2019 (2) TMI 2027 - HC - Indian Laws

Seeking a direction for appointment of a Sole Arbitrator in respect of disputes which have arisen between the respondent and itself - notified claims or not - whether the claims lodged if not settled or withdrawn by the contractor are included in the final bill - Section 11(6) read with Section 11 (8)(b) of the Arbitration and Conciliation Act 1996 - HELD THAT - The following conclusions have been reached I) Where there is contestation or the decision rendered by the General Manager leaves scope for argument as to whether the claims lodged by a Contractor can be categorized as Notified Claims is best left to the Arbitral Tribunal. In other words except for the situation where there is no doubt that the claims were not lodged with the Engineer and the Site Engineer as required under Clause 6.6.1.0 67 read with 6.6.3.0 68 the matter would have to be left for resolution by Arbitral Tribunal. II) Aspects with regard to accord and satisfaction of the claims or where there is a dispute will also have to be left to the Arbitral Tribunal. The position in law in this regard remains the same both pre and post amendment brought about in the 1996 Act after 23.10.2015. III) After the insertion of Subsection (6A) in 11 of the 1996 Act the scope of inquiry by the Court in a Section 11 petition (once it is satisfied that it has jurisdiction in the matter) is confined to ascertaining as to whether or not a binding arbitration agreement exists qua the parties before it which is relatable to the disputes at hand. IV) The space for correlating the dispute at hand with the arbitration agreement is very narrow. Thus except for an open and shut case which throws up a circumstance indicative of the fact that a particular dispute does it not fall within the four corners of the arbitration agreement obtaining between the parties the matter would have to be resolved by an Arbitral Tribunal. In other words if there is contestation on this score the Court will allow the Arbitral Tribunal to reach a conclusion on way or another. This approach would be in keeping with the doctrine of Kompetenz Kompetenz; a doctrine which has statutory recognition under Section 16 of the 1996 Act.

Summary

Issues Involved:
1. Whether the claims made by the petitioner (NCCL) are "Notified Claims" under the terms of the contract.
2. The jurisdiction of the General Manager to determine the arbitrability of the claims.
3. The impact of the "No Claim Certificate" and subsequent withdrawal of claims by NCCL.
4. The applicability of Section 11(6A) of the Arbitration and Conciliation Act, 1996, and its effect on the court’s role in appointing an arbitrator.
5. Whether the disputes should be referred to arbitration despite the General Manager's decision.

Detailed Analysis:

1. Notified Claims:
The petitioner, NCCL, sought arbitration for claims arising from a delayed project. IOCL resisted, arguing that the claims were not "Notified Claims" as per the contract, which required claims to be notified within ten days of the event causing the claim. The court examined the relevant clauses of the General Conditions of Contract (GCC), particularly Clause 1.21.0.0 defining "Notified Claims" and Clause 6.6.1.0 detailing the notification requirements. The court noted that NCCL had provided the necessary notices and included the claims in the final bill, thus fulfilling the conditions for "Notified Claims."

2. General Manager's Jurisdiction:
IOCL argued that its General Manager had the final authority to determine whether claims were "Notified Claims" and thus arbitrable. The court analyzed Clause 9.0.2.0, which grants the General Manager the power to decide on the arbitrability of claims. However, the court found that the clause did not explicitly state that the General Manager's decision was final. The court emphasized that allowing one party unilaterally to determine arbitrability could undermine the arbitration process and the statutory power conferred on the Arbitral Tribunal under Section 16 of the 1996 Act.

3. No Claim Certificate:
NCCL had issued a "No Claim Certificate" under duress, as IOCL had indicated that the final bill and EOT requests would only be processed if NCCL withdrew its claims. The court found that this constituted coercion, making the certificate invalid. The court referenced the Supreme Court's decision in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., which held that issues of coercion or duress should be examined by the Arbitral Tribunal.

4. Section 11(6A) of the Arbitration and Conciliation Act, 1996:
The court highlighted the limited scope of judicial intervention under Section 11(6A), which confines the court's role to ascertaining the existence of an arbitration agreement. The court cited the Supreme Court's judgment in Duro Felguera S.A. v. Gangavaram Port Limited, emphasizing that the court should only ensure that an arbitration agreement exists and should leave questions of arbitrability to the Arbitral Tribunal.

5. Referral to Arbitration:
The court concluded that the disputes should be referred to arbitration. It appointed Hon’ble Mr. Justice Madan B. Lokur as the arbitrator, noting that the General Manager's decision did not preclude arbitration. The court emphasized that any contestation regarding the claims being "Notified Claims" or issues of coercion related to the "No Claim Certificate" should be decided by the Arbitral Tribunal.

Conclusion:
The court directed the appointment of an arbitrator to resolve the disputes between NCCL and IOCL, emphasizing the limited role of the court under Section 11(6A) and the necessity for the Arbitral Tribunal to determine issues of arbitrability and coercion. The decision underscores the importance of adhering to the arbitration agreement and the statutory framework governing arbitration in India.