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2021 (4) TMI 1356 - HC - Indian LawsConstitution of Arbitral Tribunal to adjudicate the disputes that have arisen between the parties in relation to the Contract Agreement - scope of examination under Section 11 of the A & C Act at a pre-referral stage - whether the Contract Agreement stands discharged by the Settlement Agreement is required to be adjudicated by the Arbitral Tribunal constituted in terms of the Arbitration Clause as contained in the Contract Agreement? - HELD THAT:- This Court is not required at this stage to give a conclusive finding as to the existence of an arbitration agreement between the parties. In one sense, the Court would require to take a negative view if it finds that ex facie there is no Arbitration Agreement between the parties, and accordingly, the Court would reject the application under Section 11 of the Act. However, in all other cases where an arguable case is made out by the applicant, the parties are required to be referred to arbitration. It is clear that once it is apparent that the parties had entered into an agreement to refer the disputes to arbitration, the dispute whether the same has been discharged by a settlement is required to be liberally construed in favour of relegating the parties to arbitration. Unless the Court comes to the conclusion that the dispute raised by the claimant with regard to the validity of the settlement is bereft of any merit; is not bona fide; or is a frivolous one, the Court must relegate the parties to resolve the disputes in arbitration. In case where the Courts finds that the arbitration agreement does not exists, the parties would nonetheless be entitled to agitate the disputes before Civil Courts. In this perspective, once it is established that the parties had entered into an arbitration agreement, the Courts must lean in favour of relegating the parties to that forum. Once it established that the parties had entered into an Arbitration Agreement, the question whether the contract (including the arbitration clause) stood discharged by accord and satisfaction must be considered with the perspective whether the same is established without any detailed adjudicatory exercise. Thus, unless the Courts concludes that the said disputes are ex facie unmerited and frivolous, the parties must have their say before the agreed forum. It is apparent from the above that SPML had indicated that it was facing financial constraints on account of NTPC withholding the Bank Guarantees. NTPC on the other hand does not appear to have provided any substantial grounds for withholding the same. It however, continued to persist with SPML that it would release the Bank Guarantees if SPML withdraws the disputes - SPML had invoked the arbitration clause and had sought reference of disputes to arbitration. It had also approached this court. Thus, it would be difficult for SPML to establish that it was economically coerced to enter into the Settlement Agreement. However, this Court is unable to accept that the dispute whether the Contract Agreement stood discharged/novated in terms of the Settlement Agreement, is ex facie untenable, insubstantial or frivolous. The present application cannot be rejected by relegating the petitioner to once again seek reference of the disputes before an adjudicator. SPML had requested NTPC to appoint an adjudicator but NTPC had not done so. Thus, the contention that the present petition is pre-mature as the parties have not referred the disputes to an adjudicator, is unmerited. The petition is disposed of.
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