Multiple arbitrations are permissible if the cause of action arises after the constitution of a tribunal.: Delhi High Court
The Delhi High Court has passed a judgement on 17-02-2022 in the case of Panipat Jalandhar NH1 Tollway Pvt. Ltd. Vs NHAI ARB.P. 820/2021. Justice Suresh Kumar Kait disposed of the petiton.
FACTS OF THE CASE
The present petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner seeking appointment of the respondent’s Arbitrator upon its failure to appoint the same, for adjudication of disputes with regard to Concession Agreement dated 9th May, 2008. In addition, prayer is also made to declare that the purported appointment of Justice (Retd.) G.P. Mathur, former Judge, Supreme Court by the respondent is non est and bad in the eyes of law.
The petitioner- Panipat Jalandhar NH-1 Tollway Private Limited had entered into a Concession Agreement dated 9th May, 2008 with respondent – National Highway Authority of India (NHAI) for Six-Laning of Panipat-Jalandhar Section of NH-1 from Km 96.00 to Km 387.10 (length of 291.10 Km) in the State of Haryana and Punjab to be executed on Built-Operate-Transfer (Toll) basis on Design- Build-Finance- Operate (DBFO) pattern under NHDP Phase-V. The duration of the Concession Agreement was 15 years commencing from 11th May, 2009 till 11th May, 2024.
According to petitioner, subsequent to entering into the Concession Agreement, petitioner started the work, however, certain disputes arose between the parties and those disputes pertaining to the year 2013 are pending before an independent arbitral tribunal.
Petitioner has claimed that out of the 291.1 km, the work on 269 km was completed when respondent took a decision to delink 22.1 km out of the total length, for the delay and failure on the part of respondent to hand over the stretch and consequently, due to this delinking, petitioner suffered severe loss to the tune of more than INR 2,000 crores. Accordingly, petitioner sent a Notice of Dispute dated 25th October, 2019 to the respondent. Since the parties failed to resolve the disputes, petitioner invoked arbitration under clause 44.3 of the Concession Agreement and issued a notice dated 7th February, 2020 calling upon the respondent to confer a set of Arbitrators. However, on 4th December, 2020 respondent suspended the Concession Agreement, (against which petitioner preferred a petition under Section 9 of Arbitration and Conciliation Act, 1996.
Court took reference from the case of Gammon India Ltd. And Another Vs. National Highways Authority of India 2020 while dealing on the aspect of ‘Multiplicity- multiple invocations, multiple references, multiple Arbitral Tribunals, multiple Awards and multiple challenges, between the same parties, in respect of the same contract or the same series of contracts”, “ Filing of different claims at different stages of a contract or a project is thus permissible in law, inasmuch as the contract can be of a long duration and the parties may wish to seek adjudication of certain disputes, as and when they arise. Despite this permissibility, multiplicity ought to be avoided as discussed hereinafter.
The endeavour of Courts in the domain of civil litigation is always to ensure that claims of parties are adjudicated together, or if they involve overlapping issues, the subsequent suit is stayed until the decision in the first suit. It is with the intention of avoiding multiplicity that the principles enshrined in Order 2 Rule 2 CPC, Section 10 CPC and Res Judicata are part of the Code of Civil Procedure from times immemorial. However, since arbitral proceedings are strictly not governed by the Code of Civil Procedure, 1908, it is possible for parties to invoke arbitration as and when the disputes arise, but should the same be permissible without any limitation and ignoring the principles of public policy as enshrined in these provisions.
Multiple arbitrations before different Arbitral Tribunals in respect of the same contract is bound to lead to enormous confusion. The constitution of multiple Tribunals in respect of the same contract would set the entire arbitration process at naught, as the purpose of arbitration being speedy resolution of disputes, constitution of multiple tribunals is inherently counter-productive.”
In the opinion of this Court multiple arbitrations can exist if the cause of action continues or arises after constitution of a tribunal. This Court is informed that disputes pertaining to the year 2013 are pending before first arbitral tribunal. The suspension and termination of Concession Agreement in question are subject matter of consideration before the second arbitral tribunal. The petitioner has not been able to establish that the disputes, resolution of which is sought under the proposed third arbitral tribunal, cause of action thereof arose post suspension and termination of Concession Agreement. This fact is further substantiated by the language of Notice dated 4th June, 2021 invoking arbitration, which clearly stipulates that for resolution of differences which were subject matter of Notice of Dispute dated 25th October, 2019, the constitution of third arbitral tribunal is sought, which is already under consideration before the second arbitral tribunal and so, in the considered opinion of this court, it would lead to multiple observations and findings by two different tribunals, which cannot be permitted.
With aforesaid observations, the present petition is accordingly disposed of.
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ARTICLE WRITTEN BY ABHINAV CHATURVEDI