# M/s S.K. Industries v. State of U.P. & Ors

- **Citation:** (2021) 2 ILRA 298
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-12-03
- **Case number:** Writ C No. 20423 of 2020
- **Bench:** Surya Prakash Kesarwani, Dr. Yogendra Kumar Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-s-k-industries-v-state-of-u-p-ors-46154
- **Pages:** 5

## Headnote

Arbitration and Conciliation Act 1996,
S. 30 - Settlement - arbitral tribunal to
encourage settlement of the dispute -
arbitral tribunal may use - mediation,
conciliation or other procedures, at
any
time
during
the
arbitral
proceedings -to encourage settlement
- Section 30 of the Act, 1996, is to be
availed during the pendency of the
arbitral proceedings. (Para 12, 13)

Agreement entered into between petitioner
&
State
for
milling
paddy-Recovery
certificate issued against petitioner-Clause
12 of the agreement contains arbitration
clause-Held- In the present case, the
dispute having not yet been referred for
arbitration & no arbitral proceedings being
pending - therefore question of settlement
of the dispute U/s 30 of the Act, 1996,
would not arise - Liberty granted to
petitioner to make application to refer the
dispute for arbitration as per terms of the
agreement (Para 8, 14, 16)

Writ Petition disposed off. (E-4)

## Text

298 INDIAN LAW REPORTS ALLAHABAD SERIES
(2021)02ILR A298
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 03.12.2020

BEFORE

THE HON'BLE SURYA PRAKASH
KESARWANI, J.
THE HON'BLE DR. YOGENDRA KUMAR
SRIVASTAVA, J.

Writ C No. 20423 of 2020

M/s S.K. Industries ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Ramendra Asthana, Sri Vijay Kumar
Ojha

Counsel for the Respondents:
C.S.C.

Arbitration and Conciliation Act 1996,
S. 30 - Settlement - arbitral tribunal to
encourage settlement of the dispute -
arbitral tribunal may use - mediation,
conciliation or other procedures, at
any
time
during
the
arbitral
proceedings -to encourage settlement
- Section 30 of the Act, 1996, is to be
availed during the pendency of the
arbitral proceedings. (Para 12, 13)

Agreement entered into between petitioner
&
State
for
milling
paddy-Recovery
certificate issued against petitioner-Clause
12 of the agreement contains arbitration
clause-Held- In the present case, the
dispute having not yet been referred for
arbitration & no arbitral proceedings being
pending - therefore question of settlement
of the dispute U/s 30 of the Act, 1996,
would not arise - Liberty granted to
petitioner to make application to refer the
dispute for arbitration as per terms of the
agreement (Para 8, 14, 16)

Writ Petition disposed off. (E-4)
(Delivered by Hon'ble Surya Praksh Kesarwani, J.
&
Hon'ble Dr. Yogendra Kumar Srivastava, J.)

1. The present writ petition has been
filed praying for the following reliefs :-

"(a) Issue a writ, order or
direction in the nature of mandamus
commanding the respondent nos. 1/2 to
decide arbitration claim (contained in
annexure No. 7 to the writ petition) within
a period of three months or within as short
a period as may be deemed to be necessary
under facts and circumstances of the case.

(b) Issue a writ, order or direction
in the nature of mandamus commanding
the respondents and their subordinates etc.
not to take any coercive measure on the
basis
of
recovery
certificate
dated
19.09.2018 forming subject matter of
aforesaid arbitration proceedings (copy of
arbitration claim petition annexure no. 7 to
the writ petition)."

2. The principal grievance sought to
be raised is against a recovery certificate
dated 19.9.2018 for amount of Rs.
48,60,102/- issued against the petitioner in
accordance with Clause 19 of the Paddy
Purchase
Policy
2017-18
dated
31st
August, 2017.

3. The petitioner claims to have filed
an application seeking settlement of dispute
under Section 30 of the Arbitration and
Conciliation Act 19961 as per clause 12 of
the CMR agreement. The petitioner also
claims to have filed an application for
staying the recovery proceedings during the
pendency of the settlement proceedings.

4. Contention of learned counsel for
the
petitioner
is
that
the
aforesaid
application for settlement under Section 30
2 All. M/s S.K. Industries Vs. State of U.P. & Ors.
299
of the Act, 1996 is pending before the
authorities with no decision thereon, and
accordingly no recovery can be made
against the petitioner in the meantime.

5. As per the case set up in the writ
petition, the petitioner is a rice mill which
had entered into an agreement with the
State authorities for milling of paddy
procured by the State Government under
the Paddy Purchase Policy 2017-18. The
recovery proceedings initiated against the
petitioner are in respect of certain defaults,
which the petitioner has disputed, and
accordingly it is submitted that in view of
the arbitration clause under the CMR
agreement, the dispute is to be referred for
arbitration. Further it is submitted that an
application under Section 30 of the Act,
1996 having been submitted by the
petitioner for settlement of dispute along
with an application for stay, the recovery
proceedings during the intervening period
cannot be initiated.

6. The law relating to arbitration is
governed in terms of the Arbitration and
Conciliation Act, 1996, and the procedure
for appointment of arbitrators is provided
under Section 11 of the said Act.

7. For ease of reference the relevant
statutory
provisions
contained
under
Section 11 and Section 30 of the Act, 1996,
are being extracted below:-

"11.
Appointment
of
arbitrators--(1)
A
person
of
any
nationality may be an arbitrator, unless
otherwise agreed by the parties.

(2) Subject to sub-section (6), the
parties are free to agree on a procedure for
appointing the arbitrator or arbitrators.

(3)
Failing
any
agreement
referred to in sub-section (2), in an
arbitration with three arbitrators, each party
shall appoint one arbitrator, and the two
appointed arbitrators shall appoint the third
arbitrator who shall act as the presiding
arbitrator.

(3A) The Supreme Court and the
High Court shall have the power to
designate, arbitral institutions, from time to
time, which have been graded by the
Council under section 43-I, for the
purposes of this Act:

Provided that in respect of those
High Court jurisdictions, where no graded
arbitral institution are available, then, the
Chief Justice of the concerned High Court
may maintain a panel of arbitrators for
discharging the functions and duties of
arbitral institution and any reference to the
arbitrator shall be deemed to be an arbitral
institution for the purposes of this section
and the arbitrator appointed by a party shall
be entitled to such fee at the rate as
specified in the Fourth Schedule.

Provided further that the Chief
Justice of the concerned High Court may,
from time to time, review the panel of
arbitrators.
(4) If the appointment procedure in subsection (3) applies and--

(a) a party fails to appoint an
arbitrator within thirty days from the
receipt of a request to do so from the other
party; or

(b) the two appointed arbitrators
fail to agree on the third arbitrator within
thirty days from the date of their
appointment,

the appointment shall be made,
on an application of the party, by the
arbitral institution designated by the
Supreme Court, in case of international
commercial arbitration, or by the High
Court, in case of arbitrations other than
international commercial arbitration, as the
case may be.
300 INDIAN LAW REPORTS ALLAHABAD SERIES

(5)
Failing
any
agreement
referred to in sub-section (2), in an
arbitration with a sole arbitrator, if the
parties fail to agree on the arbitrator within
thirty days from receipt of a request by one
party from the other party to so agree (the
appointment
shall
be
made
on
an
application of the party in accordance with
the provisions contained in sub-section (4).

(6) Where, under an appointment
procedure agreed upon by the parties,--

(a) a party fails to act as required
under that procedure; or

(b) the parties, or the two
appointed arbitrators, fail to reach an
agreement expected of them under that
procedure; or

(c)
a
person,
including
an
institution, fails to perform any function
entrusted to him or it under that procedure,

the appointment shall be made,
on an application of the party, by the
arbitral institution designated by the
Supreme Court, in case of international
commercial arbitration, or by the High
Court, in case of arbitrations other than
international commercial arbitration, as the
case may be] to take the necessary
measure, unless the agreement on the
appointment procedure provides other
means for securing the appointment.

(6A) xxx

(6B) The designation of any
person or institution by the Supreme Court
or, as the case may be, the High Court, for
the purposes of this section shall not be
regarded as a delegation of judicial power
by the Supreme Court or the High Court.

(7) xxx

(8)
The
arbitral
institution
referred to in sub-sections (4) (5) and (6)
before appointing an arbitrator, shall seek a
disclosure in writing from the prospective
arbitrator in terms of sub-section (1) of
section 12, and have due regard to--

(a) any qualifications required for
the arbitrator by the agreement of the
parties; and

(b) the contents of the disclosure
and other considerations as are likely to
secure the appointment of an independent
and impartial arbitrator.

(9) In the case of appointment of
sole or third arbitrator in an international
commercial
arbitration,
the
arbitral
institution designated by the Supreme
Court may appoint an arbitrator of a
nationality other than the nationalities of
the parties where the parties belong to
different nationalities.

(10) xxx

(11) Where more than one
request has been made under sub-section
(4) or sub-section (5) or sub-section (6) to
different arbitral institutions, the arbitral
institution to which the request has been
first made under the relevant sub-section
shall be competent to appoint.

(12) Where the matters referred
to in sub-sections (4), (5), (6),and (8) arise
in an international commercial arbitration,
or any other arbitration, the reference to the
arbitral institution in those sub-sections
shall be construed as a reference to the
arbitral institution designated under subsection (3A).

(13) An application made under
this section for appointment of an arbitrator
or arbitrators shall be disposed of by the
arbitral institution within a period of thirty
days from the date of service of notice on
the opposite party.

(14) The arbitral institution shall
determine the fees of the arbitral tribunal
and the manner of its payment to the
arbitral tribunal subject to the rates
specified in the Fourth Schedule.

Explanation--For the removal of
doubts, it is hereby clarified that this subsection shall not apply to international
2 All. M/s S.K. Industries Vs. State of U.P. & Ors.
301
commercial arbitration and in arbitrations
(other
than
international
commercial
arbitration) where parties have agreed for
determination of fees as per the rules of an
arbitral institution.

30. Settlement.--(1) It is not
incompatible with an arbitration agreement
for an arbitral tribunal to encourage
settlement of the dispute and, with the
agreement of the parties, the arbitral tribunal
may use mediation, conciliation or other
procedures at any time during the arbitral
proceedings to encourage settlement.

(2) If, during arbitral proceedings,
the parties settle the dispute, the arbitral
tribunal shall terminate the proceedings and,
if requested by the parties and not objected to
by the arbitral tribunal, record the settlement
in the form of an arbitral award on agreed
terms.

(3) An arbitral award on agreed
terms shall be made in accordance with
section 31 and shall state that it is an arbitral
award.

(4) An arbitral award on agreed
terms shall have the same status and effect as
any other arbitral award on the substance of
the dispute."

8. In the instant case, although the
agreement entered into between the petitioner
and the State authorities for milling of the
paddy procured under the Paddy Purchase
Policy of the State Government, has not been
placed on record, the petitioner claims that
Clause 12 of the aforesaid agreement
contains an arbitration clause whereunder
every
dispute,
difference
of
question
pertaining to the agreement or the subject
matter thereof shall be referred to the
arbitration of certain designated authorities.

9. In the aforesaid circumstances,
where an appointment procedure has been
agreed upon by the parties, the appointment
of arbitrators is to be made as provided
under sub-section (6) of Section 11 of the
Act, 1996.

10. Sub-section (6) of Section 11 of the
Act, 1996 provides that where, under an
appointment procedure agreed upon by the
parties, (i) a party fails to act as required
under that procedure; or (ii) the parties, or the
two appointed arbitrators, fail to reach an
agreement expected of them under that
procedure; or (iii) a person, including an
institution, fails to perform any function
entrusted to him or it under that procedure,
the appointment of arbitrator (s) is to be made
upon an application made by the party
concerned.

11. In the facts of the present case, in
the event the CMR agreement, contains an
arbitration clause, as is sought to be
contended by the petitioner, it is open to the
petitioner to invoke the arbitration clause.

12. As regards the claim petition stated
to have been filed under Section 30 of the
Act, 1996 for settlement of the dispute, along
with an application for stay, we may take
note of the fact that the provision with regard
to settlement of the dispute, under Section 30
of the Act, 1996, is to be availed during the
pendency
of
the
arbitral
proceedings
whereunder it is provided that if during
arbitral proceedings the parties settle the
dispute, the arbitral tribunal shall terminate
the proceedings, and record the settlement in
the form of an arbitral award on agreed terms.

13. The object and purpose of Section
30 of the Act, 1996, is to encourage
settlement of the dispute by the arbitral
tribunal with use of mediation, conciliation
or other procedures, during the pendency of
the arbitral proceedings before the arbitral
tribunal.
302 INDIAN LAW REPORTS ALLAHABAD SERIES

14. In the present case, the dispute
having not yet been referred for arbitration
to the arbitral tribunal and no arbitral
proceedings being pending the question of
settlement of the dispute under Section 30
of the Act, 1996, and making an arbitral
award in terms thereof would not arise at
the present stage.

15. Learned counsel for the petitioner
at this stage makes a prayer that he may be
permitted to invoke the arbitration clause as
contained in the CMR agreement for
appointment of an arbitrator, by moving an
appropriate application before the authority
concerned, and in the event of failure to act
as required as per the procedure provided
under the arbitration clause he may invoke
the provisions under sub-section (6) of
Section 11 of the Act, 1996.

16. In this regard, we may observe
that in the event, the agreement entered into
by the petitioner with the State authorities
for milling of the paddy procured by the
State agencies, contains an arbitration
clause, as asserted by the petitioner, it
would be open to the petitioner to make an
appropriate application to the authority
concerned for referring the dispute for
arbitration as per terms of the agreement.

17. With the aforesaid observations,
the writ petition stands disposed of.

18. It is made clear that we have not
expressed any opinion on the merits of the
claim sought to be set up by the petitioner.
----------
(2021)02ILR A302
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.01.2021

BEFORE
THE HON'BLE PANKAJ NAQVI, J.
THE HON'BLE PIYUSH AGRAWAL, J.

Writ C No. 21540 of 2020

Shri Sushil Kumar Nagrath ...Petitioner
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Petitioner:
Sri Rohan Gupta

Counsel for the Respondents:
C.S.C., Sri M.C. Chaturvedi, Sri Shivam
Yadav, Sri Kaushalendra Nath Singh

A. U.P. Industrial Area Development Act (6
of 1976), S.3, S.6, S.6A, S.7 - Lease deed -
Levy of transfer charges - Issue - whether
NOIDA is empowered to levy transfer
charges on conveyance executed by its
lessees / sub-lessees? - Petitioner
challenged the levy on the ground that it
has no statutory sanction / flavour - Held
- Levy of transfer charge is not tax but fee
which authority is empowered to collect
under terms of lease deed - Transfer
charge may not be having statutory
flavour in its traditional sense as urged by
petitioner but once NOIDA instrumentality
of State in exercise of its supervisory
power under S. 7, stipulates condition of
payment of transfer charges to be paid to
NOIDA,
lessor
on
every
subsequent
transactions and makes said stipulation
binding on subsequent sub-lessees, it
becomes contractual liability for all sublessees to comply with same
- No
interference warranted. (Para 19)

B. Tax & Fee - Difference - tax and fee are
compulsory mode of exaction - but in case
of tax there may not be any liability to
render any service / amenity while fee
presupposes delivery of service / amenity,
thus there is an element of quid pro quo
(Para 10)

Lease deed executed by NOIDA (lessor) in
favour of Army Welfare Housing Organization
(lessee) - Petitioner, sub-lessee intended to
transfer property in favour of third person -
applied before NOIDA seeking permission -