The court held that the validity of claims and the arbitrability of related disputes must be referred to arbitration, rejecting the respondent's claims of non-compliance with contractual protocols limiting arbitration.

JUDGMENT (ORAL)

(Video-Conferencing)

1. This is a petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act"), seeking reference of certain disputes, pending between the petitioner and the respondent, to arbitration. The claims, of which the petitioner seeks reference, are nine in number and have been enumerated in the petition thus:

"I. Claim no. I - Refund of encashed Bank Guarantee amounting to Rs.2,10,00,000/- with interest @18% per annum from 06.09.2016 till realization.

II. Claim no. II - Payment of the amount of Rs. 5,95,56,611.51 due against 30th R/A and Final Bill with interest @18% per Annum from 13.04.2017 (60 days after the date of submission of 30th R/A & Final Bill on 13.02.2017) till realization.

III. Claim no. III - Refund of Rs. 1,34,79,327/- with interest @18% per annum recovered by BCPL from R/A bills towards Price Reduction Schedule (PRS).

IV. Claim no. IV - Refund of amount of Rs. 29,93,017/- with interest @18% per annum deducted towards mandatory discount against CENVATable excise duty from R/A Bills as all excise invoices against bought out items have been submitted to BCPL from time to time for availing CENVAT.

V. Claim no. V - Refund of retained amount of Rs.15,60,066/- with interest @18% per annum from R/A bills towards non-submission of PF Challans as the necessary challans have been submitted to BCPL from time to time.

VI. Claim no. VI - Refund of retained amount of Rs. 6,13,984/- with interest @18% per annum towards Abnormally High Rate (AHR) items as rates for such items were submitted to BCPL through EIL for approval and payment.

VII. Claim no. VII - Extended stay compensation (beyond the scheduled completion period plus a grace period of 8 weeks) amounting to Rs. 3,72,50,000/-.

VIII Claim no. VIII - Compensation for reduction in contract value (from the awarded value of Rs.33,89,22,376.38 to the final executed value of Rs.24,33,83,122.78) amounting to Rs.10,81,162.38.

IX Claim no. IX - Loss incurred and damages suffered amounting to Rs.1,00,00,000/- due to wrongful termination of contract and illegal encashment of CPBG."

Facts

2. Bids were invited by M/s. Engineers India Limited (EIL) on behalf of the respondent - Brahmaputra Cracker And Polymer Limited (BCPL), for certain works associated with Brahmaputra Petrochemical Complex at Lakwa, Assam. The petitioner bid, and was awarded the contract vide Fax of Acceptance dated 14th February, 2013, followed by a Detailed Letter of Acceptance dated 8th March, 2013. The total value of the contract was Rs. 33,89,22,376.38.

3. Clause 107 of the contract provided for resolution of the disputes between the parties, arising in the context of the contract, and reads thus:

"107.1 Unless otherwise specified, the matters where decision of the Engineer-in-Charge is deemed to be final and binding as provided in the Agreement and the issues/disputes which cannot be mutually resolved within a reasonable time, all disputes shall be referred to arbitration by Sole Arbitrator. The Employer [GAIL (India) Ltd.] shall suggest a panel of three independent and distinguished persons to the bidder/contractor/supplier/buyer (as the case may be) to select any one among them to act as the Sole Arbitrator.

In the event of failure of the other parties to select the Sole Arbitrator within 30 days from the receipt of the communication suggesting the panel of arbitrators, the right of selection of the sole arbitrator by the other party shall stand forfeited and the EMPLOYER (GAIL) shall have discretio