Merely approaching AA before seeking an appointment of Arbitrator is not forum shopping: HC

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Case Details: Brilltech Engineers (P.) Ltd. v. Shapoorji Pallonji and Company (P.) Ltd. – [2023] 148 taxmann.com 58 (HC-Delhi)

Judiciary and Counsel Details

Ms Neena Bansal Krishna, J.
Ankur Singhal, Adv. for the Petitioner.
Manik Dogra, Haiyesh Bakshshi, Ravi Tyagi, Gaurav Mishra, Ms Mayuri Shukla, Daman Popli & Neetu Devrani, Advs. for the Respondent.

Facts of the Case

In the instant case, the petitioner was awarded a work order for electrical works in a residential project by the respondent. However, a dispute arose between the parties regarding the payment. The petitioner filed an application u/s 9 of IBC to initiate the CIRP against the respondent.

The Adjudicating Authority (NCLT) found that claim of the petitioner was valid and genuine and the respondent was asked to settle the matter. However, officials of the respondent were not willing to settle the matter.

As per clause 13 of the work order, disputes were to be resolved through arbitration. Thereafter, the petitioner filed an instant petition u/s 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.

The Respondent raised an objection claiming that the petitioner had been filing petitions before various forums of law submitting claims and, thus, it was a clear indication that petitioner was resorting to forum shopping and its acts were mala fide.

High Court Held

The High Court observed that the scope of enquiry in proceedings before the NCLT and before an arbitrator was absolutely distinct and merely because the petitioner approached the NCLT before seeking the appointment of arbitrator, it couldn’t be said that he was indulged in forum shopping.

The High Court held that it was quite evident that there was consistent stand of the respondent challenging amounts claimed by the petitioner, and, thus, clearly, there were arbitral disputes in regard to the claimed amounts and disputes between the parties were referable to arbitration. Therefore, the instant petition was to be allowed.

List of Cases Reviewed

Nirman Sindia v. Indal Electromelts Ltd. AIR 1999 Ker 440 (para 39) distinguished.

List of Cases Referred to

Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 (SC) (para 27)
A. P. State Financial Corpn. v. Gar Re-Rolling Mills [1994] 2 SCC 647 (para 32)
National Insurance Co. Ltd. v. Mastan [2006] 2 SCC 641 (para 32)
Ireo Grace Realtech (P.) Ltd. v. Abhishek Khanna [2021] 3 SCC 241 (para 32)
Union of India v. Cipla Ltd. [2017] 5 SCC 262 (para 33)
Bharat Sanchar Nigam Ltd. v. Nortel Networks India (P.) Ltd. [2021] 5 SCC 738 (para 35)
Concept Infracon (P.) Ltd. v. Himalaya Press Power Ltd. 2016 SCC OnLine Delhi 518 (para 36)
Municipal Corpn, Jabalpur v. Rajesh Construction 2007 (2) ARB. LR 65 (SC) (para 36)
Nirman Sindia v. Indal Electromelts Ltd. AIR 1999 Ker 440 (para 39)
Alupro Building Systems (P.) Ltd. v. Ozone Overseas (P.) Ltd. 2017 SCC Online Delhi 7228 (para 42)
Badri Singh Vinimay (P.) Ltd. v. MMTC Ltd. 2020 SCC OnLine Delhi 106 (Para 43)
Anacon Process Control (P.) Ltd. v. Gammon India Ltd. 2016 SCC OnLine Bom 10076 (para 44)
State of Goa v. Praveen Enterprises 2011 SCC OnLine SC 860 (para 44)
Universal Consortium of Engineers (P.) Ltd. v. Kanak Mitra AIR 2021 Cal. 127 (para 49)
Bhupender Lal Ghai v. Crown Buildtech (P.) Ltd. [ARB. P. Nos. 470 and 471 of 2009, dated 14-7-2011] (para 50)
Haldiram Manufacturing Co. Ltd. v. SRF International [2007] 139 DLT 142 (para 50)
Civtech Engineers (P.) Ltd. v. M.N. Securities (P.) Ltd. [ARB. P. No. 93 of 2010, dated 1-9-2010] (para 50).

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