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Bombay High Court Considers Section 11 Petition for Appointment of Arbitral Tribunal in Monorail Project Cost Overrun Dispute. Pre-Arbitration Steps Under Clause 20 of General Conditions of Contract Allegedly Not Followed by Contractor.

High Court: Bombay High Court Bench: BOMBAY
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2026-08-24 17:41:41
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Issue of Consideration

Whether the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable given the respondent's objection that the applicants failed to comply with the mandatory pre-arbitration steps prescribed under Clauses 20.1 and 20.2 of the General Conditions of Contract.

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Case Details

2019 LawText (BOM) (07) 95

Commercial Arbitration Application (L.) No.89 of 2019

2019-07-24

G.S. Kulkarni, J.

2019:BHC-OS:12583

Atul Sharma, Ravi Varma, Siddhartha Srivastava, Abhinav Sharma, Ankit Kothari, Sachin Sharma for Applicants; Gautam Ankhad, Pooja Sharma for Respondent

Consortium comprising of Larsen & Toubro Limited and Scomi Engineering Bhd.

Mumbai Metropolitan Regional Development Authority

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Nature of Litigation

Commercial arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitral tribunal to adjudicate disputes arising under a contract for the Monorail system project.

Remedy Sought

The applicants seek the appointment of an arbitral tribunal as per the General Conditions of the Contract, as the respondent failed to nominate a panel of arbitrators upon the applicants' request.

Filing Reason

The respondent rejected the applicants' interim commercial claims for cost overrun due to project delays and refused to refer the disputes to arbitration, contending that the applicants did not comply with the mandatory pre-arbitration procedure under Clauses 20.1 and 20.2 of the General Conditions of Contract.

Previous Decisions

The Supreme Court by its judgment dated 3 October 2018 had earlier dismissed a similar Section 11 petition filed by the applicants on the ground that the arbitration would be domestic and not international commercial arbitration, granting liberty to approach the appropriate court.

Issues

Whether the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 is maintainable given the respondent's objection that the applicants failed to comply with the mandatory pre-arbitration steps prescribed under Clauses 20.1 and 20.2 of the General Conditions of Contract.

Submissions/Arguments

The applicants contended that they had duly notified the delay events and complied with the requirements of Clauses 20.1 and 20.2 of the GCC, which was substantiated by the respondent's determination of delay events under Clause 3.5, and that there was no dispute on the existence of the arbitration agreement. The respondent argued that the applicants had not followed the procedure under Clause 20.1 of the GCC — specifically, they did not issue the required notice within 30 days of becoming aware of the event or circumstance giving rise to the claim and did not provide supporting documents — and thus the pre-condition for invoking arbitration was not satisfied, rendering the petition premature.

Judgment Excerpts

the Supreme Court by its judgment dated 3 October 2018 held that the arbitration petition was not maintainable before the Supreme Court as the arbitration would not fall under category of an international commercial arbitration but it would be a domestic arbitration (Para 11) The Applicant has not complied with clause 20.1 of the GCC. This is a condition precedent for invocation of arbitration. (Para 17, point a)

Procedural History

The consortium bid for and was awarded the Monorail project contract by the respondent in 2008-2009. During execution, delays occurred and multiple extensions were granted. The applicants filed interim commercial claims for cost overrun in February 2015 and November 2015, which were rejected by the respondent. The applicants then invoked the contractual dispute resolution mechanism under Clause 20 by issuing a notice to the respondent's representative, who disputed the claims. After further correspondence and the respondent's refusal to nominate arbitrators, the applicants initially filed a Section 11 petition before the Supreme Court, which dismissed it on 3 October 2018 as not maintainable, directing the applicants to approach the appropriate court. The present petition was then filed before the Bombay High Court.

Acts & Sections

  • Arbitration and Conciliation Act, 1996: Section 11
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Section 11 Arbitration and Conciliation Act, 1996 appointment of arbitrator cost overrun Monorail project pre-arbitration steps Clause 20 General Conditions of Contract notice within 30 days commercial dispute domestic arbitration

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