2014 (1) TMI 1066 - HC - Companies Law

Appointment of arbitrator by court - Dispute over final settlement entered between parties - Appellant contends that they signed settlement deed under duress and coercion - Whether the Petitioner was made to sign the settlement deed, indemnity bond and affidavit dated 11th April 2011 under duress and coercion - Held that - it appears to the Court that the answer to that question will necessarily involve examination of witnesses as well as the documents in light of their depositions. Since it is not possible for the Court to conclusively hold at this stage that the Petitioner s plea is an afterthought, make-believe or lacking in credibility , the appropriate course would be to permit the parties to raise this as one of the first issues to be decided in the arbitral proceedings - Arbitrator to be appointed by the Court will first determine whether there was a full and final settlement of the Petitioner s claims as contended by the Respondent, or whether the settlement deed, indemnity bond and the affidavit were executed under duress and coercion as contended by the Petitioner. Depending upon the answer to the said issue, the learned Arbitrator will proceed further to consider the claims of the Petitioner - Decided in favour of Petition.

Summary

Issues Involved:
Petition under Section 11 (5) of the Arbitration and Conciliation Act, 1996 seeking reference to arbitration of disputes arising from a construction contract. Dispute over non-completion of work, delayed payments, and supply issues. Allegations of coercion to sign a settlement deed and indemnity bond. Interpretation of settlement agreement and full and final settlement of claims. Appointment of a sole Arbitrator and arbitration procedure.

Detailed Analysis:

1. Petition for Arbitration: The petitioner filed a petition seeking reference to arbitration under Section 11 (5) of the Arbitration and Conciliation Act, 1996. The dispute arose from a construction contract awarded by the respondent for the construction of Towers for a housing project. The petitioner alleged non-completion of work, delayed payments, and supply issues, leading to a request for arbitration.

2. Coercion Allegations: The petitioner claimed that it was forced to sign a settlement deed and an indemnity bond under duress and coercion. The respondent denied these allegations and argued that the settlement had fully and finally settled the petitioner's dues. The court noted the conflicting claims and the need for further examination.

3. Legal Precedents: Reference was made to legal precedents, including the Supreme Court's decision in National Insurance Company Limited v. Boghara Polyfab Private Limited. The court emphasized the need to determine the genuineness of disputes related to coercion or duress before referring the matter to arbitration to avoid unnecessary costs.

4. Appointment of Arbitrator: The court decided to appoint a sole Arbitrator, Justice R.C. Chopra, to adjudicate the disputes between the parties. The arbitration would take place under the Rules of the Delhi High Court Arbitration Centre to streamline the process and minimize costs. The fees of the Arbitrator would be as per the DHCAC (Arbitrators' Fees) Rules.

5. Conclusion: The petition was disposed of with the appointment of the sole Arbitrator and instructions for arbitration proceedings. The court highlighted the importance of resolving the coercion allegations as a preliminary issue before addressing the substantive claims of the parties, ensuring a fair and thorough arbitration process.

This detailed analysis covers the key issues and legal aspects addressed in the judgment, providing a comprehensive overview of the court's decision and reasoning.