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2023 Supreme(Online)(Del) 18154
DELHI HIGH COURT
T. S. Thakur, J
M/s Kuldeep Kumar Contractor v. Hindustan Prefab Limited
Arbitration Petition No. ARB.P.1032/2022
The issuance of a No-Claim Certificate does not render an arbitration agreement void; disputes are arbitrable if an arbitration clause is present and procedures followed.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Appointment of Sole Arbitrator - Petition for arbitration filed by the petitioner following denial of claims by the respondent after completion of work under contract - The court examines the applicability of an arbitration clause despite the issuance of a No-Claim Certificate. The doctrine of severability indicates that the arbitration clause remains effective even if other contractual obligations are disputed - Compliance with Clause 26 of the Special Conditions of Contract is determined sufficient for invoking arbitration. (Paras 1-56)
(B) Kompetenz-Kompetenz principle - Emphasizes that an arbitral tribunal can rule on its jurisdiction, including determining claims related to the arbitration agreement validity - Judicial intervention at the initial stages should be limited, promoting arbitration as a dispute resolution mechanism. (Paras 41-46)
| Table of Content |
|---|
| 1. petitioner seeks appointment of arbitrator. (Para 1 , 2 , 3 , 4) |
| 2. petitioner invokes arbitration clause for dispute resolution. (Para 5 , 6 , 7 , 8 , 9 , 10) |
| 3. petitioner emphasizes duty under arbitration agreement. (Para 11 , 12 , 13 , 14 , 15) |
| 4. respondent argues against arbitration, claims no dispute. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30) |
| 5. court analyzes jurisdiction and arbitration clause validity. (Para 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 6. court discusses kompetenz-kompetenz principle. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50) |
| 7. court decides to refer dispute to arbitration. (Para 51 , 52 , 53 , 54) |
| 8. order for arbitrator appointment and proceedings. (Para 55 , 56 , 57) |
1. The instant petition has been filed on behalf of the petitioner under S.11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act, 1996") seeking the appointment of a sole Arbitrator and inter alia praying as under:
"a. appoint an independent and impartial Sole Arbitrator, in terms of the Dispute Resolution clause, as contained in the contract - Agreement and the provisions of the ; so as to adjudicate the disputes which have arisen between the parties to the present petition;
b. grant costs of this application; and / or
c. Pass such further order / directions as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case in favour of the petitioners and against the respondents."
2. Factual Matrix
The petitioner is a partnership firm having its registered office at shop No. 452, 1st Floor, New Grain Market, Karnal, Haryana - 132001. The petitioner is a listed Class - 1 / (A) 'Contractor', primarily dealing with civil construction works, with Government departments. The respondent is a company incorporated under the Companies Act, 1956, having its registered office at Jangpura, New Delhi - 110014, functioning under the administrative control of the Ministry of Housing and Urban Affairs, Government of India.
3. On 22 October, 2018, the respondent, issued a 'Letter of Award' to the petitioner vis - a - vis work related to "Construction of pre - fabricated shelter for homeless persons at different places in Haryana" for the revised / accepted rate of Rs. 16,37,69,289/-, inclusive of all taxes. The time period for completion of the work was fixed at two months. Pursuant to the Letter of Award, the petitioner furnished an irrevocable and unconditional Performance Bank Guarantee, amounting to Rs. 81,88,465/- to the respondent and thereafter, an Agreement was signed between the petitioner and the respondent on 16 November, 2018. The relevant terms and conditions of the Agreement are enlisted as follows:
Art.1.1 delineates the scope of work.
Art.2 sets out the 'Contract - Documents'.
Art.5, thereof, postulates and declares that the agreement shall be governed by and be construed and interpreted in accordance with the laws of India and gives exclusive jurisdiction to Delhi court(s) only.
4. The work could not be completed within stipulated time period as envisaged in the Agreement. Thereafter, the petitioner had completed the entire work as per the terms and conditions of the Agreement and obtained the Completion Certificate dated 27 July, 2021. The petitioner made a claim, including final bill, Performance Bank Guarantees and security deposit in terms of the above said Agreement, however, the respondent denied the said claims entirely.
5. Being aggrieved by the acts of the respondent, the petitioner invoked the arbitration clause, i.e. Clause 26 of the Special Conditions of Contract (hereinafter referred to as 'the SCC') vide letter dated 19 February, 2022 under S.21 of the Act, 1996, pertaining to "Settlement of Disputes and Arbitration". Along with this letter, the petitioner appended a Statement of Claims in respect of the amounts, which is reproduced hereunder:
6. The respondent did not reply to the said notice dated 19 February, 2022 and
