M/S Popular Switchgears PVT LTD vs. Haryana Vidyut Prasaran Nigam LTD And Ors

Facts

M/s Popular Switchgears Pvt. Ltd. (the applicant) filed three petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an Arbitrator. The disputes arose from purchase orders placed by Haryana Vidyut Prasaran Nigam Ltd. (the respondent) for goods supplied by the applicant. The core of the dispute concerns the imposition of Goods and Services Tax (GST) effective from July 1, 2017, leading to amounts claimed by the applicant as statutory variations. The total invoice values and the amounts due on account of GST imposition were provided. Clause 24 of the agreements stipulated that disputes would be referred to an Arbitrator. The applicant invoked the arbitration clause, leading to the present petitions. The respondent contended that they had proposed a panel of three arbitrators as per Clause 18 of the purchase order and Clause 24 of their terms and conditions, but the applicant had not responded to their letter dated April 6, 2021, proposing this panel.

Held

The Court held that a dispute had indeed arisen between the parties concerning statutory variations due to the imposition of GST. It was evident that the parties had agreed to refer disputes to arbitration. The Court noted that while the respondent had proposed a panel of arbitrators, the communication suggesting this panel was dated April 6, 2021, and the names of the arbitrators were not explicitly sent to the applicant-company in that communication. Therefore, the Court found it appropriate to appoint a common Arbitrator for all three cases, given that the disputes involved the same parties and were of a similar nature. Accordingly, Shri D.P. Bajaj, Chief Engineer, Punjab PWD (B&R) (retd.), was appointed as the Arbitrator. The Arbitrator was directed to comply with all necessary conditions as per the Arbitration and Conciliation Act, 1996, as amended. Parties were directed to appear before the Arbitrator on September 20, 2021. The petitions were disposed of with these directions.

Key Issues

1. Whether the Court has the power to appoint an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, when a dispute has arisen between the parties concerning statutory variations due to GST imposition. Petitioner's Argument: The applicant argued that a dispute had arisen concerning the imposition of GST, and as per the arbitration clause in the agreements, an Arbitrator should be appointed to resolve this difference. They initiated the present petitions as a consequence of invoking the arbitration clause. Respondent's Argument: The respondent contended that they had already initiated the process for appointing an Arbitrator by suggesting a panel of three arbitrators, as stipulated in the purchase order and their terms and conditions. They claimed that the applicant had failed to respond to their communication dated April 6, 2021, which proposed this panel, thereby indicating a lack of cooperation from the applicant's side in the appointment process.