Dismissed

M/s. Koneru Constructions Pvt. Ltd. v. M/s. Sembcorp Energy India. Limited

Telangana HC25 Jan 2024ARBAPPL/70/2020

Case brief

AI extract

What is this about?

The High Court dismissed the applicant's application for appointment under Section 11(6) of the Arbitration Act. The Court held that the dispute was settled by a Minutes of Meeting dated 15.12.2017, where the applicant accepted amounts and received payments/bank guarantee release. Allegations of fraud or duress were considered bald pleas raised after benefits were accrued.

What did the court decide?

Application for appointment of arbitrator under Section 11(6) of the Act dismissed as no subsisting dispute exists.

M/s. Koneru Constructions Pvt. Ltd. Vs M/s. Sembcorp Energy… — Arbitration | Telangana HC (2024)

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[³¹⁶⁸¹

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\i-

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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THURSDAY, THE TWENTY FIFTH DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HON'BLE SRI JUSTICE K. LAKSHMAN

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ARBITRATION APPLICATION No 70 of 2O20

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Between:

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M/s. Koneru Constructions Pvt. Ltd., Plot No^- 145, D.No.-^{5gA-17-1114th} Road , R.T.C. Colony, Vijayawada Andhra Pradesh- 520008, rep. by its Managing Director [/r. K.V.Prasad.

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...Applicant

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AND

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M/s. Sembcorp Energy lndia. Limited, (formerly Mis.Thermal Powertech Corporation (l) Ltd) Pyanampuram/ Nelaturu Village. Muthukuru Mandal, SPSRNellore-524344

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Also At:

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M/s. Sembcorp Energy lndia Limited 6-3-1090, Block-A, Level-S, TSR Towers Rajbhavan Road, Somajiguda Hyderabad-500082.

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Also At:

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M/s. Sembcorp Energy lndia Limited Sth Floor Tower-C, Building No.1, DLF Cybercity, Gurgaon- 122OO2 Haryana, lndia.

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...Respondents

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Arbitration Application Under Section 11 (6) of the Arbitration and Conciliation Act 1996 praying that this Hon'ble Court may be pleased to appoint a Sole Arbitrator of the Honorable Court's choice to adjudicate the disputes and differences between the Applicant and the Respondent and pass the award in the interest of^justice.

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Counsel for the Petitioner: SRI S.V.S. CHOWDARY

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Counsel for the Respondent: SRI R.N. HEMENDRANATH REDDY, representing SRI THOOM SRINIVAS

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The Court made the following: ORDER

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HON'BLE SRI JUSTICE K. LAKSHMAN

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ARBITRATION APPLICATION No.7O of 2O2O

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ORDER:

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lleard Sri S.V.S. Chowdary, learned counsel for the petitior.rer- and Sri I{.N.1Ieme ndranath Reddy, learned Senior Counsel representing Sri^'I'hoom Srinivas, learned counsel lor the respondent.

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'l'his application is filed r.rnder Section I I (6) of the Arbitr-ation and Conciliation Act, 1996 (hereinafter ref'ened to as 'the Act') to appoint an arbitrator of its choice to adjudicate the arbitlable disputes and differences between applicant and respondent and pass the award in the interest ofj ustice

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3. CONTI'N'tS OF'I'IIE, APP LICAN'I':-

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(i) It is a construction contractor executing civil and

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infrastructure works across India.

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(ii) It was originally awarded two (2) conrracts i.e..

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(l ) Contract lbr^{(lonstr.uction} of 2 Nos^..IJ,. 1.ypc ancl I No

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"C'''li,pe Residential Blocks and Courrnunitv I lall.

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(2) Contract for Construction ol'2 Nos^{"B" 'ly'pe} and 3 Nos. "C" Type Residential Illocks nar.ned^''SGPC Towers and communiry Hal[" in ]'PCIL^{(SEM]]CORP)'fownshipat} Nellore. Andhra Pradesh.,^{vide the lollowingWorkOrders:-}

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(a) Vide Work Order datcd^{l0.luly 2014.}

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(b) Amendment No. I to Work^{Orderdated[ 2 January201 5,}

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(d) Work Order dated 09 Novcrnber^{20 1 5,}

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(f) Amendmcnt dated¹² March^2018.

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(g) Amendmcnt to Work^{OrderdaLedl2 March 2018and}

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(h) Arrendrnent No.2^{datedl2 Marr;h 2018'}

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(iii) The value ol^{thecontract was originally} Rs.5 8,17,50,264.^{Pursuantto the subsequent atnendments,the} modified contract^{value was Rs.46, t7,44,350/-''l'hc samewas} furtlrer modified to 1ts.45,40,62,6311-.^{Whilethey werecarrying} out works in lull scale,^{theyhave rcceiveda cotnmunicationfrom} respondent^{onI 2.01 .20 I 5 to stopthe wolk irr.rmediatelywithout}

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offering^{any reasons.}

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(iv)^-lhe subject contracts were put to tender even rvithout approval olbuilding plans for the township buildings and cornmunity hall etc.

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(u) Criminal cases and municipal actions were initiated.

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The project was virtually abandoned subject to the applicant to a situation where theil entire plant, rnachineries and inventories are locked up in the project premises in addition to subjecting the applicant to huge financial losses.

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(vi) By the tirne the contract was reopened, the applicant was subjected 10 complete stoppage ol work between 12.01 .20 t 5 to 30.09.2015. The appticant incurred additional financial loss.

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(vii) In addition to the blockage of their plant and machinery in thc project site, they were further subjected to financial distress as thc respondent has with-held thc processing and releasing of pending RA Bill amounts on the specious plea of want ol tirnc extension.

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(viii) Pursuant to the effor.ts made by the applicant, approvals were received from the municipal authorities.

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(i*) While the worhs with respect to B .l.ype and C .fype

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Blocks and Club House were complcred by 15.06.2017 and the works with respect to C^-fype & B Type were completed by 31.10.2017. The respondent had subjected the applicanr to hnancial black mail with levy ol l_iquidated Damages and encashment of Bank Guarantee, coerced thc applicant into signing a Minutes of Meeting (hereinafier referrcd to as ,MOM,) dated, 15.12.2017. The respondent cornpelled the applicant to accept levy of Liquidated Darnages of a huge amount of Rs.75 lakhs without taking responsibility ol the delays on the parr of rhe respondent in not providing the required drawings. The non-provision of drawings by the respondent was also admitted in the said MOM.

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(x) Thus, according to the applicant, thc rcspondent has

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coerced the applicant with threat on the following events:

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(i) Huge threatened illegal recoveries for vari ations/deviations.

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(ii) Threat of levy ol liqLridared damages, running to crores of rupces.

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(iii) Threat of Encashment of Banl< Guarantee

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)

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(xi)^-lhe said coercive acts would have cornpletely destroy'cd thc Applicant financially

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(xii) lt is a srnall contractor who had been subjected to huge fraud and coercion to restrain it from initiating any legall contractual remedies. The Applicant had to sign the said MOM dated 15.12.2017 under severe coercion and threats of encashment of banl< guarantees.

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(xiii) The so called full and final settlement canvassed bv the respondent was on 15.12.2017, the final paymenr was released to the applicant only on l5.l1.2018. The Applicant's Perfbrmance Bank Guarantee was also released onlv on 06.02.20t9

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(xiv) tJnder thc said coercive threats of the respondent, the applicant had to wait until performance Bank Guarantee was released to them on 06.02.2019, as the Applicant was under serious apprchension that action for legal entitlement would trigger encashrnent ol Perlormance Bank Guarantee which would ruin the Applicant financially ancl cripple them as a contractor.

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(xv)'fhc rcleasc o1'thc said performance Bank Guarantee on 06.02.2019, thc applicant had notihed rheir claims ro rhe

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respondent firstly. Vide letter dated 12.04.2019, followed by the recent notice dated 12.08.2020.

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(xvi) Vide its letter dated 12.04.2019, the applicant had raised a dispute on the legal validity ol' the MOM dated 15.12.2017, on the ground that the sar.ne is not binding on the Applicant pursuant to it being a product of intentional black mail, fraud and coercion. Accordingly, the validity of the MOM dated 15.12.2017 is one of main disputes raised by the applicant

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(xvii) Finally, applicant raised claims against the respondent vide letters dated 12.04.201 9 and 12.08.2020 and the same are specifically mentioned in Paragraph No.2l of the application

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(xviii) The total alnount claimed against the Itespondcnt is Rs. 14,99,15,991-60 ps. (Rupecs l-ouftcen Crorcs, Ninety Ninc Lakhs, Fifteen Thousand, Ninc Hundred Nincty Onc and Paisc Sixty Only)

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(xix) The Respondenl has rejectcd thc requesl of the applicant for arbitration vide their letter dated^{12.08.2020 on the} ground that there was a futl and final settlcrnent^betweenthe

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parties and that they arc objecting to invocation of arbitration as nothing survives lor adjudication

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(xx) The MOM of Full and Final Settlement dated 15.12.2017 is not legally valid, a dispute inherently arosc with respect to the validity of the Minutes of Full and Final Settlement dated 15.12.2017 which has to be adjudicated in terms of the said Work Orders i.e. Arbitration

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4 Since the respondent has rejected the request made by the applicant to appoint an arbitrator, it has filed the present application under Section 1 I (6) of the Act seeking appointment ol an arbitrator to adjudicate the disputes and differences between applicant and respondent and to pass an award

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CONTENTS OF'TIIT] RESPONDFIN'I':-

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-I-he said application was opposed by the respondent on the lollowing glounds:-

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(i) Pursuant to the albresaid work orders, execution of the same by the applicant, delays etc, the representatives of the applicant, respondent have discussed the same and entered into full and final serrlement and MOM datcd 15.12.2017 was signed.

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The said settlelnent agreemcnt was subscquentll, elfcctuated and acted upon by the parties, thus putting a quietr.rs to any disputes that would ernanate lrom the work orders. The alleged disputes set out under the application are not arrenablc to the arbitration

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(ii) 'l.he settlement agreement does not dispute that the pafties therein shall submit to the^jurisdiction of an arbitral tribunal for adjudicating disputes euranating from the said settlement agreement. 1'hus, in the absence of cxistence ol an arbitration agreement or a specific teference to^1l-re arbitration clauses set out in the work orders any request in referring the disputes qua the Settlement Agreement to arbitration^rs erl'oneous and bad in law.

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(iii) In the back ground o1- the said Scttlemcnt Agreement, a quictus has been put to all thc allcged^disputes between the parlies. Even for the sake of argutrent,^disputes ernanating from the Work Orders ought to be rclerred^{1o arbitral} tribur.ral (s) constituted independently under each^work ordct

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(iu) The respondent emphasizes tl-rat each^rvot k ot'dct constitutes an independent contract and inter a/ir: stipulates^an independent arbitration agreement and as such the said

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agreemen ts/contrac ts are not intrinsically linked to one another. Thereforc, a unilateral request lor composite reference to a Sole Arbitrator is ext.ra contractual, erroneous and bad in law.

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(u) The applicant has admittedly benefited and acted in furtherance of the Settlement Agreement so much so that respondent has to settle with tiquidated damages for delayed and defective perfomance by the applicant under the work orders for a meagre surn of Rs.75 takhs. It is only pursuant to unduly enriching itself lrom the benefits of the Settlernent Agreement, has the applicant chosen to convcniently invoke arbitration by misrepresenting the true and correct facts.

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("i) The allegation of the applicant that the Settlement Agreernent was a product of intentional black mail, fraud and coercion is false and baseless. The applicant invited the same only for the purpose of liting the present apptication. The disputes between the applicant and respondent were negotiated, settled as agreed in MOM dated 15.12.201'l . The said settlement was effected and the applicant was benefited out ol the same. 'lherefore, thcre are no disputes much less arbitral disputes

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between the applicant and the respondent. Thc prcscnt

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application is liable to be dismissed

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Applicant had filed re.!oinder to the counter filed by

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respondent denying the allegations madc thercin

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Sri S.V.S. Chowdary, learned counsel lor the applicant made his submissions cxtensivcly referring to the various documents and clauses of the said docurnents. I Ic l-ras also

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placed reliance on the following^judgments:-

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(i) Avilel Post Studioz Lintitetl v. IISBC PI lloldings

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(Mauritius) Ltdl

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(iil Perkins Eostmnn Architects DI'C v. IISCC (India) Limibd

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(iii) Ameet Lalchand Shah tnd Others v. Rishublr

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E n terprises antl Anot h err

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(iv) Cltloro Controls India Privale Limiled v. Severn

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Trent llaler Puri/ictttion INC.

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t (2014) scc online Bom 929

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'1ZOte)^{SCC OntineSCt5l7}

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' 1zo^{rayt s scc ors}

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o (zo r:) t scc o+ t

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(v) Mayovctli Trodittg Privote Limited v. Praclyuat Deb

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B urmsns untl

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(vt) Vid.ya Drolia and Others vs. Durgu Toding Corporation6

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Sri R.N. I lernendranath Reddy, learned Senior Counsel

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representing Sri l-hoom Srinivas, leamed counsel for the respondent had also made his submissions extensively and he has placed reliance on the following judgment

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(i) Vidya Drolia and Others v. Durga Tading Corporationl

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(ti) NTPC Limited v. M/s SpML Infra Limitud

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(ili) Duro Felgueru, S.A v. Gangavurum Port Limitud

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(iv) The Iron und Steel Cotnpany Limited v. Tiwari Rood

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Linesto

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(v) Nntional Insurtnce Company Limited v. Boghara

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Polyfab Priv e LimitedtI

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' 1zo^{reys scc z r+}

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u lzoz ry z scc r

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'(zoz^{t) z sccr}

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3 civil nppeal No.4??8 ut 2u '.1 darcd t0.04.2021 ' (20 t?) 9 SCC 7to

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'o zoor 1ty scc r066

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(vi) Sree Vishnu Constructions v. Chief Engineer (Air

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Force) and othersl2

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(vii) Agastya Agro Limited vs. Uniled Indio Insuronce

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Company Limitedt3

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FINDTNGS OF TIIE, COUITT:-

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In the light of the aforcsaid discussion, the^following issues fell for consideration bcfore this Court

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(i) Whelher High Court under Section 11(6) o1 the Act can decide the validity of MOM dated 15.12.2017^{entered between}

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the parties?

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(ii) Whether the allegations of financial duress, lraud and coercion can be considered by the Iligh Couft under^Section 11(6) of thc Act?

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(iii) Whether there are any disputes much less arbitral disputes between the applicant and respondent to be adjudicatcd by an arbitrator to be appointed by this Court?

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(iv)^'I'o what relieP

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"^{(2009)I scc 267}

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'' lzdltq^{aLo ::o}

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't^{2022 SCC Online TS 1323}

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There is no dispute with regard to the awarding of work orders to the applicant and amendments. Since the same are not in much dispute, there is no need to refer the same in detail. According to the applicant, the respondent addressed a letter dated 12.0 I .201 5 r.equesting the applicanr to stop the work. Criminal cases wet.e lodged. Municipal actions were taken. Therefore, according to the applicant, there is no delay in execution of work.

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I l. Whereas, according to the respondent, there are delays in execution and compretion of the work. Thererbre, both the representatives of the applicant and the respondent sat together negotiated, discussed on the said issues and entered into a settlement dated 15.12.2017. Even the applicant is also not disputing with regard to signing of the said MOM dated 15.12.2017. But, accor.ding to applicant, the respondent has obtained the same under financial duress, fraud and coercion.

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In the light olrhe same, rhe said MOM dared t5.12.2017 is relevant and the same is extracted below:

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" MoM hetween Mis.SGPC & ll/s Koneru on 1 5. t 2.201 7 Contract clo.sure o.f' l ownshlc Builtling Bktcks, SOpC Towers Nellore

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Members Present
SGPC Ko ne r u C) on s I r u t I iorts
Mr. DAK Pra.sad Mr.Kl/ P rosad
It|r Suresh Babu l) L,lr.Churan
Mr. Williams Mr.Ch. Rumeslt
Mr.K.Bhuskar lleddy,
Mr.P.M.V Suresh

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Di.tcussion held on contractuul lssues i e recoverrcs balance pgyments, apDlicable LD, additional urels execuled as Der tha /inal drau'in,ls etc..

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l. Recoveries from the C:ontract price Rs. 3 I .0 Lacs

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a) Koneru utnflmed that the tlil/erential tost of.stcal bety,een CRS & Non-CRS abour @Rs. 2.500/- per lvlT for J20M7' Le, 10.5 Lacs.

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b) Collapsible door not bcen creuied bl Koneru uccordingly lhe same need to bc recoyered It-om bills however M/s. Koneru requested lo recover fbr the cost of collapsible door os pcr original drowing which was luving brick vorks o[ uboul 3m on either side inside the club house Konetu confirmad for recovery on dccounl ofcollapsible door about ]1.-i Lacs.

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c) Koneru confirmed recove0/ of about 6.0 t,ocs Jbr 06 Bloclrs due to deletkn of structure at tcrrace level as per rcvised drawings whercin il utas the part oforiginal tender druy,ing.

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SGPC agrecd to ntake puyment o/ )1.s. 29. l8 luc.s tovt,urds addilional areas executed as pcr the .finul dratrings againsr Koneru's reque.st letter tlated 2 1.06 I7

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Time Extension. Prolonged dil;cussion.s v,ere held betvteen 6p..PC and Koneru on tlrc various reusons Jitr dclay in contplelion viilStoppage antl Rt-slart of tt,orks tlue to tlrau,ing ,,p1troralr, Idle labour, Dclay in releuse of drainuge dravrinps, dcLat in

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ralaase offronts Jbr fnishing duc to ongoing lnterior decoration vvork. Koneru Conslruction Jinally accepted .[or ths ]gyy sf delay LD of Rs. 75.0 Lacs on the lotal conroct value for ull the Conlracls. This u,ill ba udjusted from the final 5%o cash retention amount and the balance will be released on submission of BG os pe r c o ntroc I proy is i on s.

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Subsequent to above agreement, Time of completion of ddferent contracls is extended as under:

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i) For Block.s 81, 82, C I ancl Olub House - upto I5th.lune'17

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ii) F-or Blocks C2, 83 and 81 - upto 3 I " October I 7

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The above dates shall be considered for contractual wo-ronty period.

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There are no furlher claims arul recoveries from eilher party olher than menlioned above. "

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I 3. Perusal of the aforesaid MOM would reveal that the

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attendees of the said meeting have discussed on contractual issue i.e. rccoveries, balance payrnents, applicable LD, additional areas executed as per the final drawings etc. Recoveries were specifically mentioned therein. The respondent agreed to make payment of Rs.29.18 lakhs towards additional arrears executed as per final drawings against the applicant's request vide letter dated 21 .06.2011 . The applicant finally accepted for the levy of I-iquidated Daurages of Rs.75 lakhs lor delay on the total contract value for all the contracts. The same will be adjusted frorn the frnal 5%o cash retention amount and the balance wi[ be rcleased on submission of Bank Guarantee as per the contract provisions. Finalty, they have agreed that ,.There arc no

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further claims and rccoverics from either party other than

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mentioned abovet'.

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Thus, according to the respondent, the said agrcement was entered in futl and final settlernent of all the clain.rs and disputes between the applicant and respondent. Attendees ol the rnceting have signed the said MOM. There was no coercion or fraud as alleged by the applicant. The said MOM was acted upon. The applicant is benehciary out of the said MOM dared 15.12.2017

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According to applicant, pursuant to the said full and^flnal settlement dated 15. 12.2017, final payment was^{releasedto the} applicant only on l5.l 1.2018. The applicant's Perlormance^Bank Guarantee was also rcleased on 06.02.2019.^{'fl-rerefore, the} applicant was under serious apprchension that action fol^legal entitlement would trigger encashment of the Perlbrn-rancc Bank Guarantee which would ruin the applicant financially^{and cripplc} them as a contractor.

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Whereas according to the respondent, the applicant^having benefited from out ol thc said settlerxent, receivcd final^payn-rent on I 5. I 1 .20 I 8 and Performance Bank Guarantce was also released on 06.02.2019. f'wo uonths thereafter, applicant^had

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issued notice dated 12.04.2019 contending that it has made to sign thc said MOM dated 15.12.2017 due to financial duress, fraud and coercion

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After one and half year of entering into the said MOM dated 15.12.2017, for the firsr tirne applicant had made allegations of financial duress, fraud and coercion with a mala fide^{inlentionfor wrongful gains} and also to fi le the present application. 1-he applicant is also seeking to adjudicate the validity of the said MOM dated 15.12.2017 by an arbitrator to be appointed by this Cour1.

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ln Avitel Post Studioz Limiled (Supra), a Division Bench ol Bombay High Court held that issues of coercive and fraud has to be considered by the arbitrator to be appointed by the High Court under Section I I (6) of the Act. But the facts of the said case are altogether different to the facts of the present case. In the present case, the MOM was dated, 15.12.2017 and the applicant after receipt of benefits under the said settlement and on efl'ectuating the said settlement, issued notice only on 12.04.2019 raising financial duress, fraud and coercion for the fi rst time.

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The facts of Perkins (Supra) arc also difl'crcnt to the facts of the present case.

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In Ameet Lalchmd Shth tnd Otfters (Supra),^rvl.rerein Apex Courl held that coercion has to be considered by^the arbitrator to be appointed by the I{igh Court under Section^{I l(6)} ofthe Act. The facts are slightly different^{therein to the facts of} the present case

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In Chloro Controls Indfu Private Limited^{(Supra), Apex} Court held that in exceptional^{conditions rvhcncotnposile} reference can be made^{rvithout prior consentol non-signatories} or third parties, enumerated and^{explained in detail .It was held} that where various agreements constitute^{a composite transactlon,} court can refer the disputes to^{arbitrationexistingbetwcen} signatory or non-signatory^parties if:^{(i) all ancillaryagrecmcnts} between them are relatable to^{principalagreernentand( ii)} performance ol one agreement is so intrinsically^{interlinked with} other agreements that they are incapable^{o1' beingbeneticially} performed without perfortnance of others or served^{lrornthe rest} r.e., it rs possible to invoke principlc ol^"compositc performance". Whereas, in the prcsent^{casc the facts are} altogether different. There are three^{Work Olders,atncndments,}

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arbitration clauscs are different and the procedure lnentioned therein is also different. Therefore, the principle laid down therein is not applicable to the facts of the present case.

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ln Mayavati Trading Private Limited (Supra), the Apex Court held that High Court while considering any application under Scction I I (4) to I 1 (6) of the Act has to confine itself to examination of existence of arbitration agreement, nothing more, nothing less, and leave all other preliminary issues to be decided by the arbitrator.

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The Hon'ble Supreme Court in Vidya Drolia v. Durga

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Trading Corporationro laid do*n the test to exercise power under Section I I ol' the Act, 1996. The courts while exercising power under Section ll of the Act, 1996 shall examine as to whelher an arbitration agreement, primafacie, exists. The Courts cannot conduct a roving enquiry involving facts and interpretation of contractual terms. The relevant paragraph is extracted below:

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"244. Belorc wc part, the conclusions reached. with respecl to Question l, arc:

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244.1. Sections 8 and I I of the Act have the same ambir u'ith respect to.judicial interfercnce.

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'''. lzoz^t.1z scc t

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244.2. Usually, subject-matter arbitrability cannot be decided at the stage ol Section 8 or 1 I ol the Act. unless it is a clear casc oldeadwood.

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244.3.The court, under Sections 8 and I t, has to reler a tnatter to arbitration or to appoint an arbitrator. as thc case may be, unless a party has cstablished a prrma facic (summary findings) case of non-existence of valid arbitration agreelnent, by sumrnarily portraf ing a strong case that he is entitled to such a finding.

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244.4. The court s hould refcr a matter if thc validitv of the arbitration asrcement cannot bc dctermined onaD rima facie basis. as laid down above i.e. "when in doubt do refer".

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244.5. The scoDe of thc court to examine thc^prima facie validity of an arbitration agrccmcnt^includes only:

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244.5.1. Whcther the arbitration agrccment^{rvas in} writins? or

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244.5.2. Whether the arbitration agreemcnt^was contained in exchanse of letters. telecom munication, etc.?

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244.5.3. Whethcr the corc contractual ingrcdients q ua the arbitration agrccmcnt werc firlfilled?

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244.5.4. On rare occasions. whcthcr the^sub icctmatter of dispute is arbitrable?"

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In the light ofthe aforesaid discussion,^{it is rclevant to note}

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that after amendment of the act in 2015^{and thc scopc ofpower}

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under Section l1(6) of the Act is extrcmely lirnited.^{'fhe said} principle was also laid by the Apex Court in Vidya Drolia^and

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Others (supra).

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In NTPC Limited (Supra) the Ilon'ble Apex Couft

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3bq;idered the scope of 11 (6) of the Act^{and that rvhether the}

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[{igh Court can consider the validity settlement arrived between thc parties undel Section I I (6) of the Act. In the said case, the settlement agreement was dated 27 .05 .2020. The applicant contended that there were no subsisting disputes between the parlies in vicu, of the Settlemenl Agreement dated 27.05.2020 and that the application for the arbitration is an afterthought and abuse ol the process. After the said settlement of disputes, followcd by its irnplementation, SPML Infra Limited, respondent therein repudiated the Settlement Agreernent and filed an application under Section ll(6) of rhe Act in Delhi High Court seeking appointmenl of an arbitrator. An allegation was made that the letcntion of the Bank Guarantees compelled SpML Infra I-imitcd to accept the tcrms of Settlement Agreement. Apex Court referring the arbitration clause in the terms of settlernent dated 27.05.2020 and considering the principle laid down in Vidyt Drolia (Supra), Pravin Electricsls private Limited v. Galaty Infru and Engineering private Limited^ts, Sanjiv Praktsh v. Seemu Kukrejt and Olherst6 antt Intlian Oil Corpor ion Limited v. NCC l-imitetltl held that the parties were referrcd to arbilration, as the prima facie review in each ofthese ''12ozrysscc6;t '" 1202^t1o566732 r7 (2022) SCC OnLinc SC 896

¶205

¶206

cases on the objection of non-arbitrabi lity was found to be inconclusive. Foilowing to the exception to the gencral principle that the Court may not refer parties to arbitration wl-ren it is clear that case is manifestly and ex facie non-arbitrablc, in BSLN tnd anolher vs. Nortel Nelworks India I'rivate Limitedts and Secunderabad Cantonment Board v. B. Ramschsndrdth und ,sozsle arbitration was refused as the clairns of thc palties were demonstrablv time-barred

¶207

ln paragraph Nos.25, 26,27 and 28 of NTPC Limited (Supra), Apex Court held as follows:-

¶208

"25. Eye of the Needle: The above-referred precedcnts crystallize the position of lau, that lhe pre-rcfcrral jurisdiction of lhe courts under Seclion Il((t) o/ the ltt is rery narro) and inheres fwo inquiries. 7Irc primary inquiry is about the exislence and the validity of an arbitrulion agreement, which also includes an enquiry os lo the parlrc:i to the agreement and the applicant's prfiily to the .soid agreement. These are mallers which require a lhorough examination by the referral Court. I'hc secorulary enquiry that mny arise at the reference stage itsel;/ is v,ith respctl to the non-arbitrability of the dispute.

¶209

As a ganeral rule and o principle. tfu u-hitral tribunal is the pre-ferred first authority lo t]etcrntinc ond

¶210

'' lzoz^{ry : scc zs} rheqat) 5 scc 7os

¶211

¶212

decitle all qucstions of non-arbitrab ility. As an exceplion to lhe rule, and rarely as o tlemurrer, rhe referral Court may reject claims which are manifestly and ex_Jitcie non_ abitrable. Exptaining this position. Jlou,ing from the principles laid dov,n in Vidhyo Droliu (supra), this Court in a subscquent decision ln Norrel Net:works (s.upra) held;-

¶213

15.1 While exercising jurisdiction under Section ll us lhe judicial /brum, the Court may exercise the prima facie test lo screen and knockdov,n ex .facie meritless, frivolous, and dishonest litrgation. Limited jurisdiction of fhe Courts u'ould ensure expeditious anr) e"{ficienr disposal ar the refbrral stagc. tlt the referral slage, the Court can interfere ''onl),," y,hen it is "manik:jt,, thot the claims are ex facie time harred und deod, or there is rut subsisting clispute.,,

¶214

The standartl oJ' scruliny lo exomine the non_ arbitrability of o claint i,s only prima facie. Referral Courts must not undertake a full review of the contesled facls; thay must only be conlined to a primary first review and let facts .speok fttr lhentsclves. This olso requires the courts to exantine whether the a-rserlion on arbitrability is bonafide or not. 7'he prima facie scrutiny of the Ioctrj must lead to a clear conclusion lh.tl there is nol aven o veslige oJ.doubt that the claint is rutn-u.hitrable. On lhe other hand, even if there is thc .slightest tloubur. thc rule i,t- to refer the dispufe b arbilralion.

¶215

'l'hc limitcd scrutiny, through the eye ofthe needle is neLe-\sory and compclling. It is intertu)ined with the duq) oJ tlrc rcferral Court to protect lhe p(rtie.s from heing forceLl to orbitrale u,hen the motter is demonstrably non_arbitrable. It has becn termed u-t o legilimate interference by courts to re/ise re/Lrcnce in ordcr f(, prevent utastage oJ public ancl

¶216

¶217

privale resources. F'urther, as noleLl in Vidya Droliu (sttpru), iJ this duty within the Lrmited composs i.s nol excrr:ised, and the C'ourl becomes loo reluctdnt to inl?rveft. il may undermine lhe effectiwness of both, arbitration and the Court. Therefore, this Courl or a High Courl, as the case may be, while exercising^jurisdiction under Section I I⁽⁶⁾ o[ the Acl, is nol axpecled lo act mechunically merely to deliver a purported dispute ruised by an applicanl at the doors of^the chosen arbilralor as explained in DLF llome Developers Limited vs. Rnjapura llomes Private Limiteiq.^"

¶218

The Apex Courl in paragraph No.38 of thc said Judgrrent

¶219

also considered the lacls in the said case that during the^penderlcy of the Writ Petition, parties engaged themselves in multiple discussions about their claims and counter-claims. All^that culminated in to Settlement Agreement dated^{2'7.05.2020. In} compliance with the said Settlement Agreement, NI-PC^rcleased the Bank Guarantees on 30.06.2020 whicl.r^were the^sub.iect rnatter ol the Writ Petition

¶220

On examination of facts of the said case, in^paragraph Nos.46, 47 and 48, the Apex Court held^{as follows:-}

¶221

" 46. We will now examine whether^{the allegalionsoJ} coercion and economic duress in^{the execution of the} Seltlement Agreement ore bona /ide or^{not. I.his inquiryhas a} direct beuring on the arbitrability^{ol' thc dis:puta. ltv'as} during lhc subsislenca of tht^{Ll'rit Pctitirtnurul rhc llig,h}

¶222

']o^{(2021)SCCOnlineSC781}

¶223

¶224

(ourt's inlarim ortlet y,hen,\Pl.,ll, had complete protection of the Court, that the parties entered into the Se lement Agreement This agreement was comprehensive. It inter alia provided for (i) the release of Bank Guarantees by N7'PC. (ii) rhe v,ithdrau,al o.f SPML's llrit Petition, (iii) restroining NTI'(.- from filing contempt proceedings against SPML for letting tha Bank Guarantees expire, and finally, (iv) reslraining SPML from initiating dny proceedings under the subjecl contract, including arbitration. The Se lement Agreement ulso recordetl that lhere were no subsisting issues pcnding hetween the pdt lics.

¶225

17.^'fhe plea of coertion and eatrutmic duress musl be seen in the context of the execution of the Settlemenl Agreement not being disputed, and its implementation leading to the release of thc Bank^(iuarantees on 30.06.2020 also not being dispuled. llnlost three weeks alter the release of the Bank (]uarantees, u letter of repudiataion was issued by SPML on 22.07.2020 l'his letter was asued about tteo months after the Selllement AKraemant^y,as axacutcd and in.[act during the sut:sistence o/ thc Writ Petitiotl ,l.fter reuping the benefits of the Seltlement Agreemenl, the Writ Petition was withdrawn on 21.09.2020. lt is thareafter that lhe present application undcr Section II(6) 4 the Acr.t,us filed. The sequence of events Ieods us to utnclude that the Ieuer of repudiation was issued only to wriggle out o/'the terms of lhe Settlement Agreement.

¶226

The forcgoing clariJies beyond doubt that the claims soughl lo be submi ed lo arbitrution were raisetl crs un a/ierthought Fhrther. SPML's ullegations oJ' coercion and econontic dures.s in lhe erecution of lhe Se lemenl Agreemenl lack bona.fida. 7'he1' are liabla to be knocked dov.n as ex Jacie.frivoktus^{and unte nable} -"

¶227

¶228

¶229

29 . F inatly the apcx Court found fault with the order of the High Court appointing an arbitrator under Section I t (6) ol the Act. Apex Cou( observed that High Courl ought to have examined the issue of the final settlement of disputes in the context of the principle laid down in Vidhyn Drolil^(Supra)

¶230

ln Agastya Agro Limited (Supra), paragraph Nos. l8 and

¶231

19 are relevant and the same are extracted below:-

¶232

"18. Further, the argument of the Applicant thal the exbtence of dure.ss urul Jraud is to hc decidetl by thc arbilralor only cannol be accepted. If such an argumenl is uccepted lhen anlt parly sceking appointment of an arbitrator con allege existence of fruutl/duress/distress/coercion^{and iniliate lhe arbitral} proccss ,41 this sldge, it is apt lo re./'er to the decision of the Suprente Court in Oriental lnsurance Co. Ltd.^{v. Dicilex} Furnishing l.td.

¶233

"26. An overall reading oJ Dicitex's application (under Section I I (6)) cleurly .shows lhot its Rrievance v'ith respecl to lhe involunlury nulure of lhe discharge voucher was arliculuted. Il cannot he disputed that several letlers spanning over ht)o^years staling lhal it was facing./inanc ial crisis on accounl o/ lhe deLay in settling the claint,^wcre addressed to the oppellant. Thi.s Court is^conscious of^lhe .[act^{thot un applicationunderSection I l(6)i.s in the form of} a pteading which ntcrely seeks an order^{oJ the court,} .for uppointmcnt ofan orbilrator. lt^{cannotbe conclusive of the} pleas or conlenlions lhat lhe claimant or lhe^parly concerned can take in the orbitral^proceedings. f.1!--.1fu$ slose, therefore. lhe court which^{isreouired to ensre lltal}

¶234

¶235

an arbitrable dispute extsls, has lo be^prima facie convinced obout llte senuineness or credibilitv of the^plea of coercion; it c(nnol be loo particular about the nalnre ef Ihe plea, b,hich necessarily has lo be made and established in the sabskmtive (read orbitration) proceeding. If the courl were lo take a controry aDDroach and minulelv examine the plea and iudge its credibilitv or reasono ltleness, tere would be o danset of ils denvine a ferqn!^{lo lhe applicont} altogelher,^{becausereieclion oF the} aoolicaliott toould render llte findins^(about lhe finalitv of tlte disclnree and ils effecl as satisfnclion) linal, thus preclurlinp the applicflnt of its right evenl to approach a civil courl. There are deci.sions of this Court (Associated Construclion v Pov,anons Ilclicopters Ltd. lAssociated L'on.>'truction Pav,anhons I lelicoptars l-Id., (2008) 16 SCC 128) and Bogharalyfab [Natktnal lnsurance Co. Ltd. v. BogharaPolyfab (P) Ltd., (2009) I S(:C 267. (2009) I SCC ({)v) ll-l which upheld the con('ept of economit dres.s. llaving rcgard to the locl.t und tirtumstunces, this C|urt is oJ'the opinion lhot llle reusoning in lhc ineugned judgment (Dicilex Furnishing Ltd. v. Oriental Insurance Co. Ltd., 2015 SCC Online Bom 5055J cannot be faulted."

¶236

Therefore, thc ,4pplicant connor moke bald allegations regarding .fiaud and usercirn just to get an arbilrator appointed. lJ duress/coercion tre alleged the lpplicant seeking appointment of an u'bitrator has to prima focie sutisfy lhe courl regarding lhc existence of such Jizcts LonslitlrtinN dure.ss/coert'ion. ln tha ahsence of an_y prima fhcie^{prool regttrdingdures.sicot,rcion.} thc uturl cun re/ se lo appoint on crrbitrator. According lo this Courl, the requiremenl o;f such prima facie suti,;faction regarding the allegations o/ fraud/coerc ion/dure.ss/distrcs.s i,,^ in Iinc u,ith

¶237

¶238

the prima .facie revieu, test laid down in Vidya Drolia (Supra) "

¶239

In Sree Vishnu Construcliorts (Supra), paragraph Nos.l0

¶240

and I I are relevanl and the same are extracted below:-

¶241

"10. It is perlinant Io nole lhot the applicant .failed to olfer ony plausible explanotion;for not raising the i:'sue oJ coercion and undue influence inntedialely t(iar paymenl under l-inal Bill. As already, observed .supra, the applicant, afler receiving thc paymenls under F'inal Bill, had signed^'no furlher claim' cerlifcate. Sincc the full^and final^{payment is madcin the l,'inalBill and the} applicant signed no .furlhcr claim certi/icate, a.t lhe arhitration application is liable lo be dismissed on that ground aLone, since the applicanl signed lhe same withoul any prote.st/objection. A party who comes to the Court must come with clean hands l4/he n fruud, undue in/ucnce otd coertiott r: pleudcd, olleust soma factual J'otndatnn^{ntusl be laid in the pLcadings,which is} lacking ln lhe present upplicalion, by v,a1t 6J^p615s11lry. reJerence made alLegation.s of undue influence and coercion, as .such, this application is lidble lo be tlismisseti on the ground alone. When once thcre is.[ult and fnal satis-faclion, lllere exists no urbitral dispute, os rightly contended b), lhe learned counsel Jitr the respondents.

¶242

ll. Sincc invocution of cu'bilrutksrt i:; prior lo Amendment lct,2015, tha^provision.r oJ'said Act 2015 urc not applicuhle to such arbitrul proceedings^which have commenced in lerms^oJ'the provisions of Section 2l of the Principul Act, unLess othcrv,ise^{agreed by the} parties.^(Sce Union o/ lndia t's. Pormar Construction

¶243

¶244

Contptrny, (2019) I 5 SCC 682. I'he aJbrestid principle was.followed in the utse of Union of lndia vs. Pradeep Vinod^()onstructbn Company, (2020) 2 SCC 161. l4/hile con.sidering on application under Section ll (6) oJ the Act, the llon'ble Supreme Court held that iI the party is unable to estoblish a claim of undue influence offraud, or appeors to be lacking in credibility, it is nol open lo the^(:ourt to refer the dispute to arbitration, (See ONGC Mangalore Petochenticals vs. /N,S Constructions Line (2018) 3 SCC 373. A bald plea of undue inJluence is not sufficient, the applicant has to establish a prima facie case. Illithout establishing the prima Jacie cose, fraud and undue int'luence by placing muterial on record, upplicant is not entitled /br referring the matter b rhe arbitration. (See New lndia Assurance Company Limited vs Genus Power lnfra.structure Limited, 201 5 (2) ALD I 67 (SC) (201 5) 2 SCC 121). llhen once one of the parties adopts o path of full underslunding and exetutes u documenl in furtherance^{o.[ the sante, it is notopento him} to^take recourse of arbitration thereafter (See ll/cpcos Lintitcd vs. Salma Dam Joint Venture (2020) 3 SCC 169). "

¶245

In National Insurance Company (Supra), Apex Courl considered the fact that the claimant therein who is keen to have a settlernent and avoid litigation, volr-rntarily reduces the clairn and requests for scttlement. 1'he respondent therein agrees and settles the clairn and obtains a full and final discharge voucher. lf the claimant might have agreed for settlernent due to flnancial

¶246

¶247

¶248

compulsions and commercial pressure or economic duress, the decision was his free choice. There was no threat, coercion or compulsion by the respondent therein. Thereflore, thc accord and satisfaction is binding and valid and there cannot be any subsequent clairn or reference to arbitration

¶249

In lron and Sleel Compan-1' (Supra), the Apex Court held

¶250

that the scope of thc ac1 and l'ules made therein

¶251

"Sub-section (2) of Section ll of the Act provides that subject to sub-seclion^((t), the parties are free to ugrae on

¶252

a procedure for appornting the arbilralor. Tha opening part of sub-sections (3) and⁽⁵¹ qfSettion 1l o/ the Act use the expression 'failing any ogreemant referred to in sub-section (2)" There/bre, sub'.scctions (3) and (5) will come inlo ploy onl1,v'hen lhere i.\ no agreemcnl belwecn lhe porties as is rekrreel to in sub seclion (2) oJ Section I I of the Act, viz. thol lhe parlics lruvc not ugrced on a procedure .for appointing the u.bilrotor or ot bitralors. A lhe parties have agreed on a pntcadure .for uppointing arbitrator or arbilr(1tors, sub-sections⁽³⁾ and (5) of Section ll of the Act can have no applicotion. Similarly, under sub-section (6) oJ Section I I request to the Chicf Justice or lo an inslilulion de.signated by hittt to toke the necessary measures, tan be made iJ thc c'ottditions enumeraled in clauses^(u) or^(b) or^(c) oJ this sub-sccliott are satisfted. There-fore^{reLoltrse to} sub-sacliotl^{(6) can be} had only v,here the partie s^lruvc ograed on u^procedure for dppointment qfon arbitrutor but lul o^partyJLtil:; to uct^{Lt.</sup> required undar thut procadure o/^(b) the^parties, or^lhe lwo appoinled arbilrators, fail to reuch^{un dgraemenl}}

¶253

¶254

¶255

expected of thent under that procedure, or (c) person, including an inslitution, fails to perlornt any functittn entrusted to him or it under that procedure Therefore o combined reoding o/ the various sub-sections of Section ll o/ the Acl u,ould shou, that the request to the Chief ,lustice .[or oppointment oJ an arbitrator can be made under sub-sections⁽⁴⁾ and (5) ofSection ll where parties have not agreed procedure .for appoinling the arbitrator as conlemplaled by sub-section (2) of Sec I I . A request lo the Chief .Iustice for appointment of an arbitrator can also be made under sub-seclion (6) where parties have agraed on a procedure for appointment oJ' an orbitrator as contemplated in sub-seclion (2) but certain consequential nleo.\ures v,hit:h are required to be taken^qs enumerated in cluuses (a) or (b) or (c) of sub-section (6) not taken or perJbrmed.

¶256

ln the present case the agreemenl executed betu,ean the porties conlains an arbitratktn clause ond clause 13. I clcarly provides that all disputes und di.fJbrences whalsoaver arising between the parties out oJ' or relating to lhe consh'uction, meaning ond operulion or e.[fect of the contracl of the breach thereof shall be setlled h)' arhitrotion in accordanca h-ith the Rulas of ,.lrbitration ol the lndrun Council ol'lrbitrotion sub-seclions (3), (41 and 6) o./ Section I I can have no application. The stagc for^{invokingsub-.;ection(6) of} Section^I I had also^not arrived. ln lhese circumstances, the application moved by the respondenr be.forc the City Civil Clourt, Ilyderohad, v,hich v'ct.s o designatad aulhority in accordant:e with lhe scheme Jiamed by the Chief Justice d the Andhra Pradash High Court, was not mainlainable ut all ond the Citt Civit Court had no jurisdiclion or authorily to appoinl on arbitrotor. 7'hus the order dalad 3I 03.2004 pus.sed by thc

¶257

)./,

¶258

ChieJ'.Iudge, City Civil Courts ltyderahad. appointing a retired juridical o/fcer as arhilrator is cleorly y,ithout jurisdiction and has to be set aside.

¶259

The legislativc :;cheme o.f'Section I I is very clear, i"f the porties have agreed on o procedura .fbr oppointing the arbitrator or arbitrator.s as contemplated by subsection (2) thereof, then the dispute between the porties has to be decided in accordunce v,ith the said procedure and recourse to lhe Chiaf ,lustice or his designale cannol be taken straightawo)'. A par4.'Lan ap1trouch thc^('hief Juslice or his designate only i/ the parties hat,e not ugreed on a procedure for appointing the arhitrator os conlemplated by sub-section (2) ofScction I I of the Act Ltr the various contingencies provideLl ./br in sub-scction (6) have arisen. Since the parties here hatl agraed on a procedure for appointing an arbitralor fu .settling the dispute by arbilralion as contenplaled by suh-section (2) and lhere is no allegation lhal unvone ofthe conlingencies enumerated in clau.ses (u) or^(b) or (c) of sub-sactiort (6) had arit^en, the applicatkn movd by llrc respondenl herein lo the City Civil Court, yderttbad, v,as clearl),not maintainuble and lhe suitl court ltad no.iurisdiction to enlertain such an applicalion and pu.ss ctn)t ord(r. Tlle order dated 27.12.2001, therefore, s not sustainabla.

¶260

In lhe matter ol settlement of dispute by arbilralion, lhe agreement exetutcd by the porties has to be given greol importancc ond un ugrecd proudrc.fi;r appoinling lhe arbilrators hus baan ploccd on ltigh pedestal and has to be given preference lo uN other ntode for^{securing appointment of an arbilralor.Il is} ./br^this reason that in clause (a1 oJ sub-.sact tn⁽⁸¹ ofSection I I oJ the Act it is specifically pro,',idcd rhur tha^('hie/ ./ustice or the person or instittttbn dcsignutad hv hin. in apprtinting

¶261

'., -'. ; J '* ';

¶262

¶263

on arbilrutor, .shall have due regard to any qttali,fications recluired of the arbitrotor by the agreement of the parties.

¶264

The iudicial prorusuncements also show that normally the clause in the agreenxent providing for settling lhe dispute by arbitration by arbitrators having certain quulifications or in certain agreed manner should be adhered to and should nol be departed with unless lhere are strong grounds for doing so. "

¶265

On consideration of the same and also on examination of

¶266

the facts therein, the Apex couft set aside the orders of Civil

¶267

Court as welt as FIigh Courl in appointing an arbitrator.

¶268

In Vidltyo Drolit (Supra), Apex Court hetd that the scope under Section 1 I (6) of the Act is very limited.

¶269

In thc light of the principte laid down by Apex Cou(, corring to the facts of thc case on hand, as discussed supra, there are three work ordcrs and there are amendments to the same. Clause 12 of thc Work Order I deals with Arbitration and the sanre is extracted bcloiv:-

¶270

I. Work Order I

¶271

a. I2.0 Arbitration

¶272

'Any dispute or diffcrence whqtsoever arising befiveen the pqrties oul of or relaling to lhc conslruclion, nteaning, scope, operalion or e/fect of this L.ontruct or the validity or lhe breach thereof shall be settled by arbilration in accordance with Intlian Arbitration anct Conciliation Act 1996, and subsequenl amendment thereol'and as Der thc Rulas ol Arbitration of lhe Indi.an Council o Arbilralion

¶273

¶274

and the award made in pursuance thereol shull be bintling on the

¶275

parties. I'he seat ofarbitration shall he Llyderabad.' 36. Clause I2 of the Work Order II dcals with Arbitration and

¶276

the same is extracted below:-

¶277

II. Work Order [l

¶278

12.0 Arbitration

¶279

'Except where olherwise provided./br in lhe contracl uny dispule or difference relating to thc meaning oJ thc speci/ictttion^dc.sign.s, drawings ond instruction hercin before mentktned and as lo the quality of workman.ship or malerials used on lhe v,ork or as lo any olher question, claim, right, matler or thing^{v'holsoever in anyu,ay} arising out of or relating to the contruct. design;'. drau'ing.r spcciJications, estinxale.t, inslructions, ordcrs of the.se utrulitions or otherwise concerning the works, oJ lhe execulion or .fuilure^to execute lhe same whether arising during lhc^proEress of the work or after the complelion or obandonmenl thernl'shull be relcrred^to the sole arbitrution of the Chrcf F,xecutiva O/ficer.^T PCll'^{und i/ thc} CEO, TPCIL is unable or untilling to act. lo^the.sole arbitrolion^o.[ some olher person appointed by the^(:l:O.7 P(lL u,illing to act^as such arbitralor There will bc no ohjectiott if tha arbitrcttor^so appointed is an empkryec o[7'PCIL. and thut hc hud to deal^u'ith the matters to which lhe conlracl relates and thot in^{Ihe course} o[ his duties as such he had expressed viev,.s on all or an,v^{o-/ the} malters in dispute of dffirence. The arhilralor kt^{v'hom lhe mottcr} is originally referred being transferred or vocating^{hi.s olJicaor} being unable to act for^{any reason} suth CllO^{as ttftsresaiclot the} time of such lrdnsfer rttcttlion^oJ o/fice^{ot inahilityto ttct slloll} appoint (see nole) onothcr^{person lo dct a\ arl)itralc accordance} n,ilh the terms of the conlracl such person shall ba^{entitled ttt} proceed wilh the raferencc.fi'om lhc stoge ut^v'hich it^{vaslc./i bt his}

¶280

t-)

¶281

predecessor. It is ulso a lerm of this contracl lhfll no person other tltan a DErson a noinled brt CEo TPCIL I,S fl resaitl should acl as arbilrltlor tnd if for ony reason that is nol nossible llrc malter is nol lo be re rred to nrbitration al all. in all case.r vthere lhe amount of the claim dispute is Rs. 50,000 (Rupees fifty thousand) and above Ihc arbitrotor shall give reasons for the award ln lhe event the Parties are unuhle to resolve any dispute or difference ("Dispute") r,hut.\oever arising bett,een the Parties out of or reldling to th? con.\trtrction inlerprelalion, meaning, scope, operation or c./Ject of this Agreement or the validity or the breach thereoJ accordance with Section 31, the same shall be settled by arbilration in accordance v,ith lhe Indian Arbitration and Conciliution Act-1996 as amended und as in affect of such time. l'he scat oJ urhitration shull be Hyderabad The decision of the arbitrators shall be./inal and biruling and shall be enforceable in any court of competent jurisdiction as decree of the court. The Parties hereby waive any rights to appeal or lo review ,such award h)) an!' court or trihunol und the ay,urd shall be final and binding. 'l'he Partias ugrec thot tha arbitral au,ard may be enforced ugainst the l'arlies to the urbilrolion proceeding or their sssets wherever they nru1 bc ./btrnd urul that o judgntenl upon the arbitrql award may be entered in any courl having jurisdiction thereo/. Pending ,/inal^resolution of unv dispute. the Parties shall t:ontinue to petftt m llrcir respectiyc obligations hereunder to the extenl such obligations are not being disputetl in good faith or agreed olherwise betwecn the Parties The costs of such arbitration or expert resolution slrull be delermined by and allocatetl beltteen the Partics hl thc urbitral tribunal in it:; rtr hi.s award.,

¶282

37 Clause l3 of thc Worl< Order III deals with Arbitration and the same is extlacted below:-

lII. Work Order 3

12.0 Arbitration

'Except where otherwise provided for in lhe contract un.v dispute,r or dilference reloting to the nrcaning of the spccilication de.tign.s.. drawings and instruclion herein before mentioned and as to the quality of workmanship or materiols used on thc v'ork or as to ortl: other queslion, claim, right, matler or thrng vthatsoeyet' in ony vuv arising out of or relating to the contract, designs, drat'ing:; speciJications. estimates, instruclions, orders of lhasa conditions or otherwise concerning lhe works, of the execulion or .lailure to execute the same whcther ctrising during the progress o./ the work or a.fter the completion or ahandonment thareof shall bt rclbrred to the sole arbitration of the Chief Executive OJJicer NC(:PPL arul t/ the CEO, NCCPPL is unable or unn,illing to act, lo the sola arbitration of some other person appointed by thc CEO. NCCPPI. willing to act as such arbitrator. I.hcrc v,ill be rut ohjcction i/ tha arbilrator so appointed is an employea d NC('PPl, und thut he hud to deal with the nollers to which lhc contr ct relalcs und lhat in the course of his duties as such he hotl expressed viev,s on ull or any of the matters in tlispute of dilference.^'fhc urlsitralor to thom lhe malter is originaLly referred heing lransferrecl or vucoting hi.s o.f.fice or being unable lo act .for any reuson such C F,O u.forcsoid at the time of such lransfer vacation of o./ftce or inability to act shall appoint (see note) another person to act as arbilrator in accordance \uith lhe terms rl' the contracl such pcr.son shall be entitled to proceed u,ith the refurente t'ront lha stuge tll vhich it was left by his predecessor. It is ttlso o lerm of this conlracl thal no person olhe r tha4 o^person aDpqi4llal bt, CEO. NCCPPL as aforesaid should acl as lLrhilruto!^qnd if fpr ury ryLUptLthal is ,rol possible tlre matter is not to be refcrrel lo nrbilrolion at all. in oll cases u,hare lhe amount of the chun dispute is |ls. 50.000,(Rupees fJiy thousand) and above the orbin-alot s'hall give reasons

¶288

¶289

.for^{the award. ln the evenlthe Partiesareunable} to^{resolve any} dispute or di/Jbrence ("Dispute") u,hatsoever arising betu,een the Parlies out of or relating to the construction, interpretution, meaning, scopc, operation or el/ect of this Agreement or the valit{il.t or lhe brcuch thercol accordancc with Section 3l, the sume shall be setlled hy urbilrdtiot.t in accordttnce with the Indian Arbitration and Conciliatbn Act- t 996 as amended and as in efJbct at such lime. Tha seat of urbitration .shall be Hyderabad 7'he decision oJ the arbitator,s shall be./inal ond binding and shalt be en;fbrceable in any .(ourl olcompetent jurisdiction as decree of the court. The Parties hereby v,aive any rights to appeal or to review such av,ard by any court or tribunal and the award shalt be fnat and binding. I.he Porties agrea that tha arbitral award may be enforced against the Parties to the arbitralion proceeding or their ossets whereyar they may be found and that a judgment upon the arbilral uu'ard muj' bc cntered in an), court having jurisdiction thcreoJ. Panding.final resolulion of qry dispule, the Porties shall conlinue to perform lheir res;seclive obligations hereunder Io the extent such obligations ure not being disputetl in good faith or agreed otheru,ise betwcen the Pcrrlies. T'he costs of such arbitration or expert rcsolutiott.shall bc determined by and allocated benyeen lhe l'artics by the arbitral tribunal in its or his award.,

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Perusal of thc said work orders and arbitration clauses would reveal that there are three separate work orders, three distinct subject matters, separate and distinct nature and quantum o1- work under each work order, separate tirne schedules were also specified. Each work order contains a separate arbitration clause signed by the respective pafties to the Work

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Orders. Thus, there are contracts each having an independent existence with separate arbitration clauses, 1['re disputes emanating therc frorn cannot collectively be rct-errcd to a singlc composite arbitral tribunal lor adjudication. The sarne are to be referred to independent arbitral tribunals under each respective work order. It is not in disputc that the contractual provisions always take precedence over the convenience of the parties. The said principle was laid down in Duro Felguera^(Supra)

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As discussed supra, pursuant to the said thrce Work Orders, amendments thereto, there were disputes between^the applicant and respondents. Therefore, the representatives of applicants and respondents sat together discussed the same at length and cntcred into an agleement by way of signing MOM dated 15.12.2017. In the said agreement, it is specifically agreed that there are no furlher claims and recovcries fiom cither^party other than mentioned above. lt is also relevant^{to note thatthe} disputes between applicant and respondent^{wcre settledby way} of MOM dated 15.12.2017. There is no arbitralion clause^{in thc} said MOM.

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It is also relevant to note that vide lctters dated^12.03.2018 (three numbers) applicant informcd tl-re respondent^aboutthe

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I I

amendment to the contract lor settlement of claims against the work order.^'fhe details were specifically mentioned. Thus, according to the applicant except the said claim, lhere is no variations/claims/rccoveries lrom either parly. The same was signed by both the applicant as welI as respondents.

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4l . Applicant had issued a email dated 17.03.2018 to the respondent stating that it is accepting the amendment order done by TPCIL and as per the MOM on 15.12.20\7, the recoveries in contract pricc and t,icluidity Damages should be recovered from the security deposit and the amended value of Rs. 29,1 8,287 Iakhs should be paid immediately. Thus, applicant requested the respondent to provide with the work experience certificate for the completed works.^'[he said MOM dated 15.12.2017 was effectuatcd, applicant has received tinal payrnent on 15.11.2018 and Perforrnance Bank Guaranl.ee was also released on 06.02.2019. Thus, the applicanr has benefited out of the said MOM dated 15.12.2017. Afrer one and half year, it cannot make bald .allegations that they u,erc cornpclled to sign MOM dated 15.12.2017 due to financial duress, fiaud and coercion. The said allegations are without any basis.

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As riglitly corltended by Sri R.N.llemcndranath Rcddy,

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learned Senior Counsel reprcsenting Sri Thoom Srinivas, learned

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counsel for the respondent that applicant has not issued notice in terms of Section I I (6) (a) ol the Act and procedure laid down under Rules were not followed. The applicant has filed the present application under Section 16 of the Act straight away before this Court secking appointmcnt of an arbitrator

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Thus. this Court is olthe considered vicw that there are no

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disputes much less arbitrable disputes between^{the applicantand} respondent to be adjudicated in view of MOM dared 15.12.2017 Viewed from any angle, this application is Iiable to be^dismissed and accordingly it is disrnissed

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Consequcntly, misccllaneous Pctitions,^pending if^any,

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shall stand closed.

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SD/- K. SRINIVASA^RAO JOINT REGISTRAR P

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//TRUE COPY'

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SECTION^OFFICER

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To, 1. One CC to SRI^{S.V.S. CHOWDARY'Advocate-[OPUC]} 2. ffi d; iI s-ni.^{iiioovt sRlNlvAs,Advocate[oPUc]} J. Two CD CoPies