Comet Power Private Limited v. Global Institute of Technology Society
2025-02-21
SUDESH BANSAL
body2025
DigiLaw.ai
ORDER : 1. Instant arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 has been filed by the applicant seeking appointment of a sole Arbitrator to adjudicate/resolve the dispute between the parties. 2. Respondents has filed reply to the arbitration application. 3. Heard counsel for both parties and perused the documents available on record. 4. Applicant has come up with a case that Power Purchase Agreement dated 03.11.2018 was entered into between one Pink City Energy Private Limited and the respondent, to install and operate a solar photovolatic power plant of 628 KWP capacity at the premise of respondent at Sitapura, Jaipur. Respondent had agreed to purchase the entire solar power project on terms and conditions as agreed under the Power Purchase Agreement dated 03.11.2018. It has been pleaded that later on, under the Novation Agreement dated 15.02.2019, all the rights and liabilities of Pink City Energy Pvt. Ltd. were transferred to the applicant-Company and respondent, being party to the Novation Agreement, agreed for the same and put his signature. The Novation Agreement is part and parcel of the original Power Project Agreement dated 03.11.2018 wherein Clause 17.7(c) is incorporated as an arbitration agreement between parties. Clause 17.7(c) reads as under:- "(c) Arbitration Procedure: (i) In case of any dispute arising out of this Agreement or otherwise, between the parties hereto, Indian Standards and CEA Guidelines will be used for technical issues. A period of not more than 15 days will be allotted at each stage of resolution. Upon failure to resolve the said dispute through conciliation the dispute shall be referred to arbitration. The Director (Pink City Energy Private Limited), may appoint an arbitrator from the panel of arbitrators. The arbitrator(s) shall be appointed within a period of 30 days from the date of receipt of written notice/ demand of appointment of arbitrator from either party. The cost of the arbitration will be shared equally by Power Producer and the Purchaser. (ii) The venue of such arbitration shall be Jaipur. The arbitral award shall be binding on both the Parties." 5. It has been pleaded that dispute between the applicant and respondent has arisen due to not clearing the outstanding dues and invoices of applicant-Company as also hiring another agency by the respondent to dismantle and re-install the solar plates, that too without any written approval of the applicant.
The arbitral award shall be binding on both the Parties." 5. It has been pleaded that dispute between the applicant and respondent has arisen due to not clearing the outstanding dues and invoices of applicant-Company as also hiring another agency by the respondent to dismantle and re-install the solar plates, that too without any written approval of the applicant. As per the applicant, such an action of respondent is in clear breach of terms of agreements and such dispute is required to be resolved through arbitration. 6. Applicant invoked arbitration clause by serving a legal notice dated 04.03.2024 to the respondent under Section 21 of the Arbitration and Conciliation Act and then has filed instant arbitration application on 01.06.2024. 7. Counsel for respondent submits that indeed there are no outstanding dues of the applicant and even the applicant has not quantified his outstanding dues in the arbitration application nor has clarified true nature of dispute sought to be referred to Arbitrator, hence, he submits that the arbitration application deserves to be dismissed. 8. This Court finds that whether the applicant has any outstanding dues against the respondent or the entire dues have been cleared, is a disputed question of fact. Further, there is a dispute between parties in respect of breach of condition No.8.3 of the agreement because it is the applicant's case that without his written authorization, respondent has hired another agency to dismantle and re-install the solar plates of the solar plant. Thus, obviously there is a dispute between parties which needs to be resolved. 9. This Court finds that the execution of Power Purchase Agreement dated 03.11.2018 and Novation Agreement dated 15.02.2019 is not under dispute between parties. The agreement dated 03.11.2018 contains an arbitration agreement incorporated in Clause 17.7(c) referred hereinabove and in that view, the dispute is required to be referred to the arbitration. 10. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to look into the existence of dispute and an arbitration agreement between the parties.
10. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to look into the existence of dispute and an arbitration agreement between the parties. 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.” 11. In the recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning [Civil Appeal No. 7821/2024 and Arising out of SLP (C) No. 3792/2024] delivered on 18 th 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 result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Mr.
As a result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Mr. Ravindra Kumar, District Judge (Retd.), Address:- Villa No.36, Parth City, Kalwar Road, Jaipur; Mobile:- 9414395945; E-mail:- rkarya@gmail.com, as Arbitrator to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996. 13. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to 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 Mr. Ravindra Kumar, District Judge (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 08.03.2025 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 instant arbitration application stands disposed of accordingly.