The Dispute Between The Parties Which Arises Subsequently Can Be Proceeded In A Separate Arbitration: High Court of Delhi
The High Court of Delhi has observed that a subsequent dispute arising from the same transaction can be referred to a separate arbitration and the arbitration agreement cannot be said to be a one-time measure that cannot be invoked after an award is made in the earlier reference. The Single Bench of Justice Mukta Gupta observed that the word "all disputes" in an arbitration...
The High Court of Delhi has observed that a subsequent dispute arising from the same transaction can be referred to a separate arbitration and the arbitration agreement cannot be said to be a one-time measure that cannot be invoked after an award is made in the earlier reference.
The Single Bench of Justice Mukta Gupta observed that the word "all disputes" in an arbitration agreement means all the existing disputes at the time of invocation of arbitration and the disputes that arise subsequently can be decided in a separate arbitration. There is no legal impediment that proscribes the invocation of the arbitration agreement if there is a pending arbitration or an award is made in an earlier arbitration.
The Court further held that issue of limitation of the substantive claims shall not be decided by the court while exercising jurisdiction under S. 11, the same shall be left to be decided by the tribunal under S. 16 of the Act.
Facts
The parties entered into a contract for the manufacture and supply of sleepers. The petitioner agreed to supply 1,40,75 sleepers for a consideration of Rs. 22,36,51,750. The Respondent terminated the contract during the currency of the contract. The Petitioner challenged the early termination and invoked the arbitration clause. The arbitrator held the termination to be illegal and allowed the claim of the petitioner.
The petitioner filed the present application for the appointment of the arbitrator for the dispute regarding the manufactured sleepers, the delivery of which is not taken by the Respondent for the reason that retesting is required to be done. The petitioner through several communications requested the Respondent to do the retesting and take the delivery and but the Respondent has failed to take the requisite actions.
Contention Of The Parties
The respondent apart from refuting the claims made by the petitioner also challenged the maintainability of the petition on the following grounds:
- That an arbitrator was already appointed for adjudicating the disputes between the parties and the arbitrator has published its award, therefore, the no fresh application can be filed as the issues between the parties stand extinguished and there is no dispute subsisting between the parties.
- The claims of the petitioner are time barred.
- The claims of the petitioner are barred by res judicata as already been decided in the earlier arbitration.
The petitioner countered the contention of the respondent on the following grounds:
- The earlier arbitration was regarding the early termination of the contract and unpaid dues for sleepers already supplied.
- The present petition is regarding the sleepers kept in the manufacturing unit of the petitioner for want of retesting by the respondent.
- The cause of action for the present petition only arose after the refusal of the respondent to take the delivery and carry out the retesting, therefore, the same could not be made part of the earlier arbitration.
- The sleepers are still lying with the petitioner; therefore, the claims cannot be held to be time barred.
- The sleepers were manufactured according to the requirement of the respondent and the same cannot be used in some other activity.
Analysis By The Court
At the outset, the Court observed that it is an admitted position that the earlier arbitration was confined to the issues of illegal termination and payment for supplies already made and the present petition is in respect of the sleepers not accepted by the respondent.
The Court held there is no stipulation in the contract that once some disputes are referred to Arbitration, no further disputes arising from the same contract cannot be decided by an Arbitrator.
The Court has observed that a subsequent dispute arising from the same transaction can be referred to a separate arbitration and the arbitration agreement cannot be said to be a one-time measure that cannot be invoked after an award is made in the earlier reference.
The Court further held that issue of limitation of the substantive claims shall not be decided by the court while exercising jurisdiction under S. 11, the same shall be left to be decided by the tribunal under S. 16 of the Act.
Case Title: Orissa Concrete and Allied Industries Ltd. v. Union of India, Arb. P. 560/2021
Citation: 2022 LiveLaw (Del) 312
Date: 05.04.2022
Counsel for the Petitioner: Mr. Raman Kapur, Senior Advocate with Mr. Dhiraj Sachdeva, Advocate.
Counsel for the Respondent: Mr. R.V. Sinha, Advocate with Mr. A.S.Singh, Mr. Amit Sinha & Mr. Sharmaya Sinha, Advocates.