Giriraj Garg v. Coal India Ltd. & Ors.

At a glance

Parties

Giriraj Garg (Appellant) v. Coal India Ltd. & Ors. (Respondents)

Case no.

Civil Appeal No. 1695 of 2019 (arising out of SLP (Civil) No. 28693 of 2018)

Court

Supreme Court of India (Civil Appellate Jurisdiction)

Forum and rules

Application under Section 11(6) of the Arbitration and Conciliation Act, 1996

Treaty

Arbitration clause 11.12 of Coal India's 2007 e-Auction Scheme

Tribunal

Uday Umesh Lalit J. and Indu Malhotra J. (judgment by Indu Malhotra J.)

Sector

Coal sales (e-Auction)

Outcome

Appeal allowed; the arbitration clause in the 2007 Scheme is incorporated into the sale orders, and a sole arbitrator was appointed by consent.

The dispute

Coal India Ltd. (Respondent No. 1) issued a 2007 Scheme for selling coal by e-Auction. Clause 11.12 of the Scheme sent all disputes "arising out of this scheme or in relation thereto" to arbitration under the 1996 Act, seated in Kolkata. From 2012 to 2015 the appellant, a registered buyer, won several auctions, and Respondent No. 2 issued sale orders to him. He did not lift the booked coal within the 45 days allowed, and the Earnest Money Deposit was forfeited under Clause 9.2. He invoked arbitration by notice of 21 March 2016. The respondents did not appoint an arbitrator, so he applied to the Jharkhand High Court under Section 11. The High Court rejected the application. It held that the individual sale orders had no arbitration clause and did not refer to the Scheme, so Clause 11.12 was not incorporated by reference.

Key holdings

1. Section 7(5) of the 1996 Act gives statutory recognition to incorporation by reference of an arbitration clause. The provision closely follows Article 7(2) of the UNCITRAL Model Law as it stood before 2006. The Court followed Habas Sinai v. Sometal and Inox Wind v. Thermocables: in a 'single contract case', a general reference to a standard form document is enough, while in a 'two-contract case' the reference must be specific to the arbitration clause. ¶¶ 4.1–4.10
2. The sale orders arise out of the 2007 Scheme. Clause 7 of their standard terms says they are governed by the guidelines, circulars and instructions issued by Coal India Ltd. and Bharat Coking Coal Ltd. This is a single contract case with a reference to a standard form document, so Clause 11.12 of the Scheme is incorporated into the sale orders. ¶ 5
3. The words "in relation thereto" in Clause 11.12 have the widest meaning (citing Renusagar and Doypack). The clause covers all transactions under the 2007 Scheme, including these sale transactions. ¶ 5.1
4. The High Court's order was set aside and the appeal allowed. By consent of the parties, Justice Pranab Kumar Chattopadhyay (retired Judge of the Calcutta High Court) was appointed sole arbitrator. The appointment is subject to disclosure under the Sixth Schedule to the 1996 Act, and the proceedings are to be held in Kolkata. ¶¶ 5.2–6

Procedural history

1. 2012–2015The appellant took part in coal e-Auctions under the 2007 Scheme and was issued sale orders; the EMD was later forfeited.
2. 21 March 2016The appellant served notice invoking arbitration under Clause 11.12; the respondents did not appoint an arbitrator.
3. 21/18 May 2018A Single Judge of the Jharkhand High Court rejected Arbitration Application No. 11 of 2016 under Section 11.
4. 15 February 2019The Supreme Court allowed the appeal and appointed a sole arbitrator by consent.

Tribunal, counsel and experts

Decided by

• Uday Umesh Lalit Judge, Supreme Court of India
• Indu Malhotra Judge, Supreme Court of India (authored the judgment)

For the claimant

Kedar Nath Tripathy · B. B. Pradhan · Susanta Kr. Muduti · M. A. Aleem Majid

For the respondent

Anupam Lal Das · Anirudh Singh · Krishanu Barua

Run a conflict check on these names →

Keywords

• incorporation by reference
• Section 7(5) Arbitration and Conciliation Act 1996
• Section 11(6) appointment of arbitrator
• single contract case
• two-contract case
• standard form contract
• coal e-Auction
• 2007 Scheme
• Coal India
• Bharat Coking Coal
• earnest money deposit forfeiture
• in relation to
• UNCITRAL Model Law Article 7(2)
• Habas Sinai v Sometal
• M.R. Engineers v Som Datt Builders
• Inox Wind v Thermocables

Summary generated with AI from the published documents — refer to the award for the authoritative text.