Delhi High Court
Aar Pee Refrigeration And ... vs Airports Authority Of India Through The ... on 17 February, 2025
Author: Purushaindra Kumar Kaurav
Bench: Purushaindra Kumar Kaurav
$-5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 113/2025
Date of Decision: 17.02.2025
IN THE MATTER OF:
AAR PEE REFRIGERATION AND AIRCONDITIONING
THROUGH ITS PROPRIETOR SH. ANJUMAN AGNIHTRI
..... PETITIONER
Through: Mr.Rahul Rai, Mr.Vishal Bhardwaj,
Mr.Tushar Rawal and Mr.Shekhar
Mehla, Advocates.
Versus
AIRPORTS AUTHORITY OF INDIA THROUGH THE REGIONAL
EXECUTIVE DIRECTOR
.... RESPONDENT
Through: Ms.Sonal K Singh and Mr.Ratik
Sharma, Advocates.
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
JUDGEMENT
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (A&C Act), seeking the appointment
of an Arbitrator to adjudicate upon the disputes that have arisen between the
parties. The facts of the case would indicate that the petitioner is a
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proprietorship concern engaged in the business of providing Air-
Conditioning Maintenance and allied services.
2. Learned counsel for the petitioner submits that the respondent had
invited e-tenders for the works pertaining to "Annual Comprehensive
Maintenance and Operation of A/C Plants at Various Locations" in the
operational area at IGI Airport, Delhi, for a period of two years (2018-2020).
3. Pursuant thereto, upon compliance with requisite formalities,
including the deposit of a bank guarantee, the respondent awarded the
contract in favour of the petitioner vide award letter dated 20.11.2018.
However, certain disputes subsequently arose between the parties,
compelling the petitioner to first invoke the Dispute Redressal Committee
(DRC) and thereafter initiate arbitration proceedings against the respondent
in terms of Clause 25 of the General Conditions of Contract (GCC).
4. Learned counsel for the petitioner submits that despite the
commencement of arbitration and the ongoing proceedings, the respondent
continued to seek the services of the petitioner-entity for the completion of
contractual works. In compliance with its obligations, it is submitted that the
petitioner diligently proceeded with the execution of the works as per the
contract.
5. It is further submitted that upon completion of the obligations under
the agreement, the petitioner duly intimated the respondent and requested for
the release of outstanding payments, formal recording of completion, and
issuance of the completion certificate. According to the petitioner, after
multiple follow-ups, the respondent issued a Completion Certificate only on
21.06.2023. However, the certificate reflected wrongful deductions under
the head "Reimbursement of EPF, ESI, Wage Difference, Bonus, and
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exclusive GST,", and this, according to the petitioner, caused certain
financial prejudice. Aggrieved by these adjustments, the petitioner issued a
Demand Notice for Arbitration on 21.06.2023 under Clause 25 of the GCC,
raising claims under various heads. Learned counsel submits that the
disputed claims amount to Rs.40,59,496/-.
6. Subsequently, on 16.10.2023, the petitioner addressed a letter to the
respondent through its Senior Manager (Engg.-E), requesting the
appointment of a DRC/Arbitrator concerning the final bill for the executed
works.
7. Further, it is submitted that in accordance with Clause 25 of the
Agreement, the petitioner once again issued a notice in Form XVII on
10.05.2024, reiterating its claims and requesting the appointment of an
arbitrator. Thereafter, on 09.10.2024, the petitioner, through its legal
counsel, sent another notice to the respondent seeking the appointment of a
DRC/Arbitrator.
8. In light of the foregoing, the learned counsel for the petitioner submits
that it is necessary that an Arbitrator be appointed under Clause 25 of the
GCC to adjudicate the disputes between the petitioner and the respondent.
9. The respondent, by way of reply dated 14.02.2025, opposes the
instant petition primarily on the ground that a part of the claim raised herein
could have been the subject matter of a prior dispute, which has already
attained finality.
10. Learned counsel for the respondent contends that before the
commencement of the present round of arbitral proceedings, the disputes
between the parties had already been adjudicated by the DRC of the
respondent, which, after considering the merits of the claims, ruled in favour
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of the respondent. Further, she submits that the first Arbitral Tribunal
rendered an award in favour of the respondent herein, directing the
petitioner herein to pay an amount of Rs.9,38,400/- (Rupees Nine Lakh
Thirty-Eight Thousand Four Hundred Only).
11. Pursuant thereto, the respondent, by letter dated 16.09.2021, requested
the petitioner to deposit the awarded amount through demand draft.
However, the petitioner did not comply with the same. Instead, the petitioner
preferred an application under Section 34 of the Arbitration and Conciliation
Act, 1996, bearing OMP (Comm) No. 99/2021 titled AAR PEE
Refrigeration & Air-Conditioning v. Airports Authority of India, before the
Patiala House Courts, New Delhi, challenging the first Arbitral Award. The
Patiala House Court, by judgment dated 26.11.2021, dismissed the Section
34 application and upheld the findings of the Arbitral Tribunal. The
petitioner did not prefer any appeal against the said judgment, thereby
allowing the awarded amount under the first Arbitral Award to attain
finality.
12. The respondent further submits that, as per the Agreement, the work
allotted to the petitioner was to be completed by 14.12.2020, but the actual
completion occurred on 11.02.2021. Additionally, under the terms of the
Agreement, the petitioner was required to rectify all defects until
11.08.2021, which marked the expiry of the Defect Liability Period.
Subsequently, on 21.06.2023, the respondent issued a Completion
Certificate, wherein it sought certain recoveries from the final bill of the
petitioner solely under the ambit of the agreement between the parties.
13. Learned counsel further submits that the petitioner, vide letter dated
21.06.2023, sought reference of certain disputes to the DRC. However, the
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respondent submits that the petitioner failed to specify the nature of the
disputes, especially when the issues between the parties had already been
adjudicated in the first arbitral proceedings. The respondent also points out
that certain letters/communications between the parties have not been
annexed by the petitioner along with the present petition.
14. Learned counsel then contends that, at this stage, a petition under
Section 11 of the A&C Act is not maintainable, therefore, the same deserves
to be dismissed.
15. I have considered the submissions made by learned counsel appearing
on behalf of the parties and perused the record.
16. The Supreme Court, in various decisions, has held that at the stage of
Section 11, the Court only needs to look into as to whether there subsists any
dispute arising from an arbitration clause. The veracity of the claim on
merit, as to whether the same is acceptable or otherwise, need not be
examined in depth.
17. The relevant paragraphs of the decision in the case of Interplay
Between Arbitration Agreements under Arbitration, 1996 & Stamp Act,
1899, In re1, reads as under:-
"120. In view of the above discussion, we formulate our conclusions on
this aspect. First, the separability presumption contained in Section 16 is
applicable not only for the purpose of determining the jurisdiction of the
Arbitral Tribunal. It encapsulates the general rule on the substantive
independence of an arbitration agreement. Second, parties to an
arbitration agreement mutually intend to confer jurisdiction on the
Arbitral Tribunal to determine questions as to jurisdiction as well as
substantive contractual disputes between them. The separability
presumption gives effect to this by ensuring the validity of an arbitration
agreement contained in an underlying contract, notwithstanding the
invalidity, illegality, or termination of such contract. Third, when the
(2024) 6 SCC 1
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parties append their signatures to a contract containing an arbitration
agreement, they are regarded in effect as independently appending their
signatures to the arbitration agreement. The reason is that the parties
intend to treat an arbitration agreement contained in an underlying
contract as distinct from the other terms of the contract; and Fourth, the
validity of an arbitration agreement, in the face of the invalidity of the
underlying contract, allows the Arbitral Tribunal to assume jurisdiction
and decide on its own jurisdiction by determining the existence and
validity of the arbitration agreement. In the process, the separability
presumption gives effect to the doctrine of competence-competence.
***
(iii) Negative competence-competence
139. The international arbitration law as well as domestic law prioritize
the Arbitral Tribunal by permitting them to initially decide challenges to
their authority instead of the Courts. The policy consideration behind this
approach is two-fold : first, to recognize the mutual intention of the parties
of choosing the arbitrator to resolve all their disputes about the
substantive rights and obligations arising out of contract; and second, to
prevent parties from initiating parallel proceedings before courts and
delaying the arbitral process. This is the positive aspect of the doctrine of
competence-competence.
140. The negative aspect, in contrast, speaks to the national courts. It
instructs the Courts to limit their interference at the referral stage by
deferring to the jurisdiction of the Arbitral Tribunal in issues pertaining to
the existence and validity of an arbitration agreement. Thus, the negative
aspect of the doctrine of competence-competence suggests that the Courts
should refrain from entertaining challenge to the jurisdiction of the
Arbitral Tribunal before the arbitrators themselves have had an
opportunity to do so. [ George A. Bermann, "The "Gateway" Problem in
International Commercial Arbitration", (2012) 37 Yale Journal of
International Law 1, 16.] Allowing Arbitral Tribunals to first rule on their
own jurisdiction and later allowing the Courts to determine if the tribunal
exercised its powers properly safeguards both the power and authority of
the Arbitral Tribunal as well as the Courts. The negative aspect of the
doctrine has been expressly recognised by Indian courts. Considering both
the positive and negative facets, the principle can be defined as a rule
whereby arbitrators must have the first opportunity to hear challenges
relating to their jurisdiction, which is subject to subsequent review by
courts. [ Fouchard, Gaillard, Goldman on International Commercial
Arbitration, Emmanuel Gaillard and John Savage (Eds.), (1999) 401.]"
18. Admittedly, the dispute raised in the instant petition is after
completion of work, whereas, the earlier dispute which has been decided,
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was during the subsistence of the contract. It is thus seen that if after
completion of work, if the petitioner has any further claim to be raised
against the respondent, the same cannot be rejected at the very nascent stage
and the same can be the subject matter of adjudication of the Arbitrator.
19. In view of the aforesaid, since the existence of the arbitration clause is
evident from a perusal of the Agreement, there is no impediment in
appointing an independent Sole Arbitrator for adjudicating the disputes
between the parties as prayed for, as mandated in terms of the judgments of
the Supreme Court in Perkins Eastman Architects DPC v. HSCC (India)
Ltd.,2 TRF Limited v. Energo Engineering Projects Ltd.,3 Bharat
Broadband Network Limited v. United Telecoms Limited.,4 and Interplay
between Arbitration Agreements under the Arbitration & Conciliation Act,
1996 & the Indian Stamp Act, 18995.
20. The Court, therefore, leaving all rights and contentions of the parties
open, appoints Mr. Akshat Bajpai, Advocate (Mobile No7985177435; e-mail
ID: [email protected]) as the sole Arbitrator.
21. The arbitration would take place under the aegis of the Delhi
International Arbitration Centre (DIAC), and would abide by its rules and
regulations. The learned Arbitrator shall be entitled to fees as per the
Schedule of Fees maintained by the DIAC.
22. The learned arbitrator is also requested to file the requisite disclosure
under Section 12 (2) of the Act within a week of entering on reference.
23. The registry is directed to send a receipt of this order to the learned
(2020) 20 SCC 760
(2017) 8 SCC 377
2019 SCC OnLine SC 547
In re, 2023 SCC OnLine SC 1666.
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arbitrator through all permissible modes, including e-mail.
24. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned Arbitrator
on their merits, in accordance with law.
25. The petition stands disposed of in the aforesaid terms.
PURUSHAINDRA KUMAR KAURAV, J
FEBRUARY 17, 2025
Nc/sp
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