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IN THE HIGH COURT OF DELHI
Jyoti Singh, J.
China Petroleum Pipeline Bureau - Appellant
Versus
Indian Oil Corporation Limited - Respondent
Arb.A. (Comm.) 35 of 2019
Decided On : 10-01-2020




Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 16 - Appeal regarding non-arbitrable claims - Appellant's claims except for one were deemed not arbitrable by the Arbitrator, leading to appeal - Contractual clause stipulating 'notified claims' was upheld by the Court. (Paras 14-35)

(B) Jurisdiction of Arbitrator - Arbitrator's authority is circumscribed by the contract; non-compliance with 'notified claim' requirements negates jurisdiction to arbitrate those claims. (Para 26)

(C) Legal principles of bifurcation of claims - Consistent judicial interpretation requires that all claims intertwined with a common issue must be adjudicated in the same forum to avoid conflicting judgments. (Paras 16, 30)

Table of Content
1. factual background of the arbitration case (Para 1 , 2 , 3 , 4 , 5 , 6 , 9 , 10 , 11 , 12)
2. court's analysis of contract terms and arbitrability (Para 14 , 24 , 25 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34)
3. arguments regarding the arbitrability of claims (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23)
4. definition and scope of 'notified claims' (Para 26)
5. final conclusion on appeal dismissal (Para 35 , 36)

JUDGMENT

Jyoti Singh, J. The present appeal under Section 37 (2) (a) of the Arbitration and Conciliation Act, 1996 (`Act') has been filed assailing the order dated 29.11.2019 passed by the learned Arbitrator whereby the application of the respondent herein under Section 16 of the Act has been allowed and the Arbitrator has held that all claims of appellant (claimant before the Arbitral Tribunal) except claim No. 2.11 along with interest, fall beyond the scope of Arbitration Agreement and are not arbitrable.

2. The brief facts necessary for adjudication of the present appeal are that on 20.08.2015 the respondent issued a Notice Inviting Tender for Main Line Laying and Combined Station Works for Laying New Crude Oil Pipeline from Chennai Port to CPCL, refinery at Manali, Chennai and Combined Station Works of mechanical, civil, electrical and instrumentation works of other facilities at Chennai Port and CPCL refinery, Tamil Nadu.

3. The Appellant being declared as a successful bidder was awarded a Letter of Acceptance on 11.04.2016. The appellant issued a Bank Guarantee towards the initial security deposit in favour of the respondent for an amount of Rs.3,10,53,113/- valid upto 10.10.2018. A formal Contract was entered into between the parties on 01.06.2016. The appellant commenced the work in June, 2016.

4. It is the case of the appellant that while his contract was subsisting, the respondent floated another NIT in September, 2016 but on being questioned, assured the appellant that it would not be given effect to. The appellant regularly communicated to the respondent the progress of the work but despite this the respondent terminated the contract vide letter dated 07.12.2016.

5. It is the case of the appellant that efforts were made, thereafter, to amicably resolve the disputes, but the same were unsuccessful. Thereafter, the respondent invoked the Bank Guarantee and the appellant filed a petition under Section 9 of the Act in this Court, which was dismissed.

6. The appellant then invoked the Arbitration Clause and sent a notice dated 31.10.2018 to the respondent requesting the respondent for nomination of an Arbitral Tribunal in accordance with Clause 9 of the General Conditions of Contract (hereinafter referred to as `GCC').

7. The respondent replied to the said notice on 30.11.2018 stating that the claims made by the appellant were not `notified claims'. The appellant objected to the said stand of the respondent and sent a detailed communication to this effect on 25.12.2018.

8. The respondent without considering the objections raised by the appellant and taking the same to be a failure on the part of the appellant to appoint a Sole Arbitrator, proceeded to appoint Shri R.D. Goyal as a Sole Arbitrator vide its letter dated 02.01.2019.

9. The appellant filed its statement of claim before the Tribunal on 23.03.2019 and raised the following claims:

"2.1 Towards the loss incurred by the Claimant regarding Materials:

i. Expenses incurred for procurement of main materials = 308.02 lacs;

ii. Expenses incurred for third party inspection of the materials procured by the Claimant = 41.66 lacs; and

iii. Expenses towards procurement of consumable materials = 59.20 lacs

2.2 Towards the loss incurred by the Claimant for hiring of Manpower:

i. Expenses incurred in hiring Chinese staff = 573.93 lacs

ii. Expenses incurred in hiring Indian staff = 14.00 lacs

iii. Expenses incurred in hiring consultants for liasoning work = 5.50 lacs

2.3 Towards the loss suffered by the Claimant in procuring equipment

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