M/S Shukla Construction Bhilai vs. Steel Authority Of INDIA Limited

Facts

The applicant, M/s Shukla Construction Bhilai, through its proprietor Abhay Kumar Shukla, filed multiple applications under Sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. These applications arose from various construction contracts awarded by Steel Authority of India Limited (SAIL), Bhilai Steel Plant. The applicant contended that disputes arose concerning these contracts, and despite sending notices for the appointment of an arbitrator on multiple occasions, SAIL failed to appoint one. The respondent, SAIL, argued that the notices invoking arbitration were invalid as they lacked quantified claims and details of the dispute. SAIL also raised objections regarding the vagueness of the impleaded respondents and contended that the applicant had not fulfilled contractual obligations, such as providing statutory clearance, which prevented the processing of final bills. SAIL further argued that the applicant relied on an incorrect arbitration clause in their petition.

Held

The Court considered the arguments presented by both parties regarding the validity of the arbitration notices and the applicable arbitration clauses. While the respondent raised objections concerning the vagueness of the notices and the applicant's alleged non-compliance with contractual obligations, they ultimately stated that they would have no objection if an arbitrator were appointed by the Court to resolve the disputes. The applicant and respondent agreed that a retired Judge of the High Court could be appointed as the Sole Arbitrator and jointly proposed Hon’ble Mr. Justice R.C.S. Samant. The Court found merit in appointing an arbitrator to resolve the underlying contractual disputes. Therefore, the Court appointed Hon’ble Mr. Justice R.C.S. Samant, a retired Judge of the High Court, as the Sole Arbitrator to adjudicate the disputes between the parties. The respondent was directed to raise all its objections before the appointed arbitrator. The remuneration of the arbitrator was to be settled by mutual consent of the parties. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the notices dated 12.02.2024 and 02.09.2024, issued by the applicant, constitute a valid invocation of arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, given the alleged lack of quantified claims and specific details of the dispute? (Question of law) 2. Whether Clause 20.2 of the General Conditions of Contract (GCC) is the applicable arbitration clause for the disputes arising from the contract dated 12.08.2020, or is Clause 93 of the GCC, as contended by the respondent, the correct provision? (Question of law) 3. Whether the respondent, Steel Authority of India Limited, is obligated to appoint an arbitrator based on the notices and claims presented by the applicant, considering the respondent's arguments regarding contractual breaches and non-compliance by the applicant? (Question of mixed law and fact) Petitioner's arguments: The applicant argued that they had fulfilled all formalities as per the tender documents and that the respondent had failed to appoint an arbitrator despite repeated notices and requests, as per Clause 20.2 of the General Conditions of Contract. They asserted that they had availed all remedies available under the contract and therefore, an arbitrator should be appointed by the Court. Respondent's arguments: The respondent argued that the notices were invalid under Section 21 of the Arbitration and Conciliation Act, 1996, as they did not contain quantified claims or sufficient details of the dispute. They also contended that the applicant had invoked the wrong arbitration clause, relying on Clause 20.2 instead of Clause 93. Furthermore, the respondent alleged that the applicant had defaulted on contractual obligations, such as failing to provide statutory clearance, which hindered the processing of the final bill, and therefore, they were not obligated to appoint an arbitrator based on defective notices.