Case Title: M/S Tantia Constructions Limited V. Union of India
The Supreme Court stated that when a dispute has already been referred to arbitration and an award has been made on the claims made, it is "rightful" to refuse to refer to arbitration- in the exercise of Section 11(6) of the 1996 Arbitration Act: a new arbitration proceeding sought to be initiated with respect to some further claims. The Supreme Court noted that it is of the "firm opinion that there cannot be two arbitration proceedings with respect to the same contract/transaction."
An SLP against the Calcutta High Court's September 20, 2021 order denying the SLP petitioner's plea under Section 11 of the 1996 Act for the appointment of an arbitrator to resolve the dispute between the parties was being heard by the bench of Justices M. R. Shah and B. V. Nagarathna. The High Court noted that the Supreme Court's ruling in the matter of Bharat Sanchar Nigam Ltd. v. Nortel Networks was cited in the assailed decision (2021) that if it is determined that the claim is time-barred or that there is no ongoing dispute at the referral stage, the court may intervene. According to the Calcutta High Court, the current case comes under the second type; once a disagreement has been decided upon, it cannot be regarded to be an ongoing issue that has to be resolved. In the impugned order, the High Court stated:
"I do not find any case is made out for the appointment of an arbitrator afresh considering the aforesaid enunciation of law and the fact that the appointment of an arbitrator is sought for resolution of the dispute which in fact has already been adjudicated upon in the earlier claim petition filed by the applicant."
"Having heard the learned counsel for the petitioner, we are of the firm conclusion that there cannot be two arbitration processes with regard to the same contract/transaction," the justices Shah and Nagarathna's bench wrote in their ruling. Additionally, the bench noted: "It is undisputed that the arbitrator in the current instance rendered a decision on the claims made after the dispute was already brought to arbitration. After then, it was requested to start a new arbitration process in order to address any further issues, maybe after the final amount was paid."
The bench continued by saying that the High Court has the power to decline to send the matter to arbitration in accordance with Section 11(6) of the Arbitration and Conciliation Act of 1996.
The panel rejected the SLP, saying, "We are in total accord with the position adopted by the High Court."
The High Court noted in the impugned order that the applicant requested the appointment of an arbitrator by filing an arbitration petition before the High Court, which was dismissed on September 16, 2016, directing the appointing authority to ensure the establishment of an arbitral tribunal; that the Tribunal considered the clause in the petition that provided for the appointment of an arbitrator. The contract was signed on March 22, 2016, the final bill was prepared and submitted on December 16, 2016, and after the Tribunal had considered the claim, the applicant filed a new application for the appointment of an arbitrator on August 21, 2017. At this point, the Court is only required to determine whether an arbitration clause is present; the merits of the case cannot be discussed, and all other issues must be resolved.
The High Court further noted in the order being challenged in the current SLP that, on the other hand, the respondent's advocate had argued that the applicant had raised some disputes at an earlier stage and had requested the appointment of an arbitrator in accordance with the High Court's September 16, 2016, issued directive. The Arbitral Tribunal was established; the applicant submitted his claim petition on February 23, 2017, and the Tribunal decided the claim while passing judgement on it on December 11, 2020; the claim for which the applicant is now requesting the appointment of the Arbitral Tribunal was included in the claim petition filed by him and has already been decided by the Arbitral Tribunal; that the applicant intends to raise the same issues that he raised in the earlier arbitration proceedings, which have already been dealt with and partially rejected, by filing a subsequent demand notice on August 21, 2017, and that once the applicant's claims have already been decided upon by the arbitrator, there is no need to appoint a new arbitrator.
"A perusal of the claim petition filed by the applicant with reference to the subject matter of dispute in the present application and the award of the Arbitral Tribunal as has already been passed clearly shows that the issues, which are sought to be raised now for appointment of an Arbitral Tribunal, in fact, have already been adjudicated upon the claim petition filed by the applicant. As to whether under such circumstances, the Court should direct appointment of an arbitrator has been gone into by Hon'ble the Supreme Court in Bharat Sanchar Nigam Ltd. and Anr. v. M/s Nortel Networks India Pvt. Ltd., Civil Appeal Nos. 843-844 of 2021 decided on March 10, 2021, wherein it has been opined that at the referral stage, the Court can interfere when it is found that the claim is time-barred or there is no subsisting dispute. The case in hand falls in the second category. Once a dispute has already been adjudicated upon, it cannot be said to be a subsisting dispute which requires resolution. Considering the aforesaid enunciation of law and the fact that the appointment of an arbitrator is sought for the resolution of the dispute which in fact has already been adjudicated upon in the earlier claim petition filed by the applicant, I do not find any case is made out for the appointment of an arbitrator afresh", held the High Court in the impugned order.