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IN THE HIGH COURT OF DELHI
Prateek Jalan, J.
Consolidated Construction Consortium Limited - Appellant
Versus
South Delhi Municipal Corporation - Respondent
Arb.P. 319 of 2017
Decided On : 02-11-2022
JUDGMENT
1. By way of the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 ["the Act"], the petitioner seeks appointment of an arbitrator to adjudicate disputes arising between the parties under a Concession Agreement dated 14.03.2011 for "Development of Multilevel Automated Parking-cum-Commercial Complex at South Extension Part-I & II, New Delhi" ["the Agreement"]. The Agreement was awarded to the petitioner on 30.07.2010, pursuant to a tender issued by the respondent.
2. The petitioner relies upon Article 20 of the Agreement, entitled "Disputes", which reads as follows:
"Article 20: DISPUTES
In the event that any dispute, controversy or claim arises among the Parties in connection with or under this Agreement or the interpretation of any of its provisions or upon the occurrence of an event of Default any party shall refer the dispute, controversy or claim to the Commissioner, MCD.
Section 20.1 Mediation by Commissioner
The Party that initially issued the notice of intention to refer the matter to the MCD and MCD in Consultation with Consultant will appoint a officer who will look into the written documents; (i) a description of dispute; (ii) a statement of that party's position; and
(iii) copies of relevant documentary evidence in support of such position.
(a) Within 10 days of receipt of the above documents, the other parties shall submit; (i) a description of the dispute; (ii) a statement of that party's position; and (iii) copies of relevant documentary evidence in support of such position.
(b) The officer appointed by MCD may call for such further documentary evidence and/or interview such persons, as it may deem necessary in order to reach a decision.
(c) The officer appointed by MCD shall give notice to the parties of its decision within 20 days of receipt of the documents provided by the parties pursuant to subsection (b) and (c) above. The decision of the officer appointed by MCD shall be binding.
(d) The officer appointed by the MCD should give decision in writing. The decision of the MCD shall be final and binding on the party.
Section 20.2 Performance during Dispute Resolution
Pending the submission of a dispute, controversy or claim to the officer appointed by the MCD and thereafter until the final decision of the officer appointed by the MCD, as the case may be, the parties shall continue to perform all of their obligations under this Agreement, without prejudice to a final adjustment in accordance with such decision.
Section 20.3 Survival
The provisions relating to indemnification contained in Section 15.2, intellectual property contained in Section 18, confidentiality contained in Section 19.1 and the dispute resolution provisions contained in this Article 20 shall survive the termination of this Agreement."
3. Disputes having arisen between the parties, by a legal notice dated 01.07.2016, the petitioner called upon the respondent to pay a sum of Rs.41,88,50,435/- with further interest or to appoint a neutral arbitrator to decide the disputes.
4. By a response dated 29.08.2016, the respondent disputed the existence of an arbitration clause.
5. The petitioner, however, reiterated its request for appointment of an arbitrator, by a legal notice dated 05.10.2016.
6. As the respondent did not accede to the request, the petitioner has approached this Court under Section 11 of the Act.
7. Notice was issued in the present petition on 15.05.2017, but the hearings were adjourned from time to time to await the decision of the Supreme Court in S.L.P.(C) 16913/2017 [South Delhi Municipal Corporation vs. SMS Ltd.], directed against the judgment of this Court dated 09.03.2017 in ARB.P. 793/2016 [SMS Ltd. vs. South Delhi Municipal Corporation], 2017 SCC OnLine Del 7414. It was noted in this Court's order dated 25.07.2017 that the Supreme Court, by an order dated 07.07.2017, had granted stay of the judgment of this Court in SMS Ltd. Supra (note 1). The said Special Leave Petition re
Article 20 of the Concession Agreement constitutes an arbitration agreement despite its mediation label, featuring binding decision-making attributes and fulfilling statutory requirements.
The dispute resolution clauses in the Concession Agreements do not constitute valid arbitration agreements under Indian law due to lack of intent, binding nature, and necessary compliance with arbitr....
Point of Law : Arbitration - Concession Agreement – Maintainability of writ - Power under Article 227 of Constitution in a rare and exceptional circumstance - When an alternative and efficacious reme....
An agreement to constitute an Arbitration Agreement must involve the Arbitral Tribunal determining the rights of the parties in an impartial and judicial manner, with an equal obligation of fairness ....
The judgment establishes the requirement of a written agreement for arbitration, the interpretation of settlement of disputes clauses, and the significance of party conduct in determining the existen....
An arbitration agreement remains valid and enforceable despite procedural limitations on arbitrator appointment, ensuring disputes are addressed effectively.
The main legal point established in the judgment is the importance of party autonomy in arbitration, the enforceability of the entire arbitration clause, and the conditional acceptance of arbitration....
The use of 'may' in arbitration agreements indicates optionality rather than obligation, requiring mutual consent for arbitration to be valid.
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