Dhansar Engineering Company Private Limited Vs Eastern Coalfields Limited (Calcutta High Court)
The case of Dhansar Engineering Company Private Limited vs Eastern Coalfields Limited, as adjudicated by the Calcutta High Court, revolves around the validity of a policy circular as an arbitration clause. This article provides a detailed analysis of the judgment passed on 1 December, 2022, under section 11(6) of the Arbitration and Conciliation Act, 1996.
The respondent, Eastern Coalfields Limited, issued an e-tender for various works including hiring heavy machinery and coal removal. Despite being awarded the contract, the applicant, Dhansar Engineering Company, allegedly failed to fulfill the tender’s conditions. Eastern Coalfields Limited subsequently terminated the contract due to non-compliance.
The crucial contention lies in a Circular issued by Coal India Limited (CIL), Eastern Coalfields Limited’s subsidiary, mandating arbitration for disputes with private contractors. While the applicant argued that the Circular effectively incorporated an arbitration clause into their contract, the respondent disagreed, citing procedural lapses.
The Calcutta High Court examined the applicability of clauses 2 and 5 of the Circular. The applicant insisted on clause 2, pertaining to future contracts, as the basis for arbitration. Conversely, the respondent emphasized clause 5, applicable to existing contracts, and contended that the Circular merely expressed a desire for arbitration without formal incorporation.
