Delhi High Court: In a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (‘the Act’) for reference of disputes between the parties to arbitration, where petitioner alleged coercion by respondent, C. Hari Shankar, J., appointed a sole arbitrator to adjudicate upon the disputes, while holding that an allegation of coercion was a pure question of fact which necessarily had to be examined by the arbitral tribunal.
Background
The petitioner was awarded a contract for construction of a World Class Skill Centre at Jahangirpuri, IIT, Delhi and a contract for construction of Additional M.P. Hall, Lab, Activity Room and Upgradation, Face Lifting of Shahbad Daulatpur, Delhi. It was contended by the petitioner that the work had been completed, however, certain bills raised for the same remained unpaid. It was further submitted that the petitioner was entitled to escalation.
As per the dispute resolution clause contained under the General Conditions of Contract (‘GCC’), all disputes between the parties were to be settled by way of arbitration after following a detailed pre-arbitral protocol.
The petitioner submitted that a representation was addressed to the Chief Project Manager on 25-09-2023 for consideration of the petitioner’s claims, in accordance with the GCC. However, upon receiving no response from the Chief Manager, the petitioner appealed to the Managing Director of the respondent and suggested the constitution of a Dispute Resolution Committee (‘DRC’), to look into the grievances of the petitioner. Both parties submitted that no DRC had been constituted in the respondent Organization.
The petitioner issued a notice to the respondent under Section 21 of the Act, for reference of the disputes to arbitration, however, the respondent did not respond. The petitioner, therefore, filed a petitioner under Section 11 of the Act seeking reference of the dispute to arbitration.
The respondent contended that the petitioner had alleged coercion by the respondent, and such an allegation had to be looked into at this stage.
Decision and Analysis
Upon hearing contentions of both parties, the Court referred to the decision in ESRI R&D Center India (P) Ltd. v. Ambience Towers (P) Ltd., 2024 SCC OnLine Del 4614 wherein it was observed that the insertion of sub-section (6A) in Section 11 by the Arbitration & Conciliation (Amendment) Act, 2015 (‘2015 Amendment’) was intended to dilute the effect of earlier judgments such as National Insurance Co. Ltd. v. Boghara Polyfab Ltd., (2009) 1 SCC 267; Union of India v. Master Construction Co., (2011) 12 SCC 349; and New India Assurance Co. Ltd. v. Genus Power Infrastructure Ltd., (2015) 2 SCC 424, wherein it was held that the referral Court, while exercising jurisdiction under Section 11(6) of the Act, was also required to examine any allegation of fraud or coercion if raised by either party. This position, it was held by the Supreme Court in Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 and Mayawati Trading Pvt Ltd. v. Pradyut Deb Burman, (2019) 5 SCC 362, no longer survived after the insertion of sub-section (6-A) in Section 11.
The Court said that coercion, or its absence, was a complex question, purely of fact, which necessarily had to be examined by the arbitral tribunal. The Court referred to the decision in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 (‘Vidya Drolia’), where it was held that only where serious fraud had been alleged to have vitiated the very execution of the arbitration agreement, which could be decided without leading evidence, that the referral Court could look into such allegations.
The Court noted that the decision of Vidya Drolia (Supra) clarified that interference by the referral Court in the arbitral process should be limited and that ideally all issued of fact and law should be decided by the tribunal, keeping in mind arbitral autonomy.
The Court further noted that the GCC did not stipulate the venue of arbitration, however, the parties were situated in Delhi and the work had been carried out in Delhi, hence, the Court had jurisdiction to deal with the matter.
The Court said that in the present case the disputes were prima facie arbitrable. The parties being the same and the disputes being common, the Court referred all disputes to be adjudicated vide arbitration before P.V. Dinesh, Senior Advocate, sole arbitrator.
[Nafees Ahmed v. Delhi Tourism and Transportation Development Corpn. Ltd., 2024 SCC OnLine Del 4664, decided on 09-07-2024]
Advocates who appeared in this case :
Advocate for the petitioner: Avinash Trivedi, Advocate
Advocates for the respondent: Abhimanyu Garg, Ankita Sarangi, Advocates
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