The Single Bench of the Delhi High Court in the case of M/S Thermal Engineers and Insulators Pvt Ltd vs Delhi Tourism and Transportation Development Corporation Ltd. consisting of Justice Navin Chawla reiterated that in exercising its powers u/s 11 of the Arbitration and Conciliation Act, the court, while considering an application, can only prima facie evaluate the existence of the Arbitration Agreement; it cannot adjudicate the parties' claims and counterclaims in detail.
Facts
This petition was filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the "Act") requesting the appointment of an Arbitrator to adjudicate disputes between the parties over purported payments owed to the petitioner for the construction, upgrading, and facelifting of a school. The Arbitration Agreement between the parties is contained in Clause 25(ii) of the General Conditions of Contract (‘GCC’).
Procedural History
An arbitration petition was first filed, which was disposed of by the order of this Court observing that under Clause 25(i) of the GCC, the petitioner was to first file an appeal before the Chief Engineer; failing any decision thereon, the petitioner had the remedy to a further appeal before the Dispute Resolution Committee ('DRC'); and only thereafter, the petitioner could file a petition u/s 11 of the Act. Therefore, the petition was dismissed for being premature.
Petitioner appealed to Chief Engineer on 12.03.2022. The petitioner requested a DRC through a letter dated 02.05.2022. As even this request was ignored, the petitioner invoked the Arbitration Agreement and filed the present petition.
Contentions Made
Respondent: It was contended that the petitioner executed an undertaking whereby it received a sum of Rs.61,23,683/- (Rupees Sixty-One Lakh TwentyThree Thousand Six Hundred Eighty-Three only) towards the ‘full and final bill payment’ of the subject work. In view of the said document, the Arbitration Agreement contained in the original work contracts stood discharged.
Petitioner: It was contended that the said alleged undertaking was obtained by the respondent by withholding the payment of the running account bills of the petitioner. The same therefore, cannot be relied upon. In any case, this will be a dispute to be adjudicated by the Arbitrator.
Observations of the Court
The Bench, relying on Vidya Drolia v. Durga Trading Corporation, reiterated that the Court at the stage of exercise of powers u/s 11 of the Act is only to prima facie consider the existence of the Arbitration Agreement; it cannot enter into a detailed adjudication of the claims and counter-claims made by the parties on that issue. Such issues are to be necessarily left for the Arbitral Tribunal to determine.
It also opined that it is difficult to reach a conclusion on the plea raised by the parties without carrying out an extensive study of the documents and other evidence led by the parties which is beyond the jurisdiction of this Court at the stage of considering an application u/s 11 of the Act.
Judgment
The Bench refrained from expressing any opinion on the issue of full and final settlement of the claims by the petitioner as claimed by the respondent. This issue was to be considered by the Arbitrator. It appointed Mr. H.L. Bajaj, ex-Member of the Appellate Tribunal for Electricity as a Sole Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the above-mentioned Work, who shall give the disclosure in terms of Section 12 of the Act before entering upon the reference. The fee of the Arbitrator was to be in accordance with Fourth Schedule of the Act.
Case: M/S Thermal Engineers and Insulators Pvt Ltd vs Delhi Tourism and Transportation Development Corporation Ltd.
Citation: ARB.P. 1016/2022
Bench: Justice Navin Chawla
Decided on: 15th December 2022
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