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IN THE HIGH COURT OF DELHI AT NEW DELHI
ANU MALHOTRA, J.
DELHI DEVELOPMENT AUTHORITY - Petitioner
Versus
ELECTRONIC CORPORATION OF INDIA LIMITED (ECIL) - Respondent
CM (M) 44 of 2019 & CM.APPL. 1249 of 2019
Decided On : 21-01-2019
Arbitration - Permanent Machinery of Arbitration - [Arbitration] - [Arbitration and Conciliation Act, 1996] - [Summary: The court discussed the applicability of the Arbitration and Conciliation Act, 1996 to arbitral proceedings invoked and determined through the Permanent Machinery of Arbitration. It was established that the provisions of the Arbitration and Conciliation Act, 1996 do not apply to proceedings under the Permanent Machinery of Arbitration. The court referred to previous judgments and observed that an arbitral award under the Permanent Machinery of Arbitration may not be legally enforceable in a court of law. The court also highlighted the need for a larger Bench of the Supreme Court to determine the scope of redressal through a litigative process when the arbitral order is final and binding on both parties. The proceedings of the present petition were adjourned sine die pending the determination of the referred question by the Larger Bench of the Supreme Court.
Fact of the Case:
The petitioner sought directions regarding an award passed by the Appellate Authority under the Permanent Machinery of Arbitration, which modified the rate of interest awarded by the Sole Arbitrator in a dispute between the petitioner and the respondent related to a contract for the Commonwealth Games, 2010.
Finding of the Court:
The court discussed the applicability of the Arbitration and Conciliation Act, 1996 to arbitral proceedings under the Permanent Machinery of Arbitration and adjourned the proceedings pending a decision by the Larger Bench of the Supreme Court.
Issues: The main issue was the applicability of the Arbitration and Conciliation Act, 1996 to arbitral proceedings under the Permanent Machinery of Arbitration.
Ratio Decidendi: The court established that the provisions of the Arbitration and Conciliation Act, 1996 do not apply to proceedings under the Permanent Machinery of Arbitration and highlighted the need for a larger Bench of the Supreme Court to determine the scope of redressal through a litigative process when the arbitral order is final and binding on both parties.
Final Decision: The proceedings of the present petition were adjourned sine die pending the determination of the referred question by the Larger Bench of the Supreme Court.
ANU MALHOTRA, J.
CM.APPL.1249/2019 (Ex.)
Exemption allowed subject to all just exceptions.
CM (M) 44/2019
1. The petitioner Delhi Development Authority vide the present petition filed under Article 227 of the Constitution of India seeks directions that the impugned award dated 01.12.2017 of the Additional Secretary and Appellate Authority, Ministry of Law and Justice, Department of Legal Affairs in terms of the provision of the Permanent Machinery of Arbitration (PMA) under the aegis of the Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, vide which an appeal filed by the petitioner herein as appellant in Appeal No.02/AS(RY)/2017 in case No. PMA/Dr.GR/17/2012 passed by the Sole Arbitrator,-was disposed of whereby the Appellate Authority whilst accepting the liability of the appellant herein to pay Rs.79,90,022/- to the respondent modified the rate of interest awarded by the Arbitrator as being 15% p.a. to 8% p.a. from the date of award passed by the Sole Arbitrator with further directions to the effect that in case the entire awarded amount was not paid within the period of two months from the date of receipt of the award, the appellant would pay the entire awarded amount along with interest @ 10% p.a. till the date of realization and thus the award in respect of the interest payable by the petitioner to the respondent stand amended.
2. The Sole Arbitrator vide the award dated 09.01.2013 had allowed the claim of the respondent, M/s Electronics Corporation of India Limited in relation to the bills raised by the respondent for work done by it for the supply, installation, commissioning and for the establishment of the integrated security system for the Commonwealth Games, 2010 for its Saket sport complex in relation to which a contract had been entered into between the petitioner and the respondent vide agreement No.19/EE/ED(CWG)/3/DDA/09-10, in view of the invocation of the arbitration clause by the respondent under the aegis of Permanent Machinery of Arbitration.
3. As per the agreement no.19/EE/ED (CWG) 3/DDA/09-10 dated 07.12.2009 between the parties to the present petition vide clause 19.1, the arbitral clause therein was incorporated to the effect :-
“RESOLUTION OF DISPUTES-19.1 In the event of any dispute or difference relating to the interpretation and application of the provision of this Contract, such dispute or difference shall be referred by either party to Arbitration by one of the Arbitrators having specialist knowledge in commercial contracts in the Department of Public Enterprises to be nominated by the Secretary to the Government of India In-charge of the Department of Public Enterprises. The Arbitration and Conciliation Act, 1996 need not be applicable to the arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by and dissatisfied with such award may make a further reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law and Justice, upon such reference, the dispute shall be decided by the Law Secretary or the Special Secretary/ Additional Secretary, when so authorized by the Law Secretary, whose decision shall bind the parties finally and conclusively. The parties shall share equally the cost of arbitration as intimated by the Arbitrator.
19.2 Subject to the clause no.19.1 of the Courts of NCT of Delhi shall have exclusive jurisdiction.”
4. On behalf of the petitioner, it was submitted that the present petition had been filed under Article 227 of the Constitution of India as the award passed by the Appellate Authority under the aegis of the Permanent Machinery of Arbitration is beyond the purview of the Arbitration and Conciliation Act, 1996 and the petitioner had no other alternative efficacious remedy but to seek redressal before this Court.
5. Learned counsel for the petitioner has fairly brought to the notice of t
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