1 Engineering Projects India 2 Ministry of Heavy Industries 3 Shri N C Jain Arbitrator 4 Union of India 5 Joint Secretary and Arbitrator,Ministry of Heavy ...Respondents ! Shri Ratnanko Banerjee,Shri Tarun, Ghanshyam Patel ^ Shri Sunil Otwani, Ms Fouzia Mirza Dated: 22/09/2010 : JUDGEMENT O R D E R Writ petitions under Article 226 and 227 of the Constitution of India 1. W.P. No.1398 of 2002 (for short "the first petition") & W.P. (C) No.1781 of 2007 (for short "the second petition"), involve the same question of law and common facts and as such they are being considered and disposed of by this common order. However, for the purpose of this order the facts, as mentioned in the first petition are being referred. 2. The indisputable facts, in nutshell, as projected by the petitioner Bharat Aluminium Company Ltd. (for short "BALCO"), are that vide invitation to tenders dated 611 1997 & 7111997 (Annexures P/1 & P/2, respectively to the first petition), BALCO invited tenders from the interested parties for civil and structural works for installation of New Cold Rolling Mills Project at Korba Aluminium Complex. Pursuant to the said tender notices, the respondent Engineering Projects (India) Limited (for short "EPIL") submitted its offer to the aforesaid works on 23121997 & 24121997 (Annexures P/3 & P/4, respectively to the first petition). On due consideration, vide letter of intents dated 1671998 (Annexures P/5 & P/6 to the first petition) BALCO placed the order in favour of EPIL. Thereafter, both the companies executed agreements on 711999 & 121999 (Annexures P/7 & P/8, respectively to the first petition). Under clause 9.22.1 of the general terms & conditions of the contract i.e. Schedule 9 of the contract agreement, they agreed to resolve the disputes and differences arising out of contract by way of arbitration (for short "the arbitration agreement") (Annexure P/9 to the first petition). 3. On 232001 Government of India divested 51% of its shareholding in BALCO in favour of Sterlite Industries (India) Ltd. (for short "Sterlite") and accordingly the management of BALCO was transferred in favour of Sterlite. Therefrom BALCO has ceased to be a Public Sector Undertaking (for short "PSU"), and became joint venture. 4. Some disputes and differences arose between BALCO and EPIL. Accordingly, EPIL invoked the arbitration clause by way of letter dated 3152001. Thereafter, the Government of India, Ministry of Mines vide its letter dated 237 2001 (Annexure P/10 to the first petition) sought comments from BALCO with regard to the arbitration. BALCO vide its letter dated 982001 (Annexure P/11 to the first petition) objected the arbitration to be conducted under the Permanent Machinery of Arbitration (for short "the PMA"), on the ground that BALCO did not remain a PSU after its disinvestment on 232001. However, BALCO agreed for the arbitration being conducted as per the procedure applicable for other than Public Sector Enterprises and Government Departments i.e. arbitration under the Indian Council of Arbitration. 5. In spite of the aforesaid facts, BALCO received a communication dated 19122001 from Shri N.C. Jain (respondent No.3 in the first petition) stating that he had been appointed as the Sole Arbitrator in the matter and had entered upon the reference under the PMA. Shri Jain further directed BALCO to file its statement of claim, reply and counter claim, if any, and fixed the matter for 1432002. 6. Since BALCO has not received any response to its objection regarding the jurisdiction of the PMA, BALCO filed its reply and counter claim for an amount of Rs.45.20 crores. In the said reply and counter claim BALCO raised the preliminary objection questioning the jurisdiction of the arbitrator under the PMA and submitted that the said reference was void ab initio on the ground that BALCO was not a PSU when the arbitration proceedings commenced or when the said clause was invoked by EPIL. EPIL filed its claim for an amount of Rs.5,57,20,52256 for civil works and an amount of Rs.6,15,72,56038 for structural works. 7. On 1432002, during the course of ar