Bharat Petroleum Corporation Limited vs. Sk. Ashphaque Hossain
Original PDF →Facts
The petitioner, Bharat Petroleum Corporation Limited (BPCL), filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The dispute arose from an LPG Cylinders Transportation Contract Agreement dated 01.09.2018 with the respondent, who was engaged for transporting LPG cylinders. BPCL alleged that in March 2019, the respondent failed to return empty LPG cylinders and report trucks, leading to bottling losses. Despite repeated communications, 414 empty cylinders of 14.2 kg and 24 of 19 kg capacity were not returned. BPCL quantified the penal damages at Rs. 10,13,400/-, plus 18% GST, totaling Rs. 11,95,812/-. The respondent's offer to return cylinders was conditional on reversing a previous debit, which BPCL did. However, the cylinders were not returned. BPCL encashed the respondent's bank guarantee of Rs. 5,00,000/- and issued a show-cause notice for the balance amount of Rs. 6,95,812/- plus interest. BPCL had previously invoked arbitration and approached the High Court, but that application was withdrawn with liberty to proceed afresh due to an incorrect reference to Section 11 instead of Section 21 of the Act. A fresh notice under Section 21 was issued, but the respondent did not reply or take steps to constitute an Arbitral Tribunal.
Held
The Court held that the existence and validity of the arbitration agreement, as stipulated in Clause 35 of the Agreement, do not appear to be in dispute prima facie. Furthermore, the disputes raised by BPCL also appear to fall within the scope of the said arbitration agreement at this stage. In view of these findings, the Court exercised its jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996. The Court appointed Mr. Shaunak Ghosh, Advocate, as the learned sole Arbitrator to adjudicate the disputes between the parties in terms of the Agreement dated 01.09.2018. The Arbitrator is to enter upon the reference after making the necessary disclosures as per Section 12(1) and subject to Section 12(5) of the Act. The Arbitrator's remuneration is to be fixed as per the Fourth Schedule or by mutual agreement. All questions relating to arbitrability, admissibility of claims, limitation, jurisdiction, and other issues are left open to be urged before the Sole Arbitrator for decision in accordance with law. The petition was disposed of with these directions.
Key Issues
1. Whether the Court has jurisdiction to appoint a sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, in light of the arbitration agreement and the disputes that have arisen between the parties? Petitioner's Arguments: The petitioner contended that an arbitration agreement exists as per Clause 35 of the contract, and disputes have arisen within its scope. They argued that the respondent failed to respond to the Section 21 notice and take steps to constitute the Arbitral Tribunal, necessitating the Court's intervention under Section 11(6) to appoint an arbitrator. Respondent's Arguments: The respondent did not appear before the Court despite service, and therefore, no arguments were recorded on their behalf.
Sections Cited
Section 11(6), Section 21, Section 12(1), Section 12(5)
AI-generated summary — verify with the full judgment below
OD-13 ORDER SHEET
IN THE HIGH COURT AT CALCUTTA ORIGINAL SIDE
AP/131/2026 BEFORE: The Hon’ble JUSTICE GAURANG KANTH Date : 25th August, 2026. Appearance: Mr. Sanjib Kr. Mal, Adv. Ms. Shomrita Das, Adv. Mr. Shomrik Das, Adv. ..for the petitioner
The Court: Affidavit of service is taken on record. Despite service, none appears for the respondent. The petitioner has preferred the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a learned sole Arbitrator to adjudicate the disputes and differences which have arisen between the parties in terms of the LPG Cylinders Transportation Contract Agreement dated 01.09.2018 executed with the respondent. The respondent was engaged as a contractor for transportation of LPG cylinders from the filling plant of Bharat Petroleum Corporation Limited (BPCL) at Khurda, Odisha. According to BPCL, in March 2019, it was noticed that the respondent had failed to return certain empty LPG cylinders and had also failed to report the trucks, resulting in bottling losses. Despite repeated communications, including letters dated 11.04.2019, 18.04.2019,
2 19.04.2019, 25.07.2019, 13.09.2019 and 03.10.2019, the respondent allegedly failed to return 414 empty cylinders of 14.2 kg capacity and 24 empty cylinders of 19 kg capacity pertaining to Truck No. OR04K8515 under ERV No. 820028714. By letter dated 03.10.2019, BPCL quantified the penal damages at Rs.10,13,400/-, together with GST at 18%, aggregating to Rs.11,95,812/-. The respondent offered to return the cylinders subject to reversal of an amount earlier debited by BPCL. Although BPCL reversed the said amount on 20.12.2019, the respondent allegedly failed to return the empty cylinders. Thereafter, BPCL encashed the respondent's bank guarantee for Rs.5,00,000/- and, by show-cause notice dated 22.12.2020, called upon the respondent to pay the balance amount of Rs.6,95,812/-, together with interest. BPCL initially invoked the arbitration mechanism by notice dated 28.12.2021 and thereafter approached this Court by filing AP/625/2023. By order dated 05.05.2026, the said application was permitted to be withdrawn with liberty to proceed afresh, as the notice dated 28.12.2021 had incorrectly been described as a notice under Section 11 instead of a notice under Section 21 of the Arbitration and Conciliation Act, 1996. Pursuant thereto, BPCL issued a fresh notice under Section 21 of the Act dated 13.05.2026. The respondent neither replied to the said notice nor took any steps towards constitution of the Arbitral Tribunal. Clause 35 of the Agreement contains the arbitration agreement and provides for reference of disputes to a Sole Arbitrator. The said clause
3 further stipulates that the Courts at Kolkata shall have exclusive juri iction in respect of applications arising out of the Agreement. The existence and validity of the arbitration agreement do not, prima facie, appear to be in dispute. The disputes raised by BPCL also appear, at this stage, to fall within the scope of the said arbitration agreement. In view of the said, this Court exercises its juri iction under Section 11 of the Arbitration and Conciliation Act, 1996 and appoints Mr. Shaunak Ghosh, Advocate (Mobile No. 9831299143) as the learned sole Arbitrator to adjudicate the disputes between the parties in terms of the Agreement dated 01.09.2018. The learned Sole Arbitrator shall enter upon the reference after making the disclosure in terms of Section 12(1) of the Act and subject to the provisions of Section 12(5) thereof. The learned sole Arbitrator shall be entitled to fix the remuneration in accordance with the Fourth Schedule of the Act or as may be mutually agreed between the parties. A copy of this order shall be communicated by the petitioner to the learned sole Arbitrator for necessary action. It is clarified that all questions relating to the arbitrability of the disputes, the admissibility of the claims, limitation, juri iction, and all other issues are left open to be urged before the learned Sole Arbitrator, who shall decide the same in accordance with law. With the aforesaid directions, the present petition stands disposed of.
(GAURANG KANTH, J.) bp.
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