The Allahabad High Court, while appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 reiterated that the scope of Judicial Review in proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996 is very narrow and debatable questions of fact cannot be gone into by the Court while adjudicating an application for appointment of arbitrator.
Brief Facts:
The present application was filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an Arbitrator in terms of Clauses 63 & 64 of the General Conditions of Contract 2014, Indian Railways, in respect of disputes and differences arising out of a contract.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the appellant submitted that under the contract, the power to determine the contract was with the Divisional Railway Manager and not with the Assistant Divisional Engineer Chhapra, who had issued the communication. It is also submitted that after the said communication, the opposite parties themselves required the applicant to complete the work of launching by 09.06.2022 and 14.06.2022 and therefore, it amounts to a waiver of the notice. In support of his statement, he has placed reliance on a communication dated 19.09.2022 by Senior Divisional Manager-II, Varanasi addressed to the applicant.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent contended that firstly the said communication does not amount to waiver of notice as the applicant was repeatedly asked to stop the work. Alternatively, it is submitted that the applicant had not laid a claim before the General Manager in terms of the conditions of the contract and had straightway invoked the arbitration clause, therefore, the application deserves to be rejected.
Observations of the court:
The court noted that the main dispute between the parties is – whether the claim of the applicant is arbitrable or not; whether it would fall under the ‘excepted matter’ as notice under Clause 61 was duly given or the said notice having been waived, the bar relating to non- arbitrability of certain matters under Clause 63 would not apply.
Further, the court referred to the decision of the court in the case of Vidya Drolia and Others vs. Gujarat Informatics Limited, wherein it was held that the expression "the existence of an arbitration agreement" in Section 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the Court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment and further while deciding issue of arbitrability, the Court under Section 11(6) has a very limited power, confined to cases where there is not even a vestige of doubt that the claim is non-arbitrable. Further, considering the factual matrix of the case stated that for resolving the dispute between the parties, it was necessary to appreciate evidence which cannot be done in the proceedings under Section 11(6) of the Act of 1996.
The court concluded that in the present case, it cannot be said that the claim is outrightly non-arbitrable and it cannot be decided at this stage, as it involves deciding debatable questions of fact, therefore, the issue should be left open to be decided by the arbitrator. Further, the court stated that once the opposite party believed that the dispute fell under 'excepted matters' and was non-arbitrable, it was sufficient for them to refer the dispute to an arbitrator.
The decision of the Court:
The court allowed the application and appointed Sri Shashi Kant Gupta, a retired Judge of this Court as the arbitrator.
Case Title: Neelkanth Construction vs Union of India and Ors.
Coram: Hon’ble Mr. Chief Justice Manoj Kumar Gupta
Case No.: ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 42 of 2023
Advocate for the Petitioner: Mr. Chandra Shekhar Singh
Advocate for the Respondent: A.S.G.I., A.K. Saxena, Awadhesh Kumar Saxena
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