IMPORTANT POINT
Power under section 11 cannot exercised in absence of an arbitrable dispute.

JUDGMENT :

R.K. Agrawal, J.

1. Leave granted.

2. This appeal is directed against the final judgment and order dated 12.01.2015 passed by the High Court of Karnataka at Bengaluru in C.M.P. No. 35 of 2014 whereby learned single Judge of the High Court allowed the petition filed by the respondent No. 1-Company for appointment of an arbitrator for resolution of the dispute between the appellant-Company and respondent No. 1-Company.

3. Brief facts:

(a) Respondent No. 1-the Contractee Company was awarded a Contract for “Site Grading, Construction of Roads, Water Drains and Compound Wall for Aromatic Complex at Mangalore” in Mangalore SEZ by the appellant-Contractor on 17.03.2008. The total contract value as per the Letter of Acceptance (LOA) was Rs. 163,25,68,576/-which was subsequently revised to Rs. 195,68,24,399.02/-vide letter dated 20.09.2010 and the completion period was also extended upto 30.11.2010.

(b) On 21.09.2012, the Contractee Company submitted a No Dues/No Claim Certificate certifying the payment of all the bills and in total settlement of all the claims whatsoever against the Contract. Thereafter, on 10.10.2012, the appellant herein-the Contractor Company made a payment of the final bill of Rs. 20.34 crores to the Contractee Company.

(c) Subsequently, on 24.10.2012, the Contractee Company withdrew letter dated 21.09.2012 for “No Dues/No Claim Certificate” stating that it was a pre-requisite condition for release of their long due legitimate payment against the works executed under the Contract and the same was furnished by the Contractee Company under duress and coercion of the appellant-Contractor.

(d) The Contractee-Company, vide letter dated 12.01.2013 to the appellant-Contractor, submitted a claim of Rs. 96,88,48,642.00 for the losses incurred during execution of the contract at Mangalore. On 19.06.2013, the appellant-Contractor issued a Completion Certificate stating that the works awarded under the Contract have been executed and completed in all respects and no claim certificate has also been submitted by the Contractee-Company. After several communication in writing, the appellant-Contractor, vide letter dated 25.07.2013, denied the claim of the contractee-Company.

(e) Vide letter dated 14.09.2013, the contractee-Company sent a notice to the appellant-Contractor for resolving the dispute between the parties through Arbitration as envisaged under Article 9.0.2.0 to the Contract and appointed Mr. K. Mohandas, Former General Manager (Law)-SBI as its Arbitrator. The appellant-Contractor, vide letter dated 18.10.2013 denied the request of the contractee-Company as not tenable in law.

(f) Being aggrieved by the decision of the appellant-Contractor in not referring the dispute to Arbitration, the contractee-Company preferred a C.M.P. No. 35 of 2014 before the High Court of Karnataka at Bangalore.

(g) Learned single Judge of the High Court, vide judgment and order dated 12.01.2015, allowed the petition filed by the contractee-Company.

(h) Being aggrieved by the order dated 12.01.2015, the appellant-Contactor has filed this appeal by way of special leave before this Court.

4. Heard Mr. P.S. Narasimha, learned senior counsel for the appellant-Company and Mr. P. Vinay Kumar for the Respondents.

Point for consideration:

5. The only point for consideration before this Court is whether the respondent-Contractee Company has made out a case for referring the dispute to Arbitration?

Rival Submissions:

6. Learned senior counsel for the Contractor-the appellant Company strenuously contended that the High Court erred in holding that the contractee-Company established a case to show that there was a genuine and serious dispute regarding the claim and that the claim that No Dues Certificate/No Claim Certificate was issued under duress/coercion is erroneous and unsustainable. Learned senior counsel further contended that there was no withholding of payment and the extension was granted subject to the contractee-Company’s request and the contract do