Scheme Governing Auction Disputes Applies In All Auction Cases Unless Contrary Scheme Without Arbitration Clause Is Shown: Calcutta High Court

Brief Facts:

Satya Narayan Shaw (petitioner) has filed this petition under section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking appointment of an arbitrator under Clause 11.12 of the Spot E-Auction Scheme 2007 for coal sale in Mahanadi Coalfields Limited (MCL) for May 2009. As per the petitioner, five rakes of Grade “F” coal (each 3950 MT) were allotted based on the Spot E-Auction held on January 27, 2010.

The petitioner deposited Rs. 3,39,13,350. Three rakes were delivered in 2010. K.R. Enterprises ordered five rakes for supply from Deulbera siding (MCL) to NALCO, which issued a 'No Objection Certificate'. The petitioner applied for change of destination for the remaining two rakes on September 9, 2010, at Sourav Ghosh (respondent no. 3)'s Kolkata office. The said applications were in connection with the two rakes which were purchased by the petitioner.

The Petitioner submitted that the respondent no.3 unilaterally amended the Letter of Indent by inserting “BOXN” alongside “BOBRN” despite being fully aware of NALCO's operational requirements which had been outlined in their NOC.

It was further submitted that there are concerns regarding the non-delivery of two rakes of coal purchased in the e-auction by Mahanadi Coalfields Limited, the refund issued after deducting certain charges, the loss suffered by the petitioner due to such refund and non-delivery, and the cancellation of the order by E.R. Enterprise.

Per contra, the Respondent submitted that there is nothing to show that the Scheme of 2007 was also applicable to the subject Spot E auction. Unilateral amendments to the letter of Indent was not done by the respondent no. 3. The prayer for change of destination etc. was not permissible. The rakes were changed by the railways and not by MCL. Moreover, the claims arising out of the Spot E-auction in 2010, were completely barred by limitation.

Observations:

The court at the outset noted that the Scheme provides for sale of coal via e-auction for May 2009 and includes an arbitration clause. In this case, the e-auction took place in January 2010. The respondent failed to produce any scheme without such a clause or prove that the arbitration clause was inapplicable.

It further added that disputes arose regarding change of rakes, refund of money, and non-delivery of coal. The respondent no. 3 allegedly failed to load two rakes despite advance payment. The reason for non-loading is an arbitrable issue.

The court also noted that while the respondent blames the Railways for the indent amendment, the petitioner contends that respondent no. 3 was responsible for supply but instead refunded the amount after a decade, in August and December 2019, deducting charges unilaterally and causing losses. Two writ petitions were filed, and the petitioner was granted liberty to seek arbitration for dispute resolution.

Accordingly, the present petition was allowed and the arbitrator was appointed.

Case Title: SATYA NARAYAN SHAW VERSUS SOURAV GHOSH

Case Number: AP-COM/154/2025

Judgment Date: 07/04/2025

Mr.ShuvasishSengupta, Adv. Mr. Souvik Ghosh, Adv. …for the petitioner

Mr. Varun Kedia, Adv.(VC) Mr. Avee Jaiswal, Adv. …for Respondent no.1 Mr. AyanPoddar, Adv. Mr. Soham Dutta, Adv. Ms. Anjali Shaw, Adv. …for respondent no.3

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