M/s ARSS Infrastructure Projects Ltd. vs M/s NMDC Limited

"Heard Mr. Basa Chanakya, learned counsel representing Mr. B. Vamshidhar Reddy, learned counsel for the applicant and Mr. K. Raghava Charyulu, learned Senior Standing Counsel for National Mineral Development Corporation (NMDC) appearing for the respondent. The applicant company is one of the leading construction companies in Orissa and is engaged in high quality construction activities. The applicant was awarded Letter of Award of Contract dated 17.02.2016 for Plant Road Network, Phase-II of 3.0 MTPA Integrated Steel Plant of NMDC Limited at Nagarnar, Chhattisgarh, in terms of General Conditions of Contract and Tender document dated 07.01.2015. Clause 16 thereof provides for settlement of disputes and arbitration. Clause 16.4 provides that Managing Director of the respondent-NMDC Limited will be the appointing authority. Clause 16.5 confers power on the appointing authority to select and appoint sole Arbitrator from the panel. Clause 16.7 provides that Courts at Hyderabad only shall have jurisdiction to entertain and adjudicate any disputes. Clause 16.8 provides that the venue of arbitration shall be the headquarters of the NMDC, Hyderabad, Telangana.

In view of the decision rendered by a Constitution Bench of the Apex Court in Central Organization for Railway Electrification v. ECI SPIC SMO MCML (JV), a Joint Venture Company^{11.(2025) 4 SCC 641}, the arbitration clause, conferring power upon the Managing Director of the respondent-NMDC to nominate an arbitrator, being a unilateral clause, would not prevail.

The applicant invoked the arbitration clause by service of notice dated 20.07.2024 upon the respondent. The respondent gave a reply on 19.10.2024 proposing the names of three former Judges of different High Courts, for appointment as sole Arbitrator in terms of the arbitration clause, to which the applicant did not agree. Therefore, the applicant invoked the jurisdiction of this Court under Section 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 (for short, 'the Act').

Learned counsel for the applicant submits that this Court may appoint any independent Arbitrator of its choice to adjudicate the dispute between the parties. The seat of arbitration remains at Hyderabad.

Learned Senior Standing Counsel for the respondent submits that though the respondent had proposed further names for appointment as sole Arbitrator, if the applicant insists, this Court may appoint any independent Arbitrator.

Having considered the relevant materials placed from record and the submissions of learned counsel for the parties, it is evident that there exists a dispute between the parties. Arbitration clause 16.5 being a unilateral clause conferring power upon the Managing Director of the respondent-NMDC to nominate an Arbitrator of its choice, the same would not hold good in view of the judgment of the Apex Court in ECI SPIC SMO MCML (JV) (supra).

Therefore, this Court proposes to appoint Sri Justice Chakradhari Sharan Singh, former Chief Justice of Orissa High Court (Resident of 52, Allahabad High Court Judges Colony, Sector 105, Noida-201 301; Mobile No.9431015002), as an independent Arbitrator to adjudicate the dispute between the parties. It is made clear that all questions of law and fact are left open to be raised before the learned Arbitrator in respect of the dispute arising under General Conditions of Contract and Tender document dated 07.01.2015 between the parties.

The proposed Arbitrator is requested to submit his consent and a declaration in terms of Section 12(1) read with Schedule VI of the Act.

Registry is directed to communicate this order to the proposed Arbitrator. Let the matter be listed after three weeks with the response, if any, of the proposed Arbitrator.”