TMI Blog2022 (7) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... t if a clause stipulates that under certain circumstances there can be no arbitration and they are demonstrably clear then the controversy pertaining to appointment of Arbitrator has to be put to rest. In the recent decision of this Court in the case of DLF Home Developers Limited v. Rajapura Homes Private Limited and Another [ 2021 (9) TMI 1053 - SUPREME COURT ] in which this Court also had an occasion to consider Section 11(6A) of the Arbitration Act and ultimately has observed, after referring to and considering the decision of three Judges Bench of this Court in the case of Vidya Drolia [ 2020 (12) TMI 1227 - SUPREME COURT ] that the jurisdiction of the Court under Section 11 of the Arbitration Act is primarily to find out whether there existed a written agreement between the parties for resolution of the dispute and whether the aggrieved party has made out a prima facie arguable case, it is further observed that limited jurisdiction, however, does not denude the Court of its judicial function to look beyond the bare existence of an arbitration clause to cut the deadwood. The issue / aspect with regard to accord and satisfaction of claims is seriously disputed and is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned judgment and order passed by the High Court in Arbitration Petition No.407/2018 is hereby modified to the extent and it is directed that only one claim of the respondent which is declared by the General Manager as a Notified Claim shall have to be referred to arbitration and the learned Arbitrator shall adjudicate only that claim which is declared by the General Manager as a Notified Claim and the learned Arbitral Tribunal shall not have any jurisdiction to adjudicate on any other claims which as such are not declared as Notified Claims. Application disposed off. - CIVIL APPEAL NO. 341 OF 2022 (@ SLP (C) No.13161/2019) With CIVIL APPEAL NO. 342 OF 2022 (@ SLP (C) No.13408/2019) CIVIL APPEAL NO. 344 OF 2022 (@ SLP (C) No.13815/2019) CIVIL APPEAL NO. 343 OF 2022 (@ SLP (C) No.13813/2019) CIVIL APPEAL NO. 345 OF - - - Dated:- 20-7-2022 - M. R. SHAH And B. V. NAGARATHNA , JJ. JUDGMENT M. R. SHAH , J. 1. As common questions of law and facts arise in this group of appeals and as such between the same parties and with respect to similar contracts / agreements, all these appeals are decided and disposed of together by this common judgment and order. 2. Feeling ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, grounds on which it is based, and the amount claimed. The OWNER shall not anywise be liable in respect of any claim by the CONTRACTOR unless notice of such claim shall have been given by the CONTRACTOR to the EngineerinCharge and the Site Engineer in the manner and within the time aforesaid and the CONTRACTOR SHALL be deemed to have waived any and all claims and all his rights in respect of any claim not notified to the EngineerinCharge and the Site Engineer in writing in the manner and within the time aforesaid. 6.6.2.0 The EngineerinCharge and/or the Site Engineer shall be under no obligation to reply to any notice of claim given or claim made by the CONTRACTOR within the provisions aforesaid or otherwise or to reject the same and no omission or failure on the part of the EngineerinCharge or Site Engineer to reject any claim made or notified by the CONTRACTOR or delay in dealing therewith shall be deemed to be an admission by the OWNER of the validity of such claim or waiver by the OWNER of any of its rights in respect thereof, with the intent that all such claims otherwise valid within the provisions of Clause 6.6.1.0 read with Clauses 6.6.3.0 and 6.6.3.1 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged the OWNER from and against the same, even if in not including the same as aforesaid, the CONTRACTOR shall have acted under a mistake of law or fact. 6.6.5.0 Notwithstanding the existence of any claim by the CONTRACTOR in terms hereof or otherwise, the CONTRACTOR shall continue and be bound to continue and perform the works to completion in all respects according to the Contract (unless the Contract or works be priorly determined by the OWNER in terms hereof) and shall remain liable and bound in all respects under the Contract. 6.6.6.0 The payment of any sum on account to the CONTRACTOR during the performance of any work or item of work in respect of which a claim has been notified by the CONTRACTOR in terms of Clause 6.6.1.0 hereof or the making or negotiation of any interim arrangements in respect of the performance of such work or item of work by the OWNER, shall not be deemed to be an acceptance of the related claim by the OWNER, or any part or portion thereof with the intent that any such payment shall constitute merely an interim facility or interim assistance to the CONTRACTOR, and not an obligation upon the OWNER. 6.7.0.0 DISCHARGE OF OWNER S LIABILITY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the OWNER in terms of Clause 6.8.2.0, and shall be and remain entitled to receive the unadjusted balance of the Security Deposit remaining in the hands of the OWNER in terms of Clause 6.8.3.0 hereof. xxx xxx xxx 9.0.0.0 ARBITRATION 9.0.1.0 Subject to the provisions of Clauses 6.7.1.0, 6.7.2.0 and 9.0.2.0 hereof, any dispute arising out of a Notified Claim of the CONTRACTOR included in the Final Bill of the CONTRACTOR in accordance with the provisions of Clause 6.6.3.0 hereof, if the CONTRACTOR has not opted for the Alternative Dispute Resolution Machinery referred to in Clause 9.1.1.0 hereof, and any dispute arising out of any Claim(s) of the OWNER against the CONTRACTOR shall be referred to the arbitration of a Sole Arbitrator selected in accordance with the provisions of Clause 9.0.1.1 hereof. It is specifically agreed that the OWNER may prefer its Claim(s) against the CONTRACTOR as counterclaim( s) if a Notified Claim of the CONTRACTOR has been referred to arbitration. The CONTRACTOR shall not, however, be entitled to raise as a setoff defence or counterclaim any claim which is not a Notified Claim included in the CONTRACTOR's Final Bill in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the Contract Documents. 4.2. As per the contract entered into between the parties, the designated date for commencement of the project was the date of issuance of FOA i.e. 03.03.2010, and that the scheduled date of completion was 02.10.2011. It appears that the execution of the project was delayed, as a result of which the project was completed only on 28.12.2015. The NCCL was issued a completion certificate by the IOCL indicating the date of completion of the project as 28.12.2015. In view of the delay in completion of the project beyond the scheduled date, the NCCL made a request for extension of time vide the communication dated 23.05.2016. While the EOT requests were pending with the IOCL, the NCCL submitted its final bill dated 05.08.2016 to the EngineerInCharge appointed under the contract between the parties. According to the NCCL, the NCCL in its final bill dated 05.08.2016 made a specific reference to the Notified Claims. There were correspondences between the EngineerInCharge and Thyssenkrupp Industrial Solutions India (P) Ltd. (hereinafter referred to as TKIS ) pending settlement of the final bill and the request for Extension of Time (EOT). The NCCL respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation clause contained in the Agreement on 01.07.2017. That, the IOCL, in accordance with Clause 9.0.2.0 referred the matter regarding arbitrability of NCCL s claims to the General Manager on 12.07.2017. 4.9. Vide the communication / letter dated 10.11.2017, the General Manager held that the claims cannot be referred to arbitration and that the Arbitration Agreement itself does not survive on account of NCCL withdrawing its Notified Claims. The General Manager held that therefore there exist no dispute to be referred to arbitration. 4.10.Thereafter the respondent NCCL approached the Delhi High Court by filing Arbitration Petition No.115/2018 under Section 11(6) of the Arbitration Act for appointment of sole Arbitrator. The said petition was opposed by the IOCL on a number of grounds. However, by overruling all the objections raised on behalf of the appellant IOCL, by the impugned judgment and order, the High Court has allowed the said arbitration petition and appointed the sole Arbitrator. 4.11.Impugned judgment and order passed by the High Court dated 08.02.2019 in Arbitration Petition No.115/2018 is the subject matter of present Civil Appeal No.341/2022 (arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitration agreement itself is an independent contract and is consensual in nature, it is left to the parties to include an arbitration agreement in the underlying contract, or not to include it. If no arbitration agreement exists in a contract, the only option if a dispute arises for either party is to go by way of a suit; (ii) An arbitration agreement can exist in the underlying contract or outside the contract, which is absolute in terms. This is the standard arbitration clause, and would be in the nature of where any dispute arises between the parties in relation to the interpretation or implementation of this contract, it shall be referred to arbitration under the Arbitration and Conciliation Act, 1996... This would be an UNRESTRICTED or ABSOLUTE arbitration clause. In such a case, in the background of Section 11(6A), no question of the Court declining to refer the matter to arbitration would arise, if it finds that the arbitration agreement exists and is valid. In such a case, every dispute between the parties has to be referred to arbitration because Section 11(6A) would mandate this; (iii) The third category would be where the parties agree to have an arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red various aspects with respect to the restricted arbitration clause. But in the case of unrestricted clauses, all issues raised by the contracting parties will have to be referred to arbitration, because of Section 11(6A). However, the instant case is a case of a restricted arbitration clause that specifically excludes certain issues from arbitration, as a result of which, no arbitration clause exists for those other or excepted disputes and hence, the question of referring those disputes would not arise. That in the case of Vidya Drolia (supra), the Arbitration Agreement itself sets out what is excluded from arbitration. Therefore, it was held that Section 11(6A) would not stand in the way of making a reference. 8.8 It is further submitted by learned Attorney General that in the present case the respondent NCCL received the amount of final bill in full settlement of their claims. That in the present case the arbitration clause itself states that where the final bill amount has been received by the party, or where a sum has been received on account of Notified Claims, the arbitration clause itself stands extinguished. Therefore, the fact that amount of final bill having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service v. Indian Oil Corporation Ltd. [ARB. PET. 334/2014 decided on 12.02.2015] (v) Bongaigaon Refinery v. M/s. Buildworth Pvt. Ltd. [Arb.Appeal 10/2006 before Gauhati High Court] 8.13 It is submitted that the Special Leave Petitions against the decision in the case of China Petroleum Pipeline Bureau (supra) and Srico Projects Pvt. Ltd. (supra) have been dismissed by this Court. 8.14 It is further submitted by learned Attorney General that in the present case the final bill payment had been made to the respondent and accepted by it pursuant to an understanding between the parties by which the respondent expressly waived its Notified Claims. It is submitted that the arbitration clause itself is subject to Clauses 6.7.1.0 and 6.7.2.0. It is submitted that Clause 6.7.2.0 dealing with Notified Claims expressly declares that the acceptance of any amount by the contractor in respect of the Notified Claims shall result in full and final satisfaction of the claims by the contractor in respect of the Notified Claims and hence, the contract, including the arbitration clause, shall stand discharged and extinguished. This is as per Clause 6.7.2.0 itself, notwithstanding any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m covered by a decision of the General Manager is specifically an excluded matter. It is submitted that in the present case the General Manager rejected the demand of the NCCL in regard to the Notified Claims, particularly as the demand in regard to Notified Claims had been specifically withdrawn by the NCCL. It is submitted therefore that viewed from any angle, as no arbitration clause existed so far as the NCCL is concerned, the High Court has committed a serious error in referring the dispute between the parties to Arbitrator and appointing the Arbitrator. 8.18 Now, so far as the other four cases are concerned, the learned Attorney General has submitted that in those four cases the claims were referred / sent to the General Manager under Clause 9.0.2.0 of the GCC. That in all the remaining cases the General Manager declared that none of the claims of the NCCL was a Notified Claim. Therefore, the claims which are found by the General Manager not to be Notified Claims are not arbitrable and are outside the scope and purview of the Arbitration Agreement. It is submitted that in that view of the matter, the High Court ought to have dismissed the applications / petitions filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the decision to partially allow its application for EOT is unacceptable as the same is not in accordance with the conditional offer given by NCCL and also since the delay was caused due to reasons attributable to the IOCL; (10) Disregarding the aforesaid letter, IOCL on 08.05.2017, unilaterally released the payment against the final bill, after adjusting the price discount; (11) That, NCCL on 16.05.2017 i.e. within 10 days from the release of the amount, informed IOCL that the application for price discount is misplaced and its Notified Claims still hold good as the conditional offer of NCCL was not accepted; (12) Since IOCL miserably failed to provide an appropriate response within a reasonable period of time, NCCL invoked the arbitration clause i.e. Clause 9.0.1.0 of the GCC and submitted its claims to IOCL; (13) It is submitted that as per Clause 9.0.1.0 read with Clause 9.0.2.0 of the GCC, IOCL had to refer the claims of NCCL to its General Manager and then the General Manager was to issue a declaration pursuant to which the arbitration could commence; (14) It is submitted that in the claims concerned in four of the petitions, the determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of election, the present proceedings ought to be dismissed since IOCL has preferred an application under Section 16(2) and 16(5) challenging the jurisdiction of the Arbitral Tribunal. 9.3 On an interpretation of the Clauses of the GCC, Shri Ranjith Kumar, learned Senior Advocate appearing for the respondent NCCL has submitted that a bare perusal of the relevant clauses of the GCC would indicate that the General Manager of IOCL is neither entitled to examine whether a Notified Claim is an excepted claim nor can he look into the issue whether there is accord and satisfaction between the parties. 9.4 It is submitted that Clause 9.0.1.0 is subject to Clauses 6.7.1.0, 6.7.2.0 and 9.0.2.0. Further, Clause 9.0.2.0 creates a machinery whereby IOCL has unbridled power conferred upon its General Manager to certify if a claim is capable of being referred to arbitration. The said clause, according to IOCL vests the sole discretion of deciding the arbitrability of claims on the General Manager. It is submitted that, as such, the interpretation of the Clause as suggested by IOCL, is in derogation of not only the arbitrator s power to decide arbitrability, but also the Court s power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that therefore the reasoning behind the decision rendered by the General Manager that the claims are not Notified Claims is not only unsustainable, but is also ex facie contrary to Clause 9.0.2.0. It is submitted that Clause 9.0.2.0 does not render the decision of the General Manager final. 9.8 It is further submitted that vide the Amendment Act, 2015, section 11(6A) has been inserted by virtue of which, the scope of intervention at Section 11 stage is very narrow. Reliance is placed upon the decision of this Court in the case of Duro Felguera S.A. v. Gangavaram Port Limited [(2017) 9 SCC 729]. It is submitted that after insertion of Section 11(6A), the scope of intervention by the Court at the stage of appointment of Arbitrator is narrowed down and the Courts may have to now only examine the existence of a valid arbitration agreement. That in the aforesaid decision it is held that the legislative purpose is essentially to minimize the Court s intervention at the stage of appointment of Arbitrator and that the intention as incorporated in Section 11(6A) ought to be respected is the submission. 9.9 It is submitted that despite the above binding decision, in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited v. Commonwealth Games 2010 Organizing Committee [(2014) 6 SCC 677], the role of a Court is to assist and support arbitration and leave a substantive part of the adjudication to the arbitral Tribunal. It is submitted therefore that at the stage of an application filed under Section 11, the Court is only supposed to look as to, whether, a valid arbitration agreement exists. It is submitted that therefore the scope of intervention by the Court is restricted at the stage of appointment of Arbitrator and it can neither examine whether certain claims are excepted nor can it look into the issue of whether there is accord and satisfaction . 9.14 It is further submitted by learned Senior Advocate appearing for the respondent NCCL that in cases where the claims are rejected by the General Manager on the ground that there was accord and satisfaction between the parties and hence, not referable to arbitration, in the instant case the respondent has disputed petitioner s contention on accord and satisfaction even before the payment of final bill. It is submitted that therefore the issue whether accord and satisfaction existed between the parties is virtual in nature and exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 16. 9.18 It is further submitted that insofar as the claims concerned in other four petitions (except the lead matter), the determination was made after an inordinate delay. That in 3 out of 5 petitions, the determination by the General Manager was made after the respondent filed the Arbitration Petitions before the High Court. That in SLP No.13408/2019, even no reference to the General Manager was made until the filing of the Arbitration Petition before the High Court. That therefore the General Manager s decision in the aforesaid four SLPs is inefficacious as the determination has been made not only thirty days after the submission of the claim, but also after the arbitration petitions were filed before the High Court. Reliance is placed upon the decisions of this Court in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. reported in (2000) 8 SCC 151 (Paras 18 and 19). 9.19 It is further submitted by Shri Ranjith Kumar, learned Senior Advocate appearing for respondent NCCL that in the present case, the petitioner had filed an application challenging the jurisdiction of the Arbitral Tribunal under Sections 16(2) and 16(5) of the Arbitration Act before the Arbitral T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and held that party autonomy is virtually the backbone of arbitration. It is further observed and held that party autonomy being the brooding and guiding spirit in arbitration, the parties are free to agree on the application of three different laws governing their entire contract (1) proper law of contract; (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration. It is further observed in the said decision that the parties to an arbitration agreement have the autonomy to decide not only on the procedural law to be followed but also the substantive law. The choice of jurisdiction is also left to the contracting parties. 10.5 In the case of DLF Universal Ltd. Anr. v. Director, Town and Country Planning Department, Haryana Ors. [(2010) 14 SCC 1], it is observed and held that the contract is to be interpreted according to its purpose. The purpose of a contract is the interest, objective, values, policy that the contract is designed to actualize. It comprises the joint intent of the parties. It is observed that it is not an intent of a single party; it is the joint intent of both the parties and the joint intent of the parties is to be discover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 18 and 19, it is observed and held as under: 18. Arbitration arises from a contract and unless there is a specific written contract, a contract with regard to arbitration cannot be presumed. Section 7(3) of the Act clearly specifies that the contract with regard to arbitration must be in writing. Thus, so far as the disputes which have been referred to in Clause 39 of the contract are concerned, it was not open to the Arbitrator to arbitrate upon the said disputes as there was a specific clause whereby the said disputes had been excepted . Moreover, when the law specifically makes a provision with regard to formation of a contract in a particular manner, there cannot be any presumption with regard to a contract if the contract is not entered into by the mode prescribed under the Act. 19. If a non arbitrable dispute is referred to an Arbitrator and even if an issue is framed by the Arbitrator in relation to such a dispute, in our opinion, there cannot be a presumption or a conclusion to the effect that the parties had agreed to refer the issue to the Arbitrator. In the instant case, the respondent authorities had raised an objection relating to the arbitrability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleadings before the Arbitral Tribunal. After referring to and considering in detail the earlier decisions on the point, more particularly, with respect to nonarbitrability and the excepted matters , it is ultimately concluded in para 76 as under: 76. In view of the above discussion, we would like to propound a fourfold test for determining when the subject matter of a dispute in an arbitration agreement is not arbitrable: 76.1. (1) When cause of action and subjectmatter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem. 76.2. (2) When cause of action and subjectmatter of the dispute affects thirdparty rights; have erga omnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable; 76.3. (3) When cause of action and subjectmatter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; 76.4 (4) When the subjectmatter of the dispute is expressly or by necessary implication nonarbitrable as per mandatory statute(s). 76.5 These test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disputes including the question of jurisdiction and nonarbitrability. Ultimately in para 154, the proposition of law is crystallized as under: 154. Discussion under the heading Who decides Arbitrability? can be crystallized as under: 154.1. Ratio of the decision in Patel Engineering Ltd. on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23102015) and even post the amendments vide Act 33 of 2019 (with effect from 982019), is no longer applicable. 154.2. Scope of judicial review and jurisdiction of the court under Section 8 and 11 of the Arbitration Act is identical but extremely limited and restricted. 154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competencecompetence, is that the arbitral tribunal is the preferred first authority to determine and decide all questions of nonarbitrability. The court has been conferred power of second look on aspects of nonarbitrability post the award in terms of subclauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), this Court had an occasion to consider the decision in the case of Vidya Drolia (supra) and in paras 46, 47 and 53.2, it is observed and held as under: 46. The upshot of the judgment in Vidya Drolia [Vidya Drolia v. Durga Corpn., (2021) 2 SCC 1: (2021) 1 SCC (Civ) 549] is affirmation of the position of law expounded in Duro Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] and Mayavati Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441], which continue to hold the field. It must be understood clearly that Vidya Drolia [Vidya Drolia v. Durga Corpn., (2021) 2 SCC 1: (2021) 1 SCC (Civ) 549] has not resurrected the preamendment position on the scope of power as held in SBP Co. v. Patel Engg. Ltd. [SBP Co. v. Patel Engg. Ltd., (2005) 8 SCC 618]. 47. It is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie timebarred, or that the dispute is nonarbitrable, that the court may decline to make the reference. However, if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the owner (EngineerinCharge or Site Engineer) to reject any claim made or notified by the contractor or delay in dealing therewith shall be deemed to be an admission by the owner of the validity of such claim or waiver by the owner of any of its rights in respect thereof. 11.2 As per Clause 6.6.3.0, any claims of the contractor notified in accordance with the provision of Clause 6.6.1.0 and remain due at the time of preparation of Final Bill by the contractor, shall have to be separately included in the Final Bill prepared by the contractor in the form of a Statement of Claims attached thereto, giving particulars of the nature of the claim, grounds on which it is based, and the amount claimed and shall be supported by a copy of the notice sent in respect thereof by the contractor to the EngineerinCharge and the Site Engineer under Clause 6.6.1.0. It further provides that any variance with the claim notified by the contractor within the provision of Clause 6.6.1.0 shall be deemed to be a claim different from the Notified Claim with consequence in respect thereof indicated in Clauses 6.6.1.0 and 6.6.3.1. 11.3 Clause 6.6.3.1 further provides that the owner (IOCL) shall not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Clause 6.6.3.0 and associated provisions thereunder, upon the condition that such payment is being made in full and final settlement of all the claims of the contractor shall, subject to the provisions of Clause 6.7.3.0, be deemed to be in full and final satisfaction of all claims of the contractor notwithstanding any qualifying remarks, protest or condition imposed or purported to be imposed by the contractor relative to the acceptance of such payment with the intent that upon acceptance by the contractor of any payment made, the Contract (including the arbitration clause) shall stand discharged and extinguished insofar as relates to and/or concerns the claims of the contractor. 11.7 The next important clause to be considered would be Clause 9.0.0.0. The said clause is for Alternative Dispute Resolution Machinery. As per Clause 9.0.1.0, subject to the earlier Clauses, namely Clauses 6.7.1.0, 6.7.2.0 and 9.0.2.0, any dispute arising out of a NOTIFIED CLAIM of the contractor included in the Final Bill of the contractor in accordance with the provisions of Clause 6.6.3.0 and if the contractor has not opted for the Alternative Dispute Resolution Machinery referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not included in the Final Bill, such a claim is outside the purview of the arbitration agreement. Whether or not a claim sought for arbitration by the contractor is a Notified Claim or any such matter / dispute is specifically excluded from the scope, purview and ambit of arbitration agreement, such matter / dispute shall have to be first decided by the General Manager prior to the arbitral proceeding with or proceeding further with the reference. Thus, unless there is a decision by the General Manager on whether or not a claim sought to be referred to arbitration by the contractor is a Notified Claim or not, the Arbitrator or Arbitral Tribunal shall have no jurisdiction to entertain such a dispute. The aforesaid clauses of the GCC are part of the contract between the parties herein and both the parties are bound by the aforesaid claims. 12. It is the case on behalf of the petitioner IOCL that the IOCL had settled the claim of respondent NCCL accepting NCCL s offer to grant extension of time; not to give price adjustment of over 4% of the total contract value and consequently IOCL condoned the delay of 1493 days and granted extension of time without applying any price discount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims were not lodged with the Engineer and the Site Engineer as required under Clause 6.6.1.0 68 read with 6.6.3.0 69, the matter would have to be left for resolution by Arbitral Tribunal. II) Aspects with regard to accord and satisfaction of the claims or where there is a dispute will also have to be left to the Arbitral Tribunal. The position in law in this regard remains the same both pre and post amendment brought about in the 1996 Act after 23.10.2015. III) After the insertion of Subsection (6A) in 11 of the 1996 Act the scope of inquiry by the Court in a Section 11 petition, (once it is satisfied that it has jurisdiction in the matter) is confined to ascertaining as to whether or not a binding arbitration agreement exists qua the parties before it which is relatable to the disputes at hand. IV) The space for correlating the dispute at hand with the arbitration agreement is very narrow. Thus, except for an open and shut case which throws up a circumstance indicative of the fact that a particular dispute does it not fall within the four corners of the arbitration agreement obtaining between the parties the matter would have to be resolved by an Arbitral Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Court at the stage of deciding Section 11 application if the facts are very clear and glaring and in view of the specific clauses in the agreement binding between the parties, whether the dispute is nonarbitrable and/or it falls within the excepted clause. Even at the stage of deciding Section 11 application, the Court may prima facie consider even the aspect with regard to accord and satisfaction of the claims. 13.1 Now, so far as the submission on behalf of the respective parties on the decision of the General Manager on Notified Claims in Civil Appeal No.341/2022 arising out of SLP (C) No.13161/2019 is concerned, the General Manager has decided / declared that the claims are not arbitrable since they had been settled and the arbitration agreement has been discharged under Clause 6.7.2.0 of the GCC and no longer existed / subsisted. As observed hereinabove, the claims had been settled or not is a debatable and disputable question, which is to be left to be decided by the Arbitral Tribunal. Therefore, matters related to the Notified Claims in the facts and circumstances of the case also shall have to be left to be decided by the Arbitral Tribunal as in the fact situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to agree on applicability of (1) proper law of contract, (2) proper law of arbitration agreement and (3) proper law of the conduct of arbitration. Parties to the contract also may agree for matters excluded from the purview of arbitration. As observed by this Court in a catena of decisions, unless the effect of agreement results in performance of an unlawful act, an agreement, which is otherwise legal, cannot be held to be void and is binding between the parties. At this stage, the decision of this Court in the case of Sreekanth Transport (supra) is required to be referred to. In the case before this Court, the contract provided for exclusion of some matters from the purview of arbitration. A senior officer of the department was given the authority and power to adjudicate the same. One of the clauses provided that the decision of the Senior Officer, being the Adjudicator, shall be final and binding between the parties. This Court considered the same as excepted matters . In the aforesaid decision, it is observed and held in paragraph 3 as under: 3. Excepted matters obviously, as the parties agreed, do not require any further adjudication since the agreement itself provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the High Court in Arbitration Petition No.407/2018 is concerned, as the General Manager himself has declared that only one claim of the respondent was / is a Notified Claim, the said appeal is to be allowed partly by observing that the claim which is declared by the General Manager as a Notified Claim only shall have to be referred to arbitration and the learned Arbitrator shall have no jurisdiction to adjudicate the disputes with respect to other claims which as such are not declared as Notified Claims by the General Manager. 14. In view of the above and for the reasons stated above, following order is passed. (1) Civil Appeal No.341/2022 arising out of the impugned judgment and order passed by the High Court in Arbitration Petition No.115/2018 is hereby dismissed. However, it is observed that the learned Arbitrator shall first decide the aspect with regard to accord and satisfaction of the claims and arbitrability of the disputes with regard to such claims by deciding an application under Section 16 of the Arbitration Act, which is reported to be pending. The learned Arbitrator shall first decide the jurisdiction of the Arbitral Tribunal and the arbitrabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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