Jagtaji Infrastructure vs. Northern Railway

Facts

The petitioner, Jagtaji Infrastructure, entered into an agreement with Northern Railway for the construction of a Road Under Bridge. The contract value was initially ₹5,03,41,925.48, later enhanced to ₹6,48,95,967.37. After work completion and issuance of a completion certificate on June 8, 2020, disputes arose concerning the final bill processing and release of the security deposit. The petitioner alleges the final bill payment was wrongly withheld, leading them to sign a "second and final Addendum-Corrigendum" and a 'no claim certificate' under duress. This addendum, issued 25 months post-completion, allegedly reduced the contract value unilaterally. Aggrieved by non-payment, the petitioner invoked arbitration on September 1, 2023, raising 24 claims. The respondent, in a letter dated June 19, 2024, requested GST invoices for the final bills to process payment.

Held

The Court held that there is no impediment to constituting an arbitral tribunal to adjudicate the disputes between the parties, citing the Supreme Court's judgments in the matter of the interplay between arbitration agreements and stamp duty, and the appointment of arbitrators. The Court also emphasized its duty to appoint an independent Sole Arbitrator, referencing several Supreme Court judgments concerning the appointment of arbitrators, particularly in cases where the appointing authority might have an interest in the dispute. The respondent acceded to the appointment of an independent Sole Arbitrator. Consequently, Justice (Retd.) Najmi Waziri was appointed as the Sole Arbitrator. The respondent is entitled to raise preliminary objections regarding jurisdiction and arbitrability before the arbitrator. The arbitration proceedings will be conducted under the aegis of the Delhi International Arbitration Centre (DIAC). All claims and contentions of the parties are kept open for the arbitrator to decide on merits.

Key Issues

1. Whether the Court has the power to appoint a Sole Arbitrator in light of the arbitration agreement between the parties, considering the Supreme Court's judgments on the interplay between arbitration agreements and stamp duty, and the appointment of arbitrators in cases involving railway contracts? (Section 11(6) of the Arbitration and Conciliation Act, 1996). Petitioner's arguments: The petitioner sought the appointment of a Sole Arbitrator to adjudicate the disputes arising from the contract. Respondent's arguments: The respondent did not dispute the existence of the arbitration agreement and acceded to the appointment of an independent Sole Arbitrator by the Court.