In ARB.P. 1065/2022-DEL HC- Sec.16 of A&C Act accords mandate to Arbitral Tribunal to rule upon its own jurisdiction; Whether matters submitted for arbitration are in accordance with arbitration agreement, are issues within scope of Tribunal’s authority: Delhi HC
Justice Mini Pushkarna [23-11-2022]

Read Order: M/S SUNEHARI BAGH BUILDERS PVT LTD v. AIRPORTS AUTHORITY OF INDIA 

Mansimran Kaur

New Delhi, November 25, 2022:The parties are governed by the contract and the arbitrator and the arbitration proceedings cannot traverse beyond what has been contemplated in the contract between the parties, the High Court of Delhi has held.

Justice Mini Pushkarna dismissed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, via which the petitioner was seeking appointment of a sole arbitrator to adjudicate the additional disputes between the parties. The petitioner alternatively prayed for reference of additional disputes- sixth and seventh claims to the sole arbitrator, already appointed  

The Bench was of the view that in the present case the sole arbitrator had  already decided his jurisdiction by giving a finding that he would not arbitrate on claim nos- six   & seven  of the statement of claim filed by the petitioner. Thus, petitioner cannot invoke the jurisdiction of this court under Section 11 of the Act.

Facts in brief were that the respondent had floated a tender for execution of the work of “Construction of Central Air Traffic Flow Management (CATFM) and Associated offices at New Delhi. Petitioner was declared as successful participant in the tender and was awarded the work, pursuant to which an agreement dated January 20, 2016  was executed between the parties for Rs. 11,53,06,853.

The work was completed by the petitioner on December 31, 2018. . Subsequently, petitioner invoked Clause 25 of the General Conditions of Contract (GCC) through  its letter dated April 8, 2020 and June 8, 2020 seeking reference of its disputes to a duly constituted Disputes Resolution Committee . 

Thereafter DRC was constituted and matter was referred for adjudication on January 1, 2021 The petitioner submitted five claims before the DRC on February 2, 2021. 

 Upon receiving the recommendations of DRC, petitioner issued a letter dated October 25, 2021 seeking to refer a total seven number of claims to arbitration. Respondent however referred only five claims of the petitioner to the arbitrator, which formed part of the proceedings before the DRC.

It was the case of the petitioner that as per Clause 25 (i) of the agreement, the DRC had to give its decision within 45 days of its constitution .However, in the present case the DRC was constituted on February 1, 2021 and the DRC had given its order/recommendation on September 22, 2021.  Thus, the petitioner by its letter dated October 25, 2021  requested the respondent to refer seven  claims for arbitration. However, respondent after seeking consent of the petitioner out of the three named persons appointed Sh. Pradeep Kumar Gupta, former DG of CPWD as sole Arbitrator vide letter dated December 13, 2021 and referred to only five claims.

 The respondent by its letter dated February 22, 2022 replied to the letter of the petitioner dated and stated that since only five  claims were submitted before the DRC, therefore claims no. six and seven were not referred for adjudication before the Arbitral Tribunal. Since the respondent had  not referred the said two claims to the sole arbitrator, the present petition was filed. 

After considering the submissions of the parties, the Court noted that regarding the arbitration agreement between the parties, it was clear that the parties had agreed that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority. Thus, in the present case, the appointing authority referred five claims of the petitioner to the arbitrator which have been raised by the petitioner before the DRC. 

The question that was raised before this Court was with respect to reference of additional claims viz. claim no. six and and seven to the arbitrator. While adjudicating this issue, it is pertinent to bear in mind that the arbitrator had already considered the said request of the petitioner with respect to considering claim nos. Six  and seven and given a finding thereof.

The definition of arbitration agreement as occurring in Section 7 of the Act itself envisages reference of all or certain disputes between the parties to arbitration in regard to the terms governing the parties.

 As a rule, an arbitrator is a creature of a contract between the parties and is governed by the terms and conditions of the contract. The Supreme Court has held in very categorical terms that the parties are entitled to fix boundaries with respect to jurisdiction and legal authority of the arbitrator by way of the contract between the parties, the Court further noted. 

Hence, it is clear that where the arbitration agreement envisages reference of certain disputes by the appointing authority, then the arbitrator has the authority to decide only the said disputes as specifically referred. The Arbitral Tribunals are in the nature of private forum which have been chosen voluntarily by the parties for adjudication of their disputes. Thus, the examination whether the disputes fall within the scope of the arbitration agreement is a significant aspect.

 Perusal of the present case shows that the petitioner has already raised the issue as regards the reference of additional claims no. - six and seven before the learned arbitrator. This is in tandem with the law laid down by the Supreme Court which empowers an Arbitral Tribunal to rule upon its own jurisdiction as per the Doctrine of “kompetenz-kompetenz”. Thus, in the present case, the learned arbitrator has already given his finding as regards the reference of the said disputes before him, the Court stated. 

In the present case the sole arbitrator had already decided his jurisdiction by giving a finding that he would not arbitrate on claim nos- six   & seven of the statement of claim filed by the petitioner. Thus, petitioner cannot invoke the jurisdiction of this court under Section 11 of the Act. The petitioner would have to avail other remedies as provided under the Act or which are available under law, the Court thus observed. 

In view of the above, the present petition was accordingly dismissed.