At Post-Award Stage, Referral Court Has To Protect Parties From Being Forced To Arbitrate When Matter Is Demonstrably Non-Arbitrable: Delhi HC
The Delhi High Court was considering a Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 by the Petitioner seeking recommencement of the arbitral proceedings.

The Delhi High Court dismissed a petition seeking the appointment of an Arbitrator and clarified that it is the duty of the Referral Court at the post-award stage to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable.
The High Court was considering a Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 by the Petitioner seeking recommencement of the arbitration and appointment of a nominee Arbitrator on behalf of the Respondent to adjudicate upon the disputes between the Parties.
The Single-Judge Bench of Justice Subramonium Prasad held, “This Court is of the view that to realise the true and correct meaning to this Court’s role of exercising its supervisory role under the Act of 1996, Referral Courts especially at the post award stage must step in to prevent the arbitration process from being misused to perpetuate injustice. The concept of manifest injustice extends to scenarios where the dispute is so evidently flawed that it is clear that relegating the parties to arbitration would serve no purpose.”
Senior Advocate Lovkesh Sawhney represented the Petitioner while Advocate Gauhar Mirza represented the Respondent.
Factual Background
The Respondent had invited bids with regard to the execution of the Dulhasti Hydro Electric Project. The Petitioner herein submitted its bid and a contract was entered into between the parties. After the time for completion of work was extended, the certificate of completion was issued by the Respondent. The Petitioner raised bills for the two packages stating that certain additional costs which were said to have been incurred by the Petitioner on account of overstaying at the site were included.
It was stated that the total claim amount towards these additional costs was Rs 360.56 crore but the claim was rejected by the Respondent. The Arbitration Clause was invoked and an amount of Rs. 60 crore was awarded by the Arbitral Tribunal.When this award was challenged, the Single-Judge Bench set aside the Majority Award. Aggrieved thereby, the Petitioner approached the High Court for appointment of an Arbitral Tribunal to adjudicate the disputes between the parties.
Reasoning
At the outset, the Bench asserted, “It is well-settled that referral Court under Section 11 of the Act of 1996 does not dwell into detail on the question as to whether there is an arbitral dispute or not. A referral Court primarily looks into the question as to whether there is an arbitration agreement and that the disputes have arisen between the parties and if there is an arbitration agreement and disputes have arisen between the parties then a referral Court, exercising jurisdiction under Section 11 of the Act of 1996, refers the matter to the Arbitration. It is equally well-settled that the principle that is followed by Courts while exercising jurisdiction under Section 11 of the Act of 1996 is, when in doubt, refer.”
It was noticed that the Award which was set aside by the Single Judge under Section 34 of the Act of 1996 was stated on the ground that the basis for granting of the claim was without any reason. “Since the Tribunal has carefully scrutinized the contentions and has come to the conclusion that there is no evidence or material for grant of such claim after having done that exercise once, this Court is of the opinion that referring the same issue back to the same Tribunal or to a new Tribunal would be re-agitating the same issue”, it added.
The Single Judge had held that there were contradictory findings in the award wherein the Tribunal on one hand held that there is no material to award the amount but on the other hand had granted Rs.60 crore. “ There is no quarrel with the legal proposition expounded that there will be no impediment in law for the parties to an arbitration agreement in initiating fresh proceedings in the event of the court setting aside an arbitral award on any issue which has not been concluded, however, in the present case, all issues stand concluded between the Parties”, the Bench said.
The Court also emphasized, “This Court is of the view that it is the duty of the Referral Court especially at the post award stage to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable. This is more so also from the perspective that one of the primary rationale behind the enactment of the Act of 1996 was speedy justice and bringing a finality to an ongoing dispute i.e. there be an end to litigation even though a party may remain dissatisfied with the verdict.”
Noting that the present petition would squarely fall within the definition of a dead wood, the Bench dismissed the Petition and asserted, “The principle that a party cannot be permitted to re-adjudicate the same issue is based on public policy. The Courts of competent jurisdiction have to ensure that no one should be made to face the same kind of litigation twice over as such a process is contrary to fair play and justice.”
Cause Title: M/S Jaiprakash Associates Limited v. M/S NHPC Limited (Neutral Citation: 2025: DHC: 226)
Appearance:
Petitioner: Senior Advocate Lovkesh Sawhney, Advocate Rohit Kumar
Respondent: Advocates Gauhar Mirza, Hiral Gupta, Sukanya Singh, Rohit Rahar, Devarshi Mohan