Gujarat High Court: In an application under Section 11 of the Arbitration and Conciliation Act, 1996 (‘the Act’) for appointment of Arbitrator, Sunita Agarwal, CJ., allowed the application and held that the petitioner’s claim was not stale or non-arbitrable if ‘No Claim Certificate’ was issued.
Background
In the matter at hand, the petitioner gave a Notice of Claim dated 01-10-2018 to the Narmada Clean Tech Limited (‘respondent’), which was subsequently denied by the respondent. The respondent filed an application before the Principal Senior Civil Judge, Ankleshwar, District Bharuch under Section 8 of the Act, which was allowed, and the matter was referred to Arbitration. The petitioner sent a notice dated 16-05-2023 to the respondent to give consent for appointment of Arbitrator. The respondent refuted the said notice and asserted that all the claims were settled in 2015 and ‘No Claim Certificate’ was issued on 25-11-2015 and the amount paid under the terms of the contract was accepted by the petitioner. The respondent’s submission was that the petitioner’s claim was belated, and the dispute was non-arbitrable.
Analysis and Decision
The Court relied on NTPC Ltd. v. SPML Infra Ltd., (2023) 9 SCC 385, wherein the principle ‘eye of the needle’ was propounded. The Court reiterated that inquiry by the Courts at a pre-referral stage under Section 11(6) of the Act is very narrow and is confined to the preliminary inquiry about the existence and validity of an arbitration agreement and the applicant’s privity to the agreement. For inquiry regarding the non-arbitrability of the dispute, at the referral stage, the Court said that it is settled that such an inquiry is an exception to the general rule and the principle that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. The Court also reiterated that the referral Court may reject claims which are manifestly and ex-facie non-arbitrable. The Court said that it can be examined in the inquiry, whether the assertion of arbitrability is bona fide or not. Further, the Court said that if the Court reaches a clear conclusion on prima facie scrutiny of the facts, that there is not even a vestige of doubt that the claim is non-arbitrable, it may refuse to refer the dispute to arbitration. However, even if there is slightest of doubt, the rule is to refer the dispute to arbitration.
On applying the said principle to the case at hand and upon prima facie scrutiny of the material, the Court held that it cannot be concluded that the dispute was non-arbitrable, or the petitioner’s claim had become stale for issuance of ‘No Claim Certificate’ on 25-11-2015. The Court noted that the application under Section 11(6) of the Act was filed after dismissal of the Commercial Suit. Therefore, the Court referred the dispute to Arbitration and appointed a sole Arbitrator to resolve the disputes between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021.
[Poll Cont Associates v. Narmada Clean Tech Ltd., 2024 SCC OnLine Guj 1123, decided on: 09-02-2024]
Advocates who appeared in this case :
For the petitioner: Advocate JF Mehta
For the respondent: Advocate Abhishek M Mehta
Buy Arbitration and Conciliation Act, 1996 HERE
