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2025 DIGILAW 369 (RAJ)

Compucom Software Ltd. v. Rajcomp Info Services Limited

2025-02-14

SUDESH BANSAL

body2025
Order : SUDESH BANSAL, J. 1. Heard counsel for both the parties and perused the record. 2. This is an arbitration application filed by the applicant under Section 11 of the Arbitration & Conciliation Act, 1996 for appointment of an arbitrator to resolve/ settle the dispute, in respect of non-clearance of pending bills of applicant by the respondent. The arbitration agreement, finds place in Clause6.38 of tender document reads as under:- “Any dispute existing out of contract shall be settled according to the provision of arbitration and conciliation act, 1996.” 3. Having heard counsel for both the parties and from perusal of the respective pleadings and documents enclosed therewith, it transpires that the applicant stood as a successful bidder, in the NIB no. F4.3(159)/RISL/Tech/15/14316 dated 25.02.2021, issued by the respondent-RISL, a contract was awarded in his favour which was required to be completed in terms of four milestones detailed out in para No.4.4 of the tender document which reads as under:- Sr Milestone Deliverable Time Frame Payment terms 1 Design, Requirement Analysis (as per Section 4.3.1 of this RFP) Business Requirement & analysis Document T1=T0 + 1 month 10% payment of Sr. No 1 of BoQ 2 Functional Requirement (Part 1) (as per Section 4.3.2.1 of this RFP) Performance Report Verified by OIC T2=T1 + 4 month 30% payment of Sr. No 1 of BoQ 3 Functional Requirement (Part 2) (as per Section 4.3.2.2 of this RFP) Non-Functional Requirement (as per Section 4.3.3 of this RFP) Performance Report Verified by OIC T3=T2 + 3 month 20% payment of Sr. No 1 of BoQ 4 Support and Maintenance Performance Report Verified by OIC T4=T3 + 4 month 40% payment of Sr. No 1 of BoQ 4. It is the case of the applicant that all four milestones have been completed by the applicant yet only payment of invoices for milestone No.1 have been cleared and the invoices for milestones No.2, 3 and 4 have not been cleared, hence, such dispute is required to be referred to the arbitrator for resolution in accordance with the Arbitration & Conciliation Act, 1996. 5. 5. In the reply filed by the respondent and arguments made by counsel for the respondent, while disputing the completion of milestones No.2,3 and 4 and denying to clear the pending Bills/ invoices of applicant for such reason, the arbitration application has been resisted fundamentally on the ground of availability of the remedy of filing appeal by the applicant under Section 38 of RTPP Act, 2012 which is also provided in Clause 5(20) of the tender document. The contention of counsel for respondent is that the statutory remedy of appeal is available to the applicant under the special enactment of RTPP Act, 2012 which shall prevail over the arbitration agreement, entered into between the parties, to resolve/ settle the dispute under the Arbitration &Conciliation Act, 1996 which is a General Law. 6. In support of such contentions, reference of two judgments namely, Gujarat Urja Vikash Nigam Ltd. Vs. Essar Power Ltd. [ (2008) 4 SCC 755 ] and Gujarat State Civil Supplies Corporation Ltd. and Ors. Vs. Mahakali Foods Pvt. Ltd. (Unit 2) and Ors. [ (2023) 6 SCC 401 ] have been made by the counsel for respondent. 7. This Court finds that the dispute, in respect of non- clearance of the bills/ invoices of applicant for milestones No.2, 3 and 4, for whatsoever reason may be, has arisen between the parties and undeniably the arbitration agreement, to resolve any dispute/ differences arising between the parties finds place in the tender document. Hence, written arbitration agreement exists between parties. 8. The legal issue raised by the counsel for the respondent in respect of ouster of jurisdiction of Arbitrator on subject matter of dispute, on account of availability of statutory remedy of appeal to petitioner under RTPP Act, 2012, can be considered and gone into by the Arbitrator in exercise of its powers envisaged by virtue of Section 16 of the Arbitration & Conciliation Act, 1996. 9. 9. The High Court, being a referral Court while dealing with the application for appointment of Arbitrator, exercises its jurisdiction within a narrow compass in the light of provision of Section 11(6A) of the A&C Act, 1996, which reads as under:- “(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” 10. The scope of examination under Section 11(6A) of the A&C Act, 1996, is confined to existence of arbitration agreement in terms of Section 7 of the A&C Act, 1996. 11. This Court is aware that in a recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co.Ltd. Vs. Krish Spinning: [Civil Appeal No.7821/2024 arising out of SLP (C) No.3792/2024] delivered on 18th July, 2024, in respect of scope of the High Court while dealing with the arbitration application in context of Section 11(6A) of the A&C Act, 1996, it has been held and observed by Hon'ble Supreme Court in following paras as under:- "110. The scope of examination under Section 11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing. 111. The use of the term 'examination' under Section 11(6-A) as distinguished from the use of the term 'rule' under Section 16 implies that the scope of enquiry under section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the arbitral tribunal to 'rule' under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the arbitral tribunal or the court enforcing the arbitral award. 112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. 112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator shall examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall "examine the existence of a prima facie arbitration agreement and not other issues". These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the "other issues" also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators.[...]" (Emphasis supplied) 114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in Vidya Drolia (supra) and adopted in NTPC v. SPML (supra) that the jurisdiction of the referral court when dealing with the issue of "accord and satisfaction" under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re: Interplay (supra)." (Emphasis supplied) 12. As a final result, the instant arbitration application succeeds and this Court appoints Hon’ble Mr. Justice Pankaj Bhandari (Retired), Former Judge of the Rajasthan High Court, Mob. As a final result, the instant arbitration application succeeds and this Court appoints Hon’ble Mr. Justice Pankaj Bhandari (Retired), Former Judge of the Rajasthan High Court, Mob. No.9460437978; E-mail:pankajbhandari63@yahoo.com; Address:- Bhandari Farm House, Opposite Hingoniya Goushala, Jaipur as a sole Arbitrator to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996. 13. The Arbitrator is requested to submit a declaration under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to his independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 14. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4 th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties. 15. The Registry is directed to intimate Arbitrator Hon’ble Mr. Justice Pankaj Bhandari (Retd.), for his approval and consent to act as Arbitrator. 16. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 17. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 17.03.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information sent by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 18. The Arbitration Application stand disposed of accordingly.