Facts & Background:

• Bihar State Mineral Dev. Corporation. & Anr. were the Appellants.
• Encon Builders (I) Pvt. Ltd. was the Respondent.
• The Appellants invited tenders to remove and stack soil, sandstone, shale, conglomerates, and coal. The Respondent’s tender was accepted; however, the Respondent allegedly failed to perform obligations under the agreement dated 17.3.1992.
• The Respondent failed to meet the terms of the contract by not producing and stacking 10,000 MT of coal per month, leading the appellants to engage another agency to complete the job. The Respondent invoked the agreement's arbitration clause (Clause 60), which the Appellants disputed.
• Disputes were referred to Appellants No.2 for arbitration under clause 60 of the agreement, though the referral process and identity of the referring party remained unclear. The hearing was adjourned to 6.7.1995, with objections raised on 15.7.1995.
• The Respondent filed an application under Section 33 of the Arbitration Act, 1940, before the Subordinate Judge-VI, Ranchi, to challenge the validity of Clause 60. The Subordinate Judge ruled in favour of the Respondent, holding that Clause 60 could not be construed as an arbitration agreement and restrained Appellant No.2 from acting as the arbitrator.
• The Appellants filed an appeal before the High Court of Patna, Ranchi Bench, challenging the order dated 11.9.1995 passed by the Subordinate Judge-VI, Ranchi, which was dismissed in Misc. Appeal No. 176 of 1995.
• Hence the present appeal.
  

Main Issue:

• Whether the Subordinate Judge-VI, Ranchi committed an error in law by refusing to refer the matter to arbitration? (Page 3)