ANCL & Co. (India) Pvt. Ltd. @APPELLANT@Hash RSWM Ltd. (Unit LNJ Denim)

This application under Section 11 of the Arbitration & Conciliation Act, 1996 (‘the Act’) has been filed by the applicant â€" Company seeking

appointment of an Arbitrator in accordance with the arbitration agreement between the applicant â€" Company and the respondent - Company.

It is, inter alia, indicated in the application that the applicant is a Company incorporated under the provisions of the Companies Act, 1956 having

principal business of Civil, Sanitary & Water Supply Installation Works being Engineers, Builders and Contractors. It is contended that the applicant

â€" Company entered into a contract dated 1.4.2011 with the respondent â€" Company for Civil, Sanitary & Water Supply Installation Works for

expansion of its Denim Unit at Village â€" Mordi, District Banswara.

It is claimed that the Clause-45 of the Contract contains the arbitration agreement between the parties.

A dispute arose between the parties resulting in exchange of correspondence filed as Annex.4 with the application. It is alleged that despite

submission of final bill, the payment was not released, requisite gate passes were not issued and that certain Minutes of Meeting held on 4.2.2014

were got signed under duress, undue influence and coercion.

Further submissions have been made that when the efforts made to resolve the issues, went in vain, the applicant by letter dated 18.10.2014 (Annex.7)

called upon the respondent to either release the payment based on the claim submitted or the letter may be treated as invoking the arbitration clause

provided in the agreement, which letter was responded vide Annex.8 relying on the Minutes of Meeting dated 4.2.2014.

Based on the above facts, the appointment of Arbitrator has been prayed for, as noticed hereinbefore.

The respondent â€" Company filed its preliminary objections to the maintainability of the application. It is, inter alia, indicated that the requirements of

arbitration agreement itself have not been fulfilled as notice was required to be given within 28 days after receiving the decision from the Architect,

which has not been given within the time indicated.

Further submissions have been made that the applicant has failed to give out specific fact as to what was the duress, coercion or undue influence in

signing the Minutes of Meeting dated

4.2.2014. It is denied that there is any dispute between the parties, which could be referred to the arbitration.

Strong reliance has been placed on mails (Annex.R/2) indicating that the bill submitted is final and there is no pending claim. Based on the said

submissions, it is prayed that the application be dismissed.

A rejoinder to the reply has been filed by the applicant placing on record a large number of documents indicating live dispute does exist between the

parties and that the applicant was placed in a situation where it had no option but to sign the Minutes of Meeting dated 4.2.2014.

Learned counsel for the applicant submitted that the existence of arbitration agreement between the parties is not in dispute, which was promptly

invoked by the applicant by issuing the notice dated 18.10.2014 (Annex.7). It was submitted that in terms of the provision of Section 11(6A) of the

Act, this Court is required to confine itself to the examination of the existence of an arbitration agreement between the parties and the disputes, which

are sought to be raised by the respondent, can only be examined by the Arbitrator.

It was also submitted with reference to the various documents that the reliance placed on the Minutes of Meeting dated 4.2.2014 and the documents

(Annex.R/2) seeking to indicate that there was no dispute between the parties and that the applicant having issued no-dues is not entitled to invoke the

arbitration clause, is also baseless besides the fact that the documents were signed under duress, undue influence and coercion. It was prayed that an

Arbitrator be appointed to resolve the dispute between the parties.

Reliance was placed on Duro Felguera, S.A. vs. Gangavaram Port Limited: (2017) 9 SCC 729 and National Insurance Company Limited v. Boghara

Polyfab Private Limited: (2009) 1 SCC 267.

Learned counsel for the respondent vehemently opposed the submissions and submitted that the pre-requisite for invoking the arbitration clause is that

the applicant was required to issue a notice within 28 days from the decision of the Architects and as the noticed in question has been issued beyond

the said period, that also after writing the mails (Annex.R/2) accepting the payment as full and final, arbitration clause could not be invoked and in

absence of any dispute, the application is liable to be rejected.

Further submissions were made that bald allegations of duress, undue influence and coercion have been made, which on its face are baseless in

absence of any further particulars and, therefore also, the application deserves to be rejected.

Reliance was placed on ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd.: AIR 2018 SC 796.

I have considered the submissions made by learned counsel for the parties and have perused the material available on record.

The existence of the arbitration agreement between the parties has not been denied. However, submissions have been made as to whether the

applicant is entitled to invoke the said agreement and / or whether on account of the execution of the Minutes of Meeting dated 4.2.2014 and the no-

dues accorded by the applicant whether any live dispute remains between the

parties for being referred to the Arbitrator.

The arbitration clause between the parties reads as under:

“45. SETTLEMENT OF DISPUTE ARBITRATION:

All disputes and differences of any kind whatever arising out of or in connection with the contract or the carrying out of the works (whether during the

progress of the works or after their completion, and whether before or after the determination, abandonment or breach of the Contract) shall be

referred to and settled by the Architects who shall state their decision in writing. Such decision may be in the form of a final certificate or otherwise.

The decision of the Architect with respect to any of the excepted matters shall be final and without appeal as stated in Clause No.43. But if either the

Employer or the Contractor be dissatisfied within the decision of the Architects or any matter, question or the dispute of any kind (except any of the

accepted matters) or as to the with-holding by the Architects of any certificate to which the Contractor may claim to be entitled, then and in any such

case either party (the Employer or the Contractor) may within twenty eight days after receiving notice of such decision give a written notice to the

other party through the Architects requiring that such matters in dispute be arbitrated upon. Such written notice shall specify the matters which such

written notice has been given and no other shall be and is hereby referred to the Arbitration and final decision of a single Arbitrator being a Fellow of

the Indian Institute of Architects to be agreed upon and appointment of a single arbitrator, to disagreement as of two Arbitrators both being Fellow of

the Indian Institute of Architects, one of the appointed by each party, which Arbitrators shall before taking upon themselves the burden of Reference

appoint an Umpire.

The Arbitrator, the Arbitrators or the Umpire shall have power to open up, review and revise any certificate, opinion, decision, requisition, or notice,

save in regard to the excepted matters referred to in Clause No.43 and to determine all matters in dispute which shall be submitted to him or them and

of which notice shall have been as aforesaid.

Upon every or any such reference the cost of and incidental to the Reference an Award respectively shall be in the discretion of the Arbitrator or

‘Arbitrators or the Umpire who may determine the amount thereof, or direct the same to be taxed as between Attorney and client or as between

party and party and shall direct by whom and to whom and in what manner the same shall be borne and paid. The submission shall be deemed to be a

submission to Arbitrator within the meaning of the Indian Arbitration and Conciliation Act, 1996 or any statutory modification thereof. The award of

the Arbitrator or Arbitrators or the Umpire shall be final and binding on parties. Such reference except as to the withholding by the Architects of any

Certificate under Clause No.40 to which the Contractor claims to be entitled shall not be opened or entered upon until after the completion or alleged

completion of the works arising from any cause unless with the written consent of the Employer shall not withhold the payment of the Interim

Certificates nor the Contractor except with the consent in writing of the Architects in any way delay the carrying out of the works by reason of any

way delay the carrying out of the works by reason of any such matter, question or dispute being referred to Arbitration but shall proceed with the

work with all due diligence and shall until the decision of the Arbitrator or Arbitrators or the Umpire be given abide by the decision of the Architects

and no Award of the Arbitrator or his obligations to adhere strictly to the Architects’ instructions with regard to the actual carrying out the works.

The Employer and the Contractor hereby also agree that Arbitration under this Clause shall be a condition precedent to any right of Action under the

Contract.â€​

The provisions of Section 11(6A) of the Act reads as under:-

Appointment of Arbitrators.-

(1)……..

(2)…….

(3)…….

(4)…….

(5)…….

(6)…….

(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-

section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration

agreement.â€​

Hon’ble Supreme Court in the case of Duro Felguera (supra) in para 18, 47, 48 & 59 observed and laid down as under:-

“18. The language in Section 11(6) of the Act ""the Chief Justice or any person or institution designated by him"" has been substituted by ""Supreme

Court or as the case may be the High Court or any person or institution designated by such Court"". Now, as per subsection (6A) of Section 11, the

power of the Court has now been restricted only to see whether there exists an arbitration agreement. The amended provision in sub-section (7) of

Section 11 provides that the order passed under Section 11(6) shall not be appealable and thus finality is attached to the order passed under this

Section.

What is the effect of the change introduced by theArbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as “the 2015

Amendmentâ€) with particular reference to Section 11(6) and the newly added Section 11(6A) of the Arbitration and Conciliation Act, 1996

(hereinafter referred to as “the 1996 Actâ€​) is the crucial question arising for consideration in this case.

Section 11(6A) added by the 2015 Amendment, reads as follows:

“11(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under subsection (4) or sub-section (5) or

subsection (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration

agreement.â€​Â

From a reading of Section 11(6A), the intention of the legislature is crystal clear i.e. the Court should and need only look into one aspect- the existence

of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to

that is simple - it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen

between the parties to the agreement.

The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara

Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an

arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at

the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.â€​ (emphasis supplied)

From the above, it is apparent that post 2015 amendment in the Act, the Court while considering any application under Section 11 of the Act should

and needs to look into the existence of an arbitration agreement, nothing more or nothing less and that the Court only needs to see if the agreement

contains a clause, which provides for arbitration pertaining to the disputes, which have arisen between the parties to the agreement.

In view of the above, as it is apparent that a dispute has arisen between the parties and there exists an arbitration agreement between the parties, the

dispute between them, deserves to be referred for arbitration.

Insofar as the issues sought to be raised by the respondent and contested by the applicant are concerned, the same can no more be adjudicated while

considering an application under Section 11 of the Act. In view thereof, reliance placed by the respondent on judgment in the case of ONGC

Mangalore Petrochemicals Ltd. (supra) also loses significance, inasmuch as, the judgment under appeal was delivered by the Karnataka High Court

on 12.1.2015 and the Amendment Act, 2015 came into force on 23.10.2015.

Looking to the nature of dispute, it would be in the interest of both the parties that a sole Arbitrator be appointed for resolving the disputes between

them.

In view of the above discussion, the application is allowed. Justice Amitava Roy, a Former Judge of the Supreme Court of India residing at A-96, 2nd

Floor, Defence Colony, New Delhi â€" 110024, is appointed as sole Arbitrator to adjudicate upon the disputes between the parties as per the

Rajasthan Manual of Procedure for Alternative Dispute Resolution, 2009 as amended up to date. The above appointment is subject to the necessary

disclosure being made under Section 12 of the Act.