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IN THE HIGH COURT OF DELHI
Navin Chawla, J.
Thermal Engineers and Insulators Pvt. Ltd. - Appellant
Versus
Delhi Tourism and Transportation Development Corporation Ltd. - Respondent
Arb.P. 1016 of 2022
Decided On : 15-12-2022




The appointment of an Arbitrator under Section 11(6) requires prima facie consideration of the Arbitration Agreement's existence, not an in-depth examination of disputes, which should be resolved by the Arbitrator.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Appointment of Arbitrator - Disputes arose regarding payment due to petitioner for construction work - Petitioner previously dismissed as premature due to not exhausting prior remedies - Respondent alleges discharge of Arbitration Agreement due to full and final payment claimed - Competing claims regarding alleged coercion in undertaking for settlement - Court holds prima facie examination appropriate at this stage, leaving detailed issues for the Arbitrator. (Paras 1-2, 8, 11-12)

Facts of the case:
The petitioner seeks appointment of an Arbitrator for disputes relating to work done for a government school; previous petition dismissed for lack of exhaustion of internal remedies. Disputes arose regarding payment with claims of coercion involved.

Findings of Court:
No impediment to appoint an Arbitrator due to existence of disputes that require adjudication.

Issues: Whether the prior undertaking constituted a full and final settlement of claims, and the appropriateness of appointing an Arbitrator under the circumstances.

Ratio Decidendi: Court reiterates that existence of Arbitration Agreement is to be determined prima facie without detailed fact-finding, and significant factual disputes should be adjudicated by the Arbitrator.

Result: Petition allowed.

Table of Content
1. petition filed for arbitration appointment due to payment dispute. (Para 1 , 2 , 3 , 4)
2. arguments concerning maintainability of the arbitration petition. (Para 6)
3. court's observations on arbitration agreement validity. (Para 7 , 8 , 9 , 10 , 11)
4. no impediments in appointing an arbitrator. (Para 12 , 16)
5. court's order appointing arbitrator and clarifications. (Para 13 , 14 , 15 , 17)

JUDGMENT

Navin Chawla, J. (Oral)

1. This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short, the `Act') seeking the appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the work of `Construction, Up-gradation and face lifting of Govt. Sarvodaya Co-ed Vidyalaya Sec- 9, Rohini (School ID: 1413010) at Rohini, New Delhi-110085'.

2. The Arbitration Agreement between the parties is contained in Clause 25(ii) of the General Conditions of Contract (in short, `GCC').

3. Disputes having arisen between the parties with regard to the alleged payment due to the petitioner for the above work, the petitioner filed a petition under Section 11 (6) of the Act being ARB. P. No.1097/2021, titled Thermal Engineers and Insulators Pvt. Ltd. v. Delhi Tourism and Transportation Development Corporation Ltd.. The same was disposed of by the order of this Court dated 28.02.2022 observing that in terms of Clause 25(i) of the GCC, the petitioner was to first file an appeal before the Chief Engineer; and failing any decision thereon, the petitioner had the remedy to a further appeal before the Dispute Resolution Committee (in short, `DRC'); and only thereafter, the remedy to file a petition under Section 11 of the Act would be available to the petitioner. The petition was, therefore, dismissed as being premature.

4. The petitioner thereafter filed an appeal before the Chief Engineer on 12.03.2022. Failing to get a response thereto, the petitioner requested for the constitution of a DRC, vide letter dated 02.05.2022. As even this request was not responded to, the petitioner invoked the Arbitration Agreement vide notice dated 14.06.2022 and thereafter, filed the present petition. 5. The learned counsel for the respondent opposes the maintainability of the present petition on the ground that the petitioner has executed an undertaking whereby it has received a sum of Rs.61,23,683/- (Rupees Sixty-One Lakh Twenty- Three Thousand Six Hundred Eighty-Three only) towards the `full and final bill payment' of the subject-work. He submits that in view of the said document, the Arbitration Agreement contained in the original work contracts stood discharged. In support, he places reliance on the judgment of the Supreme Court in Indian Oil Corporation v. NCC Limited, 2022 SCC OnLine SC 896.

6. On the other hand, the learned counsel for the petitioner submits that the said alleged undertaking was obtained by the respondent by withholding the payment of the running account bills of the petitioner. The same therefore, cannot be relied upon. He submits that, in any case, this will be a dispute to be adjudicated by the Arbitrator.

7. I have considered the submissions made by the learned counsels for the parties.

8. In Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1, the Supreme Court has held that the Court at the stage of exercise of powers under Section 11 of the Act is only to prima facie consider the existence of the Arbitration Agreement; it cannot enter into a detailed adjudication of the claims and counter-claims made by the parties on that issue. Such issues are to be necessarily left for the Arbitral Tribunal to determine.

9. The same was reiterated by the Supreme Court in Indian Oil Corporation (supra) observing as under:

    "89....Therefore, even when it is observed and held that such an aspect with regard to `accord and satisfaction' of the claims may/can be considered by the Court at the stage of deciding Section 11 application, i

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