While dismissing a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, the Delhi High Court held that the veracity of the allegations of the petitioner qua the settlement agreement cannot be looked into in a petition under Section 11.

The High Court was considering a Petition filed by the Petitioner seeking the appointment of an Arbitral Tribunal to adjudicate the disputes between the parties.

The Single Bench of Justice Manoj Kumar Ohri observed, “The veracity of the allegations of the petitioner qua the settlement agreement cannot be looked into by this Court in a petition under Section 11 of the Act. As per Section 74 of the A&C Act, the settlement agreement entered shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30. If the petitioner wishes to challenge the settlement agreement, they would have to take recourse under Section 34 of the A&C Act, subject to the rules of limitation.”

Senior Advocate Ramesh Singh represented the Petitioner while Advocate Mritunjay Kr. Singh represented the Respondent.

Factual Background

In pursuance of an award of work by the respondent to the petitioner, an EPC Agreement was executed. Later, on disputes having arisen between the parties, the respondent issued a notice to terminate the Agreement. As per the petitioner, Clause 26.3 provided for the resolution of disputes through arbitration. It was also mentioned in the agreement that prior to such reference, the parties would attempt conciliation and would approach the Authority’s Engineer (Conciliator) to mediate and assist the authorities in resolving the dispute. However, despite the petitioner approaching the respondent, the latter failed to appoint any Conciliator, resulting in the petitioner making his request for the resolution of disputes through the Chairman of the authority under the second part of Clause 26.2.

Though it was stated that the authorities reached a settlement, however, the same did not quantify any amount and provided that reconciliation of the payment to the Contractor would be done as per the contract provisions. The contractor thereafter appointed an independent engineer, who assessed and submitted a valuation report. The respondent, however, released a sum of Rs 10,52,71,116 Crores, to which the petitioner protested. The petitioner issued another conciliation notice under Clause 26.2 of the Agreement; however, the same was denied, resulting in the petitioner taking steps for the invocation of arbitration under Clause 26.2.

Reasoning

Referring to the clauses in question, the Bench noted that Clause 26.3 clearly states that only the disputes which could not have been resolved amicably by conciliation as provided in Clause 26.2 would be decided by arbitration. It was also noticed that the petitioner itself, in one of its letters, referred to the meetings between the parties as conciliation meetings.

“Thus, the meetings were, even as per the petitioner’s own understanding, conciliation meetings wherein a settlement had been arrived at. Merely because the person conducting the meeting was not the Authority’s engineer, does not mean that the proceedings lost their character”, the Bench said.

It was further noticed that Clause 26.2 itself allows that the conciliation can be conducted by not just the Authority’s Engineer but also any other such other person as the parties may mutually agree upon. The Bench also rejected the contention that because the Authority’s Engineer was not present, the meetings ceased to be in the nature of a conciliation proceeding.

One of the allegations raised by the Petitioner was that the settlement proceedings were vitiated because, at that time, the petitioner was in financial duress. The Bench was of the view that the veracity of the allegations of the petitioner qua the settlement agreement cannot be looked into by this Court in a petition under Section 11 of the Act.

It was further noticed by the Bench that as per Clause 26.3, only those disputes may be referred to arbitration which could not be resolved by Conciliation under Clause 26.2. “Since a settlement agreement has been entered into under Clause 26.2, the dispute cannot be referred to arbitration leaving it open for the petitioner to challenge the said settlement in the appropriate proceedings, subject to limitation”, the Bench held while dismissing the Petition.

Cause Title: M/s. Arss Infrastructure Projects Ltd. v. National Highway and Infrastructure Development Corporation Ltd (Neutral Citation: 2025:DHC:1570)

Appearance:

Petitioner: Senior Advocate Ramesh Singh, Advocates Monisha Handa, Rajul Shrivastav, Hange Nanya

Respondent: Advocates Mritunjay Kr. Singh, Saikat Khatna, Harsh Garg, Akash Soni, Rajiv Vijay Mishra and Rajeev Kumar Gupta

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Delhi High CourtJustice Manoj Kumar Ohri

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.