The Jharkhand High Court has referred the disputes relating to the contract executed between RITES (Rail India Technical and Economic Service) Limited and JUVNL (Jharkhand Urja Vikas Nigam Limited) to Justice Vineet Saran, retired Judge of the Supreme Court.

RITES Limited had filed a petition to appoint an impartial sole-arbitrator regarding 10 agreements entered between RITES and JUVNL.

A Single Bench of Justice Sanjay Kumar Dwivedi directed, “… this Court directs that all disputes relating to and arising out of the contract executed between the petitioner and the respondent-JUVNL including all agreements which are the subject matter of the present writ petition, including the arbitration clause shall, hereby, stand referred to Hon’ble Mr. Justice Vineet Saran, a retired Judge of the Hon’ble Supreme Court to adjudicate upon all the claims and counter-claims which the party may chose to file before him. The Arbitrator shall be free to determine his own fee.”

Advocate Vikas Pandey appeared for the petitioners while Advocate Mrinal Kanti Roy appeared for the respondents.

In this case, JUVNL floated tender for electrification of 4923 villages under five packages and RITES Limited was found the lowest bidder. As such on due deliberation and negotiation, the whole work of electrification was awarded to it by 10 work orders. After negotiation, a draft contract agreement for all packages were prepared, however, when that contract was being examined, it was found that arbitration clause was not there and hence, a request was made by RITES to include permanent machinery of arbitration for resolution of dispute. Accordingly, the arbitration clause was inserted in the agreement and finally, the agreement was entered into between the parties.

All the 10 agreements were on the same and similar terms and conditions but in course of execution of contract work, some dispute and differences arose between the parties. Therefore, RITES invoked the arbitration clause and requested the Secretary, Department of Public Enterprise to appoint the Arbitrator for redressal of their grievance. As a result, a Sole Arbitrator was appointed who allowed some of the claims of RITES and rejected the counter claim of JUVNL. Such award was challenged by RITES before the appellate authority which allowed the appeal and enhanced the awarded amount to the tune of about Rs. 231 crores. Due to this, JUVNL moved before the Commercial Court which dismissed its petition and the matter was therefore before the High Court.

The High Court after hearing the contentions of the counsel said, “It is an admitted position that pursuant to permanent machinery of arbitration, the dispute first taken is tried to be resolved, however, the same has not attained finality as under the permanent machinery of arbitration, the Arbitration Act, 1940 as well as the Arbitration and Conciliation Act, 1996 were made outside the purview of the dispute under the permanent machinery of arbitration and the relevant paragraphs of the said judgment as already been quoted hereinabove, wherein it has been held by the Hon’ble Supreme Court considering the entire aspect of the matter arising out of the permanent machinery of arbitration and the effect has been summarized in paragraph nos. 23 to 23.8 (supra). In paragraph no.26 of the said judgment, remand the matter to the Hon’ble Supreme Court as well as the arbitration was considered.”

The Court added that it was held that the right of the appellant to demand such an adjudication in the aforesaid case cannot be denied simply because it happens to be Government owned company or even the appellant is a Government company.

The Court observed that the case of RITES Limited is fully covered in light of the judgment of the Supreme Court in the case of Northern Coalfields Limited v. Heaving Engineering Corporation Limited and Another (2016) 8 SCC 685 and that there will be no difficulty in having all the claims and the counter claims of the petitioner as well as the respondent JUVNL referred to for adjudication afresh in accordance with law to the sole-Arbitrator to be nominated by it.

“Since the matter is being sent to the sole-Arbitrator for a fresh round of arbitration, safely it can be under the Arbitration and Conciliation Act, 1996”, it said.

Accordingly, the High Court allowed the writ petition.

Cause Title- M/s RITES Limited & Anr. v. The State of Jharkhand & Anr.


Petitioners: Advocates Vikas Pandey, Sanjay Kumar Prasad, Piyush Poddar, and Janak Kumar Mishra.

Respondents: Advocate Mrinal Kanti Roy

Click here to read/download the Judgment