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2017 Supreme(Del) 3849
IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
INDIAN OIL CORPORATION LIMITED PIPELINES DIVISION (PLHO) – PETITIONER
Versus
INSTITUTE OF GEO-INFORMATICS PVT. LTD. - RESPONDENT
O.M.P. (COMM) 317 of 2017
Decided On : 04-09-2017
For the Petitioner: Mr. Avinav Vashisht, Mr. Nishant Menon, Mr. Abhishek Birthray, Mr. Shafiq Ahmed
For the Respondents: Mr. Anukul Raj, Ms. Nikita, Mr. Shashank Saurabh
The main legal point established in the judgment is that disputes subject to specific claims were held to be non-arbitrable, and the learned Arbitrator's adjudication on these disputes was deemed entirely illegal and contrary to the provisions of the Act.
Headnote:
Arbitration - Award - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
The petitioner invited sealed tenders for specified work, and disputes arose between the parties. The respondent filed a petition seeking appointment of an Arbitrator. The General Manager rejected certain claims as non-arbitrable and steps were taken for appointment of an arbitrator. The learned Arbitrator passed an award in favor of the respondent, which the petitioner sought to set aside under Section 34 of the Act.
Finding of the Court:
The court held that the disputes subject to claims No. 1, 3, 4, and 5 were not arbitrable, and the award to the extent it dealt with these claims was set aside. The rest of the award was upheld.
Issues: The main controversy was whether the court had withheld reference of claims No. 1, 3, 4 to 5 from arbitration, as well as the interpretation of the court's previous judgment in this regard.
Ratio Decidendi: The court emphasized that the disputes subject to claims No. 1, 3, 4, and 5 were not arbitrable, as previously held, and the learned Arbitrator's adjudication on these disputes was entirely illegal and contrary to the provisions of the Act.
Final Decision: The petition was disposed of, setting aside the award to the extent it dealt with claims No. 1, 3, 4, and 5, and upholding the rest of the award. Liberty was granted to the respondent to take steps as per law regarding its claims No. 1, 3, 4, and 5.
JAYANT NATH, J.
1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) seeking to set aside the Award dated 05.05.2017 passed by the learned Arbitrator.
2. On 19.11.2009, the petitioner is said to have invited sealed tenders for specified work. The respondent was declared as a successful bidder and a letter of acceptance was issued on 15.06.2010. Main contract was executed on 14.07.2010. The contract envisages execution of work of "Detailed Engineering survey, Soil survey, Cadastral survey & providing services for establishing ROU in ROW of Paradip-Haldia-Durgapur LPG Pipeline Project" within 28 months from the date of issuance of Letter of Acceptance.
3. Disputes having arisen between the parties, the respondent filed a petition under Section 11(6) of the Act seeking appointment of an Arbitrator. On 18.10.2011 in Arb. Pet. 42/2011, this court noted the submissions of the petitioner that an application had to be first made to the General Manager of the petitioner in accordance with the arbitration clause. It was also agreed that the General Manager of the petitioner would consider the application of the respondent and pass an appropriate order in accordance with law within four weeks. The said petition in view of this direction was dismissed as withdrawn with liberty to the respondent to file a fresh petition if so advised. In terms of the above order, the respondent approached the General Manager of the petitioner and made the following claims: -
“(1) Claim of Rs.51,19,898/,. for work done plus the service tax;
(2) Claim for refund of R.4,20,000 I-deposited by IGPL towards security deposit;
(3) Claim of Rs.18122,493/- towards loss of profit suffered by IGPL;
(4) Claim for Rs.8,00,000/- for de-mobilization of equipment, machinery and man force from the work site; and
(5) Interest@ 16% per annum on the total sum of Rs.81,62,391/- claimed under 1to 4 above with effect from 1.1.2011.”
4. The General Manager by its order dated 12.03.2012 held that the claims No. 1, 3, 4 and 5 are not notified claims and are not arbitrable. Claim No. 2 for refund of security deposit and interest thereon were held to be arbitrable under Clause 9.0.1.0 of GCC. Steps were taken for appointment of an arbitrator from a panel of three persons from whom the petitioner was to make a selection of an arbitrator.
5. The respondent thereafter filed another petition under Section 11(6) of the Act before this court being Arb. Pet. No. 175/2012. This court rejected the plea of the respondent holding that the decision of the General Manager in this regard is final and the same cannot be a subject matter of challenge under these proceedings. The petition was accordingly disposed of with a direction that the petitioner shall forward a panel of three names to the respondent within four weeks. The respondent was to on receipt of the panel select a name to be appointed as a sole arbitrator. The Arbitrator so selected would be within his/her right to arbitrate upon claim No. 2 and interest, if any, thereon along with the counter claim, if any, of the petitioner.
6. The learned Arbitrator has now passed his award in favour of the respondent.
7. I have heard learned counsel for the parties.
8. Learned senior counsel for the petitioner has vehemently argued that despite the fact that claims No.1, 3, 4 and 5 were within the ‘excepted matters’ as per clause 9 of the Agreement between the parties and were not specifically referred to the learned Arbitrator by this court in its judgment dated 19.05.2015, the learned Arbitrator has still gone ahead and has passed the Award on the said claims. He urges that in a mischievous manner the learned Arbitrator misread the judgment of this court and came to a conclusion that the learned Arbitrator could decide upon the arbitrability of these claims. Learned senior counsel has relied upon the judgment of the Supreme Court in the case of SBP & Co. vs. Patel Engineering Lt
