ORDER
B.P. Das, J.
1. The petitioner, M/s. Orissa Coal-Chem Private Limited, which is a small scale industrial unit engaged in manufacture of Hard Coal Tar-Pitch, having its factory at Angul, has filed this Writ Petition under Article 226 of the Constitution of India with a prayer to quash the arbitration proceedings initiated at the instance of Opp. Party No. 1, National Aluminium Company Limited (‘NALCO’), a Public Sector Undertaking, before the Arbitrator, Opp. Party No. 2.
2. The facts, as delineated in the Writ Petition, reveal as follows : Purchase Order No. 99/1060 dated 18.5.1994 was placed by NALCO with the petitioner-firm for supply of 3000 M.T. of Hard Coal Tar Pitch of a particular specification within a period of one year. The petitioner, however, supplied 2232.529 M.T. of aforesaid material during the contract period. As per the agreement entered into between the petitioner and Opp. Party No. 1-NALCO, the latter was to clear the payments against the supply within one month of each delivery of the material at its Smelter Plant at Angul. But payments were invariably delayed and 10% of each bill was retained by NALCO at source in lieu of performance of Bank Guarantee against the total order. In the process, a huge amount got accumulated and the petitioner, which is a small scale industrial unit, could not get working capital for purchase of raw materials for which the petitioner could not supply the material within the time stipulated in the contract, i.e., one year. Even after expiry of the contract period, NALCO did not release the amount due to the petitioner against the material supplied by it on the plea of non-production of Bank Guarantee. Thereafter, in the year 1998, NALCO placed another order with the petitioner for supply of 100 M.T. of C.T. Pitch vide Order No. NBC/MM/CTP/98/P-2 dated 24.12.1998 (Annexure-1) pursuant to which the petitioner supplied 101.790 M.T. of C.T. Pitch. NALCO did not make any payment against the said supply within one month of the delivery but it made a part payment after long lapse of time. Subsequently, NALCO placed another order with the petitioner vide Purchase Order No. NBC/MM/01/99/2204 dated 9.2.1999 (Annexure-2) for supply of 1200 M.T. of C.T. Pitch which the petitioner received on 22.2.1999. In response to Annexure-2, the petitioner by letter dated 26.2.1999 (Annexure-3) informed NALCO expressing its inability to supply the material as NALCO had withheld the payment for an amount of Rs. 21,89,841/- against the supply made earlier. The petitioner then addressed a letter dated 18.11.2000 to the Deputy General Manager of NALCO vide Annexure-4 demanding payment of the aforesaid dues and requesting him to fix a date for discussion to settle the disputes. Neither any fruitful action was taken by NALCO on the said letter nor was any action taken to refer the dispute to arbitration in terms of the arbitration clause contained in the agreement entered into between the parties. Finding no other way out, the petitioner approached the Industry Facilitation Council at Cuttack (hereinafter called ‘the Council’) in IFC Case No. 7/2001 in accordance with the provisions contained in the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (shortly called ‘1993 Act’) for settlement of its outstanding dues including the dues in respect of the supply made as per Purchase Order dated 24.12.1998 along with interest against NALCO. NALCO appeared before the Council and filed its counter. While the matter was thus pending before the Council, NALCO initiated arbitration proceedings and appointed Opp. Party No. 2 as the Arbitrator to resolve the dispute arising out of the supply of 1200 M.T. of C.T. Pitch in terms of Purchase Order dated 9.2.1999 (Annexure-2). It is stated that the Opp. Party-NALCO has invoked the arbitration clause of the agreement at a belated stage and after the petitioner approached the Council and the action of NALCO is intended to harass the petitioner. So far as the supply of 1200 M.T. of C.T. Pitch is concerned, the petitioner had already categorically intimated NALCO by its letter dated 26.2.1999 that unless its dues were cleared, the petitioner would not be in a position to supply further materials. According to the petitioner, even though the Order dated 9.2.1999 was never accepted by the petitioner, NALCO by its letter dated 7/8.2.2002 (Annexure-7) decided to refer the matter to arbitration and by another letter dated 28.2.2002 (Annexure-8) called upon the petitioner to select one of the three names suggested by NALCO for appointment as arbitrator. In response to the aforesaid letters in Annexures-7 and 8, the petitioner by its letter dated 9.3.2002 intimated NALCO that as the matter was within the scope and ambit of the decision of the Council, appointment of another arbitrator to adjudicate upon the same dispute was contrary to law. It was also alleged by the petitioner that instead of replying to its letter dated 9.3.2002, Opp. Party No. 1-NALCO unilaterally appointed Opp. Party No. 2 as the Arbitrator and intimated the same to the petitioner. Challenging the aforesaid decision of NALCO, the petitioner has filed this Writ Petition.
3. Opp. Party No. 1-NALCO has filed its counter affidavit saying, inter alia, that the Writ Petition is not maintainable as the Arbitration and Conciliation Act, 1996 being a complete statute, remedies are provided under the same vis-a-vis arbitration proceedings, which can be decided by the Arbitrator. Moreover, the petitioner has already entered its appearance and filed an application on 3.6.2002 before the Arbitrator questioning the jurisdiction of the said Arbitrator.
4. Shri R. K. Rath, Learned Counsel appearing for Opp. Party No. 1-NALCO, submitted that once the petitioner submitted to the jurisdiction of the Arbitrator, this Court instead of deciding the dispute in writ proceeding should allow the Arbitrator to decide the same in accordance with Section 16 of the Arbitration and Conciliation Act, 1996. The Learned Counsel further submitted that the Writ Petition is liable to be dismissed on the ground of suppression of the fact of appearance of the petitioner before the Arbitrator. Shri Rath submitted that the petitioner could not have moved the Council on the face of the agreement entered into between the parties which contained an arbitration clause and the Council was not competent to decide the matter and Opp. Party No. 1 has already filed an objection before the Council challenging its jurisdiction. According to Shri Rath, the Council can be called upon to act as an Arbitrator when there is no Arbitrator named in the contract or where the contract does not provide for an arbitration mechanism.
Shri Rath referred to a decision of the Apex Court in Konkan Railway Corporation Ltd. v. Rani Construction P. Ltd., AIR 2002 SC 778, as well as a decision of the Delhi High Court in National Buildings Construction Corporation Ltd. v. Antia Electricals Pvt. Ltd., 2003 (3) ARB.L.R. 91, and of the Madras High Court in Mangayarkarasi Apparels Pvt. Ltd., Bangalore v. Sundaram Finance Ltd., Chennai, 2002 (3) ARB.L.R. 210. Relying upon the aforesaid decisions, Shri Rath raised the following contentions :
(i) The Writ Petition is not maintainable as the remedy of the petitioner to challenge the finding of an Arbitrator is available under the statute and it would be open to the aggrieved party to require the arbitral tribunal to rule on its own jurisdiction. The arbitral tribunal may rule on any objection with respect to the existence or validation of the arbitration agreement.
(ii) The questions raised in this Writ Petition can very well be agitated in the arbitration proceedings before the Arbitrator to whose jurisdiction the petitioner has already submitted and filed its objection.
Apart from the above contentions, Shri Rath, Learned Counsel for Opp. Party No. 1-NALCO, submitted that the petitioner has appeared before the Arbitrator and filed an application challenging his jurisdiction but without waiting for the decision of the Arbitrator on the said application has rushed to this Court hastily by suppressing material fact and on this score also the Writ Petition is liable to be dismissed.
5. In answer to the aforesaid argument, Shri Mohanty, Learned Counsel for the petitioner, submitted that the provisions of the 1993 Act override the other laws. In this regard our attention was drawn by Shri Mohanty to Section 10 of the 1993 Act which is quoted hereunder :
“10. Overriding effect : The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.”
Shri Mohanty also referred to the provisions of Sub-section (2) of Section 6 of the 1993 Act, which were inserted into the Statute , by Act 23 of 1998 and are extracted hereunder :
“(2) Notwithstanding anything contained in Sub-section (1), any party to a dispute may make a reference to the Industry Faciliation Council for acting as an Arbitrator or conciliator in respect of the matter referred to in that sub-section and the provisions of the Arbitration and Conciliation Act, 1996 shall apply to such dispute as if the arbitration or conciliation were pursuant to an arbitration agreement referred to in Sub-section (1) of Section 7 of that Act”.
6. Our attention was also drawn by Shri Mohanty to the decision of the Apex Court in Secur Industries Ltd. v. Godrej and Boyce Mfg. Co. Ltd., (2004) 3 SCC 447. Relying upon the aforesaid decision, Shri Mohanty Learned Counsel for the petitioner, submitted that Sub-section (2) of Section 6 of the 1993 Act expressly incorporated the provisions of the Arbitration and Conciliation Act, 1996 and made the provisions of the said Act applicable to a dispute referred to the Council as if the arbitration was in pursuance of the arbitration agreement referred to in Sub-section (1) of Section 7 of the Arbitration and Conciliation Act, 1996. Therefore, the contention of Shri Mohanty is that when the petitioner has already moved the Council, the same can be construed to be a reference under the provisions of the Arbitration and Conciliation Act, 1996 for which the subsequent reference by Opp. Party No. 1-NALCO is illegal.
7. Obviously, two parallel arbitration proceedings before the Industry Faciliation Council and the Arbitrator cannot be allowed to continue relating to the same set of disputes between the parties. We are of the view that when the petitioner has first approached the Industry Faciliation Council and NALCO after entering its appearance before the said Council has filed its counter, it would be proper to allow the Council to decide all disputes raised before the Council by the parties including the objection raised by Opp. Party No. 1 -NALCO to the jurisdiction of the Council to decide the disputes and there should be stay of the arbitration proceedings pending before the Arbitrator, Opp. Party No. 2, appointed by NALCO, till the Council takes a decision in accordance with the provisions contained in Section 6 of the 1993 Act, as amended, and we accordingly dispose of the Writ Petition. We make it clear that it will be open to the petitioner and Opp. Party No. 1-NALCO to challenge the decisions of the Council on any point before the appropriate forum if they are aggrieved.
8. The Writ Petition is allowed to the extent indicated hereinabove. There shall be no order as to cost.
A. K. Patnaik, J.
9. I agree.