Ms Adept Power Private LTD vs. South Eastern Coal Fields LTD

Facts

M/s Adept Power Private Ltd., a registered MSME, was awarded a contract by South Eastern Coal Fields Ltd. (SECL) for designing, engineering, construction, fabrication, supply, erection, trial run, and commissioning of electric substations, along with maintenance, for a total contract value of Rs. 22,30,90,585/- (excluding GST). The project commenced on December 15, 2018, with a construction deadline of June 7, 2020, and a maintenance deadline of June 6, 2024. The applicant alleged substantial delays due to SECL's failure to supply critical equipment like Transformers and VCBs on time, leading to significant financial losses for the applicant. The applicant issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996, on July 19, 2025, invoking arbitration due to unresolved disputes, but SECL failed to appoint an arbitrator within the stipulated period.

Held

The Court considered the pleadings and documents presented by both parties. The primary issue was the appointment of an arbitrator to resolve the disputes between M/s Adept Power Private Ltd. and South Eastern Coal Fields Ltd. The applicant had invoked arbitration due to alleged delays and financial losses caused by SECL's failure to supply critical equipment and its subsequent failure to appoint an arbitrator. The respondent, while opposing the request, did not object to the Court appointing an arbitrator. Both parties agreed that a retired Judge of the High Court would be an acceptable Sole Arbitrator. Consequently, the Court found merit in the applicant's request for arbitration and, in view of the consensus between the parties, appointed Hon'ble Mr. Justice Arvind Kumar Verma, a retired Judge of the High Court, as the Sole Arbitrator to resolve the dispute. The Court directed the Registry to communicate the order and stipulated 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 fulfilled the pre-requisites for invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, and Clause 42A of the General Terms and Conditions of Contract, considering the notice period and the alleged failure of SECL to appoint an arbitrator? Petitioner's arguments: The applicant contended that they had fulfilled all necessary conditions by issuing a notice under Section 21 of the Arbitration and Conciliation Act, 1996, on July 19, 2025. They argued that SECL acknowledged the notice but failed to appoint an arbitrator within the statutory mandate of 30 days from the receipt of the notice, despite over 77 days having elapsed. The applicant also asserted that SECL's failure to provide critical equipment within the contractual timelines constituted a breach of contract, making SECL solely responsible for the project delays. They relied on the Supreme Court judgment in Demerara Distilleries Private Limited and Another v. Demerara Distillers Limited. Respondent's arguments: The respondent, SECL, opposed the arbitration request but stated they had no objection if the Court appointed an arbitrator. They also informed the Court about a meeting held on July 10, 2026, and a subsequent date fixed for amicable resolution, which the applicant disputed.