Bharat Petroleum Corporation Limited Vs SK. Ashphaque Hossain (Calcutta High Court)
Summary: The Calcutta High Court considered a petition filed by Bharat Petroleum Corporation Limited (BPCL) under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of a sole Arbitrator in disputes arising from an LPG Cylinders Transportation Contract Agreement dated 01.09.2018. BPCL stated that the respondent, engaged for transportation of LPG cylinders from its Khurda, Odisha filling plant, failed to return 414 empty cylinders of 14.2 kg capacity and 24 empty cylinders of 19 kg capacity and failed to report the trucks, resulting in bottling losses. BPCL quantified penal damages at Rs.10,13,400/-, together with GST at 18%, aggregating to Rs.11,95,812/-.
After reversal of an earlier debit, the respondent allegedly still failed to return the cylinders, following which BPCL encashed a bank guarantee of Rs.5,00,000/- and demanded the balance Rs.6,95,812/- with interest. BPCL had earlier invoked arbitration by notice dated 28.12.2021 and filed AP/625/2023, which was withdrawn with liberty to proceed afresh because that notice had incorrectly been described as one under Section 11 instead of Section 21 of the Arbitration and Conciliation Act, 1996. BPCL thereafter issued a fresh Section 21 notice dated 13.05.2026, to which the respondent neither replied nor took steps to constitute the Arbitral Tribunal.
The Court noted that Clause 35 contained an arbitration agreement for reference of disputes to a sole Arbitrator and conferred exclusive jurisdiction on the Courts at Kolkata. Finding that the existence and validity of the arbitration agreement did not prima facie appear to be in dispute and that BPCL’s disputes appeared to fall within its scope, the Court exercised jurisdiction under Section 11 and appointed Mr. Shaunak Ghosh, Advocate, as sole Arbitrator. The Arbitrator was directed to enter upon reference after making disclosure under Section 12(1), subject to Section 12(5), with remuneration to be fixed in accordance with the Fourth Schedule or as mutually agreed. Questions of arbitrability, admissibility of claims, limitation, jurisdiction and all other issues were expressly left open for determination by the sole Arbitrator.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Affidavit of service is taken on record.
Despite service, none appears for the respondent.
The petitioner has preferred the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a learned sole Arbitrator to adjudicate the disputes and differences which have arisen between the parties in terms of the LPG Cylinders Transportation Contract Agreement dated 01.09.2018 executed with the respondent.
The respondent was engaged as a contractor for transportation of LPG cylinders from the filling plant of Bharat Petroleum Corporation Limited (BPCL) at Khurda, Odisha. According to BPCL, in March 2019, it was noticed that the respondent had failed to return certain empty LPG cylinders and had also failed to report the trucks, resulting in bottling losses. Despite repeated communications, including letters dated 11.04.2019, 18.04.2019, 19.04.2019, 25.07.2019, 13.09.2019 and 03.10.2019, the respondent allegedly failed to return 414 empty cylinders of 14.2 kg capacity and 24 empty cylinders of 19 kg capacity pertaining to Truck No. OR04K8515 under ERV No. 820028714.
By letter dated 03.10.2019, BPCL quantified the penal damages at Rs.10,13,400/-, together with GST at 18%, aggregating to Rs.11,95,812/-. The respondent offered to return the cylinders subject to reversal of an amount earlier debited by BPCL. Although BPCL reversed the said amount on 20.12.2019, the respondent allegedly failed to return the empty cylinders. Thereafter, BPCL encashed the respondent’s bank guarantee for Rs.5,00,000/- and, by show-cause notice dated 22.12.2020, called upon the respondent to pay the balance amount of Rs.6,95,812/-, together with interest.
BPCL initially invoked the arbitration mechanism by notice dated 28.12.2021 and thereafter approached this Court by filing AP/625/2023. By order dated 05.05.2026, the said application was permitted to be withdrawn with liberty to proceed afresh, as the notice dated 28.12.2021 had incorrectly been described as a notice under Section 11 instead of a notice under Section 21 of the Arbitration and Conciliation Act, 1996. Pursuant thereto, BPCL issued a fresh notice under Section 21 of the Act dated 13.05.2026. The respondent neither replied to the said notice nor took any steps towards constitution of the Arbitral Tribunal.
Clause 35 of the Agreement contains the arbitration agreement and provides for reference of disputes to a Sole Arbitrator. The said clause further stipulates that the Courts at Kolkata shall have exclusive jurisdiction in respect of applications arising out of the Agreement.
The existence and validity of the arbitration agreement do not, prima facie, appear to be in dispute. The disputes raised by BPCL also appear, at this stage, to fall within the scope of the said arbitration agreement.
In view of the said, this Court exercises its jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 and appoints Mr. Shaunak Ghosh, Advocate (Mobile No. 9831299143) as the learned sole Arbitrator to adjudicate the disputes between the parties in terms of the Agreement dated 01.09.2018.
The learned Sole Arbitrator shall enter upon the reference after making the disclosure in terms of Section 12(1) of the Act and subject to the provisions of Section 12(5) thereof.
The learned sole Arbitrator shall be entitled to fix the remuneration in accordance with the Fourth Schedule of the Act or as may be mutually agreed between the parties.
A copy of this order shall be communicated by the petitioner to the learned sole Arbitrator for necessary action.
It is clarified that all questions relating to the arbitrability of the disputes, the admissibility of the claims, limitation, jurisdiction, and all other issues are left open to be urged before the learned Sole Arbitrator, who shall decide the same in accordance with law.
With the aforesaid directions, the present petition stands disposed of.
