Jharkhand High Court Emphasizes Section 11 Mandate For Written, Signed Arbitration Clauses As Per Section 7 Requirements

Jharkhand High Court Emphasizes Section 11 Mandate For Written, Signed Arbitration Clauses As Per Section 7 Requirements

Acting Chief Justice Shree Chandrashekhar of the Jharkhand High Court, has clarified the interpretation of Section 11(6) of the Arbitration and Conciliation Act, 1996. The Court emphasized its primary responsibility to verify the existence of an arbitration clause, which, according to Section 7, must be documented in writing and signed by the parties.

Tata Steel Utilities and Infrastructure Services Limited (TSUISL) approached the High Court seeking the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. TSUISL stated 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 with a completion deadline of December 26, 2019, was subsequently executed.

TSUISL alleged that delays occurred beyond this deadline due to factors beyond its control. They argued that Jharkhand Urban Infrastructure Development Company Limited (JUIDCO) granted extensions, pushing the completion date to April 26, 2022. TSUISL further claimed that JUIDCO failed to provide necessary site clearances and certificates despite repeated requests. Consequently, TSUISL ceased operations under the agreement, citing JUIDCO's alleged breaches and claiming outstanding payments totalling Rs. 12,22,15,222.53, including accrued interest.

In response, JUIDCO argued that no arbitrable issues existed in the matter. They contended that TSUISL's claims should be directed to the District Mineral Foundation Trust (DMFT), West Singhbhum, rather than pursued through arbitration against JUIDCO. JUIDCO maintained that it was entitled to handle charges from any funds released to TSUISL by DMFT.

The High Court ruled that in an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, the court must verify the existence of an arbitration clause, which, as per Section 7, should be a written document signed by the parties, as affirmed in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. Accordingly, the High Court deemed the arbitration application maintainable.

Subsequently, the High Court appointed Devendra Kumar Tiwary, IAS (Retd.), former Chief Secretary of the Government of Jharkhand, as the arbitrator to adjudicate the dispute between the parties. The arbitrator was directed to commence proceedings within 30 days of the order's communication, with Ranchi designated as the seat of arbitration.