Delhi High Court - Orders
Shivakriti International Limited vs Container Corporation Of India Limited on 9 December, 2021
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~1(2021)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 1022/2021
SHIVAKRITI INTERNATIONAL LIMITED ..... Petitioner
Through Mr. Prateek Mishra, Mr. Mohit
Kumar & Ms. T. Mishra, Advs.
Versus
CONTAINER CORPORATION OF INDIA
LIMITED ..... Respondent
Through Mr. R.K. Joshi & Mr. O. Joshi, Advs.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 09.12.2021
1. The petitioner has filed the present petition under Section 11 of the Arbitration & Conciliation Act, 1996 (hereafter the 'A&C Act'), inter alia, praying that a Sole Arbitrator be appointed to adjudicate the disputes that have arisen between the parties.
2. The respondent (hereafter 'CONCOR') had issued a Letter of Award (LOA) dated 24.06.2014 awarding the contract for executing the work of supply of P. Way Material, Laying & Linking of Railway Track at MMPL, Naya Raipur, to the petitioner. In terms of the LOA, the work was to commence on or before 10th day after issuance of the LOA and was to be completed within a period of twelve months. The petitioner claims that the work was required to be completed on or before 3rd July,2015.
3. The parties entered into a formal agreement on 29.10.2014 (hereafter 'the Agreement'). The petitioner claims that there were inordinate delays in execution of the work on account of reasons which were either attributable to CONCOR or otherwise but not attributable to the petitioner.
4. It is stated that on 27.07.2017, CONCOR decided to foreclose the Signature Not Verified Digitally Signed By:DUSHYANT RAWAL contract on "as is where is" basis.
5. Certain disputes have arisen between the parties in connection with the Agreement. The petitioner sent a letter dated 24.12.2018 under Clause 63 of the General Conditions of Contract (GCC) for resolution of the disputes. The Summary of claims as well as a Statement of Claims was enclosed with the said letter. The petitioner states that its claims were rejected by CONCOR by its letter dated 10.01.2019. Thereafter, the petitioner sent a letter dated 15.01.2019 seeking appointment of an Arbitrator.
6. Mr Joshi, the learned counsel appearing for CONCOR opposes the present petition essentially on three grounds. First, he submits that the petitioner has not followed the requisite procedure for seeking appointment of an arbitrator and reference of the disputes to arbitration. Second, he states that the disputes are not arbitrable as the petitioner's claim for a sum of ₹3,91,59,447/- as communicated by its letter dated 15.01.2019 is beyond 20% of the contract value and a dispute of such value is not arbitrable. Third, he submits that the petitioner had issued a No Claim Certificate and therefore the contract stood discharged.
7. Mr Mishra, the learned counsel for the petitioner has countered the aforesaid submissions of the learned counsel for CONCOR.
8. He submits that the No Claim Certificate relied upon by the learned counsel for CONCOR was issued under coercion and under economic duress. The petitioner had no option but to give the No Claim Certificate failing which, CONCOR would not release its security deposit or the Bank Guarantee which were admittedly liable to be released.
9. CONCOR's contention that the petitioner has not followed the Signature Not Verified Digitally Signed By:DUSHYANT RAWAL procedure as required under the arbitration clause is unpersuasive. In terms of Clause 63 of the GCC, the petitioner had made a representation to CONCOR. The same was rejected. Thereafter, the petitioner made a request for arbitration. The contention that the petitioner did not wait for 120 days before making a request for arbitration is unmerited considering that CONCOR had rejected the claims made by the petitioner. More importantly 120 days have since elapsed and it was not CONCOR's case that it has acceded to all the claims made by the petitioner and the dispute were resolved.
10. The question whether the No Claim Certificate issued by the petitioner was under economic duress or legally invalid is also a contentious issue. There is no dispute that the Bank Guarantees and the Security Deposit were released to the petitioner after furnishing of the No Claim Certificate.
11. This Court is not required to examine the contentious issues as raised in this proceeding as the same are beyond the standards of examination under Section 11 of the A&C Act. In terms of Section 11(6A) of the A&C Act, examination under Section 11 of the A&C Act is confined to the existence of the arbitration agreement.
12. In M/s. Duro Felguera, S.A. v. M/s. Gangavaram Port Limited:
(2017) 9 SCC 729, the Supreme Court had observed as under:
"48. ... From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.Signature Not Verified Digitally Signed By:DUSHYANT RAWAL
* * *
59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] . This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists--nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected."
13. The said decision is followed by the Supreme Court in its latest decision in Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman: (2019) 8 SCC 714 and its earlier decision in United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 was overruled.
14. In certain cases where this Court finds that ex facie there is no real dispute regarding discharge of the contract by accord and satisfaction, it may be possible for the Court to decline the relief under Section 11 of the A&C Act. However, since it is apparent that the issues raised are contentious, this Court deems it necessary to adjudicate the same and the parties must be relegated to the forum of their choice - arbitration.
15. The contention that the disputes are not arbitrable as the same exceeds 20% of the Contract value is also disputed by the learned counsel for the petitioner. He drew the attention of this Court to the averments made in the petition whereby the petitioner has confined the principal dispute to a sum of ₹10,98,859/- (Rupees Ten Lakh Ninety-eight Thousand Eight Hundred and Fifty-nine Only), which is less than 20% of the Contract Signature Not Verified Digitally Signed By:DUSHYANT RAWAL Value. He submits that the question whether the claims before the Arbitral Tribunal exceed 20% of the contract value would be examined by the Arbitral Tribunal and if the disputes are found to be not arbitrable on that ground, the Arbitral Tribunal would take a decision on the same. This Court finds merit in the petitioner's contention. The Arbitral Tribunal is competent to decide the question of arbitrability of the disputes.
16. Since there is no dispute as to the existence of an Arbitration Clause, this Court considers it apposite to allow the present petition.
17. The Arbitration Clause provides for constitution of an Arbitral Tribunal of three members. However, the learned counsel appearing for the parties jointly request that instead of a panel of three Arbitrators, a Sole Arbitrator be appointed to adjudicate the disputes between the parties. Thus, with the consent and the instance of the parties, this Court proposes to appoint Ms. Anjali Sharma, Advocate, (Mob: 9810011235) as the Sole Arbitrator to adjudicate the disputes between the parties.
18. The parties are at liberty to approach the learned Sole Arbitrator for eliciting her consent and necessary disclosure as required under Section 12(1) of the A&C Act.
19. Let the same be furnished to this Court before the next date of hearing.
20. List on 17.12.2021.
VIBHU BAKHRU, J DECEMBER 9, 2021 'gsr' Click here to check corrigendum, if any Signature Not Verified Digitally Signed By:DUSHYANT RAWAL