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2023 Supreme(Del) 1091
IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Starcon Infra Projects India Private Limited – Appellant
Versus
National Thermal Power Corporation Limited – Respondent
Arb.P. 1367 of 2022
Decided On : 27-02-2023
Mr. Pawan R. Upadhyay, Mr. Priya Soni and Mr. Gaurav Pathak, Advocates, for the Petitioner.
Mr. Puneet Taneja, Advocate (Through VC) with Ms. Laxmi Kumari and Mr. Manmohan Singh Narula, Advocates, for the Respondent.
Pre-arbitral steps under a contract are not mandatory pre-conditions for invoking arbitration, and disputes may be arbitrable even if pre-arbitral steps are not exhausted.
Headnote:
Delay - Application under Section 151 of the Code of Civil Procedure, 1908 seeking condonation of delay in re-filing the petition - Arbitration and Conciliation Act, 1996 - Section 11(6) - Clauses 47.5.1 and 47.5.2 of the contract - Appointment of sole arbitrator - Judgment of a Coordinate Bench in Ambey Mining Pvt. Ltd v. NTPC Ltd. - Arbitrability of disputes
Fact of the Case:
The petitioner sought appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 due to disputes arising from a construction contract. The respondent opposed, citing pre-arbitral steps under the contract.
Finding of the Court:
The court found that the disputes were arbitrable in nature and the petitioner had made out a case for appointment of an arbitrator. The court referred the disputes to arbitration and appointed a sole arbitrator.
Issues: Applicability of pre-arbitral steps under the contract, invocation of arbitration clause, and appointment of sole arbitrator.
Ratio Decidendi: The court held that the pre-arbitral steps were not mandatory pre-conditions for invoking arbitration, and the disputes were arbitrable. The court also relied on a judgment of a Coordinate Bench in a similar case.
Final Decision: The court appointed Justice (Retd.) Vineet Saran as a sole arbitrator to adjudicate the disputes, ensuring compliance with the Arbitration and Conciliation Act, 1996, and directed the parties to appear before the arbitrator within 10 days.
ORDER
Chandra Dhari Singh, J. (Oral)
I.A. 20287/2022 (Delay)
1. This is an application under Section 151 of the Code of Civil Procedure, 1908 seeking condonation of delay in re-filing the captioned petition.
2. For the reason stated in the application, the delay of 26 days in re- filing the captioned petition is condoned.
3. The application is disposed of.
ARB.P. 1367/2022
4. The instant petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act") has been filed on behalf of petitioner seeking the following reliefs:
" A. Appoint an independent and impartial sole arbitrator so as to adjudicate the disputes and differences arising between the parties;
B. Pass any other or further orders as may be deemed fit and proper in the facts and circumstances of the case For Starcon Infra Projects (I) Pvt. Ltd."
5. Learned counsel for the petitioner submitted that pursuant to the agreement dated 15.10.2019, the Petitioner was awarded the work of Construction of Roads and Drain and other associated civil works by the Respondent for its Solapur STPP for a total value of Rs. 22,35,16,730/-. The completion date of the tendered work was stipulated to be 15 months. The Letter of Intent dated 15.10.2019 as awarded to the Petitioner/ Applicant was made subject to the Special Conditions of Contract, and General Conditions of Contract (hereinafter referred to as the "GCC").
6. It is submitted that the Clause 7 of the GCC provides for a detailed mechanism for the Settlement of Disputes, specifically, mutual consultations, resolution of disputes through Expert Settlement Council, providing for Conciliation proceedings and failing which, through the mechanism of Arbitration as provided in Clause 7.3.
7. It is further submitted that during the pandemic, certain issues arose between the parties, due to which the petitioner issued termination notice to the respondent. It is stated that the petitioner in view of the contradictory stand having been adopted by the respondent called upon the respondent to refer the disputes to the Expert Settlement Council under clause 47.5.3 in terms of the mechanism provided under the contract for the settlement of disputes. The respondent on 1.7.2022 disputed the termination of the contract by the petitioner under clause 47.5.1/47.5.2 of the GCC and intimated the petitioner that in case the parties failed to reach an amicable settlement of disputes then the matter would be referred by the Respondent to the mechanism of dispute resolution/Expert Settlement Council under the contract.
8. It is submitted that vide letter dated 03.08.2022, the petitioner intimated the respondent about the correct factual situation and the circumstances under which and upon the failure on the part of the respondent to refer the dispute to the Expert Settlement Council, the petitioner having no other alternative had invoked the arbitration clause with a request to refer the matter to arbitration so that the disputes and differences including the validity of the termination notice issued by the petitioner under the provisions of clause 47.5.1 and 47.5.2 of the GCC may be adjudicated upon.
9. It is further submitted that Respondent vide letter dated 13.08.2022 disputed the termination of the contract carried on by the petitioner under the notice dated 10.06.2022 who further disputed the applicability of clause 47.5.1 and further impressed upon the petitioner that since the contract still continues to be in force and has not been terminated the arbitration clause as contained in clause 7.3 of the GCC cannot be invoked.
10. While buttressing his arguments, learned counsel placed reliance on the judgment of a Coordinate Bench of this Court in Ambey Mining Pvt. Ltd v. NTPC Ltd. (ARB.P. 878/2022, Neutral Citation No- 2023/DHC/000247) passed on 11.01.2023 wherein the Respondent was a party and had leveled similar objections against referring the dispute therein to arbitration, which
