OIL AND NATURAL GAS CORPORATION LTD Vs. AMBUJA CEMENT EASTERN LTD

JUDGEMENT

(1.) <DJG>P.P.NAOLEKAR, CJ</DJG>- The appeal and the civil revision arise out of the same judgment and order dated 30.9.1996 passed by the Assistant District Judge, Sibsagar in Misc. (Arb) Case No. 49 of 1995, whereby the Assistant District Judge had granted injunction restraining the petitioner and the proforma respondent from embarking upon and continuing with the arbitration proceeding arising out of the contract/supply order dated 23/26-6-1990.

(2.) The petitioner is a company, which is carrying on the business of exploration and production of hydrocarbon and the Eastern Regional Business Centre of the Company is engaged in such activities in the North Eastern States. The petitioner prepares various drill sites at various places as per geological data for the purpose of drilling rigs for exploration of hydrocarbon. The petitioner required ordinary portland cement for various constructions at drilling sites. The petitioner for the purpose of procuring ordinary portland cement (OPC) invited open tender No. SBS/SP/TS/ ORD.Cement/RC/90-91 under single bid system from cement manufacturers only for the award of annual rate contract. The bidders were asked to quote tenders for the supply of OPC at the rate of 2000 M.T. per month at F.O.R., Sibsagar, price including all taxes, duties and transportation. The petitioner received ten offers from different agencies including the Modi Cement. Calcutta. The respondent vide their quotation No. MCL/CAL/(186)/ 90-91 dated 21.5.90 offered for supply of 10,000 M. Tons of cement to the petitioner, which ultimately culminated in contract/ supply order SBS/SP/TS/ORD. Cement.RC/90-91/TR-8/T-4/TR-164 dated 23/26.6.90. There was an arbitration agreement as Clause No. 15 in addendum to the tender documents forming part of the contract. The relevant clause of the Arbitration Agreement reads as under:-

(3.) When certain differences and disputes arise between the petitioner and the respondent No. 1 out of the aforesaid contract, the matter was referred to respondent No. 2, arbitrator appointed by the Chairman-cum-Managing Director of the petitioner company by his letter dated 19th/20th May, 1994. The arbitrator took up the matter for framing the issues. The respondent No. 1 raised two preliminary issues pertaining to the appointment of arbitrator and the validity of the continuing arbitration proceedings. The two preliminary issues raised were:- (A) Appointment of present arbitrator was made by an officer of the Corporation and this is not permissible under Clause 15 of Annexure-A to the addendum to the tender documents. (B) As because the appointment of the present arbitrator is not made by a member of the Commission and therefore the arbitration proceedings cannot be restored to. The arbitrator after hearing the parties came to the conclusion that conversion of Oil and Natural Gas Commission to Oil and Natural Gas Corporation Ltd. was only to accord more flexibility in its operations and to generate more revenue. But the functions of the Board Members and Chairman of the Oil and Natural Gas Commission remained the same as in the Oil and Natural Gas Corporation Ltd. except that their designations were changed to Director and Chairman-cum- Managing Director, in accordance with the Companies Act, 1956 for its functioning and therefore the appointment of the arbitrator by the Chairman-cum-Managing Director of the petitioner Company is in consonance with the provisions of the Act, tender/contract and within the powers conferred on the Chairman-cum-Managing Director of the petitioner Company for appointment of the arbitrator.