SC stays Calcutta HC order in favour of Tata Steel

The Supreme Court today stayed the Calcutta High Court's order permitting leading steel-maker Tata Steel to go in for arbitration over a payment dispute with supplier Hitek Industries.

A Bench comprising Justice Altamas Kabir and Justice A K Patnaik also directed Tata Steel to file a reply to Hitek Industries' appeal against the order of the Calcutta High Court permitting the steel company to go in for arbitration over their dispute.

The apex court's direction came over a petition filed by Ranchi-based Hitek Industries, which had an agreement with the Tata group firm to manufacture crash barriers and supply them back to Tata Steel.

Crash barriers, or guardrails, are barriers on roads designed to prevent vehicles from leaving the roadway to improve road safety.

Tata Steel had entered into an agreement with Hitek Industries on February, 2004. As per terms and conditions, the Ranchi-based firm lifted raw material from Tata Steel's Jamshedpur-based plant and would manufacture crash barriers and supply them back to it.

However, a dispute later arose between the parties and Tata wanted to refer it for arbitration. However, the supplier opposed the move and submitted that since the agreement between them was terminated long ago, there was no question of arbitration.

According to the petition filed by advocate Pawan Kumar, the firm claimed that there was no failure on their part in making delivery of crash barriers.

Following this, Tata Steel approached the Calcutta High Court, which initially dismissed its plea. However, Tata Steel later approached the High Court again, which this time allowed it to go in for arbitration.

This was opposed by Hitek on the grounds that the Calcutta High Court has no jurisdiction, as the dispute was in Jharkhand.

It further submitted that both the firms were situated in Jharakhand and the transaction also happened in that state.

Rejecting the contention, the High Court said that as the firm had submitted a report of delivery of crash barriers in Kolkata, it had jurisdiction over the matter.

This was challenged by Hitek Industries before the apex court today, contending, "The High Court of Calcutta has erroneously allowed Tata Steel's application for arbitration, holding that part of the cause of action has arisen within the jurisdiction of it."