Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coal Field Limited

At a glance

Parties

M/s. Uttarakhand Purv Sainik Kalyan Nigam Limited (petitioner, contractor) v. Northern Coal Field Limited (respondent)

Case no.

Special Leave Petition (C) No. 11476 of 2018

Court

Supreme Court of India (Civil Appellate Jurisdiction)

Forum and rules

Application under Section 11 of the Arbitration and Conciliation Act, 1996, as amended by the 2015 Amendment Act

Treaty

Arbitration clause (clause 13) of the agreement dated 21.12.2010

Court

Indu Malhotra J. and Ajay Rastogi J.

Sector

Security services

Outcome

The High Court's order of 11.01.2018 was set aside. Limitation is to be decided by the arbitral tribunal, and Mr. Justice (Retd.) A. M. Sapre was appointed sole arbitrator.

Amount

The contractor's legal notice demanded Rs. 1,43,69,309/- plus interest. Arbitration costs are to be shared equally, and the arbitrator's fees follow the Fourth Schedule of the 1996 Act.

The dispute

Under an agreement dated 21.12.2010, Uttarakhand Purv Sainik Kalyan Nigam Limited provided round-the-clock security services to Northern Coal Field Limited (NCL). The clause referred disputes to a sole arbitrator appointed by NCL's Director (Pers.), with the venue at Singrauli. Disputes arose over payments under the contract and over security deductions from the running bills. On 29.05.2013 the contractor demanded Rs. 1,43,69,309/- plus interest. NCL did not answer the notice of arbitration of 09.03.2016 or the later notice proposing a sole arbitrator. The High Court then refused to appoint an arbitrator under Section 11, holding the claims time-barred, and the contractor sought special leave from the Supreme Court.

Key holdings

1. The notice of arbitration was issued on 09.03.2016, after the 2015 Amendment Act came into force on 23.10.2015. Section 11 as amended therefore applies. ¶ 9.2
2. Section 11(6A) contains a non obstante clause. It legislatively overruled SBP & Co. v. Patel Engineering and Boghara Polyfab. At the Section 11 stage the court examines only whether an arbitration agreement exists, and nothing more. ¶¶ 9.6–9.8
3. Under kompetenz-kompetenz, the tribunal rules on its own jurisdiction. The exception is where the arbitration agreement itself is impeached as procured by fraud, or is invalid or non-existent. The Court referred to Article V(1)(a) of the New York Convention on the invalidity of the arbitration agreement. ¶ 9.9
4. Limitation is a mixed question of fact and law and a jurisdictional issue. Under Section 16 the arbitrator must decide it, not the High Court at the pre-reference stage under Section 11. ¶¶ 9.11–9.12
5. The High Court's order was set aside. With the parties' consent, the Court appointed Mr. Justice (Retd.) A. M. Sapre as sole arbitrator, subject to declarations under Section 12. The seat is Singrauli, and the parties share the costs equally. ¶¶ 10–12

Procedural history

1. 21 December 2010The parties concluded the security services agreement, which contained an arbitration clause.
2. 29 May 2013The contractor's legal notice demanded Rs. 1,43,69,309/- plus interest.
3. 9 March 2016The contractor issued a notice of arbitration. NCL did not respond.
4. 30 May 2016The contractor sent a further notice proposing Mr. Jai Singh, a retired Additional District Judge, as sole arbitrator. NCL did not respond.
5. 20 September 2016The contractor applied to the High Court under Section 11.
6. 11 January 2018The High Court rejected the application, holding the claims barred by limitation.
7. 27 November 2019The Supreme Court set aside the High Court's order, referred limitation to the arbitrator and appointed a sole arbitrator.

Tribunal, counsel and experts

Decided by

• Indu Malhotra Judge, Supreme Court of India
• Ajay Rastogi Judge, Supreme Court of India

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Keywords

• Section 11 appointment
• Section 11(6A)
• 2015 Amendment Act
• limitation
• kompetenz-kompetenz
• Section 16
• pre-reference stage
• existence of arbitration agreement
• New York Convention Article V(1)(a)
• Patel Engineering
• Duro Felguera
• Arbitration and Conciliation Act 1996
• India
• security services
• Singrauli
• NCL

Summary generated with AI from the published documents — refer to the award for the authoritative text.