Jharkhand High Court: Section 11 Of A&C Act Directs Examining Written Signed Clauses As Per Section 7

Jharkhand High Court: Section 11 Of A&C Act Directs Examining Written Signed Clauses As Per Section 7

The dispute was between Tata Steel Utilities and Jharkhand Urban Infra on the Chakradharpur Urban Water Supply Scheme project

The Jharkhand High Court has held that under Section 11(6) of the Arbitration and Conciliation (A&C) Act, 1996, the court must examine the arbitration clause, wherein a document is signed in writing, by the parties as per Section 7.

The bench of Acting Chief Justice Shree Chandrashekhar added that if the existence of the arbitration agreement was undisputed by the parties, the matter should be referred to arbitration.

The case

Tata Steel Utilities and Infrastructure Services Ltd approached the court to appoint an arbitrator under Section 11 of the A&C Act.

It claimed being awarded a project on a 01 July 2017 tender notice for the Chakradharpur Urban Water Supply Scheme under the Jharkhand Urban Infrastructure Development Company (JUIDCO).

An agreement was executed with a stipulated 26 December 2019 completion deadline.

TSUISL alleged delays beyond the due date due to factors not under its control. It argued that JUIDCO granted extensions and pushed the completion date to 26 April 2022. It contended that JUIDCO failed to provide necessary site clearances and certificates despite repeated communications.

Thus, Tata Steel ceased operations under the agreement, stating JUIDCO's alleged breaches and outstanding payments of Rs.12,22,15,222.53 with accrued interest.

On the other hand, JUIDCO argued that no arbitration existed, therefore, Tata Steel’s claims should be directed towards the District Mineral Foundation Trust (DMFT), West Singhbhum, rather than through arbitration against it. JUIDCO added being entitled to handle charges from funds released by DMFT to Tata Steel.

The bench referred to the N.N Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd case. It noted that while considering an application under Section 11(6) of the A&C Act, the court's primary task was to ascertain the existence of an arbitration clause, which, as per Section 7, required a written document signed by the parties.

Thus, the court appointed retired IAS officer Devendra Kumar Tiwary, a former Chief Secretary of the Government of Jharkhand, as the arbitrator for adjudicating the dispute between the parties. It directed the arbitrator to commence proceedings within 30 days of the communication of the order.

The bench specified that Ranchi would be the designated seat of arbitration.