Point of Law : Exercise of judicial power under Section 11 (6A) of the Act is concerned, the Designated Judge should confine himself only to the examination of the existence of an arbitration agreement in the narrow sense, as has been laid down and Duero Felguera, and leave all other issues to be decided under Section 16 of the Act by the Arbitral Tribunal.

JUDGMENT :

Mrs. Sangeeta Chandra, J.

1. This Application has been filed by the Applicant under Section 11(6) of the Arbitration and Conciliation Act, 1996 as amended, saying that the Applicant is a public limited company duly incorporated under the Companies Act and the Respondent U.P. Power Transmission Corporation Limited (here in after referred to as UPPTCL) is a State Transmission Utility notified under Section 39 of the Electricity Act, 2003.

2. It has been argued by the learned counsel for the Applicant that a Tender was floated by the Respondent Corporation in 2010 11 bearing –11 bearing Specification No.ESD 8/48 for construction of a –11 bearing 400/220 kW Substation at Banda on turnkey basis. The contract was awarded to the Applicant on 28.12.2011, in furtherance whereof three separate Agreements were executed between the parties, the first one being for supply of equipment and materials for construction of the Substation, that is, the Supply Agreement. In between January 2013, and March 2013, the Applicant manufactured certain equipment and the same was inspected by the Respondent. The Applicant wanted to supply the equipment two months earlier to the initially agreed date of supply. A letter was written in this regard by the Applicant to the Respondent saying that it wished to supply equipment in June 2013 before the scheduled date of delivery i.e. August 2013. The Respondent refused to accept delivery prior to the due date citing procedural issues. After correspondence and discussion, when the Applicant agreed to bear the interest towards pre-ponement of the delivery and payment towards the equipment for the period of two months on the total cost of the equipment, the Respondent agreed to take the delivery before time. However, the Respondent instead of releasing Rs.11 Crore 76 lakhs, released only a sum of Rs.10 crores on an ad-hoc basis. It also indicated that interest at the rate of 12% per annum on the payment of Rs.10 crores shall have to be be paid by the Applicant until the date of erecting of the equipments.

3. The Applicant addressed several letters to the Respondent objecting to the unilateral levy of interest up to the date of erecting of the equipment and calling upon the Respondent to pay balance outstanding dues of Rs.1.76 crores towards delivery of equipment under the Supply Agreement. This correspondence continued all through 2016 and 2017. The Applicant thereafter supplied the second set of Transformers and Reactors in accordance with the terms of the Supply Agreement. On 06.02.2018 the Respondent unilaterally deducted a sum of Rs.3 Crores and 24 lacs as interest on the amount paid in advance towards supply of equipment in July 2013. In effect, the Respondent had withheld Rs.5 crores and the Applicant objected to unwarranted deductions being made by the Respondent in its various correspondence in 2018. On 4 May 2019 the entire project was successfully completed by the Applicant and it requested for inspection, finally the Respondent took over the Banda Substation on 29.11.2018.

4. The Applicant served a legal notice on 25.01.2020 calling upon the Respondent to clear outstanding principal amount of Rs.5 crores along with interest at the rate of 18% per annum from the date of delivery of equipment till the date of making payment aggregating to an amount of Rs.10.91 crores and to further pay a sum of Rs.50 lakhs as token damages and Rs.50 lakhs for indulging in illegal enrichment in violation of the terms of the agreement. The Respondent refused to pay and the Applicant invoked Arbitration Under Clause 38 of Form A of the Supply Agreement (General Conditions of Contract) subject to modification in the said Clause on account of Statutory amendment to the Arbitration and Conciliation Act, 1996.

5. On such a notice being delivered to the Respondent on 17.12.2020 alongwith Applicant’s proposed panel of three persons for appointment as Arbitrator, the Respondent refused to give its consent for the appointment of