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“arbitration Is Voluntary And Is, Therefore, To Be Resorted To Only Where The Parties Voluntarily Agree To Such Procedure”- Delhi High Court In The Case Of M/s Vindhya Vasini Construction Co Vs. M/s Bharat Heavy Electricals Ltd

Diya Pradeep ,
  06 June 2023       Share Bookmark

Court :
Delhi High Court
Brief :

Citation :
ARB.P. 1298/2022

Case title:

M/S VINDHYA VASINI CONSTRUCTION CO Vs. M/S BHARAT HEAVY ELECTRICALS LTD

Date of Order:

10th May 2023

Bench:

Hon’ble Justice Navin Chawla

Parties:

Petitioner – M/S VINDHYA VASINI CONSTRUCTION CO

Respondent - M/S BHARAT HEAVY ELECTRICALS LTD

SUBJECT

Arbitration is a process of alternative dispute resolution used to settle disputes outside of court. It can be used to resolve disputes between two or more parties and generally involves the appointment of a neutral third party (the arbitrator) to review the evidence and make a decision or award. 

The Arbitration and Conciliation Act, 1996 is an Act of Parliament that regulates arbitration and conciliation proceedings in India. The Act was passed in 1996 and is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law. The Act seeks to promote the settlement of disputes.

IMPORTANT PROVISIONS

Arbitration and Conciliation Act, 1996

  • Section 7
  • Section 11(6)

OVERVIEW

  • Disputes arose between the parties to the present case concerning the Work Order dated 10.03.2016 for receipt of equipment/material at the site, unloading, inspection, verification, storage, upkeep during storage, erection, testing, commissioning, and handing over of 400/220KV substation at Unchahar in Uttar Pradesh.
  • The present petition was filed under section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator for adjudicating disputes between the respondent and the petitioner.

ISSUE RAISED

  • Will the Arbitration Agreement contained in Clause 23 of the Work Order survive in the instance of the agreed-upon procedure to appoint an arbitrator failing?

ARGUMENTS ADVANCED BY THE PETITIONER

  • Mr.Somiran Sharma, Mr.Dhrubajit Saikiaand, and Mr.Tabarak Husain represented the petitioners in the present case.
  • The counsel submitted that the Arbitration Agreement is severable from the latter part which provides that the Head TBG or a person nominated by him cannot act as an Arbitrator
  • The case of Perkins Eastman Architects DPC and Anr. V. HSCC (India) Ltd., [(2020) 20 SCC 760] was cited to point out that the arbitration agreement would still survive even if it's severable.
  • The counsel contended that the requirement in the agreement to not refer the matter to arbitration in cases where any person appointed by Head TBG can’t act as an arbitrator is unreasonable.
  • It was finally submitted that the court should interpret the agreement so that it would encourage arbitration rather than negate the parties' intent to resolve their disputes through arbitration.
  • Reliance was placed on the case Enercon (India) Limited and Others v. Enercon GMBH and Another, [(2014) 5 SCC 1] to substantiate the above point.

ARGUMENTS ADVANCED BY THE RESPONDENT

  • Mr.Himanshu Gupta, Mr.Aditya Sikka, Ms.Padamja Sharma & Ms.Vasudha Vijaysheel represented the respondents in the present case.
  • The counsel asserted that the arbitration agreement is unambiguous when it provides that only the Head TBG, BHEL, Noida, or his nominee can act as an arbitrator.
  • The counsel further contended that the agreement would cease to operate if the Head TBG of the respondent or his nominee could not be appointed or act as an arbitrator.
  • The cases. Newton Engineering and Chemicals Limited v. Indian Corporation Limited & Ors., [(2013) 4 SCC 44]; and TRF Limited v. Energo Engineering Projects Limited, [(2017) 8 SCC 377]; and of this Court in Capacite Infra Projects Limited v. Ramprastha Promoters & Developers Limited, [2017 SCC OnLine Del 12281] were cited in support of the above point.

JUDGEMENT ANALYSIS

  • The Delhi High Court dismissed the petition as it held no merits.
  • The court ruled that the arbitration process is a voluntary one. If the parties do not wish to provide for arbitration in their Agreement, they are not obligated to resolve their matters through arbitration.
  • The bench noted that the question of interpretation does not arise in the present case since the agreement is unambiguous.
  • The court further observed that there are no disputed questions of fact in the present case that will disqualify the parties from the Arbitration Agreement. Therefore, the respondent is bound by the conditional acceptance of the arbitration.
  • Reliance was placed on the case M/s Arvind Construction Co. Pvt Ltd v. UOI,[2009:DHC:707] where the learned Single Judge held that the parties are bound by the contract entered between them, including the arbitration clause.
  • It was held that the Arbitration Agreement unambiguously provides that if the person appointed by the Head TBG cannot act as an Arbitrator, the dispute is not to be referred to arbitration at all. Hence, parties cannot be forced into arbitration.

CONCLUSION

Arbitration can be a useful tool for resolving disputes. The Delhi High Court in the present judgment reiterated the significance of voluntary consent of the parties to arbitration. Hon’ble Justice Navin Chawla interpreted section 7 of the Arbitration and Conciliation Act, 1996, and held that arbitration is an alternate dispute resolution mechanism to which the parties voluntarily submit themselves. Party autonomy is the prerequisite to arbitration proceedings and in the absence of this condition, the parties cannot be compelled to arbitration.

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