Court Overrules Objections to Arbitration, Appoints Sole Arbitrator for Mid-Day Meal Scheme Dispute
In a significant legal development, the Gauhati High Court has appointed a sole arbitrator to resolve the contractual dispute between Ekta Shakti Foundation and the State of Assam regarding the supply of mid-day meals to government schools. The court's decision comes after a protracted legal battle and multiple proceedings, including a writ petition and arbitration application.
The petitioner, Ekta Shakti Foundation, an NGO registered under the Societies Registration Act, had been engaged by the State Nodal Office, Mid-day Meals scheme, Assam, to supply freshly cooked mid-day meals to children in various districts. The initial contract, established through a Memorandum of Understanding (MoU) dated October 26, 2018, was abruptly halted by the state authorities in November 2019, with the petitioner incurring substantial financial losses due to infrastructure investments.
Following the termination of the contract without the requisite notice period, Ekta Shakti Foundation sought legal recourse. The Gauhati High Court had earlier dismissed their writ petition but granted liberty to invoke arbitration as per the MoU's arbitration clause. Despite the Foundation's subsequent notice under Section 11(6) of the Arbitration and Conciliation Act, 1996, calling for the appointment of an arbitrator, the state did not respond, prompting the current application.
The court's judgment addressed several key issues, including the validity of the arbitration clause, the necessity of a notice under Section 21, and the arbitrability of disputes involving compensation and damages. The court concluded that the absence of a Section 21 notice does not preclude the court from appointing an arbitrator when the existence of a valid arbitration agreement is undisputed.
Justice Soumitra Saikia, presiding over the matter, emphasized that the arbitral tribunal is competent to adjudicate disputes, including claims for compensation and damages, arising from the agreement. The court rejected the state's contention that such claims should only be determined by a civil court, affirming that arbitration is an appropriate forum for resolving these issues.
In light of these considerations, the court appointed Mr. Justice Achintya Malla Bujor Barua, a former judge of the Gauhati High Court, as the sole arbitrator. This appointment is contingent upon a written declaration under Section 12(1) of the Arbitration and Conciliation Act, 1996, ensuring impartiality and fairness in the arbitration process.
The decision marks a crucial step in the resolution of the dispute, with the arbitral tribunal now tasked with determining the arbitrability of the disputes and addressing the parties' claims and counterclaims.
Bottom Line:
Arbitration - Valid arbitration clause existing between the parties - Non-issuance of notice under Section 21 of the Arbitration and Conciliation Act, 1996 does not bar the referral Court from exercising its jurisdiction under Section 11(6) of the Act when there is no dispute about the existence of a valid arbitration agreement.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11(6), 12(5), 21
Ekta Shakti Foundation v. State of Assam, (Gauhati) : Law Finder Doc id # 2884140
