The Gujarat High Court on Friday delivered a detailed ruling in a contractual dispute between Adani Enterprises Ltd. and SMS Carbon and Minerals Pvt. Ltd., clearing the way for arbitration after months of back-and-forth over who should adjudicate the conflict. Chief Justice Sunita Agarwal presided over the matter, and the tone inside Courtroom No. 1 was a mix of impatience and cautious clarity as both sides attempted to defend their positions.
Background
The dispute traces back to a series of coal sale and purchase agreements and corresponding service contracts signed between April 4 and April 6, 2022. Together, they covered nearly 45,000 metric tonnes of imported steam coal at Gangavaram Port. Adani, acting as the seller, claimed that SMS Carbon designated as the buyer failed to lift the coal within the stipulated 45-day “free period.”
The court was informed that the buyer sent multiple requests for more time. Adani initially agreed to a two-month extension, primarily because both companies had a long history of business dealings. But as hearings revealed, the buyer still did not lift the coal in time, leading Adani to issue a formal arbitration notice to resolve the outstanding claims, including unpaid amounts and congestion issues allegedly caused at the port.
Court’s Observations
Chief Justice Agarwal repeatedly emphasized that the central question was not whether the agreements existed but whether a single arbitrator could be appointed for all ten interconnected contracts. The judge observed that although SMS Carbon argued that each contract required an independent arbitrator, the correspondence exchanged between the parties suggested a different reality.
The bench observed, "When parties themselves treat multiple contracts as part of one unified commercial transaction, they cannot turn around and deny the same structure while invoking arbitration."
The judge noted that both sides acknowledged the presence of arbitration clauses. The dispute was only about the name of the arbitrator, not the process. The court remarked that commercial agreements cannot be interpreted in a narrow or overly technical manner because it risks frustrating the intention of both parties—intention being the soul of contractual interpretation.
Chief Justice Agarwal referred to Supreme Court rulings where multiple agreements were consolidated under one arbitration proceeding to avoid unnecessary multiplicity. She added that it was evident all ten contracts arose from two “mother documents” dated April 4, 2022—one containing general coal-sale terms and the other covering work and service conditions.
Decision
After reviewing email exchanges, financial details, and contractual clauses, the court concluded that all agreements formed part of a single commercial project involving identical parties, identical timelines, and interlinked obligations.
The bench observed, "The respondent’s challenge on maintainability appears to be an afterthought, without substance in law or fact."
In a firm ruling, the Gujarat High Court allowed the petition and appointed former High Court judge Justice K.A. Puj as the sole arbitrator. The order specifically directs the arbitration to proceed under the 2021 Arbitration Centre Rules of the Gujarat High Court. The court clarified that all other applications pending in this matter stand disposed of.
The decision concludes at that point.
Case Details: Adani Enterprises Ltd. vs SMS Carbon and Minerals Pvt. Ltd.
Case Number: R/Petition under Arbitration Act No. 76 of 2023
