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IN THE HIGH COURT OF DELHI
Amit Bansal, J.
Aroon Aviation Services Pvt. Ltd. - Appellant
Versus
Union of India - Respondent
CS(COMM) 71 of 2021 & I.A. 2196 of 2021 (O-XXXIX R-1 & 2 of CPC)
Decided On : 10-10-2022
The court ruled that disputes containing both arbitrable and non-arbitrable claims cannot be bifurcated under Section 8 of the Arbitration and Conciliation Act, ensuring efficient resolution and preventing conflicting judgments.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Dispute arising from a contract - Application for referring dispute to arbitration rejected as the claims made are partly non-arbitrable while others fall under 'excepted matters'. Matter involves arbitration and specification of binding decisions by authority on claims. (Para 14)
(B) Arbitration Agreement - Scope of arbitration clause and the concept of 'excepted matters' - Parties cannot bifurcate disputes under Section 8; all claims must be heard simultaneously to avoid conflicting judgments. (Paras 11, 13)
Facts of the case:
The dispute arose from a contract whereby the defendant terminated a contract with the plaintiff. The plaintiff sought arbitration but the defendant contended that certain claims were non-arbitrable 'excepted matters' as per the agreement. (Paras 9, 10)
Findings of Court:
The court held that the mixture of arbitrable and non-arbitrable claims prohibits referral under Section 8. Bifurcation would increase litigation costs and delay. (Para 14)
Issues: Whether some claims are arbitrable despite others being 'excepted matters' and whether referral to arbitration is appropriate under Section 8. (Para 13)
Ratio Decidendi: The court ruled that due to the presence of both arbitrable and non-arbitrable claims in the plaint, bifurcation of disputes is impermissible under Section 8 of the Arbitration and Conciliation Act, which aims for prompt resolution and cost efficiency. (Para 11)
Result: The application is dismissed.
| Table of Content |
|---|
| 1. application for arbitration under the arbitration act. (Para 1 , 2 , 3) |
| 2. arguments on arbitrable and non-arbitrable matters. (Para 4 , 5) |
| 3. relevant clauses for arbitration exclusion. (Para 7 , 8) |
| 4. reliefs sought related to excepted matters. (Para 9 , 10) |
| 5. supreme court's stance on bifurcation of dispute resolution. (Para 11 , 12 , 13) |
| 6. application dismissed due to mixed disputes. (Para 14) |
| 7. timelines for filing written statements in commercial suits. (Para 15 , 16) |
| 8. next hearing scheduled. (Para 18) |
JUDGMENT
Amit Bansal, J. (Oral)
I.A. 14088/2021 (u/S 8 of A&C Act.)
1. The present application has been filed on behalf of the applicant/defendant under Section 8 of the Arbitration and Conciliation Act, 1996 seeking to refer the present dispute for arbitration in terms of the arbitration clause contained in the agreement between the parties.
2. Notice was issued on the application on 28th October, 2021. Reply has been filed on behalf of the plaintiff.
3. Submissions on the counsel for the plaintiff were heard on 29th July, 2022 and the matter was posted for hearing on 22nd September, 2022, when the parties were asked to take instructions with regard to the matter being referred to a sole arbitrator. Pursuant to the said order, counsel for the defendant submits that the defendant is agreeable to all disputes between the parties being referred to a sole arbitrator to be appointed by this Court. However, counsel for the plaintiff submits that he has instructions to the contrary and submits that the matter may be decided by the Court on merits.
4. It is the case of the plaintiff that the reliefs sought qua prayers A, B, C and D are in respect of `excepted matters' in the contract and therefore, the same are not arbitrable. In respect of prayer E and F, which are claims for recovery and damages, he submits that though the same may not be `excepted matters,' the plaintiff would have to combine all of its claims and the present suit could not be filed only in respect of prayers E and F. Reliance in this regard is placed on the judgment of the Supreme Court in Sukanya Holdings (P) LTD. v. Jayesh H. Pandya and Anr., (2003) 5 SCC 531.
5. Per contra, counsel for the defendant places reliance on Clause 8.1 of the General Conditions of Contract for Services (GCC) to submit that the present dispute is not covered under the `excepted matters' and therefore, the matter should be referred for arbitration.
6. I have heard the counsels for the parties.
7. At the outset, it may be relevant to refer to the relevant clauses of the GCC with regard to settlement of disputes.
"8.1 Matters Finally Determined by the Railways
All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the contractor to the GM and the GM shall, within 120 days after receipt of the contractor's representation, make and notify decisions on all matters referred to by the contractor in writing provided that maters for which provision has been made in Clauses 3.5, 4.13, 4.22.4, 4.41.1, 5.4.2, 5.5.2(c), 6.5, 6.6, 6.7, 7.1, 7.2 and 7.4 and sub clauses thereof of General Conditions of Contract for Services or in any Clause of the Special Conditions of the Contract shall be deemed as `excepted matters' (matters not arbitrable) and decisions of the Railway 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.
8.2 Demand for Arbitration
8.2.1. 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 falls to make
