Aar Pee Refrigeration And Airconditioning Through Its Proprietor Sh. Anjuman Agnihtri vs. Airports Authority Of INDIA Through The Regional Executive Director

Facts

The petitioner, AAR PEE REFRIGERATION AND AIRCONDITIONING, entered into a contract with the respondent, Airports Authority of India, for AC maintenance services at IGI Airport from 2018-2020. Disputes arose, leading to arbitration. The petitioner claims wrongful deductions, including GST, were made from its final bill after completion, amounting to Rs. 40,59,496/-. The petitioner issued multiple notices seeking arbitration. The respondent opposed the petition, arguing that a prior dispute had been adjudicated by a DRC and a first Arbitral Tribunal, resulting in an award against the petitioner for Rs. 9,38,400/-, which was upheld by a Section 34 application. The respondent also noted that the current dispute arose after contract completion, unlike the prior dispute during its subsistence.

Held

The Court held that at the stage of Section 11 of the Arbitration and Conciliation Act, 1996, the Court's role is limited to determining if a dispute exists arising from an arbitration clause, without delving deeply into the merits of the claim. The Court referred to the Supreme Court's decision in 'Interplay Between Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899', emphasizing the doctrine of competence-competence and the negative aspect of judicial non-interference at the referral stage. The Court found that the existence of an arbitration clause was evident from the agreement. It distinguished the current dispute, which arose after the completion of work, from the earlier dispute that occurred during the subsistence of the contract. Therefore, the Court concluded that any further claims raised by the petitioner after completion could not be rejected at the nascent stage and were subject to arbitration. Consequently, the Court appointed Mr. Akshat Bajpai, Advocate, as the sole Arbitrator to adjudicate the disputes, leaving all rights and contentions of the parties open to be decided on merits. The arbitration would be conducted under the aegis of the Delhi International Arbitration Centre (DIAC).

Key Issues

1. Whether a dispute arising after the completion of a contract, particularly concerning deductions from the final bill including GST, can be referred to arbitration when a prior dispute during the contract's subsistence has already been adjudicated by a Dispute Redressal Committee and an Arbitral Tribunal, with the latter's award upheld by a court under Section 34 of the Arbitration and Conciliation Act, 1996? (Mixed question of law and fact, turning on Section 11 of the Arbitration and Conciliation Act, 1996 and the principle of res judicata/finality of awards). Petitioner's arguments: The petitioner contended that the current dispute arose after the completion of contractual obligations and involved wrongful deductions from the final bill, including GST. They argued that despite the prior arbitration, this new set of claims necessitated a fresh arbitration to adjudicate the post-completion financial disputes. They relied on the principle that courts at the Section 11 stage only need to ascertain the existence of a dispute and an arbitration clause. Respondent's arguments: The respondent argued that the petition under Section 11 was not maintainable as a part of the claim could have been subject to a prior dispute that had already attained finality. They asserted that the prior adjudication by the DRC and the first Arbitral Tribunal, whose award was upheld by the Patiala House Court, covered the disputes between the parties. They also pointed out that the current dispute arose after the contract's completion, distinguishing it from the earlier dispute during its subsistence.