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2023 (4) TMI 652 - SUPREME COURTCoercion and economic duress - It is the case of Appellant NTPC that there were no subsisting disputes between the parties in view of the Settlement Agreement dated 27.05.2020 and that the application for arbitration is an afterthought and abuse of the process - HELD THAT:- This Court has consistently been holding that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engg. Pvt. Ltd. [2021 (3) TMI 382 - SUPREME COURT], Sanjiv Prakash v. Seema Kukreja and Ors. [2021 (4) TMI 319 - SUPREME COURT], and Indian Oil Corporation Ltd. v. NCC Ltd., [2022 (7) TMI 974 - SUPREME COURT]the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BHARAT SANCHAR NIGAM LTD. & ANR. VERSUS M/S NORTEL NETWORKS INDIA PVT. LTD. [2021 (3) TMI 447 - SUPREME COURT] and Secunderabad Cantonment Board v. B. Ramachandraiah & Sons [2021 (3) TMI 612 - SUPREME COURT], arbitration was refused as the claims of the parties were demonstrably time-barred. The allegations of coercion and economic duress are not bona fide, and that there were no pending claims between the parties for submission to arbitration. The Respondent’s claim fits in the description of an attempt to initiate “ex facie meritless, frivolous and dishonest litigation” - There were no allegations of coercion or economic duress compelling SPML to withdraw any pending claims under the subject contract as a condition for the return of the Bank Guarantees. On the contrary, the only allegation by SPML was with respect to NTPC’s “illegal” action of interlinking the release of the Bank Guarantees with some other contracts. This was precisely the argument before the High Court, and, in fact, this submission is recorded by the High Court while issuing notice and injuncting NTPC. This fact clearly indicates that the plea of coercion and economic duress leading to the Settlement Agreement is an afterthought. This is a case where the High Court should have exercised the prima facie test to screen and strike down the ex-facie meritless and dishonest litigation. These are the kinds of cases where the High Court should exercise the restricted and limited review to check and protect parties from being forced to arbitrate - High Court has committed an error in allowing the application under Section 11(6) of the Act. High Court ought to have examined the issue of the final settlement of disputes. Appeal allowed.
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