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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
Ion Exchange (india) Ltd. – Appellant
Versus
Doosan Power Systems India Pvt. Ltd. – Respondent
Arb.P. 845 of 2022
Decided On : 24-01-2023
Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996 - Article 19 DISPUTES AND ARBITRATION, 33 DISPUTES AND ARBITRATION
Fact of the Case:
The petitioner filed a petition seeking appointment of a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 for disputes arising from two contracts. The disputes included non-payment, levy of liquidated damages, failure to release retention monies, and other monetary claims.
Finding of the Court:
The court found that the appointment of the same sole Arbitrator for both contracts was permissible and clarified that the reference to arbitration under each contract would be independent of each other. The court also held that the arbitration clause in the 'Supply Contract' allowed for arbitration of disputes besides a question of fact, contrary to the respondent's contention.
Issues: The issues involved the maintainability of a single petition for appointment of a Sole Arbitrator for two separate contracts and the interpretation of the arbitration clauses in the contracts.
Ratio Decidendi: The court clarified that the appointment of the same sole Arbitrator for both contracts was permissible and that the arbitration clause in the 'Supply Contract' allowed for arbitration of disputes besides a question of fact. The court also emphasized the need to give full effect to the arbitration agreement between the parties.
Final Decision: Ms. Justice Pratibha Rani, Retired, was appointed as the Sole Arbitrator to adjudicate the disputes arising from the two contracts, with the reference to arbitration under each contract being independent of each other. The respondent was given the liberty to raise objections before the Arbitrator, and all rights and contentions of the parties in relation to the claims/counter-claims were kept open to be decided by the arbitrator.
JUDGMENT
Sachin Datta, J. (Oral)
1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator to adjudicate the disputes between the parties. The disputes between the parties have arisen in the context of:
(i) Contract bearing No.2017001270 for supply of material and equipment (hereinafter referred to as the "Supply Contract") for a consideration of Rs.39,05,00,000/- (Rupees Thirty-Nine Crores Five Lacs only) dated 12.01.2018.
(ii) Contract bearing No. 2017001271 for erection, commissioning, testing and performance guarantee test (hereinafter referred to as the "ECOM Contract") for consideration of Rs.3,90,00,000/- (Rupess Three Crore Ninety Lacs only) dated 12.01.2018.
2. The Arbitration Clause in the "Supply Contract" is in the following terms:
"Article 19 DISPUTES AND ARBITRATON
19.1 Except as otherwise provided in the Contract, any dispute concerning a question of fact arising under the Contract shall be mutually agreed upon and amicably settled by the Parties. Any other disputes, disagreements, questions or breach besides a question of fact which shall arise as to the obligation of any Party under the Contract or the interpretation of any provision thereof, if not settled by mutual agreement, shall, at the option of the initiating Party and upon written notice to the other Party, be finally settled by arbitration.
19.2 The arbitration shall take place in New Delhi, India, and shall be conducted in accordance with the Indian Arbitration & Conciliation Act 1996 including amendments and under the Laws and regulations of India. In construing and interpreting the terms and conditions of this Contract, the arbitrators shall reach their decisions in accordance with the following;
19.2.1 The literal meaning of the wording of this Contract or if ambiguous. 19.2.2 The intent of Parties as revealed by this Contract as a whole or, if still ambiguous;
19.2.3 Each Party shall bear its own expenses with respect to any arbitration and the compensation and expenses of the arbitrators shall be borne in such a manner as may be specified in the decision of the arbitrators. 19.2.4 The laws and regulations of the India effect at the time of arbitration proceedings.
19.3 From the date the dispute, disagreement or difference arises up to the date of settlement of the matter in question by arbitration, Purchaser's good faith interpretation shall prevail: and Supplier shall comply with Purchaser's good faith interpretation and shall continue to fulfill its obligations under the Contract in good faith during the pendency of any arbitration and shall not be entitled to suspend or cease the fulfillment of its contractual obligations. The arbitration decision shall be final and irrevocable and the Parties hereto expressly and unreservedly agree to be bound thereby."
3. The Arbitration Clause in "ECOM contract" is as under:
"33 DISPUTES AND ARBITRATION
33.1 Settlement of Disputes
All disputes, controversies, or differences, which may arise between the Contractor and the Sub-Contractor, out of or in relation to or in connection with the Contract, or for any breach thereof, shall be amicably settled by mutual conciliation between the parties hereto.
Should the parties hereto fail to settle such disputes, controversies, or differences ("Dispute") amicably within 30 (thirty) days, such Dispute shall be finally settled by arbitration in accordance with the following rule and place, the award of which shall be final and binding upon the parties hereto.
a) In case of an Indian Contractor, the arbitration proceedings shall be conducted in accordance with Indian Arbitration and Conciliation Act 1996. In case the Indian Contractor is an Indian Public Sector Enterprise/Government Department (but not a State Govt. Undertaking or Joint Sector Undertaking which is not a subsidiary of Central Govt. Undertaking), the dispute arising between the Employer and the Contractor shall be referred for reso
The court emphasized the need to give full effect to the arbitration agreement between the parties and clarified the permissibility of appointing the same sole Arbitrator for multiple contracts.
The conciliation process in the contract agreement was not mandatory, and non-compliance did not bar the petitioner from invoking arbitration.
The court confirmed the existence of an arbitration agreement and mandated the appointment of a sole arbitrator to adjudicate contract disputes, highlighting the necessity of complying with contractu....
The court's decision was based on the interpretation of the Dispute Resolution clause in the Contract Agreement and the provisions of Section 11 of the Arbitration and Conciliation Act, 1996.
The court emphasized the necessity of appointing an independent Sole Arbitrator for arbitration disputes, following the principles established in prior Supreme Court judgments.
An arbitration clause that mandates referral to arbitration constitutes a binding arbitration agreement, regardless of discretionary language used; parties are required to adhere to the arbitration m....
The court appointed an arbitrator as the parties consented to arbitration under the existing arbitration clause, complying with statutory requirements.
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