In the case of appointment of a sole arbitrator sought for by NCC Limited (the Petitioner) against its claims from Indian Oil Corporation (the Respondent), the Delhi High Court bench comprising of Justice Rajiv Shakdher held that it is only the Arbitral Tribunal which can look into the deciding upon any issues relating to the satisfaction of claims or existence of any disputes arising out of the agreement. The dispute primarily arose when the Petitioner, on account of delay in completion of the project assigned to it, issued its bills along with seeking Extension of Time (EOT) as well as seeking Notified Claims from the Respondent, to secure its justification towards completion of work post the time period stipulated in the agreement. After receiving no response in its favour, the Petitioner decided to refer the issue of payments and Notified Claims to arbitration as stipulated in the dispute resolution clause of the agreement.

In the petition filed for appointment under Section 11 of the Arbitration and Conciliation Act, 1996, the Bench adjudicated and answered on the two primary questions in relation to the dispute:

  1. Whether the claims with respect to which reference to arbitration is sought by NCCL are not “Notified Claims”?
  2. Whether under the terms of the contract obtaining between the parties, the jurisdiction to decide as to whether or not the claims are Notified claims vests solely in its General Manager?

In its conclusion to the petition, the Bench made the following observations:

  1. Where there is contestation or the decision rendered by the General Manager leaves scope for argument as to whether Bar and Bench ( ARB. P. No.115/2018 Page 37 of 38 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 68 read with 69, the matter would have to be left for resolution by Arbitral Tribunal.
  2. 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.
  3. 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.
  4. 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.

The Bench then proceeded to appoint retired Supreme Court Judge, Justice Madan B Lokur as the arbitrator to adjudicate the dispute as per the provisions of the Arbitration and Conciliation Act, 1996.

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