Judgment & Order (Cav)

1. Heard Mr. GN Sahewalla, learned Senior Counsel assisted by Mr. M Sahewalla, learned counsel for the petitioner. Also heard Mr. S Borthakur, learned counsel and Mr. SS Roy, learned CGC for the respondent.

2. The petitioner before this Court was awarded dealership of Dispensing Pump and Selling License by respondent company by execution of proper agreement dated 28.03.2023. By the said agreement, the petitioner had been running a petrol pump at Tingrai Gaon, Tinsukia since the year 2008. On the basis of a dealership granted to the petitioner by Numaligarh Refinery Limited (hereinafter referred to as “NRL”), the NRL was taken over by BPCL in the year 2012 whereupon a fresh agreement was entered by and between the petitioner and BPCL for running the patrol pump. In the year 2023, there was some persistent malfunctioning in the dispensing unit of the petitioner’s petrol pump. This dispensing unit was installed and maintained by M/S Gilbarco Vedder Root (GVR) which was 3rd Party vendor appointed by the BPCL and who supplied the dispensing unit for the petrol pump. The internal parts of the dispensing units were sent to GVR for testing wherein it was found that the dispensing unit had been manipulated and tampered with.

3. It is the petitioner's case that the Legal Metrology Department, Government of Assam had inspected the dispensing unit as a whole and issued a certificate ruling out any irregularity or tampering in a dispensing unit. However, a show-cause notice dated 22.01.2024 was issued to the BPCL asking them to show cause as to why the dealership agreement should not be cancelled. The petitioner although replied to the show-cause notice, however, subsequently approached the Court of Civil Judge (Senior Division)-cum-Commercial Court, Kamrup (Metro) under Section 9 of the Arbitration and Conciliation Act, 1996 praying for an interim protection restraining the BPCL, namely, the respondent from terminating the dealership agreement. The Commercial Court by order dated 03.07.2024 granted an interim injunction to the petitioner restraining the BPCL from taking any coercive action. The agreement executed by and between the petitioner and the respondent contained a clause being Clause- 19 which provided for settling any disputes and differences arising between the parties by appointment of an arbitrator. The petitioner therefore issued a notice dated 15.07.2024 calling upon the respondents to appoint an Arbitrator. However, the respondent did not reply to the notice issued. Meanwhile, since the respondent did not appear before the Commercial Court on subsequent dates, the interim injunction granted by the Commercial Court was made absolute by order dated 07.09.2024. The respondent authority thereafter filed an appeal before the Appellate Court of the Commercial Courts Division, namely, the Court of the Additional District Judge No. 2, Kamrup (Metro) whereupon the appellate Court stayed the order passed by the Commercial Court dated 07.09.2024 by order dated 05.12.2024 on the ground that the order was obtained without presenting the correct and true facts and circumstances of the case. Being aggrieved, another second appeal was filed before the Commercial Appellate Division Gauhati High Court being Comm. App. Div. 1/2025. The Division Bench of this Court from the question of maintainability of the second appeal, dismissed the same on the grounds and reasons mentioned in the order dated 23.04.2025. Meanwhile, the online application filed before this Court seeking appointment of an arbitrator having not been replied to, the present application under 11(6) of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner. During the pendency of this petition, the respondent authorities in view of the suspension of the injunction order passed by the Commercial Court’s Division which was stayed by the Appellate Court of the Commercial Courts Division, terminated the contract of the agreement. Being aggrieved, the present petitioner preferred an SLP being SLP No. 2235/2025 which also came to be dismissed on 30.04.2025, whereby liberty was granted to the petitioner to approach the concerned appellate Court for expeditious disposal of the appeal filed. Being aggrieved, the petitioner approached this Court by filing W.P(C) No. 2369 of 2025. A Coordinate Bench of this Court by order dated 09.05.2025 upon consideration of the matter, dismissed the writ petition giving liberty to the petitioner to approach the Commercial Appellate Division for early disposal of the appeal.

4. The learned Senior Counsel for the petitioner by referring to the agreement submits that there is a specific clause being clause No. 19 which categorically provides for appointment of an arbitrator in the event any dispute arises between the parties arising out of the said agreement.

5. It is the submission of the learned Senior Counsel for the petitioner that when there is a specific clause for agreement, the same ought to have been honored by the respondent and the appointment ought to have been made by referring the matter to be decided by an arbitrator.

6. The learned Senior Counsel for the petitioner, therefore, submits that in terms of the agreement, the arbitrator ought to have been appointed, however, failed, the present application has been filed seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The learned counsel for the petitioner has submitted that where there is no dispute with regard to the existence of a valid arbitration agreement, a referral Court is required to appoint an arbitrator where the parties are failed to honor the procedure prescribed under the provisions of the agreement executed by and between them.

7. Per contra, Mr. S.S Roy, learned counsel for the respondent strongly disputes the contention of the petitioner. It is submitted that the contention of the petitioner is incorrect as the Clause 19 of the Agreement itself clearly specifies that an arbitration proceedings shall be conducted in accordance with SCOPE Forum for Arbitration Rules for the time being in force and as amended from time to time.

8. Referring to the counter affidavit filed, it is submitted that the Rules of Conciliation and Arbitration, 2003 has been formulated for the SCOPE forum which is standing Conference of Public Enterprises. It is submitted that this is an institution which provides for resolution of disputes by way of conciliation and arbitration and certain rules have been framed, which are required to be adhered to by the parties. He submits that for arbitration, the procedure is clearly prescribed where it is provided that the party initiating arbitration besides sending a written invitation to arbitration should also approach the Scope Forum for Conciliation Arbitration (SFCA) along with payment of registration fee as prescribed under Clause 23. It is submitted that under Clause 23, a non refundable registration fee of Rs. 15,000+Statutory taxes applicable in each case shall be payable along with a request for arbitration through demand draft in favor of SCOPE payable at Delhi. The schedule of fees and administrative charges etc are all clearly prescribed under the Rules. Learned counsel for the petitioner, therefore, submits that where the procedure has been clearly prescribed, the party initiating the arbitration is required to adhere to the same; and having failed to follow the prescribed procedure, they are not entitled to seek appointment by filing an application under section 11(6) of the Arbitration and Conciliation Act, 1996. In support of his contention, he has referred to the Judgments rendered in D. Raja Reddy Vs. Director General, National Institute of Agricultural Extension Management, Hyderabad reported in 1999 Supreme (AP) 108; Northern Railway Administration, Ministry of Railway, New Delhi Vs. Patel Engineering Company Limited, reported in (2008) 10 SCC 240 and Iron & Steel Co. Ltd. Vs. Tiwari Road Lines, reported in (2007) 5 SCC 703.

Referring to the judgments, the learned counsel for the Respondent submits that the stage for invocation of powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 will be available only upon compliance of the procedure prescribed by the procedure agreed in the contract/ agreement by the party seeking arbitration. Where the party seeking arbitration has failed to follow the procedure prescribed, the power to appoint an arbitrator under section 11(6) ought not to be invoked by this Court.

9. The petitioner has filed an affidavit in rejoinder reiterating their statements and contentions raised in the petition and disputing the contentions raised by the Respondent.

10. The learned counsel for the parties have been heard. Pleadings available on record have been perused. Judgments cited have also been carefully noted.

11. At the outset, it is necessary to note that the petitioner having approached the Commercial Courts Division and had obtained an injunction order which however subsequently came to be suspended by the Appellate Court. The appeal proceedings are presently pending. No materials have been placed before the Court by either party to submit that the appeal has come to a conclusion or any orders thereof have been passed to that effect.

12. It is also seen that the challenge made to the Appellate Division of the Commercial Courts Division to the order dated 05.12.2024 whereby the interim order passed by the Commercial Courts Division dated 07.09.2024 was suspended which came to be further assailed before the Commercial Court's Division of the Gauhati High Court. The challenge made came to be dismissed by judgment and order dated 23.04.2025 passed in Comm. App. Div. No. 1/2025. The SLP filed against the said order by the petitioner also came to be dismissed by order dated 30.04.2025 giving liberty to the petitioner to request the Appellate Court of the Commercial Courts Division to expedite the hearing of the appeal.

13. There is no dispute that there is a written agreement between the parties which contains an arbitration clause. Since no dispute is raised by either party with regard to the existence or the legality of the arbitration clause in the agreement, it must be held that the said arbitration clause is a valid arbitration clause. The arbitration clause available in the agreement being Clause 19 is required to be referred to at this stage. The Clause 19 reads as under:

                   “19. Any dispute or difference whatsoever arising out of or in connection with this Agreement including any question regarding its existence, validity, construction, interpretation, application meaning, scope, operation or effect of this contract or termination thereof shall be referred to and finally resolved through arbitration as per the procedure mentioned herein below:

                   (a) The dispute or difference shall, in any event be referred only to a Sole Arbitrator.

                   (b) The appointment and arbitration proceedings shall be conducted in accordance with SCOPE forum of Arbitration Rules for the time being in force or as amended from time to time.

                   (c) The Seat of arbitration shall be at Kamrup Metropolitan

                   (d) The proceedings shall be conducted in English language.

                   (e) The cost of the proceedings shall be equally borne by the parties, unless otherwise directed by the Sole Arbitration.”

14. A perusal of the Arbitration clause reflects that the procedure for arbitration will be as per the procedure prescribed under SCOPE. From the pleadings available it is seen that SCOPE is the Standing Conference of Public Enterprises. The main object of the SCOPE as prescribed under the Rules is as under:

                   “The main object of SCOPE Forum of Conciliation and Arbitration (ADR) is to serve in settling disputes between Public Sector Enterprises and their Associates within shortest possible time at more economical and cheaper cost in comparison to other institutions. Forum has retired judges of Supreme Court, High Courts, retired Secretaries and Jt. Secretaries of Govt. of India, Chief Executives, Directors and senior officials of PSEs, besides Advocates, CAs and other professionals as Conciliators and Arbitrators on its panel.

                   The Forum has also its own infrastructure with a spacious Arbitration Hall, having sitting capacity of 15 persons and more with all the modern facilities such as projector for live projection of record of proceedings on a large screen with free service of mineral water, tea/coffee and biscuits.

                   High tea and lunch can also be arranged by the Forum on request in advance at the cost of the parties by authorized caterer of SCOPE.”

15. The SCOPE forum comprises of two parts, one is the forum for conciliation and the other is for arbitration. The SCOPE forum for arbitration has a separate set of Rules which is a part of the SFCA. The relevant clauses of the SCOPE arbitration is extracted below:

                   3. ARBITRATION CLAUSE

                   The SCOPE Forum of Conciliation and Arbitration (SFCA) recommends to all parties desirous of making reference to Arbitration by this Forum shall provide the following Arbitration clause in their existing and future contracts if law applicable does not prohibit such reference.

                   "Any dispute or difference whatsoever arising between the parties 2 relating to construction, interpretation, application, meaning, scope, operation or effect of this contract or the validity or the breach thereof, shall be settled by arbitration in accordance with the Rules of Arbitration of the “SCOPE” and the award made in pursuance thereof shall be final and binding on the parties"

                   7. PANEL OF ARBITRATORS

                   i) The Secretary in consultation with two members of the Governing Body shall prepare and maintain a panel of arbitrators from amongst persons qualified and/or possessing knowledge/or experience in their respective field/or profession and arbitration law and procedure and persons of integrity and impartiality and willing to serve as Arbitrator.

                   ii) All the members of the panel will have equal status and parties will not have any right to challenge the appointment of the Arbitrator on the ground that its nominee Arbitrator has higher status than the other Arbitrator.

                   iii) The persons who have attained the age of 80 years will automatically cease to be on the panel of the Arbitrator of the Forum. The Secretary shall ensure that the Panel is 6 regularly reviewed and updated after removing those who have attained the age of 80. In case where Arbitrator/Presiding arbitrator has been appointed and during the pendency of arbitration proceedings, he/she attains the age of 80 years, he/she will continue to be arbitrator/Presiding arbitrator till completion of arbitration proceedings upto passing of final award.

                   16. PROCEDURE FOR ARBITRATION PROCEEDINGS

                   The party initiating Arbitration shall send to the other party a written invitation to arbitration under these rules, briefly identifying the subject matter of the dispute. Thereafter the party would approach the SFCA for Arbitration alongwith payment of registration Fees as per clause 23

                   20. INITIATION OF ARBITRATION PROCEEDINGS

                   i) Unless there is provision(s) in the agreement between the parties for initiation of arbitration proceedings, a party wishing to have recourse to arbitration proceedings under these Rules shall submit its request for Arbitration to the Secretariat of the Forum with a copy to the other side. The Secretariat of the Forum shall notify in writing to the claimant and the respondent, the receipt of the request and the date of such receipt. The request shall, inter-alia, contain the following information;

                   a) the name in full description and address including e-mail of each of the parties with copy to other party.

                   b) Statement of claim and facts supporting the claim, points at issue and relief or remedies sought with relevant details of the claimant’s case with copy to other party.

                   c) Copies of the Arbitration agreement, and the Contract and such other documents and information relevant or relied upon with copy to other party.

                   d) Deposit the Advance cost of Arbitration as determined by Secretary ofthe Forumwhich will be finally adjusted towards Arbitration cost and expenses.

                   ii) On receipt of an application alongwith the claim statement, the Secretariat of the Forum shall send to the other Party a copy of claim statement, if already not sent by the claimant and attached documents and ask such other party to furnish within thirty days or within an extended date, a defense statement and counter claim (if any) setting out his case accompanied by all documents and relevant information in support of or bearing on the matter. If the respondent party fails to communicate their statement of defence within 12 the time frame agreed upon the parties or determined by the Secretariat or arbitral tribunal, the Secretariat or the tribunal shall have the discretion to treat the right of the respondent party to file such a statement of defence as having been forfeited.

                   iii) All statements replies and other documents and papers submitted by the parties and all appended documents must be supplied as indicated by the Secretariat. Where there is more than one arbitrator or more than one opposing party, the parties shall furnish to the Secretariat such number of additional copies as may be required by the Secretariat.

                   iv) After completion of the pleadings, the Secretary will forward the complete set of documents to the Arbitrator/ Arbitral Tribunal minus what has already been supplied by the parties for further arbitration proceedings.

                   v) If agreement between the parties contains provision regarding initiation of arbitration proceedings, the initiation will be done in terms of the said provisions.

                   vi) If the court passes any interim measure under Section 9 (for example, a party may seek interim protection of goods, amounts, property, etc. that is the subject matter of the arbitration before a court), the arbitral proceedings must commence within 90 days of the court order.”

The said Rules also contain the fee payable to arbitrators as well as charges for conference hall and secretarial services.

16. During the course of the hearing, the Respondent has also placed before the Court the list of Empanelled Arbitrators, which contains Empanelled Arbitrators for the Eastern region. The Empanelled Arbitrators include several former High Court judges as well as several retired district judges.

17. From a perusal of these provisions extracted, it is seen that the party initiating the arbitration, besides issuing the notice to the other contracting parties, must represent before the SCOPE for appointment and initiation of arbitration. In the Agreement also, as discussed above, there is a clear provision that the arbitration shall be as per the procedure prescribed under SCOPE proceedings. The petitioner, however, has projected before this Court that the SCOPE Rules are not applicable. According to the petitioner as per Clause 3 of the SCOPE forum of conciliation and arbitration, every agreement is mandatorily required to include the arbitration clause prescribed at Clause No. 3 of the SCOPE Rules for Arbitration. It is the contention of the learned counsel for the petitioner that such clause not having been incorporated in the Agreement, the SCOPE Rules are not applicable and therefore there is no need for the petitioner to approach the SCOPE for initiation of arbitration and that this Court under 11(6) of the Arbitration and Conciliation Act, 1996 is empowered to appoint appropriate arbitrator as the respondent has failed to respond to the demand made for appointment.

18. Having noticed the provisions of the Agreement and upon due consideration of the pleadings available as well as the submissions made before the Court, it is clear that there was a validly executed agreement between the parties which contain an arbitration clause. The clause also specifically provides that the procedure for arbitration shall be as per the procedures laid down under SCOPE. This is not disputed by the petitioner. It is well settled that a referral Court’s power generally is to examine the existence of a valid arbitration agreement. However, it is equally well settled that the stage for exercising powers under Section 11(6) of the Arbitration and Conciliation Act, 1996 is only in the event where the parties cannot agree on appointment of any arbitrator and/or where the parties have failed to perform the functions as agreed to. Although it is urged before this Court that the respondent did not reply to the notice issued by the petitioner calling upon them to appoint an arbitrator, it is to be equally noted that the petitioner had executed the agreement dated 28.03.2023 which had the Clause-19 incorporated specifying that the procedure for arbitration shall be as per the SCOPE procedure. Such execution of the agreement will amount to acceptance of all the conditions mentioned in the Agreement which the petitioner had accepted without any demur. At no stage had the petitioner questioned the imposition of this clause specified under Clause 19 that the arbitration has to be as per the procedure prescribed under the SCOPE Rules. Even in the litigation which had ensued before the Commercial Courts Division and which were also examined by the Commercial Court’s Division of this High Court and which had finally travelled to the Apex Court, the question of interpretation of Clause 19 was never an issue. In writ petition also filed by the petitioner being W.P(C) No. 2369/2025 which came to be dismissed by order dated 09.05.2025, this issue was also never raised. Therefore, it must be accepted that the petitioner all along knew that arbitration has to be as per the procedure prescribed under SCOPE as mentioned in the agreement. It is no longer res-integra that arbitration is but a creature of an agreement between the parties. Where the parties agree to refer their disputes to arbitration, then the parties are required to honor not only the said intention but also the intentions expressed in the agreement to follow the procedure for resolving the disputes by arbitration. In the facts of the present case, the procedure agreed upon by the parties is the procedure prescribed under SCOPE. Under the procedures prescribed in SCOPE, the party initiating the arbitration is required to approach the SCOPE for appointment of an arbitrator. In Iron Steel Co. Ltd (Supra), the Apex Court, while examining the scope of Section 11(6) of the Arbitration and Conciliation Act, 1996 clearly held that the legislative scheme of Section 11 is very clear. If the parties are agreed on a procedure for appointing the arbitrator or arbitrators as contemplated by sub-section 2 thereof, then dispute between the parties has to be decided as per the same procedure agreed upon and as specified in the agreement executed. Recourse to the Chief Justice or as his designate cannot be taken recourse to without first comparing with the procedure prescribed. The agreed party can approach the Chief Justice or as his designate, only if the parties to the contract/agreement dated 28.03.2023 not agree on any procedure for appointing an arbitrator as contemplated under sub-section 2 of Section 11 of the Act. In Iron & Steel Co. Ltd (Supra), there was an agreement between the parties which provided that in case of any breach of contract or disputes arising, the same shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration. There being an agreed procedure for resolution of disputes by arbitration in accordance with the Rules of Arbitration, it was held by the Apex Court that Sections 11, (3), (4) and (5) of the Act of 1995 can have no application. It was also held that the stage for invocation of the powers under 11(6) of the Arbitration and Conciliation Act, 1996 had also not arrived. Relevant paragraphs of the said Judgment are extracted below:

                   “7. Sub-section (2) of Section 11 of the Act provides that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator. The opening part of sub-sections (3) and (5) of Section 11 of the Act use the expression “failing any agreement referred to in sub-section (2)”. Therefore, sub-sections (3) and (5) will come into play only when there is no agreement between the parties as is referred to in sub-section (2) of Section 11 of the Act viz. that the parties have not agreed on a procedure for appointing the arbitrator or arbitrators. If the parties have agreed on a procedure for appointing arbitrator or arbitrators, sub-sections (3) and (5) of Section 11 of the Act can have no application. Similarly, under sub-section (6) of Section 11 request to the Chief Justice or to an institution designated by him to take the necessary measures, can be made if the conditions enumerated in clause (a) or (b) or (c) of this sub-section are satisfied. Therefore, recourse to sub-section (6) can be had only where the parties have agreed on a procedure for appointment of an arbitrator but (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure. Therefore, a combined reading of the various sub-sections of Section 11 of the Act would show that the request to the Chief Justice for appointment of an arbitrator can be made under sub-sections (4) and (5) of Section 11 where parties have not agreed on a procedure for appointing the arbitrator as contemplated by sub-section (2) of Section 11. A request to the Chief Justice for appointment of an arbitrator can also be made under sub-section (6) where parties have agreed on a procedure for appointment of an arbitrator as contemplated in sub-section (2) but certain consequential measures which are required to be taken as enumerated in clause (a) or (b) or (c) of sub-section (6) are not taken or performed.

                   8. In the present case the agreement executed between the parties contains an arbitration clause and clause 13.1 clearly provides that all disputes and differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of the contract or the breach thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties. This clause is in accordance with sub-section (2) of Section 11 of the Act. There being an agreed procedure for resolution of disputes by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration sub-sections (3), (4) and (5) of Section 11 can have no application. The stage for invoking sub-section (6) of Section 11 had also not arrived. In these circumstances, the application moved by the respondent before the City Civil Court, Hyderabad, which was a designated authority in accordance with the scheme framed by the Chief Justice of the Andhra Pradesh High Court, was not maintainable at all and the City Civil Court had no jurisdiction or authority to appoint an arbitrator. Thus the order dated 31-3-2004 passed by the Chief Judge, City Civil Courts, Hyderabad, appointing a retired judicial officer as arbitrator is clearly without jurisdiction and has to be set aside.

                   9. The legislative scheme of Section 11 is very clear. If the parties have agreed on a procedure for appointing the arbitrator or arbitrators as contemplated by sub-section (2) thereof, then the dispute between the parties has to be decided in accordance with the said procedure and recourse to the Chief Justice or his designate cannot be taken straightaway. A party can approach the Chief Justice or his designate only if the parties have not agreed on a procedure for appointing the arbitrator as contemplated by sub-section (2) of Section 11 of the Act or the various contingencies provided for in sub-section (6) have arisen. Since the parties here had agreed on a procedure for appointing an arbitrator for settling the dispute by arbitration as contemplated by sub-section (2) and there is no allegation that any one of the contingencies enumerated in clause (a) or (b) or (c) of sub-section (6) had arisen, the application moved by the respondent herein to the City Civil Court, Hyderabad, was clearly not maintainable and the said court had no jurisdiction to entertain such an application and pass any order. The order dated 27-12-2004, therefore, is not sustainable.”

19. Coming to the facts of the present case, it is seen that there is a clear provision prescribing arbitration to be initiated following the Rules and the procedure prescribed under the SCOPE Forum. The petitioner, having never disputed this aspect of the contract, it will have to be considered that the petitioner had accepted this contract without any complaint since its execution, now cannot be allowed to turn around and dispute the application of the procedure merely on the ground that the contract Agreement dated 28.03.2023 does not contain the “Arbitration Clause” as prescribed under Clause 3 of the of the arbitration Rules under the SCOPE Forum. As per information uploaded in the CIS, the Misc. Arbitration Appeal No. 9/2024 is still pending and the next date fixed in the matter is 23.12.2025.

20. Under such circumstances, this Court is of the view that the petitioner not having followed the procedure prescribe in the agreement executed by and between the parties, the stage for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 has not come. The petitioner is entitled to take recourse to the procedure prescribed in terms of the agreement read with the SCOPE procedure for commencement of the arbitration proceedings. The petitioner will approach the SCOPE Forum as per the procedure prescribed under the SCOPE Forum Arbitration Rules and thereupon the SCOPE Forum will provide for appointment of Arbitrator as per the procedure prescribed.

21. As such, in view of the discussions above, it is clear that the prayer made for appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 by the petitioner cannot be accepted as the petitioner itself did not comply with the procedure prescribed which had agreed to in terms of the agreement dated 28.03.2023 executed by and between the petitioner and the respondent.

22. In terms of the above, the arbitration petition therefore stands dismissed. Interim order, if any, stands vacated.