Delhi High Court - Orders
M/S Dps Contractors Pvt. Ltd vs Hindustan Urvarak And Rasayan Ltd on 12 March, 2024
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 152/2023, I.A. 2650/2023
M/S DPS CONTRACTORS PVT. LTD. ..... Petitioner
Through: Mr. Parivesh Singh, Mr. Prem
Parkash, Mr. Abhay Singh Chauhan,
Advs.
versus
HINDUSTAN URVARAK AND RASAYAN LTD...... Respondent
Through: Mr. Adarsh Tripathy, Mr. Vikram
Singh Baid, Mr. Ajitesh Garg, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
ORDER
% 12.03.2024
1. This is a petition seeking appointment of an arbitrator.
2. The arbitration clause is contained as Clause 35.4 of the General Conditions of Contract ("GCC"), which reads as under:
"35.4 ARBITRATION a. Any dispute or difference whatsoever arising between the parties out of relating to the construction, meaning, scope, operation or effect of this contract or the validity or the breach thereof shall be settled by arbitration in accordance with the provisions of the Arbitration & Conciliation Act, 1996 and any amendments thereafter, and the award made in pursuance thereof shall be binding on the parties.
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27 b. The performance under this contract shall not stop for any reason whatsoever during the said dispute/proceedings, unless the contractor/supplier is specifically directed by Owner/Buyer to desist from working in this behalf.
c. The Jurisdiction Venue of all arbitration shall be at Delhi only.
d. The language of proceedings shall be English.
e. The Law governing the substantive issues between the parties shall be the Laws of India."
3. Since the parties had a dispute, the petitioner invoked the arbitration vide legal notice dated 24.09.2021.
4. It is stated by Mr. Tripathy, learned counsel for the respondent that pursuant to the notice, the parties entered into negotiations and thereafter, the petitioner issued letter of indemnity on the respondent making the payments to the petitioner.
5. The letter of indemnity dated 11.05.2022 is reproduced herein below:
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27
6. Hence, Mr. Tripathy states that there can be no arbitrable disputes between the parties and relies upon the judgment of the Hon'ble Supreme Court in NTPC LTD. vs. SPML INFRA LTD., (2023) 9 SCC 385 and more particularly paragraphs 1, 9, 10 and 43 to 46, which read as under:
"1. The present appeal arises out of a decision of the High Court of Delhi, allowing the respondent's application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter "the Act") for the constitution of an Arbitral Tribunal. It is the case of appellant NTPC that there were no subsisting disputes between the parties in view of the settlement agreement dated 27-5-2020 and that the application for arbitration is an afterthought and abuse of the process.
....
9. Following the settlement agreement, the bank guarantees were released by NTPC on 30-6-2020. SPML withdrew the writ petition, as recorded in the order of the Delhi High Court dated 21- 09-2020.
10. After the aforesaid settlement of the disputes, followed by its implementation, SPML repudiated the settlement agreement and filed the present application under Section 11(6) of the Act in the Delhi High Court on 10-10-2020. In this arbitration petition, SPML alleged coercion and economic duress in the execution of the settlement agreement. The allegation was that the retention of the bank guarantees compelled SPML to accept the terms of settlement agreement. SPML also averred that NTPC had failed to appoint an arbitrator in spite of repeated requests, and therefore the High Court must constitute an Arbitral Tribunal, in exercise of its jurisdiction under the Act.
....
43. In its reply to the arbitration petition, NTPC specifically pointed out that SPML never raised any claims with respect to the dues amounting to Rs 72,01,53,899 during the pendency of the contract, and that the allegations of coercion and economic duress are This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27 completely false. NTPC alleged that the arbitration petition lacked bona fide.
44. A simple narration of the bare facts, as indicated above, leads us to conclude that the allegations of coercion and economic duress are not bona fide, and that there were no pending claims between the parties for submission to arbitration. The respondent's claim fits in the description of an attempt to initiate "ex facie meritless, frivolous and dishonest litigation". We will endeavour to give reasons for our conclusion.
45. The whole dispute revolves around the solitary act of the appellant, NTPC, in not returning the bank guarantees despite the successful completion of work. This continued even after SPML issued the no-demand certificate and NTPC released the final payment. These undisputed facts led to the institution of the writ petition before the Delhi High Court. There were no allegations of coercion or economic duress compelling SPML to withdraw any pending claims under the subject contract as a condition for the return of the bank guarantees. On the contrary, the only allegation by SPML was with respect to NTPC's "illegal" action of interlinking the release of the bank guarantees with some other contracts. This was precisely the argument before the High Court, and, in fact, this submission is recorded by the High Court while issuing notice and injuncting NTPC. This fact clearly indicates that the plea of coercion and economic duress leading to the settlement agreement is an afterthought.
46. We will now examine whether the allegations of coercion and economic duress in the execution of the settlement agreement are bona fide or not. This inquiry has a direct bearing on the arbitrability of the dispute. It was during the subsistence of the writ petition and the High Court's interim order, when SPML had complete protection of the Court, that the parties entered into the settlement agreement. This agreement was comprehensive. It inter alia provided for: (i) the release of bank guarantees by NTPC, (ii) the withdrawal of SPML's writ petition, (iii) restraining NTPC from filing contempt proceedings against SPML for letting the bank guarantees expire, and finally, (iv) restraining SPML from initiating any proceedings under the 9 subject contract, including This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:27 arbitration. The settlement agreement also recorded that there were no subsisting issues pending between the parties."
7. He further states that in the present case, the agreement was entered into between the petitioner and M/s PDIL and in the present petition, M/s PDIL is not a party.
8. I have heard learned counsel for the parties.
9. As regards the first objection is concerned, the notice invoking arbitration refers to the disputes as under:
Sr. Particulars Amount
No.
1. Release of withhold amount from RA Bill 13,80,60,851.64
dated 06.06.2019.
2. Release of GST amount 4,40,42,201.00
(Rs. 2,85,39,459.51+
Rs. 1,55,02,742.22)
3. Claim on account of Escalation 1,35,30,338.00
4. Loss of account of idling of resources 5,50,19,880.00
5. Loss of profit 1,40,00,000.00
6. Release of Performance Bank Guarantees 2,57,67,873.00
7. Finance Charges spent on Performance Expenses as incurred, Bank Guarantee and other details shall be guarantees/Policies during the prolonged submitted with claim period. statement.
8. Interest @15% on above from due dates Total (Rupees) 26,46,53,270.64+release of BG + Interest
10. Serial No. 2 relates to the release of GST amount of about Rs. 4.4 crores.
11. The letter of indemnity clearly seems to suggest that the dispute with regard to GST only has been settled and the other disputes are still pending.
12. The eye of the needle test shows that there is an arbitration agreement This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:28 between the parties and as per the petitioner, the dispute only with regard to the GST has been settled.
13. As regards the next objection of M/s PDIL being a party is concerned, a perusal of the contract shows that M/s PDIL was only acting for and on behalf the respondent.
14. The arbitration clause also shows that disputes between the contractor i.e. the petitioner and the owner i.e. the respondent, or the consultant i.e. M/s PDIL can be referred to arbitration. In the present case, the dispute is not with M/s PDIL but with the respondent and hence the petitioner has only made the respondent a party.
15. The findings above are only prima facie for deciding the present petition and the issue with regard to there being no dispute to be referred to arbitration may be raised by the respondent before the Arbitral Tribunal, who will decided the same in accordance with law.
16. For the said reasons, the petition is allowed and disposed of with the following directions:
i) With the consent of parties, instead of three arbitrators, Justice R.S. Endlaw (Retd.) (Mob. No. 9717495002) is appointed as a Sole Arbitrator to adjudicate the disputes between the parties.
ii) The arbitration will be held under the aegis of the Delhi International Arbitration Centre, Delhi High Court, Sher Shah Road, New Delhi hereinafter, referred to as the 'DIAC'). The remuneration of the learned Arbitrator shall be in terms of the Fourth Schedule of the Arbitration & Conciliation Act, 1996.
iii) The learned Arbitrator is requested to furnish a declaration in terms of Section 12 of the Act prior to entering into the reference.
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:28
iv) It is made clear that all the rights and contentions of the parties, including as to the arbitrability of any of the claim, any other preliminary objection, as well as claims on merits of the dispute of either of the parties, are left open for adjudication by the learned arbitrator.
v) The parties shall approach the learned Arbitrator within two weeks from today.
JASMEET SINGH, J MARCH 12, 2024/DM Click here to check corrigendum, if any This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/03/2024 at 20:33:28