Court Cannot Appoint Arbitrator In Absence Of Arbitration Agreement Between Disputing Parties: Orissa High Court

The Orissa High Court has held that Court cannot appoint an arbitrator to resolve dispute between the parties in absence of any arbitration agreement. The Single Bench of Acting Chief Justice Arindam Sinha (as the Judge then was) referred to Section 11(6-A) (appointment of arbitrators) of the Arbitration and Conciliation Act to hold that –

“Reference to arbitration can only be compelled when there is existence of an arbitration agreement…On application to Court for appointment of arbitrator, existence of arbitration agreement is to be looked into.”

Case Background

Disputes arose in respect of agreement dated January 22, 2010 between the applicant- M/s. Andhavarapu Power Projects (P) Limited and the opposite party-Odisha Renewable Development Agency (ORDA). The applicant gave commencement notice dated July 25, 2023, however, there was no response from the opposite party. Therefore, a petition was filed before the High Court seeking appointment of an arbitrator.

Advocate Avijit Pal appearing for the applicant referred to clause 19 of the agreement to establish the arbitration agreement. The clause said that in case of any dispute regarding any clause in the agreement, the matter shall be referred to Orissa Electricity Regulatory Commission (OERC) and the decision of OERC shall be binding on both the parties.

On the other hand, Advocate Bijay Kumar Dash, appearing for the opposite party, submitted that there is no arbitration agreement between the parties. He further contended that by virtue of clause 19 of the agreement, the opposite party had merely agreed to refer disputes to OERC. Since OERC refused to adjudicate the disputes, he argued that clause 19 stands worked out and as a corollary, the application for appointment of arbitrator is required to be dismissed.

Court's Observations

Upon perusal of clause 19 of the agreement, the Court was of the view that in case of disputes between the parties, reference was required to be made to the OERC, but strangely competence of OERC to adjudicate the disputes was not mentioned in the agreement. Further, the OERC considered the question of reference and concluded that the statute does not permit it to enter into the reference.

The Court, therefore, referred to Section 11(6-A) of the Act which provides that the Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6) [of Section 11], shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.

Justice Sinha, thus, was of the view that reference to arbitration can only be made when there is existence of an arbitration agreement and when an application is made to the Court for appointment of arbitrator, existence of arbitration agreement is to be looked into.

As far as reliance placed upon the judgment in M/s. Enzen Global Solutions Pvt. Ltd. v. Central Electricity Supply Utility of Odisha (2017) by the applicant was concerned, the Court held that coordinate Bench therein concluded about the existence of arbitration agreement from communication made between the parties as well as their conduct in Court.

However, quite distinctly, there is no such arbitration agreement between the parties in the instant case. Therefore, the Court refused to appoint an arbitrator to resolve the dispute in absence of an arbitration agreement.

Case Title: M/s. Andhavarapu Power Projects (P) Limited, Andhra Pradesh v. Odisha Renewable Development Agency, Khurda

Case No: ARBP No. 61 of 2023

Date of Judgment: March 19, 2025

Counsel for the Applicant: Mr. Avijit Pal, Advocate

Counsel for the Opposite Party: Mr. Bijay Kumar Dash, Advocate

Citation: 2025 LiveLaw (Ori) 59

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