There Cannot Be Two Arbitration Proceedings With Respect To Same Contract/Transaction: Supreme Court
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Observing that it is of the "firm opinion that there cannot be two arbitration proceedings with respect to the same contract/transaction", the Supreme Court stated that when a dispute has earlier been referred to arbitration and an award was passed on the claims made, then it is "rightful" to refuse to refer to arbitration- in exercise of Section 11(6) of the 1996 Arbitration Act- a...
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Observing that it is of the "firm opinion that there cannot be two arbitration proceedings with respect to the same contract/transaction", the Supreme Court stated that when a dispute has earlier been referred to arbitration and an award was passed on the claims made, then it is "rightful" to refuse to refer to arbitration- in exercise of Section 11(6) of the 1996 Arbitration Act- a fresh arbitration proceeding sought to be initiated with respect to some further claims.
The bench of Justices M. R. Shah and B. V. Nagarathna was hearing an SLP against the September, 2021 decision of the Calcutta High Court dismissing the SLP petitioner's application under Section 11 of the 1996 Act for appointment of an arbitrator for resolution of dispute between the parties. In the impugned order, the High Court noted that the the Supreme Court has held in the case of Bharat Sanchar Nigam Ltd. v. Nortel Networks (2021) that at the referral stage, the court can interfere when it is found that the claim is time barred or there is no subsisting dispute. The Calcutta High Court was of the view that the case in hand falls in the second category; that once a dispute has already been adjudicated upon, it cannot be said to be a subsisting dispute which requires resolution. "Considering the aforesaid enunciation of law and the fact that the appointment of an arbitrator is sought for resolution of the dispute which in fact has already been adjudicated upon in the earlier claim petition filed by the applicant, I do not find any case is made out for appointment of an arbitrator afresh", held the High Court in the impugned order.
The bench of Justices Shah and Nagarathna noted in its order, "Having heard the learned counsel for the petitioner, we are of the firm opinion that there cannot be two arbitration proceedings with respect to the same contract/transaction"
Further, the bench recorded, "It is not in dispute that in the present case, earlier the dispute was referred to arbitration and the Arbitrator passed an award on whatever the claims were made. Thereafter, a fresh arbitration proceeding was sought to be initiated with respect to some further claims, may be after final bill."
The bench went on to assert that, "The same is rightly refused (by the High Court) to be referred to arbitration in exercise of Section 11(6) of the Arbitration and Conciliation Act, 1996."
Declaring that "We are in complete agreement with the view taken by the High Court", the bench dismissed the SLP.
In the impugned order, the High Court recorded that the advocate for the applicants submitted that as during the currency of execution of the project, there was dispute regarding price escalation, the applicant prayed for appointment of an arbitrator by filing an arbitration petition before the High Court, which was disposed off on September 16, 2016 directing the appointing authority under to ensure constitution of Arbitral Tribunal; that the Tribunal considered the claim, that the contract was concluded on March 22, 2016, the final bill was prepared and submitted on December 16, 2016, and that as certain claims were rejected, fresh application was filed by the applicant for appointment of arbitrator on August 21, 2017; that at this stage, the Court is only to examine as to whether there exists an arbitration clause in agreement and that the merits of the case cannot be gone into and that all other objections are open before the arbitrator.
The High Court, in the order impugned in the present SLP, further recorded that on the other hand, the advocate for the respondent submitted that at the interim stage the applicant, raising certain disputes, sought appointment of an arbitrator, and that in terms of the direction issued by the High Court on September 16, 2016, Arbitral Tribunal was appointed; that the applicant submitted his claim petition on February 23, 2017, which was adjudicated upon by the Tribunal while passing award on December 11, 2020; that the claim for which the Arbitral Tribunal is now sought to be appointed by the applicant were part of the claim petition filed by him and have already been adjudicated upon by the Arbitral Tribunal, that in fact by filing a subsequent demand notice on August 21, 2017 the applicant wishes to raise the same issues which he had raised in the earlier arbitration proceedings and have already been dealt with and partly rejected; that once the claims made by the applicant have already been adjudicated upon by the arbitrator no question arises for appointment of fresh arbitrator.
"A perusal of the claim petition filed by the applicant with reference to the subject matter of dispute in the present application and the award of the Arbitral Tribunal as has already been passed clearly shows that the issues, which are sought to be raised now for appointment of an Arbitral Tribunal, in fact have already been adjudicated upon the claim petition filed by the applicant. As to whether under such circumstances, the Court should direct appointment of an arbitrator has been gone into by Hon'ble the Supreme Court in Bharat Sanchar Nigam Ltd. and Anr. v. M/s Nortel Networks India Pvt. Ltd., Civil Appeal Nos. 843-844 of 2021 decided on March 10, 2021, wherein it has been opined that at the referral stage, the Court can interfere when it is found that the claim is time barred or there is no subsisting dispute. The case in hand falls in the second category. Once a dispute has already been adjudicated upon, it cannot be said to be a subsisting dispute which requires resolution. Considering the aforesaid enunciation of law and the fact that the appointment of an arbitrator is sought for resolution of the dispute which in fact has already been adjudicated upon in the earlier claim petition filed by the applicant, I do not find any case is made out for appointment of an arbitrator afresh", held the High Court in the impugned order.
Case Title: M/S TANTIA CONSTRUCTIONS LIMITED v. UNION OF INDIA
Citation : 2022 LiveLaw (SC) 624
Arbitration & Conciliation Act 1996 - There cannot be two arbitration proceedings with respect to the same contract/transaction-in the present case, earlier the dispute was referred to arbitration and the Arbitrator passed an award on whatever the claims were made. Thereafter, a fresh arbitration proceeding was sought to be initiated with respect to some further claims, may be after final bill-The same is rightly refused (by the High Court) to be referred to arbitration in exercise of Section 11(6) of the Arbitration and Conciliation Act, 1996.
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