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IN THE HIGH COURT OF DELHI
Sanjeev Sachdeva, J.
Kiran Infra Engineers Limited - Appellant
Versus
Northern Railway - Respondent
Arb.P. 257 of 2022
Decided On : 06-05-2022
Disputes regarding the legitimacy of a supplementary agreement rescinding an arbitration clause must be referred to arbitration, as the Arbitral Tribunal is competent to adjudicate such matters.
Headnote:(A) Indian Contract Act, 1872 - Sections 16, 17, and 23 - Appointment of Arbitral Tribunal - Dispute over validity of supplementary agreement which allegedly rescinds principal agreement and arbitration clause - Court held that disputes regarding duress, undue influence, and enforceability of clauses must be referred to Arbitration. (Paras 5, 14)
(B) Arbitration and Conciliation Act, 1996 - Section 12 - Fee of Arbitral Tribunal to be in accordance with fourth schedule - Sole Arbitrator appointed to adjudicate claims and counter-claims. (Paras 16, 17)
Facts of the case:
The petitioner sought the appointment of an Arbitral Tribunal in relation to disputes arising from contracts, asserting that a supplementary agreement did not negate the right to arbitration. Respondent contended the agreement fully discharged the principal contract.
Findings of Court:
The existence of disputes regarding the supplementary agreement’s impact on the arbitration clause necessitates referral to arbitration.
Issues: The key issue centered on whether the supplementary agreement rescinded the arbitration clause in the principal agreement.
Ratio Decidendi: The court determined that resolution of fundamental disputes regarding the supplementary agreement falls within the purview of the Arbitral Tribunal for adjudication.
Result: Petition allowed, and disputes referred to arbitration.
| Table of Content |
|---|
| 1. condonation of delay in filing. (Para 1) |
| 2. petition for arbitral tribunal appointment. (Para 3) |
| 3. dispute regarding supplementary agreement effect. (Para 4 , 5 , 6 , 7) |
| 4. analysis of contract and arbitration clause. (Para 8 , 9 , 10 , 11 , 12) |
| 5. disputes referred to arbitral tribunal. (Para 13 , 14) |
| 6. conclusion and arbitration appointment. (Para 15 , 16 , 17 , 18 , 19) |
JUDGMENT
Sanjeev Sachdeva, J.
I.A. 6361/2022
1. Respondent seeks condonation of 10 days' delay in filing the reply.
2. For the reasons stated in the application, the application is allowed. The reply is taken on record.
ARB. P. 257/2022
3. Petitioner seeks appointment of an Arbitral Tribunal pursuant to the contract dated 01.04.2013.
4. Respondents in their reply contend that the agreement was superseded by a supplementary agreement dated 08.05.2017, which specifically stipulates that the principal agreement stands fully discharged and all terms and conditions including the arbitration clause stand rescinded.
5. Learned counsel for the petitioner contends that the supplementary agreement does not rescind or take away any right of the petitioner to initiate appropriate proceedings in accordance with law and that the agreement is hit by Sections 16 and 23 of the Indian Contract Act, 1872.
6. Learned counsel submits that the petitioner was made to sign the supplementary agreement, failing which the payment of over would not have been released to the petitioner.
7. This is disputed by learned counsel for respondent.
8. The arbitration clause contained in the subject principal contract provides as under:
"40.1 ARBITRATION
(i) In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contactor may claim to be entitled to, shall be referred by the contractor to the GM and the GM shall be within 120 days after receipt of the contractor's representation make and notify decisions on all matters referred to by the contractor in writing or if the GM fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' (matters not arbitrable any decision of the Rly authority, thereon shall be final and binding on the contractor, provided further that `excepted matters' shall stand specifically excluded from the purview of the arbitration clause), the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to Arbitration.
(ii) The demand for arbitration shall specify the matters which are in question or subject of the dispute or difference as also the amounts of claim item-wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railway, shall be referred to arbitration and other matters shall not be included in the reference.
(a) The Arbitration proceedings shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway.
(b) The claimant shall submit his claim stating the facts supporting the claims along with all relevant documents and the relief or remedy sought against each claim within a period of 30 days from the date of appointment of the Arbitral Tribunal.
(c) The Railway shall submit its defence statement and counter claims, if any within a period of 60 days of receipt of copy of claims from Tribunal thereafter, unless otherwise extension has been granted by Tribunal.
(iii) No new claim shall be added during proceedings by either party. However party may amend or supplement the original claim or defence thereof during the course of arbitration proceedings subject to acceptance by Tribunal
