Sarjan Infracon Private Limited vs. Talcher Fertilizer Limited & Anr.
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The Petitioner, Sarjan Infracon Private Limited, filed a petition under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator. Disputes arose from a Notice Inviting Tender issued by Respondent No. 2 in 2018 for land development and construction works. The Petitioner claims to have completed the project and received partial payment, with Bank Guarantees released. However, Respondent No. 1, Talcher Fertilizer Limited, issued a notice on April 8, 2024, demanding recovery of Rs. 13,67,00,000/- plus GST. The Petitioner submitted a representation on April 16, 2024, disputing the demand. After the Respondents failed to clear outstanding dues, the Petitioner invoked arbitration on February 26, 2025, proposing an arbitrator. Respondent No. 1 declined the proposal, leading to the present petition.
Held
The Court held that Respondent No. 1 has no objection to the appointment of an Arbitrator as the existence of an arbitration agreement is not disputed. Regarding Respondent No. 2, while it disputes its role, the Court noted that the tender was issued by Respondent No. 2 and the recovery notice was also issued by it. However, the Court found that the question of Respondent No. 2's role in the disputes is an issue within the domain of the Arbitrator. Accordingly, with the consent of the parties, Ms. Justice Gita Mittal, former Chief Justice of Jammu and Kashmir High Court, was appointed as the Sole Arbitrator to adjudicate the disputes. The arbitral proceedings will be held under the aegis of the Delhi International Arbitration Centre (DIAC). The Court clarified that it has not expressed any opinion on the merits of the case and all rights and contentions of the parties are left open. It will be open for the Respondents to raise the issue of Respondent No. 2's involvement before the learned Arbitrator.
Key Issues
1. Whether this Court has the power to appoint a Sole Arbitrator under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, given the existence of an arbitration agreement between the Petitioner and Respondent No. 1? (Question of law) 2. Whether Respondent No. 2, despite issuing the tender and recovery notice, has a role in the disputes arising between the Petitioner and Respondent No. 1, and thus should be referred to arbitration? (Question of mixed law and fact) Contentions: Petitioner: Argued for the appointment of a Sole Arbitrator, asserting that disputes have arisen out of the tender and subsequent recovery notice, and that Respondent No. 1 has failed to resolve these disputes. The Petitioner also sought to involve Respondent No. 2 in the arbitration proceedings. Respondent No. 1: Submitted that it has no objection to the appointment of a Sole Arbitrator by the Court, as the existence of an Arbitration Agreement is not disputed. Respondent No. 2: Objected to its reference to arbitration, contending that it has no role in the disputes between the Petitioner and Respondent No. 1.
Sections Cited
Section 11(5), Section 11(6), Section 12
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Cause title — parties, addresses and appearances
O R D E R %
2025
This petition is filed by the Petitioner under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator.
Disputes have arisen between the parties out of Notice Inviting Tender issued by Respondent No.2 in and around 2018 for land development, demolition/dismantling, construction and erection of civil, structural and other allied works associated with the pre-project of the fertilizer complex at Talcher, Angul District, Orissa. Petitioner asserts that it completed the project within the extended timelines and therefore, the Bank Guarantees furnished by the Petitioner towards performance security and retention money were released by the Respondent and Final Bill was partially paid. However, without any basis, Respondent No.1 vide notice This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/09/2025 at 13:13:38 dated 08.04.2024 unlawfully raised a demand for recovery of Rs.13,67,00,000/- plus GST to which Petitioner submitted a detailed representation on 16.04.2024 pointing out the reasons why the amount was not recoverable. In view of the failure of the Respondents in clearing the outstanding dues of the Petitioner, notice invoking arbitration was issued by the Petitioner on 26.02.2025 proposing the name of a former Judge of Orissa High Court, however, vide reply dated 05.04.2025, Respondent No.1 declined to consent to the proposal. Having no option, present petition was filed by the Petitioner.
Learned counsel for Respondent No.1, on instructions, submits that said Respondent has no objection to appointment of a Sole Arbitrator by this Court since existence of Arbitration Agreement is not in dispute. Counsel for Respondent No.2, however, objects to reference of Respondent No.2 to arbitration on the ground that it has no role in the disputes arising between the Petitioner and Respondent No.1. 4. Insofar as Respondent No.1 is concerned, it has no objection to the appointment of an Arbitrator since existence of the arbitration agreement is not in dispute. Respondent No.2 disputes its role in the entire transaction albeit it is not disputed that the Tender in question was issued by Respondent No.2 and the recovery notice was also issued by the said Respondent. Be that as it may, this is an issue which is in the domain of the Arbitrator and the objection can be raised in accordance with law.
Accordingly, with the consent of the parties, Ms. Justice Gita Mittal, former Chief Justice of Jammu and Kashmir High Court, (Mobile No. 9818000220) is appointed as Sole Arbitrator to adjudicate the disputes between the parties. Arbitral proceedings will be held under the aegis of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/09/2025 at 13:13:38 Delhi International Arbitration Centre (‘DIAC’). Fee of the Arbitrator shall be fixed as per fee schedule under DIAC (Administrative Cost & Arbitrators’ Fees) Rules, 2018. 6. Learned Arbitrator shall give disclosure under Section 12 of the 1996 Act before entering upon reference.
It is made clear that this Court has not expressed any opinion on the merits of the case and all rights and contentions of the respective parties are left open. It will be open to the Respondents to raise the issue of Respondent No.2 being a veritable party in the arbitration proceedings before the learned Arbitrator, in accordance with law.
Petition is disposed of in the aforesaid terms.
JYOTI SINGH, J AUGUST 26, 2025/RW/YA This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/09/2025 at 13:13:38
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