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2023 Supreme(SC) 324

D. Y. CHANDRACHUD, PAMIDIGHANTAM SRI NARASIMHA
NTPC Ltd. – Appellant
Versus
SPML Infra Ltd. – Respondent


Advocates appeared:
For the Appellant(s) : Mr. Adarsh Tripathi. Adv., Adv. Mr. Vikram Singh Baid, Adv., Adv. Mr. Ajitesh Garg Adv, Adv. Mr. Gaurav, AOR
For the Respondent(s): Mr. Soumya Dutta, AOR

Judgement Key Points

Certainly. Based on the provided legal document, here are some judgements that align with the principles and legal standards discussed:

  1. Judgements emphasizing the limited scope of judicial review at the pre-referral stage, particularly the necessity of a prima facie review to determine the existence and validity of an arbitration agreement, and the preference for arbitral tribunals to decide questions of non-arbitrability, are relevant. These decisions clarify that courts should only reject claims that are manifestly and ex-facie non-arbitrable, without delving into detailed factual disputes at this stage (!) (!) (!) (!) (!) (!) .

  2. Judgements that reinforce the importance of a limited and screening approach in pre-arbitration proceedings, emphasizing that the court's role is to prevent frivolous or dishonest claims from proceeding to arbitration, rather than conducting full-fledged reviews of contested facts, are pertinent. This ensures the efficiency of arbitration as an alternative dispute resolution mechanism (!) (!) (!) (!) (!) (!) .

  3. Judgements that delineate the criteria for a prima facie review, including assessing whether the assertions are bona fide and whether the dispute appears to be arbitrable on the face of the documents and claims, are crucial. They underline that the court should not engage in detailed fact-finding or mini-trials at this stage (!) (!) (!) (!) .

  4. Judgements that affirm the principle that questions of non-arbitrability, including issues like coercion, economic duress, or disputes arising from settlement agreements, are primarily within the domain of arbitral tribunals, unless the claims are clearly and manifestly non-arbitrable, are also relevant. Courts should exercise restraint and only intervene where claims are demonstrably outside the scope of arbitration (!) (!) .

  5. Judgements highlighting that allegations of coercion or economic duress in the context of settlement agreements or contractual disputes should be carefully scrutinized, and if found to be raised as afterthoughts or without bona fide basis, courts should not permit these to derail arbitration proceedings (!) (!) .

These judgements collectively reinforce the legal approach that courts should adopt a restrained, prima facie screening role at the pre-referral stage of arbitration, reserving the determination of questions of non-arbitrability for the arbitral tribunal, unless the claims are manifestly non-arbitrable.


JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

1. The present appeal arises out of a decision of the High Court of Delhi1 [in ARBP No. 477/2020, dated 08.04.2021] allowing the Respondent’s application under Section 11(6) of the Arbitration and Conciliation Act, 19962 [hereinafter ‘the Act’] for the constitution of an Arbitral Tribunal. It is the case of Appellant NTPC that there were no subsisting disputes between the parties in view of the Settlement Agreement dated 27.05.2020 and that the application for arbitration is an afterthought and abuse of the process.

2. By an order dated 15.07.2022, this Court, while granting leave, stayed all further proceedings before the Arbitral Tribunal. Short facts giving rise to the filing of the petition under Section 11 of the Act and leading to the impugned decision of the High Court are as follows.

3. Facts: The Appellant and Respondent, hereinafter referred to as NTPC and SPML respectively, entered into a contract for “Installation Services for Station Piping Package for Simhadri Super Thermal Power Project Stage-II at NTPC at Simhadri, Vishakapatnam.” In terms of the contract agreement, SPML furnished Performance Bank Guarantees and Advanced Bank G


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