China Petroleum Pipeline Bureau Versus Indian Oil Corporation Limited
Court / Forum :
Delhi High Court
Citation : Arb. A. (Comm.) 35/2019; MANU/DE/0080/2020
Coram : Justice Jyoti Singh
Subject : Section 37(2)(a) of the Arbitration and Conciliation Act, 1996
Date of Decision : January 10, 2020
- The appellant was the successful bidder in the tender issued by the respondent and was awarded a contract dated June 1, 2016. The appellant had issued a bank guarantee in favour of the respondent. The progress work was communicated to respondent from time to time, but the respondent terminated the contract with the appellant vide letter dated December 7, 2016. Thereafter, the respondent invoked bank guarantee.
- The appellant invoked the arbitration clause in the contract and sent a notice to respondent for constituting the Arbitral Tribunal. The respondent vide letter dated January 2, 2019 appointed the arbitrator.
- The Arbitrator vide order dated November 29, 2019, allowed the application filed by the respondent under section 16 of the Arbitration and Conciliation Act, 1996 (“Act”) and held that all the claims of appellant except claim no. 2.11 (loss due to bank guarantee) including any interest thereon, are beyond the scope of arbitration and therefore, non-arbitrable. The appellant subsequently filed this appeal under section 37(2)(a) of the Act.
- If the contract stipulates that only notified claims can be referred to arbitration, whether the parties can refer claims other than ‘notified claims’ to the arbitration?
- The Hon’ble Delhi High Court referred to the general conditions of contract which provided that the appellant is entitled to refer only notified claims included in final bill to the arbitration. The parties have entered into the contract with open eyes and once the appellant has signed the contract, the appellant can neither challenge a claim nor claim a reference which is contrary to the provisions of clause. As per the agreement, any claim other than ‘notified claim’ would be beyond the scope of arbitration. Once, the appellant admits that claims sought to be referred are not notified claims, the appellant cannot seek their reference to arbitration.