Section 11 Of Arbitration Act Mandates Examination Of Written, Signed Arbitration Clauses As Per Section 7 Requirements: Jharkhand High Court
The Jharkhand High Court bench of Acting Chief Justice Shree Chandrashekhar has held that in Section 11(6) of the Arbitration and Conciliation Act, 1996, the Court is required to see whether there is an arbitration clause which as per section 7 should be a document in writing signed by the parties.
The bench held where the existence of the arbitration agreement is undisputed by the parties involved, the dispute should accordingly be referred to arbitration.
Brief Facts:
Tata Steel Utilities and Infrastructure Services Limited (TSUISL) approached the High Court for the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. TSUISL claimed it was awarded a project under a Tender Notice dated July 1, 2017, for the "Chakradharpur Urban Water Supply Scheme under JUIDCO Ltd." An agreement was subsequently executed with a stipulated completion deadline of December 26, 2019. TSUISL alleged delays beyond this date due to factors not under its control and argued that extensions were granted by Jharkhand Urban Infrastructure Development Company Limited (JUIDCO), pushing the completion date to April 26, 2022. TSUISL further contended that JUIDCO failed to provide necessary site clearances and certificates despite repeated communications. TSUISL ceased operations under the agreement stating JUIDCO's alleged breaches and outstanding payments totalling Rs. 12,22,15,222.53 with accrued interest.
In response, JUIDCO argued that no arbitrable issues existed in the matter. JUIDCO argued that TSUISL's claims should be directed towards the District Mineral Foundation Trust (DMFT), West Singhbhum, rather than through arbitration against JUIDCO. JUIDCO maintained that it was entitled to handle charges from any funds released to TSUISL by DMFT.
Observations by the High Court:
The High Court held that while considering an application under Section 11(6) of the Arbitration Act, the court's primary task is to ascertain the existence of an arbitration clause, which, as per Section 7, requires a written document signed by the involved parties (referred to “N.N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.”).
The bench held that:
“…. in an application under section 11(6) of the Arbitration and Conciliation Act, 1996, the Court is required to see whether there is an arbitration clause which as per section 7 should be a document in writing signed by the parties. In the opinion of this Court, in view of the judgment in “N.N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.” (2023) 7 SCC 1, the present Arbitration Application is maintainable.”
Therefore, the High Court appointed Devendra Kumar Tiwary, IAS (Retd.), a former Chief Secretary of the Government of Jharkhand, as the Arbitrator for adjudicating the dispute between the parties. The Arbitrator was directed to commence proceedings within 30 days of the communication of this order.
Further, the High Court specified that the seat of arbitration was designated at Ranchi.
Case Title: Tata Steel Utilities and Infrastructure Services Limited vs Jharkhand Urban Infrastructure Development Company Limited
Case Number: Arbitration Application No. 21 of 2023
Advocate for the Petitioner: Mr. Indrajit Sinha, Advocate and Mr. Ankit Vishal, Advocate
Advocate for the Respondent: Mr. Krishna Murari, Advocate
Date of Judgment: 21st June 2024