In ARB.P. 790/2020-DEL HC- Merely because petitioner approached NCLT before seeking appointment of Arbitrator, it cannot be said that he was indulging in Forum Shopping: Delhi HC
Justice Neena Bansal Krishna  [15-12-2022]

Read Order: BRILLTECH ENGINEERS PRIVATE LIMITED v. SHAPOORJI PALLONJI AND COMPANY PRIVATE LIMITED & ANOTHER 

Mansimran Kaur

New Delhi, December 17, 2022: The Delhi High Court has observed that the sole purpose of Sec.21 of Arbitration & Conciliation Act, 1996 is to put party to notice about intention of approaching arbitration and petition u/s 9 as well as the willingness to resort to arbitration is sufficient compliance of Sec.21.

Justice Neena Bansal Krishna allowed a Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 which was instituted for appointment of a sole Arbitrator. A separate petition under Section 9 of the Act was filed against the respondent as well as against Army Welfare Housing Organization (AWHO) for attachment of amount of Rs. 2,58,03,143 lying in the hands of AWHO who was  indebted to pay the amount in order to enable the respondent to release the amount in favour of the petitioner. The same was also allowed. 

The Bench was of the view that  prima facie, it was shown that there  were arbitral disputes between the parties and in terms of the Clause 13 of the Work Order dated December 19, 2011 and the disputes between the parties were thus  referable to Arbitration.

The facts in brief were that AWHO had awarded the work of construction of Twin Tower residential accommodation at Greater Noida, to the respondent and had approved the petitioner as “Specialist Firm” for carrying out electrification works in the said Project.

The respondent had awarded the Work Order for electrical works in the said Project exclusively to the petitioner. It was submitted that the Project was successfully completed through  Completion Certificate and a Letter of Appreciation was issued by AWHO in favour of the petitioner.

 It was  asserted that as per the Ledger Account, an outstanding amount of Rs 59,76,574 on which interest @ 24% per annum was payable. It was claimed that the respondent had been receiving the corresponding payment from the AWHO but it failed to make payments on back-to-back basis to the petitioner; rather the payments were made after the period of 6-8 months. The dispute thus arose between the parties. 

Consequently, petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) was filed by the petitioner against the respondent in NCLT, Mumbai for initiating the corporate insolvency resolution process. The NCLT, Mumbai opined that the claim of the petitioner is valid and genuine and the respondent was asked to settle the matter. However, officials of the respondent were not willing to settle the matter and have been making fictitious and self-contradictory statements.

Thereafter, the petitioner filed the petition under Section 9 of the Act wherein again the respondent had asserted that they are desirous of amicable resolution of disputes but again adopted an adamant and illogical approach and all the efforts to amicable settlement failed.

After considering the submissions from both the sides, the Court noted that it  is a settled proposition of law that jurisdiction of NCLT can be invoked only in respect of determined debts.” However, merely because a petition has been filed by the petitioner asserting that a definite amount is payable by the respondent, would not imply that the claimed amount has been admitted by the respondent but is only expressing its inability to be able to pay the claimed amount, the Bench aded.

Further reliance was placed on the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited . It was opined that in the present case, though a proceeding may have been initiated by the petitioner before the NCLT asserting that there is an admitted debt as has been pointed out by the respondent, however  a mere assertion would not make it into an admitted liability especially when the respondent has been refuting it at every forum and in every proceeding.

Clearly, there were  arbitrable disputes in regard to the claimed amounts and the objection taken by the respondent in regard to non-existence of arbitrable disputes, was  not tenable, the Court further stated. 

In the present case, the scope of enquiry in the proceedings before the NCLT and before the Arbitrator is absolutely distinct. “Merely because the petitioner approached NCLT before seeking appointment of Arbitration, it cannot be said that he was indulging in Forum Shopping”, the Court opined. 

With respect to notice of Invocation under Section 21 of the Act , the Court noted that the  objection  being taken on behalf of the respondent of there being no proper Notice under Section 21 of the Act, loses its significance in view of the proceedings that have transpired between the parties. 

“The petition under Section 9 of the Act and the willingness of the respondent to resort to arbitration for resolution of disputes is sufficient compliance of Section 21 of the Act”, the Bench further added.

Observing that there were arbitral disputes between the parties and in terms of the Clause 13 of the Work Order dated December 19, 2011  the disputes between the parties were referable to Arbitration, the Bench allowed the petition under Sections 11 & 9 of the Act.