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2020 (3) TMI 1046 - HC - Indian LawsMaintainability of the arbitration proceeding - Joint Venture - strict compliance of sub-clause 67.1(d) of the COPA - HELD THAT - In the present case, the appellant joint venture was awarded the contract by the respondent. The arbitration agreement is between the appellant joint venture and the respondent is the claimant in the arbitral proceeding. It is the appellant joint venture who was entitled to and invoked the arbitration clause. Further, the respondent has also invoked the arbitration agreement against the appellant joint venture who has executed the contract. The appellant joint venture is the claimant in the arbitral proceeding. Accordingly, the joint venture is entitled to maintain this appeal. The present appeal filed by the appellant is maintainable.
Issues Involved:
1. Maintainability of the arbitration proceeding. 2. Compliance with sub-clause 67.1(d) of the Conditions of Particular Applications (COPA). 3. Jurisdiction of the Arbitral Tribunal. 4. Legality of the review application and subsequent recall of the order dated February 7, 2018. 5. Waiver of the right to refer disputes to the Disputes Adjudication Board (DAB). Issue-wise Detailed Analysis: 1. Maintainability of the Arbitration Proceeding: The respondent raised objections to the arbitration proceeding's maintainability on three grounds: final payment receipt by the claimant, acceptance of final measurement by the claimant, and the necessity of referring disputes to the DAB before arbitration. The Arbitral Tribunal initially rejected these objections but allowed the respondent to raise them again at the final stage. The Tribunal later revisited the issue and concluded that the arbitration proceeding was not maintainable due to the claimant's failure to exhaust the DAB procedure. 2. Compliance with Sub-clause 67.1(d) of COPA: Sub-clause 67.1(d) of COPA required disputes to be referred to the DAB initially. The claimant expressed willingness to continue with the sole member of the DAB, Shri Raychaudhuri, but the respondent did not respond or propose a replacement. The Tribunal found that the claimant's letter did not constitute substantial compliance with sub-clause 67.1(d), and the claimant should have requested the respondent to agree on a replacement. The Tribunal held that the arbitration was premature as the DAB procedure was not exhausted. 3. Jurisdiction of the Arbitral Tribunal: The respondent challenged the Tribunal's jurisdiction, asserting that the DAB procedure was not followed. The Tribunal's majority decision agreed with this view, stating that the arbitration proceeding was not maintainable. However, the claimant argued that the respondent's silence and subsequent appointment of an Arbitrator indicated a waiver of the DAB procedure. The Court found that the respondent's actions implied a waiver and that the Tribunal had jurisdiction. 4. Legality of the Review Application and Recall of the Order Dated February 7, 2018: The Tribunal allowed the respondent's review application, recalling the order dated February 7, 2018, which had initially rejected the respondent's objections. The Court found no illegality in this decision, as the Tribunal provided the respondent an opportunity to argue on the sufficiency of the claimant's compliance with sub-clause 67.1(d). 5. Waiver of the Right to Refer Disputes to the DAB: The claimant contended that the respondent waived its right to refer disputes to the DAB by appointing an Arbitrator and not responding to the claimant's proposal to continue with Shri Raychaudhuri. The Court agreed, noting that the respondent's actions indicated a conscious decision to proceed with arbitration, thus waiving the DAB procedure. Conclusion: The appeal succeeded, and the majority decision of the Arbitral Tribunal dated November 22, 2018, was set aside. The Tribunal was directed to adjudicate the disputes on merit and publish the award by June 2019. The Court emphasized the need for the Tribunal to hold sittings on a day-to-day basis without granting adjournments. The appeal and the stay application were disposed of without any order as to costs.
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