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2024 Supreme(Online)(GUJ) 15862
HIGH COURT OF GUJARAT
MRS. JUSTICE SUNITA AGARWAL, CJ
M/S SADBHAV ENGINEERING LIMITED – Appellant
Versus
M/S SUWARNA BUILDCON PVT. LTD. – Respondent
R/PETN. UNDER ARBITRATION ACT NO. 185 of 2023
The court affirmed that the existence of an arbitration agreement is undisputed, allowing the appointment of an arbitrator despite ongoing arbitration under separate agreements.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Petition for appointment of arbitrator - Dispute arose from an agreement dated 08.07.2020 containing an arbitration clause - Respondents contested maintainability citing ongoing arbitration under Contracts of Guarantee dated 16.03.2020 - Court found existence of the agreement dated 08.07.2020 undisputed and ruled that issues regarding the agreements are to be resolved by the arbitrator - Petition allowed, arbitrator appointed. (Paras 1, 45, 46)
Facts of the case:
The petitioner sought appointment of an arbitrator under an agreement dated 08.07.2020, while the respondents claimed ongoing arbitration under earlier Contracts of Guarantee dated 16.03.2020. The petitioner denied the validity of the Contracts of Guarantee, asserting they were forged.
Findings of Court:
The court determined that the agreement dated 08.07.2020 and the Contracts of Guarantee are independent and give rise to separate causes of action, thus allowing the petition for appointment of an arbitrator.
Issues: The main issues included the maintainability of the petition in light of ongoing arbitration proceedings and the independence of the agreements in question.
Ratio Decidendi: The court held that the existence of the arbitration agreement is undisputed, and the arbitrator is competent to decide on the issues raised, including the question of supersession of previous contracts. The court emphasized that it cannot interfere with the arbitrator's jurisdiction at this stage.
Result: Petition allowed, arbitrator appointed.
CAV JUDGMENT
1) The present petition under Section 11(6) of the Arbitration and Conciliation Act’ 1996 has been filed seeking for appointment of arbitrator in the matter of dispute under the agreement dated 08.07.2020 containing Arbitration Clause ‘6.8’ therein. The opposition on the part of the respondents on the maintainability of the present petition is with the assertion that the arbitration proceedings arising out of a Contract of Guarantee 16.03.2020 initiated at the instance of the respondents are pending before a learned Arbitrator appointed by the respondent No.1.
2) In order to deal with the controversy, certain facts are relevant to be noted hereinafter:
3) A Contract of Guarantee 16.03.2020 is alleged to have been executed between the petitioner (along with its group companies namely the respondent Nos. 2 to 9) and the Directors (as sureties) and respondent No.1 as sub-contractor, in respect of execution of various works specified therein, for the total amount of Rs.39.55 crore as referred to in Schedule ‘B’, alleged to be payable by the petitioner to the respondent No.1.
4) It is the case of the petitioner herein that the said Contract of Guarantee is forged and fabricated document and hence its very existence is denied.
5) Similarly, two more Contracts of Guarantee dated 16.03.2020 have been pressed into service by the respondents, existence of which has been denied by the petitioner asserting that the said contracts are forged and fabricated documents.
6) It is the case of the petitioner that an independent agreement dated 08.07.2020 had been arrived at between the petitioner and respondent No.1 for settling all issues between them and it was agreed therein that the petitioner would pay to the respondent Rs.100.57 crore approx. as per Schedule ’C’ for the ongoing projects referred to in Schedule ‘A’ thereto. It was submitted that the recital in Para ‘A’ of the said agreement refers to the contracts of December 2013, August 2014 and December 2017 between the parties thereto. It was asserted that Para ‘C’ of the recital in the said agreement clearly suggests that it has been arrived between the parties to resolve all pending issues, to seek mutually agreed resolution.
7) Clauses ‘3.1’ and ‘5.3’ of the agreement dated 08.07.2020 further records that from the date of the agreement, neither parties will have any claim of past or in future other than those specifically agreed under the agreement dated 08.07.2020 and no claims shall be filed by the parties after the execution of the agreement, except the breach of the terms of this agreement including non-payments as per the schedule drawn out therein for non-completion of work as per schedule. Clause ‘6.2’ states that the agreement dated 08.07.2020 supersedes all discussions and agreements (whether oral or in written, including all correspondences) prior to the date of the said agreement among the parties with respect to the subject matter of the agreement.
8) As noted hereinbefore, Clause ‘6.8’ contains arbitration clause.
9) It seems that the respondent No.1 has sent an arbitration notice dated 13.04.2023 to the petitioner invoking arbitration under the alleged three agreements dated 16.03.2020, in respect of alleged non-payments under the aforesaid Contracts of Guarantee, which are termed as false and fabricated documents by the petitioner herein. However, the existence or validity of the agreement dated 08.07.2020 has not been disputed rather, there is an admission in the notice dated 13.04.2023 about the said settlement agreement dated 08.07.2020 executed between the parties.
10) It is the case of the petitioner that even before the expiry of the statutory period of 30 days, a unilateral notice dated 27.04.2023 was issued by the respondent No.1 to initiate arbitration proceedings under Clause ‘10.2’ of the alleged contract of the agreements dated 16.03.2020 stating that the sole arbitrator was jointly and mutually appointed by the parties to the Contract of Guarantee.
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