Authored By: Shivani Devi (LL.M), Rayat Bahra University, Punjab, Research Writer at Law Audience,
Edited By: Mr. Varun Kumar, Advocate, Himachal, Punjab & Haryana and Founder at Law Audience.
Click Here to Download the Judgement:
CASE CORAM:
CASE NAME:
Barminco Indian Underground Mining Services LLP, Through Its General Manager, Commercial and Legal, Having Its Principal Office At – 81/1, Adchini, Sri Aurobindo Marg, New Delhi, Delhi, 110017 (Petitioner)
vs.
Hindustan Zinc Limited, Having Its Registered Office At – Yashad Bhawan, Udaipur – 313004, Rajasthan (Respondent).
CASE NO: S.B. Arbitration Application No. 10/2020.
COURT NAME: High Court of Judicature for Rajasthan At Jodhpur.
JUDGE NAME: Justice Dinesh Mehta.
JUDGEMENT DATE: 20/07/2020.
I. INTRODUCTION:
Contracts are essential in business because they define the rights and duties of the parties involved. However, disputes may arise when one party feels that the other has not acted as promised. To avoid lengthy court proceedings, many commercial contracts include arbitration as the preferred method of dispute resolution. The case of Barminco Indian Underground Pvt. Ltd. vs. Hindustan Zinc Ltd. (2020)[1], explains how arbitration works in contract disputes and why courts generally avoid interfering in arbitral decisions[2].
II. BACKGROUND OF THE CASE:
Hindustan Zinc Limited entered a contract with Barminco Indian Underground Pvt. Ltd. for underground mining operations. The agreement clearly laid down the responsibilities of both parties and included an arbitration clause for resolving disputes[3]. During the execution of the contract, Barminco faced several operational difficulties. According to Barminco, Hindustan Zinc delayed approvals, altered work conditions, and failed to provide the required support. As a result, Barminco claimed that it suffered financial losses[4]. As agreed in the contract, the dispute was referred to arbitration. After examining the facts and hearing both parties, the arbitrator passed an award in favor of Barminco. Dissatisfied with this outcome, Hindustan Zinc challenged the arbitral award before the court.
III. MAIN ISSUE BEFORE THE COURT:
Issues:
- Whether the Section 9 application was maintainable before the Rajasthan High Court?
- Which court had jurisdiction to hear the Section 9 application?
- What should be done with the application after lack of jurisdiction is found?
IV. ARGUMENTS OF THE PARTIES:
Barminco argued that it had fulfilled its obligations honestly and that the losses occurred due to Hindustan Zinc’s failure to cooperate as required under the contract. It maintained that the arbitrator had carefully considered all the material before making the decision. Hindustan Zinc argued that the arbitrator misinterpreted the contract and that the award was incorrect. On this basis, it requested the court to set aside the arbitral award.
V. COURT’S DECISION:
The Rajasthan High Court held that it had no jurisdiction to hear the Section 9 application. It is ruled that the matter should be filed before the Commercial Court, Udaipur under the Commercial Courts Act, 2015. The application was returned (not dismissed), interim protection was continued for a limited time, and the Court did not decide the merits of the dispute[5].
VI. EXPLANATION OF THE CONTRACT DISPUTE:
A contract dispute arises when one party believes that the other has failed to comply with the agreed terms. In this case, Barminco believed that Hindustan Zinc’s actions made the execution of the contract more difficult and costly. The arbitration clause played a crucial role because it reflected the intention of both parties to resolve disputes outside the court system. This helped in avoiding prolonged litigation[6].
VII. IMPORTANCE OF THE CASE:
This case highlights that arbitration is an effective mechanism for resolving commercial disputes. It reassures businesses that arbitral awards will not be easily disturbed by courts. The judgment also emphasizes the importance of honoring contractual commitments.
VIII. NOTE:
The decision in Barminco Indian Underground Pvt. Ltd. v. Hindustan Zinc Ltd. (2020), Arbitration seat abroad doesn’t make it “international”; both are Indian parties → High Court lacks Section 9 jurisdiction, it must go to the local court.
Footnotes:
[1] S.B. Arbitration Application No. 10/2020.
[2] Arbitration and Conciliation Act, 1996 – Objective and scope.
[3] Contractual agreements and arbitration clauses in commercial contracts.
[4] Principles relating to breach of contract and compensation.
[5] TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd. (Supreme Court, 2008) on the nationality test for “international commercial arbitration.
[6] Ssangyong Engineering v. NHAI (2019) – Importance of party autonomy in arbitration.
