1 Feb 2023 2:03 AM GMT
The Delhi High Court has upheld the arbitral reference made to a common Sole Arbitrator as well as a common State of Claims filed before the Arbitral Tribunal, with respect to a dispute arising under two separate agreements, considering the fact that the agreements were closely interlinked and contained identical Arbitration Clauses, stipulating same conditions. The bench...
The Delhi High Court has upheld the arbitral reference made to a common Sole Arbitrator as well as a common State of Claims filed before the Arbitral Tribunal, with respect to a dispute arising under two separate agreements, considering the fact that the agreements were closely interlinked and contained identical Arbitration Clauses, stipulating same conditions.
The bench of Justice Prathiba M. Singh remarked that the services the respondent/claimant was providing under the two agreements, were connected services. Considering the ‘allied nature’ of the two contracts and the common conditions of the Arbitration Clauses, the filing of a common claim petition before the Arbitral Tribunal cannot be faulted with, the Court said.
In a petition filed by the respondent/claimant, Aaron Security & Services Pvt Ltd, under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) before the Delhi High Court, the dispute between the petitioner, Pink City Expressways Pvt Ltd, and the respondent, under two separate agreements, was referred to arbitration. The High Court appointed a Sole Arbitrator and referred the matter to the Delhi International Arbitration Centre (DIAC).
Thereafter, the petitioner, Pink City, moved an application under Section 16 of the A&C Act before the Arbitral Tribunal, challenging the jurisdiction of the Sole Arbitrator. The petitioner also sought the return of the Statement of Claims filed by the respondent/ claimant. The Arbitral Tribunal passed an order rejecting the application under Section 16, noting that the petitioner only sought to recall the Tribunal’s order allowing the respondent to file a single Statement of Claims in respect of two separate agreements. The Tribunal also closed the petitioner’s right to file the Statement of Defence, holding that the time limit under the DIAC Rules, 2018 to file the same had expired.
The petitioner, Pink City, challenged the order of the Arbitral Tribunal before the Delhi High Court by filing a writ petition.
Pink City submitted before the Court that the Arbitrator could not have passed the order merging the claims of the respondent arising under two different agreements. Thus, it argued that the Arbitrator, first, ought to have considered the application filed under Section 16 seeking recall of the Tribunal’s order. Thereafter, an opportunity ought to have been given to the petitioner to file the Statement of Defence after the decision on the Section 16 application, it argued.
Referring to the facts of the case and the agreements executed between the parties, the Court reckoned that the two agreements were closely interlinked.
“It is observed that both of these agreements are for the same section of NH-8, referred to as project stretch. The said project stretch in both of the agreements is from Kms 42.7 to 156 of the Gurgaon-Kotpuli-Jaipur section of NH-8. Effectively, the services which the Respondent was providing in both these agreements were connected services,” the Court observed.
The Court further took note, “In the first agreement, the Respondent had undertaken the task of managing the operations in the project stretch and in the second agreement the Respondent undertook the responsibility of providing medical services including ambulance services. It is clear from nature of these two services, that they are connected to each other. The allied nature of the two contracts is clear especially in light of the two agreements being for the same project stretch i.e., Kms 42.7 to 156 of the Gurgaon-Kotpuli-Jaipur section of NH-8.”
Further, the bench noted that the Arbitration Clause contained in both the agreements was identical, stipulating the same pre-conditions and jurisdiction.
“Considering the nature of the agreements and the common conditions of the Arbitration Clauses, the filing of a common claim petition as also the reference to a common sole arbitrator cannot be faulted with,” the Court concluded.
Referring to Supreme Court’s decision in Chloro Controls (I) Pvt. Ltd. v. Severn Trent Water Purification Inc. & Ors., (2013) 1 SCC 641, the Court reckoned that composite reference to a common sole arbitrator for arbitration, can be made for multiple agreements which are for the same or connected purpose. In Chloro Controls (2013), the Apex Court had further held that a composite reference can be made for even non-signatories and third parties, the High Court took note.
The bench held that even if the petitioner had filed an application seeking recall of the Arbitral Tribunal’s order allowing a single Statement of Claims with respect to separate agreements, the same could not have delayed the filing of the Statement of Defence. The Court added that non-filing of defence in terms of the DIAC Rules and the A&C Act, results in delay in the arbitral proceedings.
Noting that repeated opportunities were given to the petitioner to file the Statement of Defence, the Court observed that almost a year after making the arbitral reference, the matter had still not proceeded further.
The bench reiterated that in order to interfere with the arbitral proceedings under Article 226/227 of the Constitution of India, the case would need to fall under ‘exceptional circumstances’.
“The present case would not fall within the realm of ‘exceptional circumstances’ for entertaining a Writ Petition under Article 226/227 of the Indian Constitution. Even the conduct of the Petitioner in the arbitral proceedings, does not warrant any interference. However, if the Petitioner wishes to seek any relief from the ld. Arbitrator it is free to do so in accordance with law,” the Court said.
The Court thus dismissed the writ petition.
Case Title: Pink City Expressways Pvt Ltd versus Aaron Security & Services Pvt Ltd
Citation: 2023 LiveLaw (Del) 103
Counsel for the Petitioner: Mr. Sidhant Dwibedi & Mr. Aaron Shaw, Advocates
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