MEMORIAL for RESPONDENT

TC-26 R

Before

THE HON’BLE
SUPREME COURT OF BHARAT
SPECIAL LEAVE PETITION NO.: ___/2023

UNDER ARTICLE 136 OF THE CONSTITUTION OF BHARAT

IN THE MATTER OF

IGNITED CONSTRUCTION PRIVATE LIMITED…………APPELLANT

v.

VIDYUT SHAKTI CORPORATION OF INDIA

LIMITED………………………………………………………...RESPONDENT

UPON SUBMISSION TO

THE HON’BLE CHIEF JUSTICE AND HIS COMPANION JUSTICES

OF

THE HON’BLE SUPREME COURT OF BHARAT

MEMORIAL ON THE BEHALF OF THE RESPONDENTS

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TABLE OF CONTENTS

INDEX OF AUTHORITIES ...................................................................................................... 4

STATEMENT OF FACTS ......................................................................................................... 7

STATEMENT OF JURISDICTION .......................................................................................... 8

ISSUES FOR CONSIDERATION ............................................................................................ 9

SUMMARY OF ARGUMENTS ............................................................................................. 10

WRITTEN SUBMISSIONS .................................................................................................. 11

I. WHETHER THE SPECIAL LEAVE PETITION FILED BY THE APPELLANT

BEFORE THIS HON’BLE COURT IS MAINTAINABLE? ........................................ 11

A. Irrespective Of The Locus Standi Of The Appellants, The Petition For Special
Leave Is Not Maintainable ............................................................................................... 11

B. Minimizing Judicial Intervention........................................................................... 12

C. Mala Fide Intentions Of Icpl ................................................................................. 13

II. WHETHER THE HON’BLE HIGH COURT HAS JURISDICTION UNDER

SECTION 11(6A) OF THE ARBITRATION AND CONCILIATION ACT, 1996 TO
CONCLUSIVELY DETERMINE THE EXISTENCE AND VALIDITY OF THE
ARBITRATION AGREEMENT? .................................................................................... 14

A. Duty Of The Referral Court ................................................................................... 15

B. Intent Behind Insertion Of Section 11(6A), Arbitration And Conciliation Act, 1996
15

C. The Instant Case Falls Within The Exceptions To The Doctrine Of Kompetenz –
Kompetenz ........................................................................................................................ 16

D. Jurisdiction Of The High Court To Conclusively Determine The Validity Of The

Arbitration Agreement ..................................................................................................... 18

III. THE TERM “NOT THEREAFTER” USED IN THE DISPUTE RESOLUTION

CLAUSE CAN BE INTERPRETED TO RESTRICT THE PETITIONER ICPL
FROM INVOKING SUCCESSIVE ARBITRATION FOR SUBSEQUENT DISPUTE
ARISING BETWEEN THE SAME PARTIES UNDER THE SAME CONTRACT. .. 20

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A. Intention Of The Parties ........................................................................................ 20

B. Successive Claims Not Allowed ............................................................................. 21

C. Res Judicata Will Apply In The Instant Case To Avoid Multiplicity Of Proceedings
22

D. Determination Of Construction Agreement And Pecuniary Motivations Of ICPL23

PRAYER FOR RELIEF ........................................................................................................... 25

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INDEX OF AUTHORITIES

INDIAN CASES

1. Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560............................. 19
2. Babanrao Rajaram Pund v. Samarth Builders & Developers, 2022 SCC OnLine SC 1165.
............................................................................................................................................ 18
3. Dolphin Drilling Ltd. v. ONGC Ltd., (2010) 3 SCC 267. ................................................. 20
4. Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729.................................... 16
5. Enercon (India) Ltd. v. Enercon GMBH, 2014-5 SCC 1. .................................................. 21
6. Gammon India Ltd. v. National Highways Authority of India, 2020 SCC Online Del 659.
............................................................................................................................................ 20
7. Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC
209...................................................................................................................................... 14
8. Hind Construction Contractors v. State of Maharashtra, (1979) 2 SCC 70. ...................... 11
9. Indian Oil Corporation Ltd. v. Industrial Gases Ltd 1975 SCC Online Cal 80. ................ 19
10. K.V. George v. Secy. to Govt., Water and Power Department (1989) 4 SCC 595. ............ 20
11. Magic Eye Developers Pvt. Ltd.v. M/s. Green Edge Infrastructure Pvt. Ltd. & Ors. Etc
SLP (C) Nos. 18339-42/2021............................................................................................. 13
12. Magma Leasing & Finance Ltd. v. Potluri Madhavilata, (2009) 10 SCC 103. ................. 12
13. Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman (2019) 8 SCC 714. .......................... 13
14. N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1. ................ 14
15. Narsi Creation Pvt. Ltd. and Anr. v. State of Uttar Pradesh SLP (C) Nos. 15142-
15143/2012. ......................................................................................................................... 9
16. National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267................... 10
17. ONGC Ltd. v. Streamline Shipping Co. (P) Ltd., 2002 SCC OnLine Bom 303. .............. 21
18. Oriental Insurance Co. Ltd. v. Narbheram Power and Steel (P) Ltd., (2018) 6 SCC 534. 16
19. Pave Infrastructure (P) Ltd. v. WAPCOS Ltd., 2020 SCC OnLine Del 1489.................... 17
20. Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227. ............................... 17
21. Pritam Singh v. The State, 1950 SCC 189. .......................................................................... 9
22. Rajasthani Marbles and Anr. v. Na.K. Kumar Son of N. Kuppurathinam, Arb. O.P. (CD)
No. 73 of 2021. .................................................................................................................. 21
23. SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC ................................................................... 10
24. SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66. .................. 14

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25. State of Gujarat & Ors. v. Devang Vikramray Jaha & Anr. SLP (C) No. 7175/ 2023. ...... 11
26. State of Haryana v M/s Shiv Shankar Construction CA Nos. 73797380/ 2021. ............... 19
27. Unique Reality (P) Ltd. v. R.C. Infra Developers, 2020 SCC OnLine Del 1488. ............. 17
28. United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17
SCC 607. ............................................................................................................................ 16
29. Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., SLP(C) No.
11476/2018......................................................................................................................... 15
30. Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. .................................................. 13
31. Vulcan Insurance Co. Ltd. v. Maharaj Singh, (1976) 1 SCC 943. ..................................... 17

STATUTES

1. THE INDIAN CONTRACT ACT, 1872, NO.9, ACTS OF PARLIAMENT, 1872.

2. THE CODE OF CIVIL PROCEDURE, 1908, NO.5, ACTS OF PARLIAMENT, 1908.
3. THE CONSTITUTION OF INDIA, 1950.
4. THE LIMITATION ACT, 1963, NO.36, ACTS OF PARLIAMENT, 1963.
5. THE SPECIFIC RELIEF ACT, 1963, NO.47, ACTS OF PARLIAMENT, 1963.
6. THE ARBITRATION AND CONCILIATION ACT, 1996, NO.26, ACTS OF
PARLIAMENT, 1996.

GOVERNMENT REPORTS

1. Law commission of India, ‘Report of the High Level Committee to Review the
Institutionalisation of Arbitration Mechanism in India’, March 2017, Report No. 239.

INTERNATIONAL TREATIES AND CONVENTIONS

1. The UNCITRAL Model Law on International Commercial Arbitration adopted by the

United Nations Commission on International Trade Law, 22st June 1985, UN Doc
A/40/17, Annex I.
OTHER GOVERNMENT DOCUMENTS

1. The National Litigation Policy, 2015.

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BOOKS COMMENTARIES AND JOURNALS

1. Anu Shrivastava, Garware Wall Ropes and Indo Unique: The Road Ahead in Treatment of
Arbitration Clauses Contained in Unstamped Instruments, 3 Indian Arbitration Law
Review (2021) 66.
2. Arbitration & Conciliation And Alternative Dispute Resolution Systems by Avatar Singh,
Eastern Book Company, 12th Edition, 2022.
3. Ila Kapoor and Ananya Aggarwal, Gateway to Arbitration : The Role of Courts in India,
(2017) 8 SCC J-5.
4. The Law & Practice of Arbitration and Conciliation by Shri O.P. Malhotra, 1st Edition,
2002.
5. UNCITRAL Model Law, Articles 8 & 16; Gary B. Born, International Commercial
Arbitration, Kluwer Law International (Chap : International Arbitration Agreements and
Competence-Competence, pp. 877-80).

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STATEMENT OF FACTS

BACKGROUND INSIGHTS:

Bharat has positioned itself as an arbitration hub and an attractive destination for global
investments. At COP 26, to address climate concerns, Bharat committed to achieving net zero
emissions by 2070 and generating 500 GW of non-fossil energy capacity by 2030. Numerous
policy measures have been adopted to meet these targets such as the construction of
transmission lines which are crucial for distributing energy generated from renewable sources
to consumers, leading to the invitation of tenders for their construction.

CONTRACTUAL DISPUTE:

Vidyut Shakti Corporation of India Limited (VSCIL) was awarded a contract to construct an
electricity transmission line. To fulfil this contract, VSCIL engaged Ignited Construction
Private Limited (ICPL) as a contractor for tower construction. A dispute arose regarding the
deductions made by VSCIL from ICPL's invoices for unsatisfactory work. The dispute
escalated to arbitration, as per the contract's dispute resolution clause, involving a three-
member Arbitral Tribunal.

ARBITRATION PROCEEDINGS:

The initial arbitration proceedings (1st Arbitration Proceedings) revolved around the
deductions in ICPL's invoices, culminating in a favourable award for ICPL in February 2023.
Subsequently, during the project's second phase, a fresh dispute arose concerning deductions
related to an Independent Engineer's appointment. ICPL, seeking resolution, invoked
arbitration again through a formal notice.

LEGAL CONTEST AND APPEAL IN THE SUPREME COURT:

ICPL rejected the proposal for conciliation and requested VSCIL to nominate its arbitrator as
per the contract. VSCIL initially agreed but later objected, asserting that invoking arbitration
multiple times for the same contract is impermissible. ICPL sought the appointment of an
arbitrator through legal means and approached the High Court of Madras. However, the court
rejected ICPL's application based on the exhaustion of the arbitration clause. Dissatisfied
with the Madras High Court's ruling, ICPL has appealed to the Supreme Court of Bharat. The
case is scheduled for a hearing before a three-judge bench on September 2, 2023.

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STATEMENT OF JURISDICTION

The counsel for the Respondents, hereby humbly submits to this Hon’ble court’s Jurisdiction
under Article 136 of the Constitution of Bharat.

[BARE PROVISION OF ARTICLE 136 REPRODUCED HEREUNDER]

Article 136 of the Constitution of Bharat reads as:

Special leave to appeal by the Supreme Court:

1. Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence, or order in any cause
or matter passed or made by any court or tribunal in the territory of India.

2. Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or
made by any court or tribunal constituted by or under any law relating to the Armed Forces.

THE PRESENT MEMORANDUM SETS FORTH THE FACTS, CONTENTIONS,

AND ARGUMENTS IN THE INSTANT CASE.

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ISSUES FOR CONSIDERATION

-I-

WHETHER THE SPECIAL LEAVE PETITION FILED BY THE APPELLANT BEFORE

THIS HON’BLE COURT IS MAINTAINABLE?

-II-

WHETHER THE HON’BLE HIGH COURT HAS JURISDICTION UNDER SECTION

11(6A) OF THE ARBITRATION AND CONCILIATION ACT, 1996 TO CONCLUSIVELY
DETERMINE THE EXISTENCE AND VALIDITY OF THE ARBITRATION
AGREEMENT?

-III-

WHETHER THE TERM “NOT THEREAFTER” USED IN THE DISPUTE RESOLUTION

CLAUSE CAN BE INTERPRETED TO RESTRICT THE PETITIONER ICPL FROM
INVOKING SUCCESSIVE ARBITRATION FOR SUBSEQUENT DISPUTE ARISING
BETWEEN THE SAME PARTIES UNDER THE SAME CONTRACT?

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SUMMARY OF ARGUMENTS

I. WHETHER THE SPECIAL LEAVE PETITION FILED BY THE APPELLANT BEFORE THIS

HON’BLE COURT IS MAINTAINABLE?

It is humbly submitted before this Hon’ble Court that in the given factual matrix, there is
no necessity or compulsion for the intervention of this Hon’ble Court and invoking its
powers under Article 136. The Special Leave Petition filed against the judgment of the
High Court is not maintainable as this case neither involves a matter of “public
importance” nor of “substantial question of law” and inference is based on a pure
question of fact which is entitled to be dismissed.

II. WHETHER THE HON’BLE HIGH COURT HAS JURISDICTION UNDER SECTION 11(6A) OF THE
ARBITRATION AND CONCILIATION ACT, 1996 TO CONCLUSIVELY DETERMINE THE
EXISTENCE AND VALIDITY OF THE ARBITRATION AGREEMENT?
It is humbly submitted before this Hon’ble Court that the high court has the full
jurisdiction under Section 11(6A) of the Arbitration and Conciliation Act,1996 to
conclusively determine the existence and validity of the arbitration agreement as it is the
duty of the referral court to conclusively decide this matter during the pre-referral
jurisdiction under Section 11(6).

III. WHETHER THE TERM “NOT THEREAFTER” USED IN THE DISPUTE RESOLUTION CLAUSE
CAN BE INTERPRETED TO RESTRICT THE PETITIONER ICPL FROM INVOKING SUCCESSIVE
ARBITRATION FOR SUBSEQUENT DISPUTE ARISING BETWEEN THE SAME PARTIES UNDER
THE SAME CONTRACT?
It is humbly submitted before this Hon’ble Court that the term not thereafter in the
Dispute Resolution Clause can be interpreted as a restriction on the Petitioner’s ability to
invoke successive arbitrations for subsequent disputes arising between the same parties
under the same contract. The arbitration clause suggests that all points of dispute and
claimed amounts were to be referred during the initial arbitration notice, and the clause
became exhausted upon its invocation in order to avoid multiplicity of proceedings.

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WRITTEN SUBMISSIONS

I. WHETHER THE SPECIAL LEAVE PETITION FILED BY THE APPELLANT

BEFORE THIS HON’BLE COURT IS MAINTAINABLE?

1. It is humbly contended before this Hon’ble Supreme Court (hereinafter referred to as

SC) that the Special Leave Petition (hereinafter referred to as SLP) filed by the
appellant is not maintainable as this case neither involves a matter of “public
importance” nor “grave injustice”. The power of the SC under Article 136 is an
exceptional one that needs to be exercised sparingly to remedy exceptional cases
involving a “substantial question of law” and therefore, this SLP is entitled to be
dismissed. The contention shall be proven by examining the following sub-issues:

A. IRRESPECTIVE OF THE LOCUS STANDI OF THE APPELLANTS, THE PETITION FOR

SPECIAL LEAVE IS NOT MAINTAINABLE

2. Article 136 provides for appeal by special leave of the Supreme Court from any
judgment, decree, determination, sentence, or order of any court or tribunal. Although
the power of the Supreme Court to grant leave under this provision is virtually
unlimited, the power has been exercised in extraordinary circumstances and is
discretionary1. In Narsi Creation Pvt. Ltd. and Anr. v. State of Uttar Pradesh2, the
Supreme Court of India has reiterated that the courts ought not to normally interfere
with the arbitral proceedings, especially till the time an arbitral award is not passed.
Further, the Apex court has deprecated the practice of filing applications in disposed
of Special Leave Petitions (SLPs) to side-step the arbitration process.

1
Pritam Singh v. The State, 1950 SCC 189.
2
Narsi Creation Pvt. Ltd. and Anr. v. State of Uttar Pradesh SLP (C) Nos. 15142-15143/2012.

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3. The Madras High Court in the instant case, rejected the application filed under section
11(6) by the Appellant and passed a detailed order dated 8th May, 2023 holding that
once the arbitration clause was invoked, the same was exhausted for subsequent
reference for arbitration as per the language of the agreement. It is clear from the
language of section 11(7) of the Act that a decision on a matter entrusted by sub-
section (4) or sub-section (5) or sub-section (6) to the High Court is final and no
appeal including Letters Patent Appeal shall lie against such decision.
4. Although the Supreme Court in SBP & Co. v. Patel Engg. Ltd.3, held that an appeal
would lie to the Supreme Court from an order of the Chief Justice of the High Court
or his designate passed under section 11 of the Arbitration and Conciliation Act, 1996
(hereinafter Act or 1996 Act). It appears that in Patel Engineering, the court provided
for appeal under Article 136 only in special cases and not as a matter of course.
5. It is submitted to this Hon’ble Court that by the non-obstante clause incorporated in
Section 11(6-A) previous judgments passed by the Supreme Court in SBP & Co. vs.
Patel Engineering Ltd.4 and in National Insurance Co. Ltd. vs. Boghara Polyfab
(P.) Ltd.5 were essentially overruled and/or no longer relevant.
6. It is humbly submitted to this Hon’ble Court that there was no error in the judgment
of the Madras High Court and the court passed a detailed order after extensively going
through the Arbitration agreement and hence, there is no necessity to invoke the
Jurisdiction of this Hon’ble Court under Article 136.

B. MINIMIZING JUDICIAL INTERVENTION

7. The Arbitration and Conciliation Act 1996 was enacted to consolidate and amend the
law relating to domestic arbitration, international commercial arbitration, and
enforcement of foreign arbitral awards. The objective of the Act was to bring the
existing law on arbitration in conformity with UNCITRAL Model Law on
Commercial Arbitration, 1985. Thus, the minimum intervention of courts and
severability of arbitration agreement form the principle of kompetenz – kompetenz.

3
SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618.
4
Ibid.
5
National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267.

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8. Under the Arbitration and Conciliation Act, Section 5 regulates court intervention in
the arbitral process. It provides that notwithstanding anything contained in any other
law for the time being in force in India, in matters governed by Part I of this Act, the
court will not intervene except where so provided in this Part6. With the increasing
scope of judicial intervention, the Law Commission of India in its 246th Report7 has
recommended curtailing the scope of judicial intervention by limiting it to a prima
facie assessment of the existence and validation of an arbitration agreement.
9. The National Litigation Policy and state litigation policies also promote arbitration in
government contracts. Arbitration must be encouraged as a dispute resolution
mechanism in disputes involving government departments or PSUs and private
parties.
10. In the State of Gujarat & Ors. v. Devang Vikramray Jaha & Anr.8, the Supreme
Court expressed its disapproval over the central and the state government’s practice of
filing ‘frivolous’ and ‘unnecessary’ appeals.
11. Hence, it is humbly submitted before this Hon’ble Court to dismiss the Petition for
Special Leave as the same would result in defeating the provisions and objects of the
Arbitration Act.

C. MALA FIDE INTENTIONS OF ICPL

12. In Hind Construction Contractors v. State of Maharashtra9, it was observed by the

Supreme Court that whether time is the essence of a contract is a question of intention
of the parties to be gathered from the terms of the contract. In the instant case, the
time of completion of work in the Construction agreement was seven months from the
date of signing i.e. by 9th August 2022. On the said date, when the work was supposed
to be completed, ICPL addressed VSCIL vide a letter, requesting for amicable

6
The Law & Practice of Arbitration and Conciliation by Shri O.P. Malhotra [1st Edn., p. 768,
Para (I) 34-14].
7
Law commission of India, ‘Report of the High Level Committee to Review the
Institutionalisation of Arbitration Mechanism in India’, March 2017, Report No. 239.
8
State of Gujarat & Ors. v. Devang Vikramray Jaha & Anr. SLP (C) No. 7175/ 2023.
9
Hind Construction Contractors v. State of Maharashtra, (1979) 2 SCC 70.

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resolution of disputes rather than invoking the Arbitration clause. The VSCIL with
bona fide intentions agreed to the said request.
13. This act of the Petitioner company was done intentionally to delay the dispute
resolution process. This also created impediments in the construction work. The
arbitration clause was invoked by ICPL on 20th October, 2022 i.e. two months after
the date of completion of work as per the agreement. Although in Magma Leasing &
Finance Ltd. v. Potluri Madhavilata10, it was held that merely because the contract
has come to an end by its termination due to breach, the arbitration clause does not
perish nor is rendered inoperative: rather it survives for resolution of disputes arising
only to the extent specified in the clause.
14. It is humbly submitted before this Hon’ble Court that the High Court has rightly
interpreted the Arbitration clause vide its order dated 8th May, 2023 holding that once
the arbitration is invoked, the same is exhausted for subsequent claims as per the
language of the Arbitration clause. The intent of the petitioner is to harass VSCIL to
extract money from the government by delaying the process.
15. Thus, in light of the abovementioned arguments, the Counsel for the Respondent
humbly submits that the Hon’ble Court shall dismiss the Special Leave Petition filed
before this court of law.

II. WHETHER THE HON’BLE HIGH COURT HAS JURISDICTION UNDER

SECTION 11(6A) OF THE ARBITRATION AND CONCILIATION ACT, 1996 TO
CONCLUSIVELY DETERMINE THE EXISTENCE AND VALIDITY OF THE
ARBITRATION AGREEMENT?

16. It is humbly submitted before this Hon’ble Court that the high court has the full
jurisdiction under Section 11(6A) of the Arbitration and Conciliation Act,1996 to
conclusively determine the existence and validity of the arbitration agreement to
prevent the parties from forced arbitration when no such arbitration agreement exists
between them.

10
Magma Leasing & Finance Ltd. v. Potluri Madhavilata, (2009) 10 SCC 103.

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A. DUTY OF THE REFERRAL COURT

17. In Magic Eye Developers Pvt. Ltd.v. M/s. Green Edge Infrastructure Pvt. Ltd. &
Ors. Etc11, it was held that if the dispute concerning the existence and validity of an
arbitration agreement is not conclusively and finally decided by the referral court
while exercising the pre-referral jurisdiction under Section 11(6) and it is left to the
arbitral tribunal, it will be contrary to Section 11(6A) of the Arbitration Act. The
referral court must decide the said issue first conclusively to protect the parties from
being forced to arbitrate when there does not exist any arbitration agreement and/or
when there is no valid arbitration agreement at all.
18. The Supreme Court in Vidya Drolia v. Durga Trading Corpn.12, also expressly
13
clarifies that Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman has held that
Section 11(6A) of the Act would continue to apply and guide the Courts on its scope
of jurisdiction at the pre-arbitration stage.
19. In the instant case, the Madras High Court was exercising pre-referral jurisdiction
under Section 11(6). Hence, as per the Judgment laid down by the Supreme Court in
Magic Eye14, it is humbly submitted before the Hon’ble Court that it was the duty of
the Madras High Court to decide the said issue first conclusively.

B. INTENT BEHIND INSERTION OF SECTION 11(6A), ARBITRATION AND CONCILIATION

ACT, 1996

20. The Arbitration and Conciliation (Amendment) Act, 2015 led to the insertion
of Section 11(6A) which provides that the court while appointing an arbitrator has to
confine itself to the examination of the existence of an arbitration agreement. The
rationale for this amendment, as explained in the 246th Law Commission Report, was
to undo the effect of a judgment delivered by the Constitutional Bench of the Supreme

11
Magic Eye Developers Pvt. Ltd.v. M/s. Green Edge Infrastructure Pvt. Ltd. & Ors. Etc SLP
(C) Nos. 18339-42/2021.
12
Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1.
13
Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman (2019) 8 SCC 714.
14
Ibid.

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Court in the SBP15 case16 which declared that the order of the Chief Justice acting
under section 11(6) will be Judicial and susceptible to be challenged by way of writ
jurisdiction.
21. It was observed by the Constitution Bench in the case of N.N. Global Mercantile (P)
Ltd. v. Indo Unique Flame Ltd.17, that without an agreement, there cannot be any
reference to the arbitration. In the said decision this Court has also specifically
observed and held that the intention behind the insertion of Section 11(6A) in the Act
was to confine the Court, acting under Section 11, to examine and ascertain the
existence of an arbitration agreement.
22. The N.N. Global case18 confirmed two earlier decisions of the Supreme Court in SMS
Tea Estates P. Ltd. v. Chandmari Tea Co. (P) Ltd.19 and Garware Wall
Ropes Ltd. v. Coastal Marine Constructions and Engg. Ltd.20. It is humbly
submitted that if the contention of the petitioner that the High Court has no
jurisdiction to conclusively determine the existence and validity of the Arbitration
Agreement is upheld then it would be against the legislative intent and the precedents
set by the Supreme Court.

C. THE INSTANT CASE FALLS WITHIN THE EXCEPTIONS TO THE DOCTRINE OF

KOMPETENZ – KOMPETENZ

23. The doctrine of kompetenz-kompetenz indicates that an arbitral tribunal is empowered

and has the competence to rule on its jurisdiction, including determining all
jurisdictional issues, and the existence or validity of an arbitration agreement. Even
though this doctrine is accepted internationally, there are variations regarding its

15
Supra note 3.
16
Anu Shrivastava, Garware Wall Ropes and Indo Unique: The Road Ahead in Treatment of
Arbitration Clauses Contained in Unstamped Instruments, 3 IALR (2021) 66.
17
N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1.
18
Ibid 19.
19
SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66.
20
Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC
209.

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scope and consequences21. The UNCITRAL Model Law on International Commercial

Arbitration, 1985 (UNCITRAL Model Law), permits the Arbitral Tribunal to consider
and decide jurisdictional issues, subject to judicial review but at the same time also
permits judicial consideration before the arbitral decision22.
24. Although in Uttarakhand Purv Sainik Kalyan Nigam Ltd.23 when the question of
rejecting an application under Section 11 on the ground that the claim is barred by
limitation came up before the Supreme Court, in view of the law set out in Section
11(6A) and Section 16 of the Act, and the legislative policy to restrict judicial
intervention at the pre reference stage, no hesitation was shown in setting the record
straight and it was held that the issue of limitation would have to be left for
determination by the arbitrator. The present position of this judgment has been
reversed by the Supreme Court in Magic Eye24.
25. The Supreme Court further clarified that there are exceptions to the doctrine
of komeptenz-kompetenz and circumstances wherein a court may intervene at the
Section 11 stage itself25. A court may decline to appoint an arbitrator under an
application under Section 11 of the Act if the disputes in question are beyond the
scope of the arbitration agreement. It is humbly submitted before this Court that the
present dispute was raised by the petitioner ICPL on the ground that no invoice for the
payment to the Independent Engineer was supplied by VSCIL. As per the Arbitration
Clause 25 of the Agreement, this dispute does not involve any question in connection
with construction, meaning, operation, effect, interpretation, or breach of the
Agreement and therefore is beyond the scope of the Arbitration Agreement.

21
Ila Kapoor and Ananya Aggarwal, Gateway to Arbitration : The Role of Courts in India,
(2017) 8 SCC J-5.
22
UNCITRAL Model Law, Articles 8 & 16; Gary B. Born, International Commercial
Arbitration, Kluwer Law International (Chap : International Arbitration Agreements and
Competence-Competence, pp. 877-80).

23
Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., SLP(C) No.
11476/2018.
24
Supra note 9.
25
Supra note 22.

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26. Hence, it is humbly submitted before this court that the present issue case falls within
the exceptions of the Doctrine of komeptenz-kompetenz.

D. JURISDICTION OF THE HIGH COURT TO CONCLUSIVELY DETERMINE THE VALIDITY

OF THE ARBITRATION AGREEMENT

27. It is humbly submitted that even if the view taken up by the Mayavati case - that
Section 11(6A) is confined to the examination of the existence of an arbitration
agreement and is to be understood in the narrow sense is considered, then also it does
not affect the order of the Madras High Court as the High Court’s decision in the
instant case was confined to determination of Existence of the Arbitration Agreement.
28. The 246th Law Commission Report, which led to the enactment of Section 11(6A),
stated as follows: -
Section 11(6A) of the amendment envisages that the judicial authority shall not refer
the parties to arbitration only if it finds that there does not exist an arbitration
agreement or that it is null and void.26 This shows that the Law Commission Report
speaks not only of “existence” but also of an arbitration clause being null and void i.e.
validity.
29. Even after The Arbitration and Conciliation (Amendment) Act, 2015, of the Supreme
Court in Oriental Insurance Co. Ltd. v. Narbheram Power and Steel (P) Ltd.27
dismissed an application under Section 11(6A) of the Act after examining the
arbitrability of the dispute.
30. In United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd 28 the
Supreme Court in the exercise of its powers under Section 11(6A) of the Act, once
again examined the arbitrability of the dispute and accepted the appeal. The court
further distinguished holding in Duro Felguera, S.A. v. Gangavaram Port Ltd.29on
the grounds that the same was a mere general observation and the issue under

26
Supra note 7.
27
Oriental Insurance Co. Ltd. v. Narbheram Power and Steel (P) Ltd., (2018) 6 SCC 534.
28
United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC
607.
29
Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729.

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consideration has been directly dealt with by a three-Judge Bench of this Court
in Oriental Insurance Co. Ltd.30 following the exposition in Vulcan Insurance Co.
Ltd.31 which, again, is a three-Judge Bench and thus its decision is binding on 2
judges bench.
31. Further the position as settled by the Supreme Court in Mayavati Trading32 appears to
be applied differently by the Delhi High Court in recent cases:
The court in Unique Reality (P) Ltd. v. R.C. Infra Developers 33, held that This Court
under Section 11(6) of the Act is only required to examine the existence and validity
of an Arbitration Agreement. This is the mandate of Section 11(6A) of the Act.
The court in Pave Infrastructure (P) Ltd. v. WAPCOS Ltd.34, stated that “In so far as
the question of the disputes being Arbitral disputes or not, is concerned, in a recent
judgment in Mayavti Trading Pvt. Ltd. the Supreme Court has held that the mandate
of the High court in examining a petition under Section 11(6) of the Act will be
confined to examination of the existence and validity of the Arbitration Agreement.”
32. It is also submitted that it is a little early to interpret that the court cannot determine
the validity of the Arbitration Agreement since the matter about the dual filter test has
already been referred to the higher bench of the Supreme Court by Justice Nariman in
Vidya Drolia35.
33. Thus, in light of the abovementioned arguments, the Counsel for the Respondent
humbly submits that the Hon’ble Court to recognize the jurisdiction of the High Court
under Section 11(6A) of the Arbitration and Conciliation Act,1996 to conclusively
determine the existence and validity of the arbitration agreement.

30
Supra note 30.
31
Vulcan Insurance Co. Ltd. v. Maharaj Singh, (1976) 1 SCC 943.
32
Supra note 15.
33
Unique Reality (P) Ltd. v. R.C. Infra Developers, 2020 SCC OnLine Del 1488.
34
Pave Infrastructure (P) Ltd. v. WAPCOS Ltd., 2020 SCC OnLine Del 1489.
35
Supra note 11.

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III. THE TERM “NOT THEREAFTER” USED IN THE DISPUTE RESOLUTION

CLAUSE CAN BE INTERPRETED TO RESTRICT THE PETITIONER ICPL
FROM INVOKING SUCCESSIVE ARBITRATION FOR SUBSEQUENT
DISPUTE ARISING BETWEEN THE SAME PARTIES UNDER THE SAME
CONTRACT.

35. It is humbly submitted before this Hon’ble court that the term “not thereafter” used in
the Dispute Resolution Clause can be interpreted to restrict the Petitioner ICPL from
invoking Successive Arbitration for subsequent dispute arising between the same
parties under the same contract as when an arbitration clause is invoked, all disputes
ought to be referred and adjudicated together.

A. INTENTION OF THE PARTIES

36. In a recent case, Babanrao Rajaram Pund v. Samarth Builders & Developers 36 , the
Supreme Court has stressed the fact that UNCITRAL Model Law on International
Commercial Arbitration, 1985 from which the Arbitration and Conciliation Act, 1996
originated, envisages a minimal supervisory role by courts. It was observed that the
courts must give greater emphasis to the substance of the clause, predicated upon the
evident intent and objectives of the parties to choose a specific form of dispute
resolution to manage conflicts between them. The intention of the parties that flows
from the substance of the Agreement to resolve their dispute by arbitration is to be
given due weightage.
37. Indian law largely leans towards an objective stance of interpretation. However, it is
essential to consider subjective evidence to understand the true meaning of a clause in
a contract, the subjective theory of presumed intention of parties is used by the court
as a shield to prevent the contract from being interpreted in a way contrary to such
intention of the parties37.

36
Babanrao Rajaram Pund v. Samarth Builders & Developers, 2022 SCC OnLine SC 1165.
37
Vivek Kathpalia, Dipti Bedi, Pragati Sharma and Abhilasha Malpani Et all Interpretation of
Contracts under Indian Law, Do you know series, Asian Business Law Institute, September,
2022.

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38. In the instant case, the intent of the parties can be inferred from the line – ‘hereof
which parties are unable to settle mutually’ in the Arbitration clause 25. It was
indeed intended by the parties that the parties themselves agreed for speedy resolution
of disputes, without causing any impediments in the construction work. Further, in the
next part of the clause, it is clearly stated that the notice invoking arbitration shall
specify all the points of disputes with details of the amount claimed to be referred to
arbitration at the time of invocation of arbitration and not thereafter."
39. It is humbly submitted before this Hon’ble court that by applying the purposive
interpretation rule, the intention of the parties indicates that all the points of dispute
with details of the amount claimed were to be referred to at the time of invocation of
arbitration. The Arbitration clause stood exhausted on the day the first Arbitration
notice was issued.

B. SUCCESSIVE CLAIMS NOT ALLOWED

40. In the case of Indian Oil Corporation Ltd. v. Industrial Gases Ltd38, it was held that
if disputes arise in terms of the contract that becomes a dispute of continuous nature
limited within the period under the said agreement. There may be successive claims
for successive periods but if all the claims of the same nature are raised within the
period fixed under the said agreement, the claims for the subsequent period may also
be included in one reference otherwise it would be contrary to the general principles
of preventing multiplicity of proceedings, this should also include arbitration
proceeding before an Arbitrator.
41. This view has also been supported by the Supreme Court in the Antrix Corporation
case39, this case was related to Sec. 11 of the Act, where the court showed pro-
enforcement bias, showing a pragmatic approach, the court held that the arbitration
agreement (or clause) can be invoked only once.
42. It is submitted that in the instant case, the subsequent claims ought to have been
included in the 1st Arbitration Notice or even during the pendency of the 1st
Arbitration proceedings as the second cause of action arose on 17th July, when the 1st
Arbitration proceeding was still going on. This view has also been supported by the

38
Indian Oil Corporation Ltd. v. Industrial Gases Ltd 1975 SCC Online Cal 80.
39
Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560.

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Supreme Court in State of Haryana v M/s Shiv Shankar Construction40, where the
Court had the opportunity to answer, inter alia, whether a claim raised after the filing
of a Statement of Claim (‘SOC’) could be awarded or not. The same was answered in
the affirmative.

C. RES JUDICATA WILL APPLY IN THE INSTANT CASE TO AVOID MULTIPLICITY OF

PROCEEDINGS

43. Although in Dolphin Drilling Ltd. v. ONGC Ltd.41, it was observed that multiple
arbitrations for different disputes under one agreement can be possible. The
observations of the Supreme Court in Dolphin show that when an arbitration clause is
invoked, all disputes that exist at the time of invocation ought to be referred to and
adjudicated together. Subsequent disputes may arise which may require a second
reference, however, if a party does not raise claims which exist on the date of
invocation, it ought not to be given another chance to raise it subsequently unless
there are legally sustainable grounds. This is necessary to ensure that the remedy of
arbitration is not misused by the parties.

44. It is the settled position in law that the principles of res judicata apply to arbitral
proceedings. The observations of the Supreme Court in Dolphin case also clearly
show that principles akin to Order II Rule 2 CPC also apply to arbitral proceedings.
Keeping in mind the broad principles that are encapsulated in Order II Rule 2 CPC, as
well as Section 10 and Section 11 of the CPC, which would by itself be inherent to the
public policy of adjudication processes in India, it would be impermissible to allow
claims to be raised at any stage and referred to multiple Arbitral Tribunals, sometimes
resulting in a multiplicity of proceedings as also contradictory awards. This stance has
also been affirmed by the Delhi High Court in Gammon India Ltd. v. National
Highways Authority of India42.

45. Regarding the submission as to the applicability of the principles of res judicata as
provided in Section 11 of the Code of Civil Procedure to the arbitration case, it is to

40
State of Haryana v M/s Shiv Shankar Construction CA Nos. 73797380/ 2021.
41
Dolphin Drilling Ltd. v. ONGC Ltd., (2010) 3 SCC 267.
42
Gammon India Ltd. v. National Highways Authority of India, 2020 SCC Online Del 659.

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be noted that Section 41 of the Arbitration Act provides that the provisions of the
Code of Civil Procedure will apply to the arbitration proceedings43.

46. Further, the Ratio Decidendi in the Dolphin case cannot be applied to that of the
instant case as the facts of the instant case are materially different from that of the
Dolphin:

In Dolphin, the duration of the contract was 4 years and the contention was that
such disputes that might arise in the earlier period of the contract would get barred
by limitation till the time comes to refer to "all disputes" after the contract. In the
instant case, the duration of the contract was for 7 months, the Limitation period
for Arbitration is three years provided under Article 137 of the Limitation Act,
1963.

Hence, there is no question of the dispute being barred by limitation after the contract.

47. Therefore, it is humbly submitted before this court that in the instant case, the
petitioner company with mala fide intentions reserved the right to raise any other
claims in the future in the Notices invoking Arbitration. If the petitioner’s argument
is accepted then it would defeat the settled position of law as set by the Supreme
Court to curb misuse of remedy of Arbitration.

D. DETERMINATION OF CONSTRUCTION AGREEMENT AND PECUNIARY MOTIVATIONS

OF ICPL

48. Although in Enercon (India) Ltd. v. Enercon GMBH44, it was held that even on the
termination of the agreement/contract, the arbitration clause will survive. We may
note the decision of the Madras High Court in Rajasthani Marbles and Anr. v. Na.K.
Kumar Son of N. Kuppurathinam45, in which it was held that a poor drafting of an
arbitration clause shall not deprive a party of its right to refer its disputes to arbitration
as long as the intention of the parties to arbitrate can be gathered from the clause.

43
K.V. George v. Secy. to Govt., Water and Power Department (1989) 4 SCC 595.
44
Enercon (India) Ltd. v. Enercon GMBH, 2014-5 SCC 1.
45
Rajasthani Marbles and Anr. v. Na.K. Kumar Son of N. Kuppurathinam, Arb. O.P. (CD)
No. 73 of 2021.

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49. It is submitted that the intention of the respondent is bona fide as they invited the
petitioners for settlement of disputes via Conciliation. It may also be noted that in
ONGC Ltd. v. Streamline Shipping Co. (P) Ltd.46, ONGC was not restrained from
terminating a contract that provided an arbitration clause. Further, the Supreme Court
observed in a case47 that interim orders should not have been granted in a case
involving personal restraints. Therefore, no remedy even under the Specific Relief
Act, of 1963 was provided.

50. Further the VSCIL was not obliged under the terms of the contract to provide an
invoice for payment of Independent Engineer. The Engineer was neither a
representative nor assignee of the VSCIL in the language of Arbitration Clause 25.
This being the position, it is clear that the said dispute was outside the scope of the
Arbitration Agreement.
51. The counsel for the respondent would also like to submit that the amount involved in
the Second claim (Rs. 2,68,38,450) was three times the amount in the 1st claim (Rs.
87,52,155). It is submitted that the petitioner did not wait to invoke the arbitration
clause in 1st claim where the amount was substantially less. When the second claim
with an exorbitant amount was in dispute, the petitioner vide letter dated 9th August,
2022 sought for an amicable resolution of disputes rather than invoking the arbitration
clause. Also, the arbitration clause was invoked by the petitioners on 20th October,
2022 i.e. 96 days after the cause of action arose. This shows the mala fide intentions
of the petitioner fueled by pecuniary motivations to embezzle more of the Taxpayer’s
money.

52. Hence, in the light of the above-mentioned points it is humbly submitted before this

Hon’ble court to hold that the term “not thereafter” used in the Dispute Resolution

Clause can be interpreted to restrict the Petitioner ICPL from invoking Successive

Arbitration for a subsequent dispute arising between the same parties under the same

contract as the same view upholds Public Interest.

46
ONGC Ltd. v. Streamline Shipping Co. (P) Ltd., 2002 SCC OnLine Bom 303.
47
Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227.

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PRAYER FOR RELIEF

Wherefore in the light of the issues raised, arguments advanced, and authorities cited, it is
humbly prayed that this Hon’ble Court may be pleased to adjudicate by using appropriate
writ, direction, or order to:
1. DECLARE, that the Special Leave Petition filed before this Hon’ble Court is non-
maintainable.
2. DECLARE, that the Hon’ble High Court has the jurisdiction under Section 11(6A) of
the Arbitration and Conciliation Act, 1996 to conclusively determine the existence and
validity of the Arbitration Agreement.
3. DECLARE, that the term “not thereafter” used in the Dispute Resolution Clause can
be interpreted to restrict the Petitioner ICPL from invoking Successive Arbitration for
subsequent dispute arising between the same parties under the same contract.

In the alternative pass any other relief which this Hon’ble Court may deem fit and proper
according to the facts and circumstances of this case; may also kindly be passed in favour of
the Respondents.

FOR WHICH ACT OF KINDNESS, THE RESPONDENTS SHALL AS IN DUTY BOUND,

EVER PRAY.

RESPECTFULLY SUBMITTED
BY THE COUNSELS ON BEHALF OF THE RESPONDENTS

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