M/S Anand Carbo Private Limited vs. South Eastern Coalfields Limited (Secl)

Facts

M/s Anand Carbo Private Limited (the applicant) filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an Arbitrator. The dispute arose from an e-tender awarded by South Eastern Coalfields Limited (SECL, the respondent) for HEMM hiring. The applicant was issued a Letter of Intent on March 8, 2019, for a total tender value of Rs. 46,69,86,447.86, including 18% GST. An agreement was executed on December 14, 2019. On July 3, 2021, SECL issued a show cause notice alleging failure to achieve targets from December 2020 to May 2021, proposing a penalty of Rs. 3,77,35,839.92. The applicant disputed this penalty and sought its release. SECL contended that the applicant had provided a 'no claim' certificate upon final bill payment and release of security deposit on August 18, 2022, indicating no dispute existed.

Held

The Court considered the arguments from both sides. Regarding the maintainability due to the 'no claim' certificate, the Court noted the applicant's readiness to appear before the Committee. The primary focus shifted to the exhaustion of the internal dispute resolution mechanism. The Court acknowledged that SECL had constituted a committee as per Clause 13 of the GCC following the applicant's legal notice. The applicant's representative initially appeared before the committee on February 25, 2023, but subsequently failed to appear for scheduled meetings on March 4, 2023, and March 17, 2023. The Court observed that the applicant's counsel stated readiness to appear before the committee. Therefore, the Court directed that the applicant be sent advance notice for the committee meeting, and the applicant shall appear to resolve the dispute as per Clause 13 of the GCC. The Committee was directed to decide the dispute within four weeks from the receipt of the order. The arbitration request was disposed of with these observations and directions, implying that the arbitration application would be considered further only if the internal mechanism failed.

Key Issues

1. Whether the arbitration application is maintainable when the applicant has provided a 'no claim' certificate upon final payment, thereby allegedly waiving any right to raise subsequent disputes? 2. Whether the arbitration application is pre-mature and not maintainable because the applicant failed to exhaust the internal dispute resolution mechanism provided under Clause 13 of the General Conditions of Contract (GCC)? Contentions of the Applicant: The applicant sought the appointment of an Arbitrator to resolve the dispute regarding the penalty imposed by SECL. The applicant disputed the penalty and demanded its release. They invoked Clause 13 of the GCC for amicable settlement and later Clause 13A for arbitration, proposing a specific Senior Advocate as the sole Arbitrator. Contentions of the Respondent (SECL): SECL argued that the application is not maintainable because the applicant provided a 'no claim' certificate at the time of final payment, signifying acceptance of all payments and absence of disputes. They further contended that the application is pre-mature as the applicant did not exhaust the internal dispute resolution mechanism under Clause 13 of the GCC, citing Union of India v. Parmar Constructions. SECL also alleged that the applicant deliberately did not participate in the committee meetings constituted as per Clause 13, thereby waiving their right to dispute resolution.