When Parties Cannot Agree Upon Rules Governing Arbitration, Independent Clause Conferring Exclusive Jurisdiction Prevails: Calcutta High Court
The Calcutta Excessive Courtroom bench of Justice Shampa Sarkar, whereas listening to a piece 11 petition, noticed that Courts at Durgapur would have the unique jurisdiction over the arbitral continuing vide Clause 46.2.4 of the GCC, because the events couldn’t agree upon the principles of arbitration governing the proceedings as supplied below Clause 46.2.5.
Factual Matrix:
The Respondent No. 2 floated a tender and issued a discover inviting bids dated 24/08/2009, wherein the Petitioner participated. The identical was accepted by Respondent No. 2 vide Letter of Acceptance dated 21/05/2010, and subsequently, the events and marketing consultant M/s MECON Ltd. entered right into a contract. The contract was awarded for “Structural Work of New Slag Yard of SMS” at Durgapur Metal Plant, and the preliminary contract value was ₹5.65 crores together with the stipulated deadline of 20 months, as a result of a number of laches on the a part of the Respondent, which resulted in delay in well timed execution. The Respondent No. 2 on 20/07/2013, unilaterally amended the contract worth to ₹8.61 crores, and the identical was not accepted by the Petitioner. The work was accomplished in September 2016, and the Petitioner submitted the R.A. payments amounting to ₹ 28.92 crores. The Petitioner, vide letter dated 07/01/2017, submitted a last invoice amounting to ₹21.34 crores, which was not paid by the Respondent. The Respondent agreed to settle the declare at ₹1.44 crores, upon reiteration of the unique claims by the Petitioner, the Respondent refused to entertain the declare of the Petitioner.
The Petitioner invoked the arbitral proceedings and, by advantage of Clause 46 of the GCC, requested the arbitrator’s appointment, to which the Respondent remained silent. Vide letter dated 20/01/2023, the Petitioner once more requested for amicable settlement, and the Respondent vide letter dated 03/03/2023 rejected all of the Petitioner’s claims and particularly acknowledged that the case couldn’t be handled as closed. The contract was additional unilaterally amended to a price of ₹11.94 crores, which was unacceptable to the Petitioner. The Respondent transferred an ad-hoc quantity of ₹ 5.66 crores to the Petitioner’s checking account. The Petitioner alleged that this was not the complete and last settlement, and in subsistence of the Respondent’s failure to pay the ultimate invoice, the Petitioner has filed this petition u/s 11 of the A&C Act.
Submissions:
The counsel for the applicant made the following submissions:
- The appliance is inside the limitation interval as the primary refusal was obtained on 19/11/2019, and the discover invoking arbitration was issued on 24/12/2020. An utility was filed within the Excessive Courtroom of Delhi earlier than this utility was filed on 27/02/2025.
- The interval throughout which the utility was pending earlier than the Excessive Courtroom of Delhi must be excluded whereas calculating the limitation interval.
The counsel for the Respondent made the following submissions:
- The Excessive Courtroom of Calcutta does not have the jurisdiction to entertain the petition. Regardless of the limitation being a blended query of regulation and info, the Courtroom’s jurisdiction has been curtailed by Clause 46.2.5 of the GCC, which specifies Delhi because the venue.
- The unique jurisdiction clause wouldn’t be relevant in view of Clause 46.2.5, because it supersedes Clause 46.2.4. By advantage of Delhi being the agreed venue, Clause 46.2.4 can not come into motion.
Evaluation of the Courtroom:
The bench noticed that in gentle of the varied correspondences exchanged between the events regarding Respondents unilaterally amending the contract worth, paying a portion of the Petitioner’s declare as full and last settlement and denying the quantum of the stability declare, allegations of coercing the Petitioner to signal clean papers and subsequent criticism to the police authorities clearly portrays that the events can not amicably settle the dispute. Any course for amicable settlement in gentle of Clause 46.2.1 can be a mere formality. The bench relied upon Visa Worldwide Restricted v. Continental Sources (USA) Restricted (2009), the place the Supreme Courtroom noticed:
“…The trade of letters between the events undoubtedly discloses that makes an attempt had been made for an amicable settlement, however with none outcome, leaving no choice however to invoke the arbitration clause.”
The bench famous that Clause 46.2.4, being an impartial clause, gives that until in any other case talked about within the contract, the arbitration shall be held at SAIL DSP Durgapur, and the Courts of Durgapur shall have unique jurisdiction. It noticed that Clause 46.2.5 would apply if the events had agreed to comply with the ICA Guidelines or the Guidelines of SCFA. The events not agreeing with respect to the implementation of Clause 46.2.5, the selection of New Delhi because the venue of the arbitration can’t be handled because the venue. Quite the opposite, Clause 46.2.4, an impartial clause, specifying the seat of the arbitration at Durgapur, and conferring unique jurisdiction to the Courts of Durgapur, shall prevail. Moreover, the events had the choice to pick both ICS or SCFA, which they selected to not; therefore, the mechanism supplied below Clause 46.2.5 failed. Clause 46.2.2 gives that the arbitration shall be ruled by the provisions of A&C Act 1996, and subsequently the Part 11 utility is maintainable.
Case Identify: Rakesh Kumar Chaudhary v. Metal Authority of India and Anr.
Case Title: AP-COM 169 of 2025
Counsel for the Applicant: Mr. Soumik Chakraborty, Mr. Ratul Das, Mr. Sitikantha Mitra, Advocates
Counsel for the Respondent: Mr. Lakshmi Kumar Gupta, Senior Advocate with Mr. Lakshmi Kanta Pal, Advocate
