In the case titled- Parsvnath Developers Ltd. & Anr. v. Rail Land Development Authority, dated- 19 May 2020, Delhi High Court has reiterated that scope and power of the court are restricted only and only to- examining the existence of the Arbitration Clause and not even its validity. The order was passed by Honourable Justice Jyoti Singh.
Petitioner’s claim
The Petitioner was awarded a tender by the Respondent for the development of a plot. There were multiple arbitrations that were held between the parties in the past. According to Petitioner, in the Second Arbitration, the arbitral tribunal declared Performance Bank Guarantee to be non-est, and Respondent was illegally holding PBG of the petitioner and became liable for damages on account of delay in returning PBG to the petitioner.
The petitioner, in the present case filed a petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 for the appointment of sole arbitrator to adjudicate the disputes between the parties.
Respondent’s claim
According to Respondent, the above petition was not maintainable. According to the respondent, the issue of PBG (Personal Bank Guarantee) was a subject matter of the earlier Arbitration and the dispute is no longer alive.
Analysis
The position of law under the Arbitration and Conciliation Act, 1996 changed after Sub-Section (6A) was inserted in Section 11 of the act. Post the amendment, while examining the scope under Section 11, Supreme Court in Duro Felguera, S.A. v. Gangavaram Port Ltd., [(2017) 9 SCC 729] held that the court would confine itself only to examining the existence of an Arbitration Agreement between the parties.
Court also held that the Arbitral Tribunal is empowered under Section 16 of the Act to rule on its own jurisdiction, including determining all other jurisdictional issues. Also, according to the changed position of law after insertion on sub-section 6A in Section 11 of the Act, Court cannot delve into issues of jurisdiction like a limitation, etc.
Thus, in the present case where Respondents raised the objection and asked the court to examine “whether the disputes sought to be raised are overlapping with the claims in the earlier arbitrations between the parties and/or are barred by principles of Order II Rule 2 CPC cannot be sustained in law.”
DECISION OF THE COURT
Now, since it was undisputed that the Agreement between the parties contains an Arbitration Clause as the parties have already subjected themselves to three Arbitrations.
The argument of Respondent that the plea of petitioner is overlapping is a plea of accord and satisfaction and, therefore, the petition was not allowed by the Court as the Court is required to restrict itself to merely examining the existence of Arbitration Agreement between parties.
Since, there existed a valid Arbitration Agreement between parties, the disputes raised by the Petitioners were referred to Arbitration in the present case.
Read Judgment
Share this Document :
Picture Source :