Legal Brief: Court under section 11(6) Arbitration and Conciliation Act 1996 is only entitled to examine existence of Arbitration Agreement and timely filing of petitions after issuance of notice.
Case: Simplex Infrastructures Limited V. Indian Oil Corporation Limited
Court: Delhi High Court
Date of Judgment: 03.09.2024
By: Adv. Saksham Mathur
Facts
- Simplex Infrastructures Limited (Petitioner) and Indian Oil Corporation Limited (Respondent) entered into a Contract Agreement on 27.07.2017 for a construction works at Haldia Refinery. The contract included a dispute resolution clause (Clause 9) with provisions for arbitration. Sub- clause 9.2 outlined specific matters excluded from arbitration, including whether a claim is “notified,” which must be decided by IOCL’s General Manager (GM).
- Simplex submitted its final bill on 19.10.2022, which IOCL did not fully considered, leading to a dispute. On 16.05.2023, Simplex issued a notice to IOCL under Section 21 of the Arbitration and Conciliation Act 1996, seeking arbitration and proposing a retired judge as arbitrator.
- IOCL responded on 29.05.2023, contesting the arbitrability of Simplex’s claims, arguing that notification by the GM was contractually required for arbitration (Clause 9.2).
- Despite its stance, IOCL suggested three retired judges as potential arbitrators. Simplex, disagreeing with this approach, filed a petition under Section 11(6) of the 1996 Act for referral to arbitration.
- The court, on 15.02.2024, noted IOCL’s objection and allowed Simplex to represent its case only for the claims as certified by GM to the GM without prejudice. The GM, on 06.2024, rejected Simplex’s representation, stating the claims were not “notified.”
Issue
- Whether the dispute between Simplex and IOCL is arbitrable despite the lack of “notification” of the claims by IOCL’s GM as required by Clause 2 of their contract?
Legal Analysis
- IOCL’s Argument: IOCL relies on the Supreme Court’s decision in IOCL v NCC Ltd (2023), which involved a similar clause (9.2) requiring the GM’s decision on “notified claims” before arbitration.
- Simplex’s Argument: Simplex argues that the Supreme Court’s later decision in SBI General Insurance Co Ltd v Krish Spinning (2024) substantially limited the scope of examination by a court under Section 11 of the 1996 Act.
- SBI General Insurance Co Ltd: This decision restricts a Section 11 court’s examination to two aspects, the existence of an arbitration agreement and the timeliness of the Section 11(6) petition (within three years of the Section 21 notice).
- Post-SBI General Insurance Co Ltd: The court in this case acknowledges that the SBI General Insurance Co Ltd decision limits its It rules that the arbitrability of the dispute, considering Clause 9.2, is a matter for the arbitral tribunal to decide.
Conclusion
The court, bound by the precedent set in SBI General Insurance Co Ltd, ruled that the question of arbitrability in the Simplex v. IOCL case should be decided by the appointed arbitrator, Hon’ble Dr. Justice S. Muralidhar. This decision underscores the limited scope of a Section 11 court’s examination after the SBI
General Insurance Co Ltd ruling, leaving the determination of arbitrability, based on the contractual clause 9.2, to the arbitral tribunal.