Reference To Dispute Resolution Board Not Mandatory Before Invoking S.11(6) Of Arbitration Act If It Is Not Constituted On Time: Calcutta HC

The Calcutta High Court bench of Justice Shampa Sarkar has held that a party cannot be compelled to approach the Dispute Resolution Board (DSB) for resolution of disputes first before invoking the jurisdiction of the court under section 11(6) of the Arbitration Act especially when the DSB was not constituted as per terms of the contract and its composition was not even communicated to the Petitioner within the stipulated time period after the execution of the contract therefore seeking reference to the DSB when the petitioner approaches the court under section 11(6) of the Arbitration Act cannot be accepted. The present application has been filed under section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator pursuant to clause 70 of the General Conditions of Contract (GCC). The clause states that arbitration shall not commence until both parties agree in writing or completion of work or upon termination or determination of the contract under the specified conditions. It further provides that upon abandonment or cancellation under certain conditions, the arbitration shall be referred until the government finds alternative arrangements for the completion of the works. The Petitioner submitted that the petitioner was allegedly compelled to accelerate the date of completion to December 8, 2024. Finding no other alternative, the petitioner had approached the authority for foreclosure. A nominal amount was paid to the petitioner for the preparatory work.The subject work could not be executed in the manner contemplated under the contract, in view of non availability of the structural drawings and designs. Per contra, the Respondent submitted that it was the incumbent duty of the petitioner to first approach the authority for constitution of the DRB and seek resolution of the dispute before the DRB. Only after the DRB was constituted, and the decision was given by the said Board, the party aggrieved could invoke arbitration as per Clause 70 of the GCC. The court noted that an internal communication dated October 23, 2024 discloses that although the DRB was formally constituted, the authority had resolved to pursue legal action vigorously to vacate the stay and cancel the contract. This indicates that the decision to terminate the contract had been taken even before the constitution of the DSB. As per clause 28, composition of the DSB was to be communicated to the petitioner within 30 days from the date of execution of the contract. It further observed that although the dispute arose in 2023, no DSB was constituted till November 2024 indicating that the Authority did not treat clause 28 as mandatory. Furthermore, the Chief Engineer was directed to oppose petitioner's court cases with the aim of cancelling the contract thereby rendering any reference to DSB a mere formality. The contract was eventually terminated even before the Petitioner could engage the DSB process thereby further undermining the efficacy of the DSB. Accordingly, the present application was allowed. Case Title: M/S. NATIONAL PROJECT CONSTRUCTION (NPCCL) VS MILITARY ENGINEER SERVICES (MES) Case Number:AP-COM/559/2025 Judgment Date: 29/07/2025 Mr. DebajyotiBasu,Sr.Adv. Mr. DiptomoyTalukder, Adv. Mr. Dibyendu Ghosh, Adv. …. for the petitioner Mr. BishwambherJha, Adv. Mr. H.K. Jha, Adv. Ms. Munmun Mishra, Adv. …for the respondent Click Here To Download Order/Judgement

Reference To Dispute Resolution Board Not Mandatory Before Invoking S.11(6) Of Arbitration Act If It Is Not Constituted On Time: Calcutta HC

Mohd Malik Chauhan

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