Delhi High Court M/S Steel Authority Of India Ltd vs M/S Engineering Project India Ltd on 19 September, 2017 $~12 * % Date of decision:19.09.2017 + O.M.P. (COMM) 248/2016 & I.A.Nos.1556/2015 & 20395/2015 M/S STEEL AUTHORITY OF INDIA LTD ..... Petitioner Through: Ms.Surabhi Diwan, Advocate versus M/S ENGINEERING PROJECT INDIA LTD ..... Respondent Through: Mr.Manoj Kumar Das, Advocate HON'BLE MR. JUSTICE JAYANT NATH JAYANT NATH, J.(ORAL) 1. In this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') seeking to impugn the Appellate Award dated 16.04.2012 passed by the Law Secretary, Govt. of India cum Appellate Authority under Permanent Machinery of Arbitration (PMA). 2. Facts of the case are that on 13.11.1991 a contract for lumpsum value of Rs. 46,94,13,000/ (Rupees Forty Six Crores Ninety Four Lacs Thirteen Thousand only) for design, manufacture, supply and delivery at site of plant and equipment and steel structures etc. was awarded by the petitioner to the respondent. It is noteworthy that both the parties are public sector undertakings. As disputes arose between the parties, the petitioner was compelled to lodge its claims before the Joint Secretary, Ministry of Heavy Industries and Public Enterprises, who was appointed as the Sole Arbitrator as per the scheme of Permanent Machinery of Arbitration. The said Sole O.M.P. (COMM) 248/2016 Page 1 of 6 Arbitrator is stated to have passed Award dated 16.05.2011. The respondents filed an appeal before the appellate authority under the Permanent Machinery of Arbitration. The appellate authority has now passed the alleged impugned award. Hence, the present petition. 3. The petitioner first filed a writ petition impugning the award dated 16.04.2012 passed by the appellate authority. The learned Single Judge in the writ petition by his order dated 07.11.2014 took the view that the award is covered by the provision of the Arbitration and Conciliation Act. He dismissed the writ petition. An LPA is pending against the said order dismissing the writ petition. 4. Learned Single judge in W.P.(C) 3570/2012 titled as M/s Steel Authority of India vs. Engineers project India Ltd. by his order dated 07.11.2014 while dealing with the background facts of the arbitration proceedings stated as follows: "4. Since, the parties are Central Public Sector Enterprises, the arbitration clause in the contract dated 13.11.1991 was substituted by an arbitration agreement, as per the draft annexed to the Office Memorandum (hereafter „OM‟) dated 22.01.2004, for resolution of their disputes through PMA. The said arbitration agreement reads as under: "In the event of any dispute or differences relating to the interpretation and application of the provisions of the contracts, such dispute or difference shall be referred by either party for Arbitration to the Sole Arbitrator in the Department of Public. Enterprises to be nominated by the Secretary to the Government of Indian In Charge of the Department of Public Enterprises. The Arbitration and Conciliation Act, 1996 shall not be applicable to arbitration under this clause. O.M.P. (COMM) 248/2016 Page 2 of 6 The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by such award may make a future reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law & Justice, Government of India. Upon such reference the dispute shall be decided by the Law Secretary or the Special Secretary / Additional Secretary, when so authorized by the Law Secretary whose decision shall bind the Parties finally and conclusively. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator. " 5. It is thereafter that the petitioner has filed the present petition under Section 34 of the Act. 6. Learned counsel for the respondent has submitted that in Northern Coalfields Ltd. v. Heavy Engg. Corpn. Ltd. & Anr., (2016) 8 SCC 685, the Supreme Court has held that the arbitration award in terms of permanent in house a