless a contrary scheme not containing the said clause is brought in record.

The Court was considering a Petition for appointment of an Arbitrator in terms of Clause 11.12 of the Spot E-Auction Scheme 2007, for sale of coal in Mahanadi Coalfields Limited (MCL) for the month of May, 2009.

The single bench of Justice Shampa Sarkar observed, "The Scheme provides for sale of coal by way of e-auction for the month of May, 2009. The scheme contains an arbitration clause. In the instant case, the eauction was held in January, 2010. The respondent could not produce any scheme to the contrary, which did not contain an arbitration clause. The respondent could not satisfy this court that the arbitration clause was not applicable in the subject e-auction."

The Petitioner was represented by Advocate Shuvasish Sengupta while the Respondent was represented by Advocate Varun Kedia.

Facts of the Case

Five rakes of coal were allotted to the Petitioner on the basis of the Spot E-Auction held on January 27, 2010 with scheme of E-auction of 2007 applicable to it as per claim. The Petitioner took delivery of three of the rakes of coal in the year 2010 out of the five rakes. One K.R. Enterprises, placed an order with the Petitioner for supply of five rakes of coal from Deulbera siding (MCL) to NALCO. A ‘No Objection Certificate’ was issued. The Petitioner applied for change of destination on September 9, 2010 at the Kolkata office of the Respondent No.3. It was alleged that the Respondent No.3 unilaterally amended the Letter of Indent by inserting “BOXN” alongside “BOBRN” despite being fully aware of NALCO’s operational requirements which had been outlined in their NOC. Upon receipt of the Indent, the Respondent No.3 supplied two rakes of coal on September 11, 2010. NALCO rejected the consignments on 12th and 14th September, 2010. K. R. Enterprises also terminated the order. Aggrieved of all of it, the Petitioner filed present Petition.

The specific contention of the Petitioner was that the Respondent No. 3 returned the amount deposited by the Petitioner in respect of the two rakes, after deducting some charges. The grievance was with regard to non-delivery of two rakes of coal purchased in the e-auction floated by Mahanadi Coalfields Limited, refund of the money deposited in respect of the said two rakes upon deduction of certain charges, the loss suffered by the Petitioner on account of such refund, non-delivery and cancellation of the order by E.R. Enterprise.

Reasoning By Court

The Court was of the view that it is required to, prima facie, ascertain as to whether there is any existence of an arbitration clause.

It concluded that Respondent has failed to produce any scheme to the contrary, which did not contain an arbitration clause. It also stated that it cannot held that the disputes are “deadwood”.

"Here, there are various claims made by the petitioner at various stages. Ultimately, the petitioner is mostly aggrieved by the refund. Such refund took place sometime in August and December, 2019. The petitioner is entitled to the exclusion of the time between March 15, 2020 and February 28, 2022, while computing the period of limitation, in invoking arbitration. Thus, the issue of limitation will have to be adjudicated in this case, on the basis of the evidence to be adduced by the parties. The other issue which has been raised by Mr. Soham Dutta that, the respondent no. 3 did not have a role to play either in the change of Indent or in the change of rake etc. are again arbitrable disputes," the Court observed.

The Application was accordingly disposed of by referring the matter to Arbitration.

Cause Title: Satya Narayan Shaw vs. Sourav Ghosh

Appearances

Petitioner- Advocate Shuvasish Sengupta, Advocate Souvik Ghosh, Advocate

Respondent- Advocate Varun Kedia, Advocate Avee Jaiswal, Advocate AyanPoddar, Advocate Soham Dutta, Advocate Anjali Shaw,

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Calcutta High CourtJustice Shampa Sarkar

Sheetal Joon