On 06 June 2020, the Government of the National Capital Territory of Delhi (GNCTD) floated a tender for the 'Development of Government Officers Colonies in the NCT of Delhi, and for the Improvement, widening and reconstruction of streets at Block A and Block B of Jaffar Bhai Street (North Delhi)'. Barkat InfraTech along with Dholu Corporation formed a joint consortium Barkat-Dholu which was valid for 2 years. After the bidding process, Barkat-Dholu was declared the successful bidder, and was accordingly awarded the Contract for a Lump-Sum Amount of INR 2,50,00,000 (Indian Rupees Two Crores and Fifty Lacs only). 'In case of any dispute or differences arising out of this Agreement, the matter shall be referred to Dispute Resolution Board ('DRB') which may be constituted by GNCTD within 30 days. Failing which, any aggrieved Party shall refer the matter for arbitration before the Singapore International Arbitration Centre ('SIAC'), the arbitral procedure however, shall be strictly in terms of rules published by the Mumbai Centre for International Arbitration Rules 2016. The arbitration shall be conducted in Hindi with a copy of the English translation. The decision/award of the arbitrator shall be final/conclusive and binding on the Parties. The seat of the arbitration shall be at New Delhi, whilst the venue shall be Singapore. This Agreement and the relationship between the parties hereto shall be governed by and interpreted in accordance with the laws of India. The courts at Delhi alone shall have sole and exclusive jurisdiction.' Pertinently, the Project was to be completed within a period of 09 Months i.e. by 14 April 2021, and it was mentioned in the underlying Contract that time was the essence of the Contract. The commencement date as envisaged under the contract was 14 July 2020. However, there was a delay of 4 months in procuring and obtaining necessary approvals from the Agencies/Central Government, which were solely attributable to GNCTD, owing to which the commencement could not take place before 17 November 2020. During the ongoing Project at the Site and just 01 month prior to the completion of the Project (September 2021), Dholu Corporation went into liquidation, and Barkat InfraTech expressed its intention of exiting the Joint Consortium i.e. Barkat-Dholu since (1) Dholu Corporation was undergoing liquidation and (2) that the Joint Consortium was also valid only for two years. After the completion of the works, certain disputes arose between the Parties i.e. Barkat-Dholu and GNCTD, and with respect to the same, Barkat-Dholu issued a Notice dated 30 August 2021 requesting GNCTD to refer the dispute to Dispute Resolution Board (DRB) for conciliation. GNCTD failed to elicit any response to the Notice dated 05 August 2021. Thereafter Barkat InfraTech (and not as a consortium) issued another notice invoking Arbitration dated 07 September 2022, requesting GNCTD to nominate their arbitrator. On 09 October 2021, Barkat InfraTech filed the Petition seeking the appointment of an arbitrator before the High Court of Delhi, and a notice was issued to GNCTD to appear on 14 October 2021. On 10 October 2021, GNCTD replied to Notice dated 05 August 2021 informing Barkat-Dholu that a DRB has been constituted as per their request and may now be adjudicated for conciliation. 

 

On 14 October 2021, the Hon'ble Court of Delhi referred the matter to SIAC for arbitration and held that the Arbitral Tribunal shall decide the questions on

(1) whether the arbitration clause being pathological was workable or not, 

(2) whether the Petition seeking appointment of an arbitrator was premature since the arbitration procedure was not followed, (3) the powers vested with the Arbitral Tribunal, how will the arbitration procedure be followed by Arbitral Tribunal and the limitations to it (emphasis to be supplied on Kompetenz - Kompetenz), 

(4) whether Barkat InfraTech as a separate Party could invoke the arbitration clause?, 

(5) whether the dispute was arbitrable or not since Dholu Corporation was undergoing Liquidation. Discuss and provide reasoning for the questions raised by the Hon'ble Court of Delhi. 

1. Discuss the inherent powers and Exercise of Discretion Powers of the Arbitral Tribunal. Elaborate to the extent such powers conferred by the Arbitral Tribunal may be exercised.

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This question touches upon critical issues in the domain of contract law arbitration and business associations In order to answer it lets break down each of the Honble Court of Delhis questions and co... View the full answer