It is beyond the scope of Section 11 of the Arbitration and Conciliation Act, 1996 to decide contentious issues regarding the disputes between the parties

In the matter of Jyoti Sarup Mittal. vs. The Executive Engineer -XXIII, South Delhi Municipal Corporation in ARB. P. No. 275/2021 decided on 12.07.2021 by the Delhi High Court.

Facts:

The Petitioner, a government contractor filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. In 2006, the Petitioner was awarded a works contract by the Respondent. Despite numerous hindrances in execution of the contract, the Petitioner completed the work in 2010 and completion certificate was issued in 2012. The final bill was submitted by the Petitioner in 2011 however, was processed and paid only in March, 2017. The Petitioner claimed that the bills as cleared had not taken into account the expenses incurred by the Petitioner due to extension of the works contract on account of various hindrances beyond the control of the Petitioner. Since then, the Petitioner followed up with the Respondent for balance payment with no fruit. The Petitioner was constrained to invoke the dispute resolution clause and followed the pre-arbitration process by writing to the Executive Engineer, Chief Engineer and the Engineer in Chief, SDMC for resolution of his grievances. After all failed attempts, the Petitioner was constrained to file the present petition.

The Respondent objected to the petition stating that the invocation of arbitration was ex facie barred by limitation in the absence of any averment of acknowledgment.

Held:

The Delhi High Court observed that it is not required to examine any other contentious issues regarding the disputes between the parties at the stage of referring the parties to arbitration. Referring to the decision of Vidya Drolia vs. Durga Trading Corporation (2021) 2 SCC 1, the Court stated that if a dispute is ex facie time barred only then an application under Section 11 ought to be rejected. However, if there is contentious issue then the same would fall beyond the realm of Section 11 and the parties must be referred to arbitration.

The petition was accordingly allowed.