S Kumars Associates vs. South Eastern Coalfields Limited Secl

Facts

S. Kumar's Associates, a civil and mining contractor, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The applicant had entered into a contract with South Eastern Coalfields Limited (SECL) for overburden removal and allied works. The contract included a dispute resolution mechanism with a two-stage in-house settlement process, followed by arbitration as per Clause 13A. The applicant claimed various pending payments, including for executed work, diesel de-escalation costs, penalty waivers, and refund of EMD. After the in-house mechanism failed to resolve the disputes, the applicant invoked arbitration by issuing a notice under Section 21 of the Act. SECL, a respondent, did not respond to the notice or agree to the nominated arbitrator. Subsequently, an order dated March 11, 2026, was passed by an SECL officer rejecting the applicant's representations, which the applicant argued did not constitute a binding adjudication.

Held

The Court held that the applicant had indeed exhausted the pre-arbitral, in-house dispute resolution mechanism as stipulated in Clause 13 of the Agreement. The applicant's representations were rejected by an officer of the respondent, which the Court noted did not constitute a binding adjudication. The Court found that the respondents had failed to act in terms of the arbitration agreement and to concur in the appointment of an arbitrator, despite the applicant's notice under Section 21 of the Arbitration and Conciliation Act, 1996. Consequently, the occasion for the Court to exercise its power under Section 11(6) of the Act had squarely arisen. The parties agreed to the appointment of Mr. Ashok Ku. Panda, a retired District Judge, as the sole arbitrator. The Court directed the Registry to communicate the order to the arbitrator and stated that the arbitrator's remuneration would be settled by mutual consent of the parties. The arbitration request petition was allowed.

Key Issues

1. Whether the applicant has exhausted the pre-arbitral, in-house dispute resolution mechanism as stipulated in Clause 13 of the Agreement, thereby fulfilling the condition precedent for invoking arbitration under Clause 13A of the Agreement? 2. Whether the respondents have failed to act in terms of the arbitration agreement and concur in the appointment of an arbitrator, thus giving rise to the occasion for the Court to exercise its power under Section 11(6) of the Arbitration and Conciliation Act, 1996? Contentions of the Petitioner/Applicant: The applicant argued that they had scrupulously exhausted the entire pre-arbitral, in-house dispute resolution mechanism contemplated by Clause 13 of the Agreement, and this mechanism failed to yield any resolution. They further contended that the respondents failed and neglected to act in terms of the arbitration agreement and to concur in the appointment of an arbitrator despite due service of the notice under Section 21 of the Act, necessitating the invocation of the Court's jurisdiction under Section 11(6). The applicant relied on Clause 13 and Clause 13A of the Agreement and Section 21 of the Arbitration and Conciliation Act, 1996. Contentions of the Respondents: The respondents' counsel opposed the arbitration request application but stated that they would have no objection if the Court appointed any arbitrator for resolving the dispute.