- (1.) In this petition under sections 11 and 15 of the Arbitration and Conciliation Act, 1996 the petitioner seeks appointment of an arbitrator consequent upon the erstwhile arbitrator having apparently abandoned the reference.
(2.) Following a notice inviting tender of June 19, 2007 the petitioner made a bid for the work of handling, loading, transporting and removing iron ore from certain mines operated by the respondent. A letter of intent was issued on August 3, 2007 in favour of the petitioner. Disputes and differences arose between the parties within a few months. By a letter of May 6, 2008 the petitioner sought a reference of the disputes to arbitration and requested the Chairman-cum-Managing Director of the respondent to appoint an arbitrator. Such official did not respond to the request with reasonable despatch. There is no dispute that there is an arbitration agreement contained in the notice inviting tender which binds the parties. There is no dispute either that the Chairman-cum-Managing Director of the respondent is the appointing authority under the arbitration agreement. Upon the appointing authority failing to pay heed to the petitioner's request of May 6, 2008, the petitioner carried a previous petition under section 11 of the 1996 Act to this Court. A petition under section 9 of the 1996 Act was also filed. During the pendency of the earlier petition under section 11 of the 1996 Act, AP No. 430 of 2008, the Chairman-cum-Managing Director nominated an arbitrator. This was intimated by advocate representing the respondent to the petitioner by a letter of September 6, 2008. The petitioner accepted the nomination and the earlier section 11 petition was disposed of accordingly. The reference progressed for a while but the arbitrator issued a letter on June 12, 2009 withdrawing himself from the reference. The letter was addressed to the Chairman-cum-Managing Director of the respondent and a copy thereof was marked to either party. It appears from the arbitrator's letter that Advocate representing the respondent had requested the arbitrator to withdraw from the reference. On June 15, 2009 the petitioner called upon the appointing authority to nominate another arbitrator. The petitioner suggested certain names. The appointing authority did not respond to the petitioner's letter, whereupon a reminder was issued on June 30, 2009. On the same day, Advocate representing the respondent replied to the petitioner's letter to the appointing authority issued on June 15, 2009 and informed the petitioner that an investigation had commenced, at the behest of the concerned ministry in respect of the procedure adopted for awarding the contract to the petitioner and that such investigation was being conducted by the Central Bureau of Investigation. The CBI had apparently recommended that the "offer" to the petitioner should not be "revived." Following the obvious rejection of the plea for appointing another arbitrator, this petition was filed on July 10, 2009.
(3.) The respondent says that since both the petitioner and the respondent are ultimately controlled by the Central Government, this petition should not have been carried to Court. THE respondent relies on the judgments (Oil and Natural Gas Commission vs. Collector of Central Excise, 1995 Supp4 SCC 541) and another (Oil and Natural Gas Commission vs. Collector of Central Excise, 1995 Supp4 SCC 541) to suggest that the present petition is in derogation of the Supreme Court directions contained in such judgments. THEre is a history to how the orders in the two judgements cited came to be made. In an order of September 11, 1991 [ (ONGC vs. CCE, 1992 Supp2 SCC 432)] the Supreme Court observed at paragraph 3 as follows: "3. This Court has on more than one occasion pointed out that Public Sector Undertakings of Central Government and the Union of India should not fight their litigations in Court by spending money on fees of Counsel, Court fees, procedural expenses and wasting public time. Courts are maintained for appropriate litigations. Court's time is not to be consumed by litigations which are carried in either side at public expenses from the source. Notwithstanding these observations repeated on a number of occasions, the present cases appear to be an instance of total callousness. THE letter of October 3, 1988, indicated that the Cabinet Secretary was looking into the matter. That has not obviously been followed up as an instance of wasting public time and energy this matter involves a principle to be examined at the highest level." THE first judgment placed by the respondent is the order made by the Supreme Court on October 11, 1991. Upon noticing the report of the Cabinet Secretary submitted to Court, the Supreme Court directed as follows at paragraphs 3 and 4 of the report: "3. We direct that the Government of India shall set up a committee consisting of representatives from the Ministry of Industry, the Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry and Public Sector Undertakings of the Government of India and Public Sector Undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the committee and its clearance for litigation. Government may include a representative of the Ministry concerned in a specific case and one from the Ministry of Finance in the committee. Senior officers only should be nominated so that the committee would function with status, control and discipline. "4. It shall be the obligation of every Court and every Tribunal where such a dispute is raised hereafter to demand a clearance from the committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with." Even though the next judgment cited by the respondent was reported in the year 2004, it is actually an order of January 7, 1994 cited in the judgment (Mohanagar Telephone Nigam Ltd. vs. Chairman, Central Board, Direct Taxes, 2004 6 SCC 431). In the order of January 7, 1994 the Supreme Court directed at paragraph 8 of the report that wherever appeals, petitions and the like were filed without the clearance of the high powered committee so as to save limitation, the appellant or the petitioner shall, within a month for such filing, refer the matter to the high powered committee with prior notice to the designated authority in the Cabinet Secretariat of the Government of India authorised to receive notices in that behalf. In Mohanagar Telephone Nigam Ltd. the Supreme Court quoted from its previous judgment in Chief Conservator of Forests vs. Collector, 2003 3 SCC 472, where it was observed that the framers of the Constitution did not contemplate that two departments of a State or of the Central Government would fight a litigation in a Court of Law and opined that it was "neither appropriate nor permissible for two departments of a State or the Union of India to fight litigation in a Court of Law." The Court emphasised, in Chief Conservator of Forests vs. Collector, that the "(v) carious departments of the Government are its limbs and, therefore, they must act in coordination and not in confrontation.";