Delhi High Court
Aaic Building Solutions Ltd. ... vs Archaeological Survey Of India & ... on 12 May, 2020
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 16.12.2019
Pronounced on: 12.05.2020
+ ARB.P. 389/2019
AAIC BUILDING SOLUTIONS LTD. (FORMERLY, AIC
BUILDING SOLUTIONS LTD) .... Petitioner
Through Mr. Sahil Raveen, Advocate
versus
ARCHAEOLOGICAL SURVEY OF INDIA & ANR.
.... Respondents
Through Mr. Jayant Bhatt, Sr. Counsel
with Ms. Deepali Suri, Mr.
Mohit Dagar, Ms. Apoorva
Jain, Ms. Umang Verma,
Advocates.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGEMENT
1. Present petition has been filed under Section 11(6) of the
Arbitration & Conciliation Act, 1996 (hereinafter referred to as the
„Act‟) for appointment of an Arbitrator to adjudicate the disputes
between the parties in relation to a Work Order dated 21.12.2009.
2. The facts necessary to mention for deciding the present
petition are that on 20.09.2009, Respondent No. 1 issued Notice
Inviting Tender for the work of "S/R to Hauz Khas". On
16.12.2009, the Superintending Archaeological Engineer gave
approval to the Superintending Archaeologist for awarding Tender
to M/s AIC Building Solutions Ltd., being the lowest Bidder. On
21.12.2009, a Work Order was issued to M/s AIC Building
Solutions Ltd. Subsequently, M/s AIC Building Solutions Ltd. was
taken over by the petitioner herein. Accordingly, the Agreement for
the project was signed between ASI and the Petitioner and the
payments relating to the Project were also made to the Petitioner,
who executed the Project on Standard Terms, as set out in the
General Conditions of Contract (hereinafter referred to as „GCC‟)
for CPWD Works as per the 2008 Manual.
3. It is the case of the petitioner that the Work Order had Clause
6(B) which clearly stipulated the material to be provided for
execution of the work. Clause 6(B) is as under:
―P/L 10 em thick Hard Sand Stone flooring in pathways
with top dressed with base lime Surkhi mortar 1:1:1 (1
U. Lime 1 Surkhi, 1.B.P. Sand) mixed with colouring
Pigment to march the stone lead 150 mts.‖
4. The execution of the aforesaid work item, according to the
Petitioner was dependent on supply of the material provided in the
Work Order. However, at the time of execution of the work,
petitioner was provided "Hard Stone" instead of "Hard Sandstone"
and the issue of the difference in the material so provided was raised
before the concerned officer before the execution of the work.
Petitioner avers that due to the Commonwealth Games approaching,
the Petitioner was compelled to proceed with the work with the
given material but was assured that additional money shall be paid
for change in the scope of work. On the assurance so given,
petitioner had proceeded with the work.
5. As per the Petitioner, cost incurred by the petitioner was
significantly higher than the specified cost in the Work Order. Due
to the change in the material, the volume of work required to dress
the stone and the cost of labour increased considerably. The
Petitioner at all times had kept Respondent No. 1 informed of the
difference in work and the cost.
6. Learned counsel for the petitioner submits that despite various
letters written to Respondent No. 1, Final Bill for the work done at
the increased cost was not been cleared on the pretext that it was
under consideration, and payment is still pending. Even the Earnest
Money Deposit has also not been released till date. Learned
counsel for the petitioner further submits that on 08.11.2018,
Respondent No. 1 in its internal letter to the Director General of
Respondent No. 1 acknowledged the pending payment and has
recorded that due to lack of instructions, no decision has been
taken.
7. Learned counsel further submits that the Work Order contains
Arbitration Clause, being Clause 25 in the GCC and the Petitioner
on 20.04.2019 invoked the said Arbitration Agreement. Since there
is no „Chief Engineer‟, CPWD as envisaged in Clause 25 in ASI,
Petitioner requested the Additional DG of the concerned Region to
appoint an Arbitrator. It is submitted that the notice has been duly
received by Respondent No. 1. Respondent No. 2 vide its letter
dated 06.05.2019, replied to the notice and stated that the work was
executed by the Petitioner for ASI and CPWD has nothing to do
with the Work Order or the Arbitration Agreement. Only the format
of CPWD has been used in Work Order and CPWD has no concern
with the Petitioner. This according to the Petitioner is an error, as
Respondent No. 2 is the appointing Authority under the Arbitration
Agreement. Since the Authority has failed to appoint the Arbitrator,
the present petition has been filed for appointment of the Arbitrator.
8. Reply has been filed in opposition to the petition only by
Respondent No. 1, ASI (Archaeological Survey of India). Stand of
Respondent No. 1 is that on 20.09.2009, ASI had issued an NIT for
the work at Hauz Khas Complex. The Tender for „S/R to Hauz
Khas‟ was divided into two components i.e, Labour Component
and Material Component. Work Order No. 13/20/2008-W-65 was
awarded to another Firm for supply of material and to M/s AIC
Building Solutions Ltd., for executing the labour component.
Petitioner was told by Respondent No. 1 to execute the labour
component of the Work Order for Hard Sandstone in accordance
with Serial No. 6(B) of the Work Order. The estimated rate of the
flooring was 1424.20 per sq. meter. It is contended by the learned
counsel for respondent that Petitioner had raised more than five
running bills till 17.08.2011 and had completed 2009.30 sq. meters
of work out of total assigned work for 2085.60 sq. meters, without
raising any objection regarding the hardness of the stone supplied.
It is argued that the malafide intent of the petitioner can be seen
from the fact that the petitioner did not even raise the said issue by
giving a written claim to the Engineer In-Charge in terms of Clause
25(i) of the GCC. Clause 25(i) relied upon by Respondent No. 1
reads as under:
― If the contractor considers any work demanded of him to be
outside the requirements of the contract, or disputes any
drawings, record or decision given in writing by the,
Engineers- in -Charge on any matter in connection with or
arising out of the contract or carrying out of the work, to be
unacceptable, he shall promptly within 15 days request the
Superintending Engineer in writing for written instruction or
decision. Thereupon, Superintending Engineer shall give his
written instructions or decision within a period of one month
from the receipt of the contractor's letter. If the
Superintending Engineer fails to give his instructions or
decision in written within the aforesaid period or if the
contractor is dissatisfied with the instructions or decision of
the Superintending Engineer, the contractor may, within 15
days of the receipt of Superintending Engineer's decision,
appeal of the Chief Engineer who shall afford an opportunity
to the contractor to be heard, if the latter so desire, and to
offer evidence in support of his appeal. The Chief Engineer
shall give his decision within 30 days of receipt of contractor's
appeal. If the contractor is dissatisfied with this decision, the
contractor shall within a period of 30 days from receipt of the
decision, give notice to the Chief Engineer for appointment of
arbitrator failing which the 'Said decision shall be final binding
and conclusive and not referable to adjudication by the
arbitrator.‖
9. Petitioner has for the first time raised the concern vide its
letter dated 21.08.2012, after receiving several payments under the
running account bills.
10. It is further argued that despite the fact that the Claim of the
Petitioner was time-barred, in order to examine that there is no
undue loss to the Petitioner, the Superintending Archaeologist
wrote to the DG of Respondent No. 1 vide letter dated 12.12.2013
for constitution of a Committee to resolve the matter. It is
submitted that the Inspection Report of the Committee
recommended that the Claim of the Petitioner was not appropriate,
having been raised after completion of the work and having
executed more than 85% of the assigned work. The Committee at
the same time recommended that the stone used by the petitioner
after necessary dressing be examined by GSI or MPL in their
Laboratory, to determine its exact characteristic and hardness.
Petitioner was also asked to clarify vide letter dated 11.12.2014 as
to why the grievance was not raised till the final bill was settled, but
the Petitioner never responded. Learned counsel points out that
both the GSI and the MPL, however, never gave any report on the
issue. Respondent No. 1, then, approached IIT-Delhi for
conducting the test and it was found that two samples out of three
were made out of Quartzite, which is nothing but hard sandstone.
The sum and substance of the report was that there was no
difference between hard stone and hard sandstone for the Work, as
both require equal effort in dressing, by chiseling.
11. Learned counsel for the respondent further submits that the
petitioner has tried to mislead the Court by giving an impression as
if there was Tripartite Agreement between the parties i.e. the
Petitioner and both the Respondents, whereas CPWD has nothing to
do with the Agreement in question. Respondent No.1 merely
follows the format/procedure of the CPWD Manual for awarding
the Tender.
12. Learned counsel for Respondent No. 1 further contends that
the petition is even otherwise not maintainable as the Claims sought
to be raised by the Petitioner are time-barred.
13. Without prejudice to the above contentions, learned counsel
for respondent No. 1 draws the attention of this Court to Clause 25
of the GCC and submits that the said Clause relied upon by the
Petitioner lays down a completely different procedure for resolution
of disputes than the one followed by the Petitioner. The Petitioner
instead of writing a letter to the Superintending Engineer within 15
days of the arising of the dispute and thereafter writing to the Chief
Engineer for appointment of an Arbitrator, has directly approached
this Court.
14. It is further pointed out that as per the procedure, Petitioner in
case of any dispute had to write to the Superintending Engineer for
its decision and in case he failed to give a decision, then within 15
days, Petitioner ought to have filed an appeal before the Chief
Engineer. If the Petitioner was dissatisfied with this decision, then
he had to give a notice to the Chief Engineer for appointment of an
Arbitrator. Petitioner has taken no recourse to this Clause and has
approached this Court after several years of the arising of the
dispute, if any.
15. Petitioner in its rejoinder argued that counsel for Respondent
No. 1 is incorrect in his submission that it only follows the format
or the procedure of the CPWD Manual. It has failed to bring to the
attention of this Court that while making the Petitioner sign the
Standard Form Agreement which is the „CPWD General Conditions
of Contract‟, Respondent No. 1 had given reference of the Work
Order dated 21.12.2009 issued in favour of the Petitioner. Learned
counsel for the petitioner has also drawn the attention to the
Agreement signed by Petitioner and Respondent No. 1, relevant
part of which reads as under:
―I/We have read and examined the notice inviting tender
Schedule A, B, C, D, E & F. Specifications applicable,
Drawings & Designs, General Rules and Directions,
Conditions of Contract, clause of contract, Special
conditions, Schedule of Rate & other documents and
Rules referred· to in the conditions of contract and all
other contents in the tender document for the work‖.
16. It is submitted that this Agreement was entered into with open
eyes, aware of Clause 25 which contains an Arbitration Clause. It is
further argued that it is wrong for Respondent No. 1 to contend that
the Petitioner should have first approached the SE and thereafter the
CE and has failed to mention that Respondent No. 1 has no Engineer
In-Charge, SE or CE. The details of hierarchy and the Authorities in
Respondent No. 1 are available on the website and are as under:
Serial Name and Designation Contact Number Mobile
No. Number
1 .......... 011-24654832 N.A.
Superintending Archaeologist 011-24654833
2 ........ 011-24654830 N.A
Dy. Superintending
Archaeological Engineer
3 ........... 011-24654829 N.A
Dy. Superintending Archaeologist
4 .......... 011-24654829 N.A
Dy. Superintending Archaeologist
5 ........... 011-24695350 N.A
Asst. Superintending
Archaeologist
6 ............ 011-24695347 N.A
Administrative Officer
8 ............. N.A N.A
Assistant Archaeologist
9 ........... 011-24654830 N.A
A.S.A.E.
17. It is denied that the Petitioner has raised the issue of
difference in the material supplied only on 21.08.2012. As a matter
of fact, when the Petitioner initiated the work, it had noticed that
the stone supplied was hard stone and had immediately raised the
issue with Shri S.N. Sharma, Deputy Superintending
Archaeological Engineer, in May 2010. Counsel reiterates that on
account of Common Wealth Games he was forced into continuing
the work with the material supplied. Even subsequently, on
28.01.2011, the said issue was raised. Learned Counsel has drawn
attention to various letters placed on record. It is further argued
that Respondent No.1 in its letter has acknowledged that hard stone
was in fact used in the floorings of the pathways and this shows that
Respondent No. 1 was very well aware of the difference in material
supplied.
18. Learned counsel further argues that this is fortified by the fact
that a Committee was constituted to resolve the issue on
19.12.2013, which recommended a specialized Laboratory to test
the material. IIT-Delhi was also requested to carry out the test.
Further, on 08.09.2016, Superintending Archaeologist had written
to the DG requesting to sanction Rs.2,31,314/-, due to the Petitioner
towards Security Deposit and the EMD. However, despite
acknowledging the debt, Respondent No. 1 did not make the
payment. Left with no other option, Petitioner again requested
Respondent No. 1 on 24.10.2018 to release the payments. Despite
assurances, money was not released and the Petitioner vide letter
dated 19.01.2019, raised its grievance with the DG of Respondent
No. 1.
19. Learned counsel for the Petitioner vehemently argues that
even in the reply to the present petition, Respondent No. 1 has
acknowledged that payment is due to the petitioner. Counsel has
drawn the attention of the Court to para 11 of the petition which
reads as under:
― The Respondent No. 1 has continuously recognized that
payment for the substituted work needs to be made to the
Petitioner. However, despite various communications, no
conclusive solution has been arrived at between the parties
despite the complete execution of the work in the Project. The
final bill for the work done by the Contractor in the Project
has also not been made despite repeated assurances given by
the officials of ASI. The present petition is limited in its scope
of seeking appointment of an arbitrator for the adjudication
of disputes between the Petitioner and the Respondent No. 1.
The Petitioner seeks liberty to place on record additional
documents, if need so arises."
20. Counsel also points to the parawise reply to the said
paragraph, which reads as under:
"That the contents of the Para 11 of the Petition are matter of
record. However, it is submitted that the claim which is put
forward by the Petitioner is not a dispute which is
enforceable through arbitration proceedings reason being the
steps which were required to be taken by the Petitioner in
accordance with clause 25 of GCC are not being taken.
Furthermore, mere acknowledging the claim of the Petitioner
does not mean that the claim that is put forward by the
Petitioner is enforceable through Arbitration.‖
21. It is thus prayed that the petition be allowed and an Arbitrator
be appointed by this Court so that the disputes between the parties
are adjudicated.
22. I have heard the learned counsels for the parties and examined
their submissions.
23. It is undisputed that pursuant to the Notice Inviting Tender,
Respondent No. 1, ASI, had issued Work Order to M/s AIC
Building Solutions which was taken over by the Petitioner herein.
The Work Order dated 21.12.2009, which is placed on record,
contains the description, specification of work, total quantity to be
executed and the amounts payable against the various Heads. Para 7
of the Work Order clearly mentions that the work would be
executed as per CPWD specifications, IS Code and Archaeological
Survey of India, Specifications.
24. Petitioner has also placed on record a document at page 26
which are the General Guidelines. Page 25 is a document titled
„Percentage Rate/Item Rate Tender and Contract‟. The Index of the
said document mentions the Guidelines for use of standard form
and there is also a reference to Tender Form CPWD-7/8. Petitioner
has also filed a document at page 28 which is the CPWD Form-7/8
and bears the heading „Government of India-Central Public Works
Department‟.
25. Para (A) of the said Form reads as under:
It is clear from a reading of this document that there is a
mention of award of Tender in favour of M/s AIC Building
Solutions Ltd.
26. Page 30 contains the „Acceptance of the Tender‟ and is signed
by the concerned officer of Respondent No. 1 as well as the
Managing Director of M/s AIC Building Solutions Ltd. Relevant
part is scanned and placed below:
27. Perusal of page 28 which is the CPWD Form-7/8 clearly
shows that the specifications, drawings and design and General
Rules & Directions, Conditions of Contract would be applicable to
the Tender in question. Relevant para has been reproduced in
paragraph 15 of this judgment.
28. The General Rules and Directions have been annexed with the
Petition and start from page 32 of the paper book. The document
referred to as "Clauses of Contract in the Acceptance of Tender
Document" is also annexed with the petition. Page 110 of the
Clauses of Contract clearly refers to Clause 25 which contains the
mechanism for Settlement of Disputes and Arbitration. The
relevant clause reads as under:
"Settlement of Disputes & Arbitration Except where otherwise
provided in the contract, all questions and disputes relating to
the meaning of the specifications, design, drawings and
instructions here-in before mentioned and as to the quality of
workmanship or materials used on the work or as to any other
question, claim, right, matter or thing whatsoever in any way
arising out of or relating to the contract, designs, drawings,
specifications, estimates, instructions, orders or these
conditions or otherwise concerning the works or the
execution or failure to execute the same whether arising
during the progress of the work or after the cancellation,
termination, completion or abandonment thereof shall be
dealt with as mentioned hereinafter:
If the contractor considers any work demanded of
him to be outside the requirements of the contract,
or disputes any drawings, record or decision given
in writing by the, Engineers- in -Charge on any
matter in connection with or arising out of the
contract or carrying out of the work, to be
unacceptable, he shall promptly within 15 days
request the Superintending Engineer in writing for
written instruction or decision. Thereupon,
Superintending Engineer shall give his written
instructions or decision within a period of one
month from the receipt of the contractor's letter. If
the Superintending Engineer fails to give his
instructions or decision in written within the
aforesaid period or if the contractor is dissatisfied
with the instructions or decision of the
Superintending Engineer, the contractor may,
within 15 days of the receipt of Superintending
Engineer's decision, appeal of the Chief Engineer
who shall afford an opportunity to the contractor
to be heard, if the latter so desire, and to offer
evidence in support of his appeal. The Chief
Engineer shall give his decision within 30 days of
receipt of contractor's appeal. If the contractor is
dissatisfied with this decision, the contractor shall
within a period of 30 days from receipt of the
decision, give notice to the Chief Engineer for
appointment of arbitrator failing which the 'Said
decision shall be final binding and conclusive and
not referable to adjudication by the arbitrator.
Except where the decision has become final, binding and
conclusive in terms of Sub Para (i) above, disputes or,
difference shall be referred for adjudication through arbitration
by a sole arbitrator appointed by the Chief Engineer, CPWD, in
charge of the work or if there be no Chief Engineer, the
Additional Director General of the concerned region of CPWD
or if there be no Additional Director General, the Director
General of Works, CPWD. If the arbitrator so appointed is
unable or unwilling to act or resigns his appointment or vacates
his office due to any reason whatsoever, another sole arbitrator
shall be appointed in the manner aforesaid. Such person shall
be entitled to proceed with the reference from the stage at which
it was left by his predecessor. It is a term of this contract that
the party invoking arbitration shall give a list disputes with
amount claimed in respect of each such dispute alongwith the
notice for appointment of arbitrator and giving reference to the
rejection by the Chief Engineer of the appeal. It is also a term of
this contract that that no person, other than a person appointed
by such Chief Engineer CPWD or the administrative head of the
CPWD, as aforesaid, should act as arbitrator and if for any
reason that is not possible, the matter shall not be referred to
arbitration at all. It is also a term of this contract that of the
arbitrator does not make any demand for appointment of
arbitrator in respect of any claims in writing as aforesaid within
120 days of receiving the intimation from the Engineer -
incharge that the final bill is ready for payment, the claim of the
contractor shall be deemed to have been waived and absolutely
barred and the Government , shall be discharged and released
of all liabilities under the contract in respect of these claims.
The arbitration shall be conducted in accordance with the
provision of the Arbitration and Conciliation Act, 1996 (26 of
1996) or any statutory modification or reenactment thereof and
the rules made thereunder and for the time being in force shall
apply to the arbitration proceeding under this clause."
29. It is thus clear that the Tender in question was governed not
only by the specifications as per the CPWD Manual, but was also
governed by the General Rules and Clauses of Contract mentioned
in the CPWD Manual and Guidelines. Clause 25 which is the part
of the Clauses of Contract was intended by the parties to be the
mechanism of resolution of disputes between the parties.
30. In my opinion, contention of respondent No. 1 that the CPWD
Manual and the Guidelines therein, were relevant only to the extent
that the Work Order was executed on a Form prescribed by the
Manual, merits rejection. It is clear from perusal of the documents
referred to above, that the Work Order and its Acceptance referred
to and included the General Rules and Clauses of Contract
mentioned in the CPWD manual which in turn contains Clause 25
as an Arbitration Clause. Thus there exists an Arbitration
Agreement between the parties.
31. Under Section 11(5) of the Act, this Court is required to
examine only the existence of an Arbitration Agreement, after
insertion of (6A) in Section 11, by 2015 Amendment to the Act.
Following paras from the judgment of the Supreme Court in the
case of Mayavati Trading Private Limited v. Pradyuat Deb
Burman, (2019) 8 SCC 714 are relevant in this regard and read as:
―9. The 246th Law Commission Report dealt with some
of these judgments and felt that at the stage of a Section
11(6) application, only ―existence‖ of an arbitration
agreement ought to be looked at and not other
preliminary issues. In a recent judgment of this Court,
namely, Garware Wall Ropes Ltd. v. Coastal Marine
Constructions & Engg. Ltd. [Garware Wall Ropes
Ltd. v. Coastal Marine Constructions & Engg. Ltd.,
(2019) 9 SCC 209 : 2019 SCC OnLine SC 515] , this
Court adverted to the said Law Commission Report and
held: (Garware Wall Ropes Ltd. case [Garware Wall
Ropes Ltd. v. Coastal Marine Constructions & Engg.
Ltd., (2019) 9 SCC 209 : 2019 SCC OnLine SC 515] ,
SCC paras 8-14)
* * *
10. However, in SBP & Co. [SBP & Co. v. Patel
Engg. Ltd., (2005) 8 SCC 618] , a seven-Judge
Bench overruled this view and held that the
power to appoint an arbitrator under Section 11
is judicial and not administrative. The
conclusions of the seven-Judge Bench were
summarised in para 47 of the aforesaid
judgment. We are concerned directly with sub-
paras (i), (iv) and (xii), which read as follows:
(SCC pp. 663-64).
(i) The power exercised by the Chief
Justice of the High Court or the Chief
Justice of India under Section 11(6) of
the Act is not an administrative power.
It is a judicial power.
* * *
(iv) The Chief Justice or the designated
Judge will have the right to decide the
preliminary aspects as indicated in the
earlier part of this judgment. These will
be his own jurisdiction to entertain the
request, the existence of a valid
arbitration agreement, the existence or
otherwise of a live claim, the existence
of the condition for the exercise of his
power and on the qualifications of the
arbitrator or arbitrators. The Chief
Justice or the designated Judge would
be entitled to seek the opinion of an
institution in the matter of nominating
an arbitrator qualified in terms of
Section 11(8) of the Act if the need
arises but the order appointing the
arbitrator could only be that of the
Chief Justice or the designated Judge.
11. This position was further clarified
in Boghara Polyfab as follows: (SCC p. 283,
para 22)
22. Where the intervention of the court
is sought for appointment of an Arbitral
Tribunal under Section 11, the duty of
the Chief Justice or his designate is
defined in SBP & Co. [SBP &
Co. v. Patel Engg. Ltd., (2005) 8 SCC
618] This Court identified and
segregated the preliminary issues that
may arise for consideration in an
application under Section 11 of the Act
into three categories, that is, (i) issues
which the Chief Justice or his designate
is bound to decide; (ii) issues which he
can also decide, that is, issues which he
may choose to decide; and (iii) issues
which should be left to the Arbitral
Tribunal to decide.
* * *
12. As a result of these judgments, the door was
wide open for the Chief Justice or his designate
to decide a large number of preliminary aspects
which could otherwise have been left to be
decided by the arbitrator under Section 16 of the
1996 Act. As a result, the Law Commission of
India, by its Report No. 246 submitted in August
2014, suggested that various sweeping changes
be made in the 1996 Act. Insofar as 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] are
concerned, the Law Commission examined the
matter and recommended the addition of a new
sub-section, namely, sub-section (6-A) in Section
11. In so doing, the Law Commission
recommendations which are relevant and which
led to the introduction of Section 11(6-A) are as
follows:
* * *
30. After a series of cases culminating
in the decision in SBP & Co. v. Patel
Engg. Ltd. [SBP & Co. v. Patel Engg.
Ltd., (2005) 8 SCC 618] , the Supreme
Court held that the power to appoint an
arbitrator under Section 11 is a
―judicial‖ power. The underlying
issues in this judgment, relating to the
scope of intervention, were
subsequently clarified by Raveendran,
J. in National Insurance Co.
Ltd. v. Boghara Polyfab (P)
Ltd. [National Insurance Co.
Ltd. v. Boghara Polyfab (P) Ltd.,
(2009) 1 SCC 267 : (2009) 1 SCC (Civ)
117] , where the Supreme Court laid
down as follows: (SCC p. 283, para 22)
22.1. The issues (first
category) which Chief
Justice/his designate will have
to decide are:
(a) Whether the party making
the application has
approached the appropriate
High Court?
(b) Whether there is an
arbitration agreement and
whether the party who has
applied under Section 11 of
the Act, is a party to such an
agreement?
22.2. The issues (second
category) which the Chief
Justice/his designate may
choose to decide are:
(a) Whether the claim is a
dead (long barred) claim or a
live claim?
(b) Whether the parties have
concluded the
contract/transaction by
recording satisfaction of their
mutual rights and obligation
or by receiving the final
payment without objection?
22.3. The issues (third
category) which the Chief
Justice/his designate should
leave exclusively to the
Arbitral Tribunal are:
(a) Whether a claim made falls
within the arbitration clause
(as for example, a matter
which is reserved for final
decision of a departmental
authority and excepted or
excluded from arbitration)?
(b) Merits of any claim
involved in the arbitration.‖
* * *
32. In relation to the nature of
intervention, the exposition of the law is
to be found in the decision of the
Supreme Court in Shin-EtsuChemical
Co. Ltd. v. Aksh Optifibre Ltd. [Shin-
Etsu Chemical Co. Ltd. v. Aksh
Optifibre Ltd., (2005) 7 SCC 234] , (in
the context of Section 45 of the Act),
where the Supreme Court has ruled in
favour of looking at the
issues/controversy only prima facie.
13. Pursuant to the Law Commission
recommendations, Section 11(6-A) was
introduced first by Ordinance and then by the
Amendment Act, 2015. The Statement of Objects
and Reasons which were appended to the
Arbitration and Conciliation (Amendment) Bill,
2015 which introduced the Amendment Act, 2015
read as follows:
‗Statement of Objects and Reasons'
* * *
6. It is proposed to introduce the
Arbitration and Conciliation
(Amendment) Bill, 2015, to replace the
Arbitration and Conciliation
(Amendment) Ordinance, 2015, which
inter alia, provides for the following,
namely--
* * *
(iv) to provide that while
considering any application
for appointment of
arbitrator, the High Court
or the Supreme Court shall
examine the existence of a
prima facie arbitration
agreement and not other
issues;
14. A reading of the Law Commission Report,
together with the Statement of Objects and
Reasons, shows that the Law Commission felt
that the judgments 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] required a relook,
as a result of which, so far as Section 11 is
concerned, the Supreme Court or, as the case
may be, the High Court, while considering any
application under Sections 11(4) to 11(6) is to
confine itself to the examination of the existence
of an arbitration agreement and leave all other
preliminary issues to be decided by the
arbitrator.‖
10. This being the position, it is clear that the law prior to the
2015 Amendment that has been laid down by this Court,
which would have included going into whether accord and
satisfaction has taken place, has now been legislatively
overruled. This being the position, it is difficult to agree with
the reasoning contained in the aforesaid judgment [United
India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd.,
(2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] , as Section
11(6-A) is confined to the examination of the existence of an
arbitration agreement and is to be understood in the narrow
sense as has been laid down in the judgment in Duro
Felguera, SA -- see paras 48 & 59.
32. Accordingly, Mr. Justice Pradeep Nandrajog, former Chief
Justice of Bombay High Court, is appointed as a Sole Arbitrator to
adjudicate the disputes between the parties.
33. The address and mobile number of the learned Arbitrator is as
under:
Mr. Justice Pradeep Nandrajog,
Former Chief Justice of Bombay High Court
K-29, Ground Floor, Hauz Khas Enclave,
New Delhi-110016
Mobile: 9818000130
34. The learned Arbitrator shall give disclosure under Section 12
of the Act before entering upon reference.
35. Fee of the Arbitrator shall be fixed as per Fourth Schedule of
the Act.
36. Respondent is at liberty to raise the issue of the claims being
allegedly time barred before the Learned Arbitrator. Needless to
state that if the objection is raised by the Respondent, the same will
be decided by the Arbitrator in accordance with law.
37. The petition is accordingly allowed.
JYOTI SINGH, J
MAY 12th, 2020
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