//  1  //
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 341 OF 2022
(@ SLP (C) No.13161/2019)
Indian Oil Corporation Limited …Appellant(s)
Versus
NCC Limited      …Respondent(s)
With 
CIVIL APPEAL NO. 342 OF 2022
(@ SLP (C) No.13408/2019)
CIVIL APPEAL NO. 344 OF 2022
(@ SLP (C) No.13815/2019)
CIVIL APPEAL NO. 343 OF 2022
(@ SLP (C) No.13813/2019)
CIVIL APPEAL NO. 345 OF 2022
(@ SLP (C) No.13816/2019)
J U D G M E N T
M.R. SHAH, J.
1. As   common   questions   of   law   and   facts   arise   in   this
group of appeals and as such between the same parties
and   with   respect   to   similar   contracts   /   agreements,   all
these   appeals   are   decided   and   disposed   of   together   by
this common judgment and order. 

//  2  //
2. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and orders passed by the High Court of Delhi,
New   Delhi   in   respect   to   Arbitration   Petitions   by   which,
in   exercise   of   powers   under   Section   11(6)   of   the
Arbitration   and   Conciliation   Act,   1996   (hereinafter
referred   to   as   “Arbitration   Act”),   the   High   Court   has
allowed the said petitions and has appointed the learned
Arbitrator   by   referring   the   dispute   between   the   parties
for   arbitration,   the   Indian   Oil   Corporation   Limited   has
preferred the present appeals. 
3. For   the  sake   of   convenience,  Civil   Appeal   arising   out   of
Special Leave Petition No.13161/2019 arising out of the
order   passed   by   the   High   Court   in   Arbitration   Petition
No.115/2018 is treated as the lead matter. 
4. The facts leading to the present appeal in a nut­shell are
as under: 
4.1. That, the appellant, Indian Oil Corporation Limited
(hereinafter   referred   to   as   “IOCL”)   floated   a   tender
in   respect   of   the   works   described   as   “Civil,
Structural  &   Associated   UG   piping   works   of  VGO­
HDT,   DHDT   &   HCDS   Units   (EPCM­2)   for   Paradip
Refinery   Project”.   The   respondent   herein   –   NCC
Ltd.   (hereinafter   referred   to   as   “NCCL”)   was
declared   the   successful   bidder.   After   issuance   of
the   Letter   of   Acceptance   dated   17.03.2010,   a

//  3  //
formal   agreement   was   executed   between   the
parties   dated   28.04.2010.   The   relevant   clauses   of
the   Agreement   which   may   have   a   bearing   on   the
issues   involved   in   the   present   appeals   are   as
under: 
“ 1.21.0.0 “ Notified   Claim”   shall   mean   a   claim   of   the
CONTRACTOR notified in accordance with the
provisions of Clause 6.6.1.0 hereof.
xxx      xxx      xxx
CLAIMS BY THE CONTRACTOR
6.6.1.0 Should   the   CONTRACTOR   consider   that   he   is
entitled to any extra payment or compensation
in   respect   of   the   works   over   and   above   the
amounts   due   in   terms   of   the   Contract   as
specified   in   Clause   6.3.1.0   hereof   or   should
the   CONTRACTOR   dispute   the   validity   of   any
deductions made or threatened by the OWNER
from   any   Running   Account   Bills,   the
CONTRACTOR   shall   forthwith   give   notice   in
writing   of   his   claim   in   this   behalf   to   the
Engineer­in­Charge   and   the   Site   Engineer
within 10 (ten) days from the date of the issue
of orders or  instructions relative  to any  works
for   which   the   CONTRACTOR   claims   such
additional   payment   or   compensation   or   of   the
happening   of   other   event   upon   which   the
CONTRACTOR   bases   such   claim,   and   such
notice   shall   give   full   particulars   of   the   nature
of   such   claim,   grounds   on   which   it   is   based,
and   the   amount   claimed.   The   OWNER   shall
not   anywise   be   liable   in   respect   of   any   claim
by   the   CONTRACTOR   unless   notice   of   such
claim   shall   have   been   given   by   the
CONTRACTOR   to   the   Engineer­in­Charge   and
the   Site   Engineer   in   the   manner   and   within
the   time   aforesaid   and   the   CONTRACTOR
SHALL  be   deemed   to   have   waived   any   and   all
claims   and   all   his   rights   in   respect   of   any
claim   not   notified   to   the   Engineer­in­Charge
and the Site Engineer in writing in the manner
and within the time aforesaid. 

//  4  //
6.6.2.0 The   Engineer­in­Charge   and/or   the   Site
Engineer shall be under no obligation to reply
to any   notice   of  claim   given   or   claim   made  by
the   CONTRACTOR   within   the   provisions
aforesaid   or   otherwise   or   to   reject   the   same
and   no   omission   or   failure   on   the   part   of   the
Engineer­in­Charge   or   Site   Engineer   to   reject
any   claim   made   or   notified   by   the
CONTRACTOR   or   delay   in   dealing   therewith
shall   be   deemed   to   be   an   admission   by   the
OWNER of the validity of such claim or waiver
by   the   OWNER   of   any   of   its   rights   in   respect
thereof,   with   the   intent   that   all   such   claims
otherwise valid within the provisions of Clause
6.6.1.0   read   with   Clauses   6.6.3.0   and   6.6.3.1
shall be dealt with/considered by  the OWNER
at the time of submission of the Final Bill. 
6.6.3.0 Any claims of the CONTRACTOR notified in ac ­
cordance   with   the   provision   of   Clause   6.6.1.0
hereof  as shall  remain  at  the  time  of  prepara ­
tion of Final Bill by the CONTRACTOR shall be
separately   included   in   the   Final   Bill   prepared
by   the   CONTRACTOR   in   the   form   of   a   State ­
ment of Claims attached thereto, giving partic ­
ulars   of   the   nature   of   the   claim,   grounds   on
which it is based, and the amount claimed and
shall   be   supported   by   a   copy(ies)   of   the
notice(s)   sent   in   respect   thereof   by   the   CON ­
TRACTOR   to   the   Engineer­in­Charge   and   Site
Engineer   under   Clause   6.6.1.0   hereof.   In   so
far as such claim shall in any manner or par ­
ticular   be   at   variance   with   the   claim   notified
by   the   CONTRACTOR   within   the   provision   of
Clause 6.6.1.0 hereof, it shall be deemed to be
a   claim   different   from   the   notified   claim   with
consequence   in   respect   thereof   indicated   in
Clause   6.6.1.0   hereof,   and   with   consequences
in respect of the notified claim as indicated in
Clause 6.6.3.1 hereof.
6.6.3.1 The  OWNER shall  not  anywise be liable in re ­
spect   of   any   notified   claim   not   specifically   re ­
flected in the Final Bill in accordance with the
provisions   of   Clause   6.6.3.0   hereof   and   any
and all notified claims not specifically reflected
and   included   in   the   Final   Bill   in   accordance

//  5  //
with   the   provisions   of   Clause   6.6.3.0   hereof
shall   be   deemed   to   have   been   waived   by   the
CONTRACTOR. Further the OWNER shall have
no   liability   in   respect   thereof   and   the   CON ­
TRACTOR   shall   not   be   entitled   to   raise   or   in ­
clude  in  the  Final Bill any  claim(s)  other   than
a notified claim conforming in all respects and
in   accordance   with   the   provisions   of   Clause
6.6.3.0 hereof.
6.6.4.0 No   claim(s)   shall   on   any   account   be   made   by
the CONTRACTOR after the Final Bill, with the
intent   the   Final   Bill   prepared   by   the   CON ­
TRACTOR   shall   reflect   any   and   all   notified
claims   whatsoever   of   the   CONTRACTOR
against   the   OWNER   arising   out   of   or   in   con ­
nection   with   the   Contract   or   work   performed
by the CONTRACTOR thereunder or in relation
thereto,   and   the   CONTRACTOR   shall   notwith ­
standing any enabling provision under any law
or   Contract   and   notwithstanding   any   right   of
claim   in   quantum   meruit   that   the   CONTRAC ­
TOR could have in respect thereof, be deemed
to have waived any and all such claims not in ­
cluded   in   the   Final   Bill   and   to   have   absolved
and   discharged   the   OWNER   from   and   against
the same, even if in not including the same as
aforesaid,   the   CONTRACTOR   shall   have   acted
under a mistake of law or fact.
6.6.5.0 Notwithstanding the existence of any claim by
the   CONTRACTOR   in   terms   hereof   or   other ­
wise, the CONTRACTOR shall continue and be
bound   to   continue   and   perform   the   works   to
completion   in   all   respects   according   to   the
Contract (unless the Contract or works be pri ­
orly   determined   by   the   OWNER   in   terms
hereof)   and   shall   remain   liable   and   bound   in
all respects under the Contract.
6.6.6.0 The   payment   of   any   sum   on   account   to   the
CONTRACTOR   during   the   performance   of   any
work   or   item   of   work   in   respect   of   which   a
claim   has   been   notified   by   the   CONTRACTOR
in  terms  of   Clause   6.6.1.0   hereof   or   the   mak ­
ing or negotiation of any interim arrangements
in  respect  of  the  performance of  such work or
item   of   work   by   the   OWNER,   shall   not   be

//  6  //
deemed   to   be   an   acceptance   of   the   related
claim   by   the   OWNER,   or   any   part   or   portion
thereof with the intent that any such payment
shall   constitute   merely   an   interim   facility   or
interim   assistance   to   the   CONTRACTOR,   and
not an obligation upon the OWNER.
6.7.0.0 DISCHARGE OF OWNER’S LIABILITY
6.7.1.0 The   acceptance   by   the   CONTRACTOR   of   any
amount paid by the OWNER to the CONTRAC ­
TOR   in   respect   of   the   final   dues   of   the   CON ­
TRACTOR under the Final Bill upon condition
that   the   said   payment   is   being   made   in   full
and   final   settlement   of   all   said   dues   to   the
CONTRACTOR   shall,   without   prejudice   to   the
notified   claims   of   the   CONTRACTOR   included
in the  Final Bill in  accordance  with the  provi ­
sions under  Clause 6.6.3.0 hereof and associ ­
ated provisions thereunder, be deemed to be in
full   and   final   satisfaction   of   all   such   dues   to
the CONTRACTOR  notwithstanding  any  quali ­
fying remarks, protest or condition imposed or
purported to be imposed by the CONTRACTOR
relative   to   the   acceptance   of   such   payment,
with   the   intent   that   upon   acceptance   by   the
CONTRACTOR of any payment made as afore ­
said,   the   Contract   (including   the   arbitration
clause)   shall,   subject   to   the   provisions   of
Clause   6.8.2.0   hereof,   stand   discharged   and
extinguished   except   in   respect   of   the   notified
claims   of   the   CONTRACTOR   included   in   the
Final   Bill   and   except   in   respect   of   the   CON ­
TRACTOR's   entitlement   to   receive   the   unad ­
justed portion of the Security Deposit in accor ­
dance   with   the   provisions   of   Clause   6.8.3.0
hereof   on   successful   completion   of   the   defect
liability period.
6.7.2.0 The   acceptance   by   the   CONTRACTOR   of   any
amount paid by the OWNER to the CONTRAC ­
TOR   in   respect   of   the   notified   claims   of   the
CONTRACTOR included in the Final Bill in ac ­
cordance with the provisions of Clause 6.6.3.0
hereof   and   associated   provisions   thereunder,
upon the condition that such payment is being
made   in   full   and   final   settlement   of   all   the
claims   of   the   CONTRACTOR   shall,   subject   to
the   provisions   of   Clause   6.7.3.0   hereof,   be
deemed to be in full and final satisfaction of all

//  7  //
claims   of   the   CONTRACTOR   notwithstanding
any   qualifying   remarks,   protest   or   condition
imposed   or   purported   to   be   imposed   by   the
CONTRACTOR   relative   to   the   acceptance   of
such   payment   with   the   intent   that   upon   ac ­
ceptance   by   the   CONTRACTOR   of   any   pay ­
ment made as aforesaid, the Contract (includ ­
ing   the   arbitration   clause)   shall   stand   dis ­
charged and extinguished insofar as relates to
and/or   concerns   the  claims  of   the   CONTRAC ­
TOR.
6.7.3.0 Notwithstanding   anything   provided   in   Clause
6.7.1.0 and/or Clause 6.7.2.0 hereof the CON ­
TRACTOR   shall   be   and   remain   liable   for   de ­
fects in terms of Clause 5.6.0.0 hereof and for
the   indemnity   to   the   OWNER   in   terms   of
Clause   6.8.2.0,   and  shall   be   and   remain   enti ­
tled   to   receive   the   unadjusted   balance   of   the
Security Deposit remaining in the hands of the
OWNER in terms of Clause 6.8.3.0 hereof.
xxx        xxx       xxx
9.0.0.0 ARBITRATION
9.0.1.0 Subject   to   the   provisions   of   Clauses   6.7.1.0,
6.7.2.0 and 9.0.2.0 hereof, any dispute arising
out   of   a   Notified   Claim   of   the   CONTRACTOR
included in the Final Bill of the CONTRACTOR
in   accordance   with   the   provisions   of   Clause
6.6.3.0   hereof,   if   the   CONTRACTOR   has   not
opted   for   the   Alternative   Dispute   Resolution
Machinery referred to in Clause 9.1.1.0 hereof,
and any dispute arising out of any Claim(s) of
the   OWNER   against   the   CONTRACTOR   shall
be referred to the arbitration of a Sole Arbitra ­
tor   selected   in   accordance   with  the   provisions
of   Clause   9.0.1.1   hereof.   It   is   specifically
agreed   that   the   OWNER   may   prefer   its
Claim(s)   against   the   CONTRACTOR   as
counter­claim(s)   if   a   Notified   Claim   of   the
CONTRACTOR   has   been   referred   to   arbitra ­
tion. The CONTRACTOR shall not, however, be
entitled   to   raise   as   a   set­off   defence   or
counter­claim   any   claim   which   is   not   a   Noti ­
fied Claim included in the CONTRACTOR's Fi ­
nal   Bill   in   accordance   with   the   provisions   of
Clause 6.6.3.0 hereof.

//  8  //
9.0.1.1 The   Sole   Arbitrator   referred   to   in   Clause
9.0.1.0   hereof   shall   be   selected   by   the   CON ­
TRACTOR   out   of   a   panel   of   3   (three)   persons
nominated   by   the   OWNER   for   the   purpose   of
such  selection,  and  should  the  CONTRACTOR
fail   to   select   an   arbitrator   within   30   (thirty)
days   of   the   panel   of   names   of   such   nominees
being   furnished   by   the   OWNER   for   the   pur ­
pose,   the   Sole   Arbitrator   shall   be   selected   by
the OWNER out of the said panel.
9.0.2.0 Any   dispute(s)   or   difference(s)   with   respect   to
or   concerning   or   relating   to   any   of   the   follow ­
ing   matters   are   hereby   specifically   excluded
from  the scope, purview  and ambit  of this Ar ­
bitration   Agreement   with   the   intention   that
any dispute or difference with respect to any of
the   said   following   matters   and/or   relating   to
the  Arbitrator's   or  Arbitral   Tribunal's   jurisdic ­
tion with respect thereto shall not and cannot
form   the   subject­   matter   of   any   reference   or
submission   to   arbitration,   and   the   Arbitrator
or the Arbitral Tribunal shall have no jurisdic ­
tion to entertain the same or to render any de ­
cision   with   respect   thereto,   and   such   matter
shall be decided by the General Manager prior
to the Arbitrator proceeding with or proceeding
further   with   the   reference.   The   said   excluded
matters are:
(i)   With   respect   to   or   concerning   the   scope   or
existence or otherwise of the Arbitration Agree ­
ment;
(ii)   Whether   or   not   a   Claim   sought   to   be   re ­
ferred to arbitration by the CONTRACTOR is a
Notified Claim;
(iii) Whether or not a Notified Claim is included
in the CONTRACTOR's Final Bill in accordance
with the provisions of Clause 6.6.3.0 hereof.
(iv)   Whether   or   not   the   CONTRACTOR   has
opted   for   the   Alternative   Dispute   Resolution
Machinery   with   respect   to   any   Notified   Claim
included in the CONTRACTOR's Final Bill.

//  9  //
9.0.3.0 The   provisions   of   the   Indian   Arbitration   &
Conciliation   Act,   1996   and   any   re­
enactment(s)   and/or   modification(s)   thereof
and   of   the   Rules   framed   thereunder   shall   ap ­
ply to arbitration proceedings pursuant hereto
subject to the following conditions:
(a)   The   Arbitrator   shall   give   his   Award   sepa ­
rately   in   respect   of   each   Claim   and   Counter­
Claim; and
(b)   The   Arbitrator   shall   not   be   entitled   to   re ­
view   any   decision,   opinion   or   determination
(howsoever expressed) which is stated to be fi ­
nal   and/or   binding   on   the   CONTRACTOR   in
terms of the Contract Documents.”
4.2. As   per   the   contract   entered   into   between   the
parties,   the   designated   date   for   commencement   of
the   project   was   the   date   of   issuance   of   FOA   i.e.
03.03.2010,   and   that   the   scheduled   date   of
completion   was   02.10.2011.   It   appears   that   the
execution of the project was delayed, as a result of
which   the   project   was   completed   only   on
28.12.2015.   The   NCCL   was   issued   a   completion
certificate   by   the   IOCL   indicating   the   date   of
completion of the project as 28.12.2015. In view of
the   delay   in   completion   of   the   project   beyond   the
scheduled   date,   the   NCCL   made   a   request   for
extension   of   time   vide   the   communication   dated
23.05.2016. While the EOT requests were pending
with   the   IOCL,   the   NCCL   submitted   its   final   bill
dated   05.08.2016   to   the   Engineer­In­Charge
appointed   under   the   contract   between   the   parties.

//  10  //
According   to   the   NCCL,   the   NCCL   in   its   final   bill
dated   05.08.2016   made   a   specific   reference   to   the
Notified   Claims.   There   were   correspondences
between   the   Engineer­In­Charge   and
Thyssenkrupp   Industrial   Solutions   India   (P)   Ltd.
(hereinafter   referred   to   as   “TKIS”)   pending
settlement   of   the   final   bill   and   the   request   for
Extension   of   Time   (EOT).   The   NCCL   responded   to
the communication dated 01.11.2016 by the TKIS,
vide its response dated 02.11.2016. It appears that
the   NCCL   conveyed   to   TKIS   that   if   its   request   for
EOT   were   considered   favorably   and   if   price
adjustment   does   not   exceed   4%,   then,   all   its
extra/additional   claims   including   Notified   Claims
submitted   by   it   through   various   communications
and the final bill should be treated as withdrawn.   
4.3. The   TKIS   having   received   the   aforesaid
communication   from   the   NCCL,   made   its
recommendations   vis­à­vis   the   request   for   EOT
made by the NCCL. It appears that thereafter, TKIS
in   its   communication   dated   13.01.2017,   informed
NCCL   that   it   had   approved   EOT   for   the   period
between   03.10.2011   to   03.11.2015,   however,
without price discount as per Clause 4.4.0.0 of the
General   Conditions   of   Contract   (hereinafter
referred to as “GCC”) and that for the period falling

//  11  //
between   04.11.2015   to   28.12.2015   which   covered
the   period   of   55   days,   it   had   concluded   that   the
delay   was   attributable   to   NCCL.   Accordingly,  TKIS
conveyed  to  NCCL  that  for  the  later  period,  as  per
Clause   4.4.2.0   of   the   GCC,   a   price   adjustment
discount of 4% would be applicable. 
4.4. It   is   the   case   on   behalf   of   NCCL   that   being
aggrieved,   it   wrote   to   the   IOCL   on   23.01.2017   to
reconsider   its   decision   and   accord   EOT   upto   the
date of completion i.e. 28.12.2015 without making
any   adjustment   towards   price   as   indicated   in   the
communication dated 13.01.2017. 
4.5. That,   thereafter,   the   IOCL   released   a   sum   of
Rs.4,53,04,021/­,   the   amount   calculated   as   per
the   communication   dated   13.01.2017,   after
making due adjustments towards taxes etc. 
4.6. It   appears   that   subsequently  and   after   a   period  of
6&1/2   months   (after   the   settlement   of   the   claim)
and   after   receiving   the   final   bill   payment   8   days
earlier,   on   08.05.2017,   vide   communication   dated
16.05.2017,   NCCL   reneged   on   the   letter   of
02.11.2016   and   alleged   that   it   was   made   to
withdraw   its   claim   under   coercion   and   it   had
withdrawn   its   Notified   Claims   as   TKIS   vide   its
communication   dated   01.11.2016,   had   indicated

//  12  //
that the review of the final bill and request for EOT
would be considered only if it gave up its insistence
on its Notified Claims being considered. 
4.7. That   IOCL   sent   its   response   vide   communication
dated   06.06.2017,   wherein   it   stated   that   none   of
the claims mentioned in the final bill were Notified
Claims.  
4.8. In   the   above   backdrop,   NCCL   invoked   the
arbitration   clause   contained   in   the   Agreement   on
01.07.2017.   That,   the   IOCL,   in   accordance   with
Clause   9.0.2.0   referred   the   matter   regarding
arbitrability   of   NCCL’s   claims   to   the   General
Manager on 12.07.2017. 
4.9. Vide the communication / letter dated 10.11.2017,
the   General   Manager   held   that   the   claims   cannot
be   referred   to   arbitration   and   that   the   Arbitration
Agreement   itself   does   not   survive   on   account   of
NCCL withdrawing its Notified Claims. The General
Manager held that therefore there exist no dispute
to be referred to arbitration.
4.10. Thereafter  the  respondent  –  NCCL  approached  the
Delhi   High   Court   by   filing   Arbitration   Petition
No.115/2018   under   Section   11(6)   of   the
Arbitration   Act   for   appointment   of   sole   Arbitrator.
The   said   petition   was   opposed   by   the   IOCL   on   a

//  13  //
number of grounds. However, by overruling all the
objections raised on behalf of the appellant – IOCL,
by   the   impugned   judgment   and   order,   the   High
Court has allowed the said arbitration petition and
appointed the sole Arbitrator. 
4.11. Impugned judgment and order passed by the High
Court   dated   08.02.2019   in   Arbitration   Petition
No.115/2018 is the subject matter of present Civil
Appeal   No.341/2022   (arising   out   of   Special   Leave
Petition No.13161/2019).
5. With   respect   to   other   four   contracts   between   the   same
parties   and   with   same   arbitration   clauses,   the   NCCL’s
claims   were   sent   to   the   General   Manager   under   Clause
9.0.2.0 of the GCC. So far as the Civil Appeal arising out
of   SLP   No.13408/2019   is   concerned,   the   NCCL   did   not
approach   the   General   Manager   but   the   Arbitration
Petition filed before the High Court was forwarded by the
IOCL   to   the   General   Manager   for   its   determination
under   Clause   9.0.2.0   of   the   GCC.   That,   in   all   the
remaining   four   cases   (Civil   Appeal   Nos.342/2022   to
345/2022),   the   General   Manager   declared   that   none   of
the claims were Notified Claims. 
6. Thereafter the NCCL approached the High Court by way
of   Arbitration   Petition   Nos.115/2018,   356/2018,
116/2018,   407/2018   and   406/2018.   By   the   impugned

//  14  //
judgment and orders, the High Court has allowed all the
respective   applications   under   Section   11(6)   of   the
Arbitration Act and by different impugned judgment and
orders,   has   appointed   the   sole   Arbitrator.   Impugned
judgment   and   orders   passed   by   the   High   Court   is   the
subject   matter   of   Civil   Appeal   Nos.341/2022   to
345/2022. 
7. Shri   K.K.   Venugopal,   learned   Attorney   General   has
appeared   on   behalf   of   the   appellant   –   IOCL   and   Shri
Ranjith   Kumar,   learned   Senior   Advocate   has   appeared
on behalf of the respondent – NCCL. 
8. Shri   K.K.   Venugopal,   learned   Attorney   General
appearing   on   behalf   of   the   IOCL   has   vehemently
submitted that  in  the  present  case  both  the  parties are
governed   by   the   terms   of   the   contract   entered   into
between the parties viz. the GCC. That in fact, both the
parties  are  governed   by  the   procedure  to   be  followed  in
case   of   dispute   between   the   parties,   more   particularly
contained in the GCC and the arbitration clause. 
8.1     It   is   further   submitted   by   the   learned   Attorney   General
that party autonomy is the backbone of arbitration and
the   terms   of   the   contract   have   to   be   interpreted   in   the
way the parties wanted and intended them to be. In this
regard reliance is placed upon the decision of this Court
in   the   case   of   Centrotrade   Minerals   &   Metal   Inc.   v.

//  15  //
Hindustan  Copper   Ltd.   reported  in   (2017)  2   SCC   228
(Paras 38­42) .
8.2     It   is   submitted   by   the   learned   Attorney   General   that
there are three categories of contracts which could arise
for consideration, which can be summarized as under: 
(i) Where no arbitration agreement exists at all. As the
arbitration   agreement   itself   is   an   independent   contract
and   is   consensual   in   nature,   it   is   left   to   the   parties   to
include   an   arbitration   agreement   in   the   underlying
contract, or not to include it. If no arbitration agreement
exists   in   a   contract,   the   only   option   if   a   dispute   arises
for either party is to go by way of a suit; 
(ii) An   arbitration   agreement   can   exist   in   the
underlying   contract   or   outside   the   contract,   which   is
absolute   in   terms.   This   is   the   standard   arbitration
clause,   and   would   be   in   the   nature   of   “where   any
dispute   arises   between   the   parties   in   relation   to   the
interpretation or implementation of this contract, it shall
be   referred   to   arbitration   under   the   Arbitration   and
Conciliation   Act,   1996...”   This   would   be   an
UNRESTRICTED or ABSOLUTE arbitration clause. 
In such a case, in the background of Section 11(6­A), no
question   of   the   Court   declining   to   refer   the   matter   to
arbitration   would   arise,   if   it   finds   that   the   arbitration

//  16  //
agreement   exists   and   is   valid.   In   such   a   case,   every
dispute   between   the   parties   has   to   be   referred   to
arbitration because Section 11(6­A) would mandate this;
(iii)  The   third   category   would   be   where   the   parties
agree   to   have   an   arbitration   clause   but   also
consensually agree that certain specified disputes alone
will be the subject of arbitration. This would mean that
no   arbitration   clause   exists   in   regard   to   all   other
disputes,   and   no   arbitration   clause   would   exist   in
regard to the ‘excepted’ or ‘excluded’ disputes. In such a
case,   Section   11(6­A)   itself   cannot   be   invoked   as   no
arbitration   clause   exists   in   regard   to   these   other
disputes.   This   would   be   a   RESTRICTED   arbitration
clause. 
8.3 It   is   further   submitted   by   the   learned   Attorney   General
that  when   all  the  conditions  mentioned  in   the  GCC  are
satisfied   and   the   procedure   is   followed   and   only   with
respect   to   the   restricted   arbitration   clauses   and   with
respect  to the Notified Claims  only  the dispute between
the parties can be referred to the arbitration. 
8.4 It   is   submitted   that   there   are   umpteen   number   of
examples   of   restricted   arbitration   clauses.   Reliance   is
placed   on   the   decision   of   this   Court   in   the   case   of
United   India   Insurance   Co.   Ltd.   v.   Hyundai   Engg.   &
Construction   Co.  Ltd.   reported in   (2018)17  SCC  607,

//  17  //
where the arbitration clause expressly stated that where
a   claim   is   made   against   the   insurer   and   the   insurer
denies   its   liability,   no   reference   to   arbitration   can   take
place.   In   support   of   the   above   submission,   reliance   is
placed on following decisions of this Court:
(1) Vidya Drolia v. Durga Trading Corpn. 
  [(2021)2 SCC 1, Paras 113­116)
(2) Garware   Wall   Ropes   Ltd.   vs.   Coastal   Marine  
Constructions & Engg. 
[(2019) 9 SCC 209, Paras 28­29)
(3) Oriental   Insurance   Co.   Ltd.   v.   Narbheram
Power &  Steel (P) Ltd. 
[(2018) 6 SCC 534, Paras 10, 23]
8.5 It   is   submitted   by   the   learned   Attorney   General   that   in
the   aforesaid   decisions,   this   Court   had   occasion   to
consider   the   applicability   of   Section   11(6­A)   and   its
impact. 
8.6 It is submitted that in the case of Garware (supra), it is
observed   and   held   that   where   the   underlying   contract
including the arbitration clause is not stamped, in such
a   case,   the   arbitration   clause   exists   in   fact   but   DOES
NOT EXIST IN  LAW. That  in other  words, Section  11(6­
A)   will   not   be   a   Bar   for   the   Court   holding   that   as   the
arbitration clause does not cover the particular dispute,
Section  11(6­A)  will not  apply  as  there  is no  arbitration

//  18  //
clause   in   that   regard   and   therefore,   no   reference   to
arbitration can be made. 
8.7 It  is  submitted  that   in  the  case  of  Vidya  Drolia  (supra),
this   Court   had   considered   various   aspects   with   respect
to   the   restricted   arbitration   clause.     But   in   the   case   of
unrestricted clauses, all issues raised by the contracting
parties will have to be referred to arbitration, because of
Section 11(6­A). However, the instant case is a case of a
restricted   arbitration   clause   that   specifically   excludes
certain issues from arbitration, as a result of which, no
arbitration   clause   exists   for   those   ‘other’   or   ‘excepted’
disputes   and   hence,   the   question   of   referring   those
disputes   would   not   arise.   That   in   the   case   of   Vidya
Drolia   (supra),   the   Arbitration   Agreement   itself  sets   out
what is excluded from arbitration. Therefore, it was held
that   Section   11(6­A)   would   not   stand   in   the   way   of
making a reference. 
8.8 It is further submitted by learned Attorney General that
in   the   present   case   the   respondent   NCCL   received   the
amount   of   final   bill   in   full   settlement   of   their   claims.
That   in   the   present   case   the   arbitration   clause   itself
states that where the final bill amount has been received
by   the   party,   or   where   a   sum   has   been   received   on
account   of   Notified   Claims,   the   arbitration   clause   itself
stands  extinguished.  Therefore, the  fact  that  amount of
final   bill   having   been   received   in   full   settlement   cannot

//  19  //
be   the   subject   matter   of   reference   by   any   specific
stipulation in the contract. 
8.9 Learned   Attorney   General   has   taken   us   to   the   relevant
clauses   of   the   GCC   more  particularly   Clauses   1.21.0.0,
6.6.0.0,   6.6.1.0,   6.6.2.0,   6.6.3.0,   6.6.3.1,   6.6.4.0,
6.6.5.0,   6.6.6.0,   6.7.0.0,   6.7.1.0,   6.7.2.0,   6.7.3.0,
9.0.0.0,   9.0.1.0,   9.0.1.1,   9.0.2.0   and   9.0.3.0.   It   is
contended that as per Clause 9.0.1.0, the only matter to
which   a   reference   to   arbitration   can   be   sought   is   a
“Notified Claim” included in the final bill and to no other
dispute.   That   all   disputes   other   than   Notified   Claims
included in the final bill, have to be pursued by way of a
suit.   The   expression,   “Notified   Claim”   is   defined   in
Clause 1.21.0.0 of the GCC. 
8.10 It   is   urged   that   only   those   Notified   Claims   which   are
notified in accordance with provisions of Clause 6.6.1.0,
can be referred to arbitration. 
8.11 It is  submitted that  the parties are at  liberty  to  provide
within   the   contract   a   departmental   machinery   for
resolution of certain matters, the determination of which
will   be   outside   the   scope   of   arbitration.   That   such
departmental machinery, being the will of the parties as
embodied   in   the   contract,   must   be   respected   and   given
effect   to.   In   support   of   the   above   submissions,   reliance
is placed on the following decisions of this Court:

//  20  //
(i) Food Corporation of India v. Sreekanth Transport
(1999)4 SCC 491 (Paras 2, 3)
(ii) Harsha Constructions v. Union of India 
(2014) 9 SCC 246 (Paras 14, 18, 19)
(iii) Mitra   Guha   Builders   (India)   Company   v.   Oil   and
Natural Gas Corporation Ltd.
(2020) 3 SCC 222 (Paras 23, 24, 26, 30)
8.12 The   learned   Attorney   General   has   also   relied   upon   the
following decisions of the Delhi High Court and Gauhati
High Courts dealing with identical clause in cases where
the IOCL was a party and in which the Delhi High Court
and   Gauhati   High   Court   have   expressly   interpreted   the
very Clause 9.0.1.0 and 9.0.2.0.
(i) China   Petroleum   Pipeline   Bureau   v.   Indian   Oil
Corporation   Ltd.   [ARB.A.   (COMM.)   35/2019,
decision dated 10.01.2020]
(ii) Srico   Projects   Pvt.   Ltd.   v.   Indian   Oil   Foundation
[ARB. PET. 276/2016 decided on 09.01.2017 along
with order dated 03.07.2017]
(iii) Institute   of   Geoinformatics   (P)   Ltd.   v.   Indian   Oil
Corporation  Ltd. [ARB. PET.  175/2012 decided on
19.05.2015]
(iv) IOT Infrastructure and Energy Service v. Indian Oil
Corporation  Ltd. [ARB. PET.  334/2014 decided on
12.02.2015]
(v) Bongaigaon   Refinery   v.   M/s.   Buildworth   Pvt.   Ltd.

//  21  //
[Arb.Appeal 10/2006 before Gauhati High Court]
8.13 It   is   submitted   that   the   Special   Leave   Petitions   against
the   decision   in   the   case   of   China   Petroleum   Pipeline
Bureau (supra) and Srico Projects Pvt. Ltd. (supra) have
been dismissed by this Court. 
8.14 It is further submitted by learned Attorney General that
in   the   present   case   the   final   bill   payment   had   been
made to the respondent and accepted by it pursuant to
an   understanding   between   the   parties   by   which   the
respondent   expressly   waived   its   Notified   Claims.   It   is
submitted that the arbitration clause itself is subject to
Clauses 6.7.1.0 and 6.7.2.0. It is submitted that Clause
6.7.2.0 dealing with “Notified Claims” expressly declares
that the acceptance of any amount by the contractor in
respect   of   the   Notified   Claims   shall   result   in   full   and
final   satisfaction   of   the   claims   by   the   contractor   in
respect   of   the   Notified   Claims   and   hence,   the   contract,
including  the  arbitration clause, shall  stand  discharged
and   extinguished.   This   is   as   per   Clause   6.7.2.0   itself,
notwithstanding   any   qualifying   remarks,   protest   or
condition   imposed   or   purported   to   be   imposed   by   the
contractor relative to the acceptance of such payment. 
8.15 It   is   submitted   that   applying   these   principles   to   the
present   case,   NCCL’s   express   statement   dated
02.11.2016   is   required   to   be   appreciated   and/or

//  22  //
considered. That pursuant to the said statement by the
NCCL, the IOCL (petitioner) levied a price adjustment of
only   4%   as   opposed   to   10%;   and   the   respondent
expressly   withdrew   its   Notified   Claims.   It   is   submitted
that   the   IOCL   also   paid   the   dues   as   per   the   final   bill.
The   Notified   Claims,   having   been   withdrawn,   therefore,
could not more be the subject matter of any reference to
arbitration.   It   is   submitted   that   as   a   result   of   the
acceptance by the NCCL of the amount paid pursuant to
its   final   bill,   and   the   Notified   Claims   having   been
withdrawn,   and   the   result   of   Clauses   6.7.1.0   and
6.7.2.0,   the   contract,   including   the   arbitration   clause
stands   discharged   and   extinguished   and   therefore,
subsequently, no reference to arbitration could be made.
8.16 It   is   submitted   that   it   is   only   6½	  months   later,   on
16.05.2017   and   after   receiving   the   final   bill   payment   8
days   earlier   on   08.05.2017,   that   the   NCCL   reneged   on
its   letter   withdrawing   its   demand   in   regard   to   Notified
Claims.   It   is   submitted   that   the   reason   why   the   NCCL
withdrew   their   demand   for   payment   of   the   full   amount
of  final  bill including  Notified Claims is that if 10% has
been   deducted   due   to   the   delay,   an   amount   of   Rs.14.8
Crores   would   have   been   deducted   from   the   payment   of
NCCL.   It   is   submitted   that   having   received   Rs.151
Crores against the contract of Rs.148 Crores, the NCCL
was   well   aware   that   in   such   an   eventuality,   it   would
have   received   no   amount   against   the   final   bill   and   its

//  23  //
bank   guarantee   would   also   have   been   invoked.   That   in
fact   by   withdrawing   the   demand,   the   respondent   was
now   able   to   get   Rs.4.53   Crores   as   well   as  the   return   of
the bank guarantee of Rs.14.8 Crores. 
8.17 It   is   further   submitted   that   Clause   9.0.2.0   of   the   GCC
specifically   excludes   certain   matters,   such   as   disputes
concerning   the   scope   of   the   arbitration   agreement,   viz.,
(i) whether or not a claim is a Notified Claim; (ii) whether
or   not   a   Notified   Claim   is   included   in   the   contractor’s
bill   etc.;   from   the   scope,   purview   and   ambit   of   the
Arbitration   Agreement.   It   is   submitted   that   under   sub­
Clause   (iii)   thereof,   a   Notified   Claim   covered   by   a
decision   of   the   General   Manager   is   specifically   an
excluded matter. It is submitted that in the present case
the   General   Manager   rejected   the   demand   of   the   NCCL
in   regard   to   the   Notified   Claims,   particularly   as   the
demand   in   regard   to   ‘Notified   Claims’   had   been
specifically   withdrawn   by   the   NCCL.   It   is   submitted
therefore   that   viewed   from   any   angle,   as   no   arbitration
clause existed so far as the NCCL is concerned, the High
Court   has   committed   a   serious   error   in   referring   the
dispute between the parties to Arbitrator and appointing
the Arbitrator. 
8.18 Now,   so   far   as   the   other   four   cases   are   concerned,   the
learned   Attorney   General   has   submitted   that   in   those
four cases the claims were referred / sent to the General

//  24  //
Manager   under   Clause   9.0.2.0   of   the   GCC.     That   in   all
the remaining  cases the General Manager declared that
none   of   the   claims   of   the   NCCL   was   a   Notified   Claim.
Therefore,   the   claims   which   are   found   by   the   General
Manager not to be Notified Claims are not arbitrable and
are   outside   the   scope   and   purview   of   the   Arbitration
Agreement.   It   is   submitted   that   in   that   view   of   the
matter,   the   High   Court   ought   to   have   dismissed   the
applications / petitions filed by the NCCL under Section
11 of the Arbitration Act. 
Making   above   submissions   and   relying   upon
decisions,   it  is   prayed   to   allow   the   present  appeals  and
set aside the respective orders passed by the High Court
referring   the   dispute   between   the   parties   to   arbitration
and appointing the sole Arbitrator. 
9. Present appeals are vehemently opposed by Shri Ranjith
Kumar,  learned  Senior  Advocate  appearing   on  behalf  of
the respondent – NCCL. 
9.1 Shri Ranjith Kumar, learned Senior  Advocate appearing
for   the   respondent   –   NCCL   has   made   following
submissions   pointing   out   the   relevant   facts   which,
according   to   him,   are   relevant   for   deciding   the   dispute
in present appeals. 
(1) That,   the   parties   herein   had   entered   into   an
agreement,   whereby   the   respondent   NCCL   was

//  25  //
tasked   with   the   job   of   completing   the   civil,
structural and associated UG Piping works for the
Paradip Refinery;
(2) Due   to   certain  reasons   attributable   to   IOCL,  there
was a delay in completion of the works;
(3) In accordance with the GCC, NCCL on 23.05.2016,
applied   for   extension   of   time   and   submitted   its
final bill on 05.08.2016;
(4) On   29.07.2016,   NCCL   issued   the   No   Due
Certificate,   however,   it   also   made   it   clear   that   the
said Certificate would not include final bill amount,
service   tax   amount   and   the   Notified   Claims   due
from IOCL;
(5) The   Engineer­in­charge   vide   letter   dated
01.01.2016,   expressly   acknowledged   the   presence
of   “Notified   Claims”   in   the   final   bill   and   coerced
NCCL   to   take   back   its   Notified   Claims   in   order   to
process its application for EOT;
(6) Under   duress,   NCCL   was   constrained   to   issue   a
letter   on   02.11.2016   withdrawing   its   Notified
Claims   on   the   twin   condition   that   the   application
for   EOT   is   considered   favorably   and   the   price
discount does not exceed 4% of the contract value;
(7) That,   the   letter   dated   02.11.2016   was   clearly
conditional   and   was   in   the   nature   of   an   offer   and
not an acceptance;
(8) Vide letter dated 13.01.2017, IOCL informed NCCL

//  26  //
that they had only partially allowed the application
for EOT and a price discount of 4% was applied to
the   period   for   which   the   application   for   EOT   was
not allowed. Therefore, it is clear that IOCL did not
positively respond to both the conditions stated by
NCCL in its letter dated 02.11.2016; 
(9) That,   aggrieved   by   the   aforesaid   decision,   NCCL
without   any   delay,   on   23.01.2017,   communicated
that   the   decision   to   partially   allow   its   application
for   EOT   is   unacceptable   as   the   same   is   not   in
accordance   with   the   conditional   offer   given   by
NCCL  and  also  since  the  delay   was  caused  due  to
reasons attributable to the IOCL;
(10) Disregarding   the   aforesaid   letter,   IOCL   on
08.05.2017,   unilaterally   released   the   payment
against   the   final   bill,   after   adjusting   the   price
discount;
(11) That, NCCL on 16.05.2017 i.e. within 10 days from
the release of the amount, informed IOCL that the
application   for   price   discount   is   misplaced  and   its
‘Notified   Claims’   still   hold   good   as   the   conditional
offer of NCCL was not accepted;
(12) Since   IOCL   miserably   failed   to   provide   an
appropriate response within a reasonable period of
time,   NCCL   invoked   the   arbitration   clause   i.e.
Clause   9.0.1.0   of   the   GCC   and   submitted   its
claims to IOCL;

//  27  //
(13) It is submitted that as per Clause 9.0.1.0 read with
Clause   9.0.2.0   of   the   GCC,   IOCL   had   to   refer   the
claims   of   NCCL   to   its   General   Manager   and   then
the   General   Manager   was   to   issue   a   declaration
pursuant   to   which   the   arbitration   could
commence;
(14) It is submitted that in the claims concerned in four
of   the   petitions,   the   determination   was   made   by
the   General   Manager   in   an   inordinately   belated
manner. It is submitted that in 3 out of 5 petitions,
the   determination   by   the   General   Manager   was
made   after   NCCL   filed   the   arbitration   petitions
before   the   High   Court.   It   is   submitted   that   in   a
completely   malafide   and   deceptive   manner,   IOCL
claims   to   have   made   a   reference   to   the   General
Manager who determined the nature of claims after
filing   of   the   counter   affidavit   by   NCCL   before   this
Court. 
(15) It   is   submitted   that   therefore,   as   such,   IOCL   is
attempting   to   scuttle   respondent’s   contractual
right to pursue arbitration by bringing on record a
document   nearly   two   years   after   the   respondent
invoked the arbitration clause. 
(16) It is submitted that the General Manager’s decision
which   is   relevant   in   SLP   Nos.13161   and   13183   of
2019 was based on the ground that there was full
and   final   settlement   between   the   parties.   It   is

//  28  //
submitted   that   as   the   decision   of   the   General
Manager   on   “Notified   Claims”   was   erroneous,
malafide   and   on   technical   grounds,   NCCL   rightly
approached the High Court of Delhi under Section
11(6)   of   the   Arbitration   Act   seeking   the   relief   of
appointment   of   Arbitrator.   It   is   submitted   that
therefore   the   High   Court   is   absolutely   justified   in
appointing the Arbitrator. 
9.2 Shri Ranjith Kumar, learned Senior  Advocate appearing
for NCCL has supported the impugned orders passed by
the   High   Court   by   making   the   following   broad
submissions:
(1) As   per   the   agreement   entered   into   between   the
parties,   the   General   Manager   is   not   permitted   to
decide if a claim  is barred by  virtue  of  there being
accord   and   satisfaction   or   a   claim   being   an
excepted claim. 
(2) Under Section 11(6­A) of the Arbitration Act, at the
stage of appointment of an arbitrator, the scope of
intervention   by   the   Courts   is   confined   to   the
examination   of   the   existence   of   an   arbitration
agreement. 
(3) At   the   stage   of   appointment   of   the   arbitrator,   the
Court   cannot   look   into   whether   there   has   been
accord and satisfaction between the parties
(4) At the stage of appointment of arbitrator, the Court
cannot   look   into   whether   a   claim   is   an   excepted

//  29  //
claim or not.
(5) Contractual   clauses   cannot   be   read   in   a   manner
that   abridges   statutory   rights   and   the   doctrine   of
mutuality,   to   confer   the   power   to   unilaterally
determine arbitrability of a dispute upon one of the
parties.
(6) As   per   the   doctrine   of   election,   the   present
proceedings ought to be dismissed since IOCL has
preferred   an   application   under   Section   16(2)   and
16(5)   challenging   the   jurisdiction   of   the   Arbitral
Tribunal.
9.3 On   an   interpretation   of   the   Clauses   of   the   GCC,   Shri
Ranjith   Kumar,   learned   Senior   Advocate   appearing   for
the respondent NCCL has submitted that a bare perusal
of   the   relevant   clauses   of   the   GCC   would   indicate   that
the   General   Manager   of   IOCL   is   neither   entitled   to
examine   whether   a   “Notified   Claim”   is   an   ‘excepted
claim’   nor   can   he   look   into   the   issue   whether   there   is
accord and satisfaction between the parties. 
9.4 It is submitted that Clause 9.0.1.0 is subject to Clauses
6.7.1.0,   6.7.2.0   and   9.0.2.0.   Further,   Clause   9.0.2.0
creates a machinery whereby IOCL has unbridled power
conferred upon its General Manager to certify if a claim
is   capable   of   being   referred   to   arbitration.   The   said
clause,   according   to   IOCL   vests   the   sole   discretion   of
deciding   the   arbitrability   of   claims   on   the   General
Manager.   It   is   submitted   that,   as   such,   the

//  30  //
interpretation of the Clause as suggested by IOCL, is in
derogation   of   not   only   the   arbitrator’s   power   to   decide
arbitrability,   but   also   the   Court’s   power   under   Section
11 of the Arbitration Act. 
9.5 It is submitted that the said Clause would indicate that
the General Manager is only supposed to see if the claim
raised   by   the   respondent   is   (i)   a   Notified   Claim   as
defined under Clause 1.21.0.0 r/W. Clause 6.6.1.0; and
(ii) whether the Notified Claim is included in the final bill
in   accordance   with   Clause   6.6.3.0.   That   the   General
Manager   is   not   empowered   under   the   said   Clause   to
state that a claim  is not arbitrable due to full and final
settlement   between   the   parties   or   due   to   a   claim   being
an excepted claim.
9.6 It   is   submitted   that   in   the   present   case,   the   IOCL   has
admitted   that   the   claims   raised   by   the   respondent   are
‘Notified   Claims’   and   this   fact   has   never   been   disputed
by the IOCL or its General Manager. It is submitted that
even   the   second   condition   is   also   fulfilled   as   the
respondent’s   final   bill   includes   its   Notified   Claims.   It   is
submitted   that   thus   the   only   logical   conclusion   which
follows   is   that   the   Notified   Claims   raised   by   the
respondent   should   have   been   referred   to   arbitration.
However,   the   General   Manager   of   the   IOCL,   in   two
cases, denied referring the Notified Claims to arbitration
on   the   ground   that   there   was   full   and   final   settlement

//  31  //
between   the   parties,   and   in   other   three   cases   the
General   Manager   has   denied   referring   the   Notified
Claims   to   arbitration   on   the   ground   that   they   are
‘excepted claims’.
9.7 It   is   submitted   that   as   per   the   GCC,   the   General
Manager   is   not   entitled   to   resist   the   reference   of   a
Notified   Claim   to   arbitration   on   the   ground   of   accord
and   satisfaction.   That   the   aspect   pertaining   to   full   and
final   settlement   between   the   parties,   forms   part   of
Clauses   6.7.1.0   and   6.7.2.0   and   not   of   Clause   9.0.2.0.
That,   in   fact,   Clause   6.7.1.0   expressly   provides   that
upon   payment   of   sums   under   the   final   bill,   there   shall
be   full   and   final   settlement,   without   prejudice   to   the
Notified   Claims   of   the   contractor   included   in   the   final
bill.   It   is   submitted   that   therefore,   even   after   the
payment   of   money   on   08.05.2017,   Notified   Claims   are
neither   settled   nor   is   there   full   and   final   settlement   in
respect of Notified Claims. It is submitted that insofar as
‘excepted   claims’   are   concerned,   as   per   Clause   9.0.2.0,
once   the   General   Manager   comes   to   a   decision   that   a
claim is a Notified Claim and the same is included in the
final   bill,   he   is   duty   bound   to   refer   the   claim   to
arbitration.  It   is   submitted   that   therefore   the   reasoning
behind   the   decision   rendered   by   the   General   Manager
that   the   claims   are   not   Notified   Claims   is   not   only
unsustainable,   but   is   also   ex   facie   contrary   to   Clause
9.0.2.0.   It   is   submitted   that   Clause   9.0.2.0   does   not

//  32  //
render the decision of the General Manager final. 
9.8 It   is   further   submitted   that   vide   the   Amendment   Act,
2015,   section   11(6­A)   has   been   inserted   by   virtue   of
which,   the   scope   of   intervention   at   Section   11   stage   is
very narrow. Reliance is placed upon the decision of this
Court in the case of  Duro Felguera S.A. v. Gangavaram
Port   Limited   [(2017)   9   SCC   729] .   It   is   submitted   that
after   insertion   of   Section   11(6­A),   the   scope   of
intervention by the Court at the stage of appointment of
Arbitrator is narrowed down and the Courts may have to
now   only   examine   the   existence   of   a   valid   arbitration
agreement. That in the aforesaid decision it is held that
the   legislative   purpose   is   essentially   to   minimize   the
Court’s   intervention   at   the   stage   of   appointment   of
Arbitrator   and   that   the   intention   as   incorporated   in
Section 11(6­A) ought to be respected is the submission.
9.9 It  is  submitted  that   despite  the  above  binding   decision,
in   the   subsequent   decision   in   the  case   of   United   India
Insurance   Co.   Ltd.   v.   Antique   Art   Exports   (P)   Ltd.
[(2019)   5   SCC   362] ,   a   coordinate   Bench   of   this   Court
took   the   view   that   once   a   claim   is   settled,   it   leaves   no
arbitral   dispute   subsisting   under   the   agreement   to   be
referred to the Arbitrator. 
9.10 It   is   submitted   that   the   conflicting   decisions   were
considered   and   the   issue   has   now   been   settled   by   a

//  33  //
Three   Judges   Bench   of   this   Court   in   a   subsequent
decision   rendered   in   the   case   of   Mayavati   Trading
Private   Limited   v.   Pradyuat   Deb   Burman   [(2019)   8
SCC 714] .  That after considering in detail the 246 th
 Law
Commission   Report;   the   report   of   the   High­Level
Committee   regarding   institutionalization   of   arbitration
in   India   and   the   Statement   of   Objects   and   Reasons   of
the 2015 Amendment Bill, it is held that post­2015, the
scope of the Courts’ powers at the stage of appointment
of   Arbitrator   is   confined   to   the   examination   of   the
existence   of   the   arbitration   agreement.   It   is   submitted
that   the   decision   of   this   Court   in   the   case   of   Mayavati
Trading   Private   Limited   (supra)   has   been   subsequently
followed by this Court in a recent decision in the case of
Vidya Drolia (supra).
9.11 Shri Ranjith Kumar, learned Senior  Advocate appearing
on   behalf   of   the   respondent   has   also   relied   upon   the
following   decisions   of   this   Court   in   support   of   his
submissions   of   applicability   of   Section   11(6­A)   and   a
very limited jurisdiction of the Courts while considering
an   application   of   Section   11(6­A)   of   the   Arbitration   Act
post­2015. 
(1) Uttarakhand   Purv   Sainik   Kalyan   Nigam   Ltd.   v.
Northern Coal Field Ltd.
(2020)2 SCC 455
(2) BSNL & Anr. v. Nortel Networks India Pvt. Ltd. 
(2021)5 SCC 738 

//  34  //
(3) Pravin   Electricals   (P)   Ltd.   v.   Galaxy   Infra   &   Engg.
(P) Ltd. 
(2021)5 SCC 671
(4) Sanjiv Prakash v. Seema Kukreja
(2021)9 SCC 732
9.12 It   is   further   submitted   that   although   2019   Amendment
to   the   Arbitration   Act   has   deleted   Section   11(6­A),   this
Court   in   the   case   of   Vidya   Drolia   (supra)   has   clarified
that the rationale behind the insertion of Section 11(6­A)
of the Arbitration Act would continue to apply and guide
the Courts on its scope of jurisdiction at stage one, that
is, the pre­arbitration stage. 
9.13 It   is   further   submitted   by   learned   Senior   Advocate
appearing for the respondent NCCL that as held by this
Court   in   the   case   of   Vidya   Drolia   (supra)   as   well   as   in
the   case   of   Swiss   Timing   Limited   v.   Commonwealth
Games   2010   Organizing   Committee   [(2014)   6   SCC
677] ,   the   role   of   a   Court   is   to   assist   and   support
arbitration   and   leave   a   substantive   part   of   the
adjudication   to   the   arbitral   Tribunal.   It   is   submitted
therefore  that  at   the  stage  of  an   application  filed  under
Section   11,   the   Court   is   only   supposed   to   look   as   to,
whether,   a   valid   arbitration   agreement   exists.   It   is
submitted that therefore the scope of intervention by the
Court   is   restricted   at   the   stage   of   appointment   of

//  35  //
Arbitrator   and   it   can   neither   examine   whether   certain
claims   are   ‘excepted’   nor   can   it   look   into   the   issue   of
whether there is “accord and satisfaction”. 
9.14 It   is   further   submitted   by   learned   Senior   Advocate
appearing for the respondent NCCL that in cases where
the   claims   are   rejected   by   the   General   Manager   on   the
ground that there was “accord and satisfaction” between
the parties and hence, not referable to arbitration, in the
instant   case   the   respondent   has   disputed   petitioner’s
contention   on   “accord   and   satisfaction”   even   before   the
payment   of   final   bill.   It   is   submitted   that   therefore   the
issue whether “accord and satisfaction” existed between
the   parties   is   virtual   in   nature   and   examination   of   the
same   would   require   detailed   perusal   of   the   evidence   by
the Arbitral Tribunal. That in any event, pursuant to the
introduction of Section 11(6­A), the Court has to restrict
itself   to   the   issue   of   existence   of   the   Arbitration
Agreement at Section 11 stage and cannot delve into the
issue of “accord and satisfaction” is the submission. 
9.15 Relying   upon   the   decisions   of   this   Court   in   the   case   of
Ambica   Construction   v.   Union   of   India   reported   in
(2006)   13   SCC   475   and   R.L.   Kalathia   &   Co.   v.   State
of   Gujarat   reported   in   (2011)   2   SCC   400 ,   it   is
submitted   that   as   observed   by   this   Court   in   the
aforesaid  two  decisions,  in  many  instances,  contractors
are coerced to issue a no­dues certificate, without which

//  36  //
no amount would be released. It is submitted that in the
aforesaid decision it is observed that merely because the
contractor   has   issued   “No   Dues   Certificate”,   if   there   is
an   acceptable   claim,   the   Court   cannot   reject   the   same
on the ground of issuance of “No Dues Certificate”. 
9.16 It   is   further   submitted   that   the   question   whether   a
Notified   Claim   is   an   ‘excepted   claim’,   is   within   the
exclusive   domain   of   the   Arbitrator   to   be   answered.
Reliance   is   placed   on   the   decision   of   this   Court   in   the
case   of   BSNL   v.   Motorola   India   (P)   Ltd.   reported   in
(2009) 2 SCC 337   and   National Insurance Co. Ltd. v.
Boghara   Polyfab   Pvt.   Ltd.   reported   in   (2009)   1   SCC
267   (even   prior   to   2015   Amendment   to   the   Arbitration
Act) as well as in the case of  Zostel Hospitality (P) Ltd.
vs.   Oravel   Stays   (P)   Ltd.   reported   in   (2021)   9   SCC
765 . 
9.17 It is further submitted that Section 11 of the Arbitration
Act   expressly   confers   powers   upon   the   Courts   to
determine the existence of an Arbitration Agreement and
subsequently appoint an Arbitrator. It is submitted that
Section   8   confers   upon   the   Courts   and   judicial
authorities   the   power   to   refer   the   parties   to   arbitration
when   there   is   an   arbitration   Agreement.   Similarly,
section 16 of the Arbitration Act categorically recognizes
and   empowers   the   Arbitral   Tribunal   to   rule   on   any
objection   raised   as   against   its   jurisdiction.   It   is

//  37  //
submitted   that   therefore   petitioner’s   interpretation   of
Clause 9.0.2.0 of  the  GCC   qua   the  purported  finality  of
the   determination   of   its   General   Manager,   seeks   to
usurp   the   statutory   powers   of   the   Courts   as   enshrined
under Sections 8 and 11 and the statutory power of an
arbitral Tribunal as enshrined under Section 16. 
9.18 It   is   further   submitted   that   insofar   as   the   claims
concerned   in   other   four   petitions   (except   the   lead
matter), the determination was made after an inordinate
delay.  That in 3 out of 5 petitions, the determination by
the   General   Manager   was   made   after   the   respondent
filed   the   Arbitration   Petitions   before   the   High   Court.
That   in   SLP   No.13408/2019,   even   no   reference   to   the
General   Manager   was   made   until   the   filing   of   the
Arbitration   Petition   before   the   High   Court.   That
therefore   the   General   Manager’s   decision   in   the
aforesaid four SLPs is inefficacious as the determination
has been made not only thirty days after the submission
of the claim, but also after the arbitration petitions were
filed before the High Court. Reliance is placed upon the
decisions of this Court in the case of  Datar Switchgears
Ltd.   v.   Tata   Finance   Ltd.   reported   in   (2000)   8   SCC
151 (Paras 18 and 19) .
9.19 It   is   further   submitted   by   Shri   Ranjith   Kumar,   learned
Senior   Advocate   appearing   for   respondent   ­   NCCL   that
in   the   present   case,   the   petitioner   had   filed   an

//  38  //
application   challenging   the   jurisdiction   of   the   Arbitral
Tribunal   under   Sections   16(2)   and   16(5)   of   the
Arbitration   Act   before   the   Arbitral   Tribunal   on
10.06.2019, which is, after filing of the present petition
and   before   the   issuance   of   notice   by   this   Court   on
03.07.2019.   That   the   petitioner   has   not   disclosed   the
same   and   has   suppressed   this   factum   of   pursuing   two
remedies   simultaneously.   It   is   submitted   that   therefore
as   the   petitioner   has   elected   to   pursue   the   proceeding
before   the   Arbitral   Tribunal   and   as   per   the   doctrine   of
election   of   remedies,   the   petitioner   ought   not   to   be
permitted   to   continue   the   present   proceedings   before
this Court. 
  Making above submissions, it is prayed to dismiss 
the present appeals. 
10. We   have   heard   learned   Senior   Advocates   appearing   for
the respective parties at length.
 
10.1 By   the   impugned   orders   the   High   Court   in   exercise   of
powers   under   Section   11(6)   of   the   Arbitration   Act   has
appointed   the   Arbitrators   to   adjudicate   and   resolve   the
disputes   between   the   parties   arising   out   of   the
respective   contracts.   The   respective   orders   passed   by
the High Court appointing the Arbitrator in applications
under   Section   11(6)   of   the   Arbitration   Act   are   the
subject matter of present appeals. 

//  39  //
10.2 It cannot be disputed that both the parties are governed
by the GCC. The GCC are the part of the Agreements /
Contracts   between   the   parties.   Under   the   GCC,   the
parties have agreed to resolve the dispute between them
only in terms of the relevant clauses of the GCC referred
to   hereinabove.   The   parties   have   agreed   that   certain
specified   disputes   alone   will   be   the   subject   of
arbitration.
10.3 In the case of Narbheram Power &  Steel   (P)   Ltd.
(supra),   it   is   observed   and   held   that   the   parties   are
bound by the Clauses enumerated in the policy and the
Court does not transplant any equity to the same by re­
writing a clause. It is further observed and held that an
arbitration   clause   is   required   to   be   strictly   construed.
Any   expression   in   the   clause   must   unequivocally
express   the   intent   of   arbitration.   It   can   also   lay   the
postulate   in   which   situations   the   arbitration   clause
cannot be given effect to. It is further observed that if a
clause stipulates that under certain circumstances there
can   be   no   arbitration   and   they   are   demonstrably   clear
then   the   controversy   pertaining   to   appointment   of
Arbitrator has to be put to rest (Paras 10­23). 
10.4 In the case of  Centrotrade Minerals & Metal Inc. (supra),
this   Court   had   an   occasion   to   consider   the   concept   of
party   autonomy   and   it   is   observed   and   held   that   party
autonomy   is   virtually   the   backbone   of   arbitration.   It   is

//  40  //
further   observed   and   held   that   party   autonomy   being
the   brooding   and   guiding   spirit   in   arbitration,   the
parties   are   free   to   agree   on   the   application   of   three
different laws governing their entire contract – (1) proper
law   of   contract;   (2)   proper   law   of   arbitration   agreement
and   (3)   proper   law   of   the   conduct   of   arbitration.   It   is
further observed in the said decision that the parties to
an   arbitration   agreement   have   the   autonomy   to   decide
not   only   on   the   procedural   law   to   be   followed   but   also
the substantive law. The choice of jurisdiction is also left
to the contracting parties. 
10.5 In   the   case   of   DLF   Universal   Ltd.   &   Anr.   v.   Director,
Town and  Country Planning Department,  Haryana  &
Ors. [(2010) 14 SCC 1],  it is observed and held that the
contract   is   to   be   interpreted   according   to   its   purpose.
The   purpose   of   a   contract   is   the   interest,   objective,
values, policy that the contract is designed to actualize.
It comprises the joint intent of the parties. It is observed
that   it   is   not   an   intent   of   a   single   party;   it   is   the   joint
intent   of   both   the   parties   and   the   joint   intent   of   the
parties   is   to   be   discovered   from   the   entirety   of   the
contract   and   the   circumstances   surrounding   its
formation (Para 13). 
10.6 In the case of  Rajasthan State Industrial Development
and   Investment   Corporation   &   Anr.   v.   Diamond   and
Gem Development Corporation Ltd. & Anr. [(2013) 5

//  41  //
SCC   470] ,   it   is   observed   and   held   that   a   party   cannot
claim anything more than what is covered by the terms
of   the   contract,   for   the   reason   that   the   contract   is   a
transaction   between   two   parties   and   has   been   entered
into with open eyes and by understanding the nature of
contract.   It   is   further   observed   that   thus   the   contract
being   a   creature   of   an   agreement   between   two   or   more
parties   has   to   be   interpreted   giving   literal   meanings
unless there is some ambiguity  therein. The contract is
to be interpreted giving the actual meaning to the words
contained   in   the   contract   and   it   is   not   permissible   for
the Court to make a new contract, however reasonable,
if  the  parties  have   not   made   it  themselves.  It   is   further
observed   that   the   terms   of   the   contract   have   to   be
construed   strictly   without   altering   the   nature   of   a
contract   as   it   may   affect   the   interest   of   either   of   the
parties adversely (Para 23). 
10.7 In   the   case   of   Mitra   Guha   Builders   (India)   Company
(supra),   while   interpreting   the   clause   by   which   the
parties   agreed   that   the   decision   of   the   Superintending
Engineer in levying  compensation is final and the same
is   an   ‘excepted   matter’   and   the   determination   shall   be
only   by   the   Superintending   Engineer   and   the
correctness of his decision cannot be called in question
in   the   arbitration   proceedings   and   the   remedy,   if   any,
will   arise   in   the   ordinary   course   of   law,   the   Three
Judges   Bench   of   this   Court   after   referring   to   and

//  42  //
considering   the   earlier   decisions   on   the   point   observed
and held that once the parties have decided that certain
matters   are   to   be   decided   by   the   Superintending
Engineer   and   his   decision   would   be   final,   the   same
cannot be the subject matter of arbitration. 
10.8 In   the   case   of   Harsha   Construction   (supra),   while
interpreting the clause in the agreement by which some
of   the   disputes   were   specifically   not   arbitrable   and   in
relation   to   the   said   disputes   the   contractor   had   to
negotiate   with   the   Engineer   concerned   and   if   the
contractor was not satisfied with the rate determined by
the   Engineer,   the   contractor   was   required   to   follow   the
procedure   mentioned   in   the   said   clause   and   in   this
regard,   in   paras   18   and   19,   it   is   observed   and   held   as
under:
“ 18. A rbitration   arises   from   a   contract   and   unless
there   is   a   specific   written   contract,   a   contract   with
regard   to   arbitration   cannot   be   presumed.   Section
7(3)   of   the   Act   clearly   specifies   that   the   contract
with regard to arbitration must be in writing. Thus,
so  far  as  the   disputes  which  have  been  referred  to
in   Clause   39   of   the   contract   are   concerned,   it   was
not open to the Arbitrator to arbitrate upon the said
disputes   as   there   was   a   specific   clause   whereby
the   said   disputes   had   been   “excepted”.   Moreover,
when   the   law   specifically   makes   a   provision   with
regard   to   formation   of   a   contract   in   a   particular
manner,   there   cannot   be   any   presumption   with
regard   to   a   contract   if   the   contract   is   not   entered
into by the mode prescribed under the Act.

//  43  //
19.   If   a   non­arbitrable   dispute   is   referred   to   an
Arbitrator   and   even   if   an   issue   is   framed   by   the
Arbitrator   in   relation   to   such   a   dispute,   in   our
opinion,   there   cannot   be   a   presumption   or   a
conclusion to the effect that the parties had agreed
to   refer   the   issue   to   the   Arbitrator.   In   the   instant
case,   the   respondent   authorities   had   raised   an
objection   relating   to   the   arbitrability   of   the
aforestated   issue   before   the   Arbitrator   and   yet   the
Arbitrator   had   rendered   his   decision   on   the   said
“excepted”   dispute.   In   our   opinion,   the   Arbitrator
could not have decided the said “excepted” dispute.
We,   therefore,   hold   that   it   was   not   open   to   the
Arbitrator   to   decide   the   issues   which   were   not
arbitrable   and   the   award,   so   far   as   it   relates   to
disputes   regarding   non­arbitrable   disputes   is
concerned, is bad in law and is hereby quashed.”
10.9 At this stage, a recent decision of this Court in the case
of Vidya Drolia (supra), which, as such, is post­insertion
of   Section   11(6­A)   of   the   Arbitration   Act,   is   required   to
be   referred   to.   In   the   said   decision   it   is   observed   and
held   that   the   issue   of   non­arbitrability   of   a   dispute   is
basic for arbitration as it relates to the very jurisdiction
of   the   Arbitral   Tribunal.   An   Arbitral   Tribunal   may   lack
jurisdiction for several reasons and non­arbitrability has
multiple meanings. After referring to another decision of
this Court in the case of  Booz Allen & Hamiltan Inc. v.
SBI Home Finance Ltd. [(2011) 5 SCC 532 (Para 34)] ,
it   is   observed   and   held   that   there   are   facets   of   non­
arbitrability, namely 
“ (i)   Whether   the   disputes   are   capable   of   adjudication
and   settlement   by   arbitration?   That   is,   whether   the
disputes,   having   regard   to   their   nature,   could   be
resolved  by  a private  forum  chosen   by  the  parties  (the

//  44  //
Arbitral   Tribunal)   or   whether   they   would   exclusively
fall within the domain of public fora (courts).
(ii)   Whether   the   disputes   are   covered   by   the   arbitration
agreement?   That   is,   whether   the   disputes   are
enumerated   or   described   in   the   arbitration   agreement
as matters to be decided by arbitration or whether the
disputes   fall   under   the   “excepted   matters”   excluded
from the purview of the arbitration agreement.
(iii)   Whether   the   parties   have   referred   the   disputes   to
arbitration?  That is, whether the disputes fall under the
scope   of   the   submission   to   the   Arbitral   Tribunal,   or
whether they do not arise out of the statement of claim
and the counterclaim filed before the Arbitral Tribunal.
A   dispute,   even   if   it   is   capable   of   being   decided   by
arbitration   and   falling   within   the   scope   of   an
arbitration   agreement,   will   not   be   “arbitrable”   if   it   is
not enumerated  in the  joint list of  disputes referred to
arbitration,   or   in   the   absence   of   such   a   joint   list   of
disputes,   does   not   form   part   of   the   disputes   raised   in
the pleadings before the Arbitral Tribunal.”
After   referring   to   and   considering   in   detail   the
earlier   decisions   on   the   point,   more   particularly,   with
respect to non­arbitrability and the ‘excepted matters’, it
is ultimately concluded in para 76 as under:
 
“76. In   view   of   the   above   discussion,   we   would
like   to  propound   a  four­fold  test  for  determining   when
the   subject   matter   of   a   dispute   in   an   arbitration
agreement is not arbitrable:
76.1. (1) When cause of action and subject­matter
of   the   dispute   relates   to   actions   in   rem,   that   do   not
pertain   to   subordinate   rights   in   personam   that   arise
from rights in rem.
76.2. (2) When cause of action and subject­matter
of   the   dispute   affects   third­party   rights;   have   erga
omnes   effect;   require   centralized   adjudication,   and

//  45  //
mutual   adjudication   would   not   be   appropriate   and
enforceable;
76.3. (3) When cause of action and subject­matter
of   the   dispute   relates   to   inalienable   sovereign   and
public interest functions of the State and hence mutual
adjudication would be unenforceable; 
76.4 (4) When the subject­matter of the dispute is
expressly or by necessary implication non­arbitrable as
per mandatory statute(s).
76.5   These   tests   are   not   watertight
compartments;   they   dovetail   and   overlap,   albeit   when
applied   holistically   and   pragmatically   will   help   and
assist   in   determining   and   ascertaining   with   great
degree of certainty when as per law in India, a dispute
or   subject   matter   is   non­arbitrable.   Only   when   the
answer   is   affirmative   that   the   subject   matter   of   the
dispute would be non­arbitrable.
76.6 However, the aforesaid principles have to be
applied with care and caution as observed in   Olympus
Superstructures (P) Ltd. : (SCC p. 669, para 35)
“ 35. ...Reference   is   made   there   to   certain
disputes like criminal offences of a public nature,
disputes   arising   out   of   illegal   agreements   and
disputes   relating   to   status,   such   as   divorce,
which   cannot   be   referred   to   arbitration.   It   has,
however,   been   held   that   if   in   respect   of   facts
relating to a criminal matter, say, physical injury,
if there is a right to damages for personal injury,
then such a dispute can be referred to arbitration
(Keir v. Leeman) . Similarly, it has been held that a
husband   and   a   wife   may   refer   to   arbitration   the
terms on which they shall separate, because they
can   make   a  valid   agreement  between   themselves
on   that   matter   ( Soilleux   v.   Herbst,   Wilson   v.
Wilson and Cahill v. Cahill ).”
10.10 On   the   question,   who   decides   on   non­arbitrability   of
the   dispute,   after   referring   to   and   considering   the

//  46  //
earlier   decisions   on   the   point,   more   particularly,   the
decisions   in   the   case   of   Garware   Wall   Ropes   Ltd.
(supra);  Hyundai Engg. & Construction Co. Ltd. (supra)
and   Narbheram   Power   &   Steel   (P)   Ltd.   (supra),   it   is
observed   and   held   that   the   question   of   non­
arbitrability   relating   to   the   inquiry,   whether   the
dispute was governed by the arbitration clause, can be
examined   by   the   Courts   at   the   reference   stage   itself
and   may   not   be   left   unanswered,   to   be   examined   and
decided   by   the   Arbitral   Tribunal.   Thereafter,   in   para
153,   it   is   observed   and   held   that   the   expression,
“existence   of   arbitration   agreement”   in   Section   11   of
the  Arbitration Act, would include aspect of validity  of
an   arbitration   agreement,   albeit   the   Court   at   the
reference   stage   would   apply   the   prima   facie   test.   It   is
further   observed   that   in   cases   of   debatable   and
disputable   facts   and,   good   reasonably   arguable   case
etc., the Court would force the  parties to abide by  the
arbitration Agreement as the Arbitral Tribunal has the
primary   jurisdiction   and   authority   to   decide   the
disputes   including   the   question   of   jurisdiction   and
non­arbitrability.   Ultimately   in   para   154,   the
proposition of law is crystallized as under: 
“154. Discussion under the heading ‘Who decides
Arbitrability?’ can be crystallized as under:
154.1. Ratio   of   the   decision   in   Patel
Engineering   Ltd.   on   the   scope   of   judicial   review   by   the
court while deciding an application under Sections 8 or

//  47  //
11 of the   Arbitration Act , post the amendments by Act
3   of   2016   (with   retrospective   effect   from   23­10­2015)
and   even   post   the   amendments   vide   Act   33   of   2019
(with effect from 9­8­2019), is no longer applicable.
154.2. Scope   of   judicial   review   and
jurisdiction of the court under Section 8 and 11 of the
Arbitration   Act   is   identical   but   extremely   limited   and
restricted.
154.3.   The   general   rule   and   principle,   in   view   of
the   legislative   mandate   clear   from   Act   3   of   2016   and
Act   33   of   2019,   and   the   principle   of   severability   and
competence­competence, is that the arbitral tribunal is
the preferred first authority to determine and decide all
questions   of   non­arbitrability.   The   court   has   been
conferred   power   of   “second   look”   on   aspects   of   non­
arbitrability post the award in terms of sub­clauses (i),
(ii) or (iv) of Section 34(2)(a) or sub­clause (i) of Section
34(2)(b) of the Arbitration Act.
154.3. Rarely   as   a   demurrer   the   court   may
interfere   at   the   Section   8   or   11   stage   when   it   is
manifestly   and   ex   facie   certain   that   the   arbitration
agreement is non­  existent,  invalid  or  the  disputes are
non­arbitrable,   though   the   nature   and   facet   of   non­
arbitrability would, to some extent, determine the level
and   nature   of   judicial   scrutiny.   The   restricted   and
limited   review   is   to   check   and   protect   parties   from
being   forced   to   arbitrate   when   the   matter   is
demonstrably   “non­arbitrable”   and   to   cut   off   the
deadwood. The court by default would refer the matter
when   contentions   relating   to   non­arbitrability   are
plainly   arguable;   when   consideration   in   summary
proceedings   would   be   insufficient   and   inconclusive;
when   facts   are   contested;   when   the   party   opposing
arbitration   adopts   delaying   tactics   or   impairs   conduct
of arbitration proceedings. This is not the stage for the
court to enter into a mini trial or elaborate review so as
to usurp the jurisdiction of the arbitral tribunal but to
affirm   and   uphold   integrity   and   efficacy   of   arbitration
as an alternative dispute resolution mechanism.”
10.11 In the recent decision of this Court in the case of   DLF

//  48  //
Home   Developers   Limited   v.   Rajapura   Homes
Private   Limited   and   Another   [2021   SCC   Online   SC
781]   in   which   this   Court   also   had   an   occasion   to
consider   Section   11(6­A)   of   the   Arbitration   Act   and
ultimately   has   observed,   after   referring   to   and
considering the decision of three Judges Bench of this
Court   in   the   case   of   Vidya   Drolia   (supra)   that   the
jurisdiction   of   the   Court   under   Section   11   of   the
Arbitration   Act   is   primarily   to   find   out   whether   there
existed   a   written   agreement   between   the   parties   for
resolution   of   the   dispute   and   whether   the   aggrieved
party   has   made   out   a   prima   facie   arguable   case,   it   is
further   observed   that   limited   jurisdiction,   however,
does   not   denude   the   Court   of   its   judicial   function   to
look beyond the bare existence of an arbitration clause
to   cut   the   deadwood.   In   the   said   decision,   this   Court
had taken note of the observations made in the case of
Vidya   Drolia   (supra)   that   with   a   view   to   prevent
wastage of public and private resources, the Court may
conduct ‘ prima facie   review’ at the stage of reference to
weed out any frivolous or vexatious claims. 
10.12 In   the   case   of   Nortel   Networks   India   Pvt.   Ltd.   (supra),
this Court had an occasion to consider the decision in
the   case   of   Vidya   Drolia   (supra)   and   in   paras   46,   47
and 53.2, it is observed and held as under: 
“ 46. The upshot of the judgment in Vidya Drolia [Vidya

//  49  //
Drolia v. Durga Corpn., (2021) 2 SCC 1: (2021) 1 SCC
(Civ)   549]   is   affirmation   of   the   position   of   law
expounded   in   Duro   Felguera   [Duro   Felguera,   S.A.   v.
Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC
(Civ)   764]   and   Mayavati   Trading   [Mayavati   Trading   (P)
Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714 : (2019)
4   SCC   (Civ)   441] ,   which   continue   to   hold   the   field.   It
must   be   understood   clearly   that   Vidya   Drolia   [Vidya
Drolia v. Durga Corpn., (2021) 2 SCC 1: (2021) 1 SCC
(Civ)   549]   has   not   re­surrected   the   pre­amendment
position on the scope of power as held in SBP & Co. v.
Patel Engg. Ltd. [ SBP & Co. v. Patel Engg. Ltd.,  (2005) 8
SCC 618]. 
47. It   is   only   in   the   very   limited   category   of   cases,
where   there   is   not   even   a   vestige   of   doubt   that   the
claim   is   ex   facie   time­barred,   or   that   the   dispute   is
non­arbitrable, that the court may decline to make the
reference. However, if there is even the slightest doubt,
the   rule   is   to   refer   the   disputes   to   arbitration,
otherwise it would encroach upon what is essentially a
matter to be determined by the tribunal.
53.2. In   rare   and   exceptional   cases,   where   the   claims
are ex facie time­barred, and it is manifest that there is
no   subsisting   dispute,   the   Court   may   refuse   to   make
the reference.”
11. Applying   the   law   laid   down   by   this   Court   in   the
aforesaid decisions, let us consider the relevant clauses
of   the   GCC   governing   the   parties   and   the   procedure   to
be   followed   in   case   of   disputes   between   the   parties   to
the contract on non­payment of alleged dues may be on
account of extra payment or compensation in respect of
the   works  over   and  above  the  amounts  due in   terms of
the   contract   and/or   the   dispute   on   the   validity   of   any
deductions made or threatened by the owner. 

//  50  //
11.1 Clause   1.21.0.0   defines   “Notified   Claims”.   It   means   a
claim   of   the   contractor   notified   in   accordance   with   the
provisions of  Clause 6.6.1.0. As per  Clause 6.6.1.0, the
contractor   shall   have   to   give   notice   in   writing   of   his
claim   with   respect   to   any   extra   payment   or
compensation   in   respect   of   the   works   over   and   above
the   amounts   due   in   terms   of   the   contract   or   on   the
validity   of   any   deductions   made   or   threatened   by   the
owner   from   any   running   account   bills,   by   giving   notice
in writing of his claim in this behalf to the Engineer­in­
Charge   and   the   Site   Engineer   within   ten   days   from   the
date of issue of the orders or instructions relative to any
works   for   which   the   contractor   claims   such   additional
payment… etc. Such notice shall give full particulars of
the  nature  of such  claim,  grounds  on  which  it  is  based
and   the   amount   claimed.   It   also   further   provides   that
the owner shall not in any way be liable to in respect of
any claim by the contractor unless notice of such claim
shall have been given by the contractor to the Engineer­
in­Charge and the Site Engineer. It also further provides
that   a   contractor   shall   be   deemed   to   have   waived   any
and all claims and all his rights in respect of any claim
not   notified   to   the   Engineer­in­Charge   and   the   Site
Engineer   in   writing   in   the   manner   and   within   the   time
(ten   days   from   the   date   of   issue   of   the   orders   or
instructions).   It   further   provides   that   all   such   claims
otherwise   valid   within   the   provisions   of   Clause   6.6.1.0

//  51  //
read   with   Clauses   6.6.3.0   and   6.6.3.1   shall   have   to   be
dealt   with/considered   by   the   owner   at   the   time   of
submission of the  Final  Bill and that  any  action  on the
part of the owner  (Engineer­in­Charge or  Site  Engineer)
to reject any claim made or notified by the contractor or
delay   in   dealing   therewith   shall   be   deemed   to   be   an
admission  by  the owner  of  the validity  of  such claim  or
waiver   by   the   owner   of   any   of   its   rights   in   respect
thereof. 
11.2 As   per   Clause   6.6.3.0,   any   claims   of   the   contractor
notified   in   accordance   with   the   provision   of   Clause
6.6.1.0   and   remain   due   at   the   time   of   preparation   of
Final   Bill   by  the  contractor,  shall   have  to   be  separately
included  in  the   Final   Bill  prepared  by   the  contractor  in
the   form   of   a   Statement   of   Claims   attached   thereto,
giving particulars of the nature of the claim, grounds on
which it is based, and the amount claimed and shall be
supported by a copy of the notice sent in respect thereof
by the contractor to the Engineer­in­Charge and the Site
Engineer   under   Clause   6.6.1.0.   It   further   provides   that
any   variance   with   the   claim   notified   by   the   contractor
within   the   provision   of   Clause   6.6.1.0   shall   be   deemed
to   be   a   claim   different   from   the   Notified   Claim   with
consequence   in   respect   thereof   indicated   in   Clauses
6.6.1.0 and 6.6.3.1.
11.3 Clause   6.6.3.1   further   provides   that   the   owner   (IOCL)

//  52  //
shall not in any way be liable in respect of any Notified
Claim   not   specifically   reflected   in   the   Final   Bill   in
accordance   with   the   provisions   of   Clause   6.6.3.0.   It
further   provides   that   in   and   all   Notified   Claims   not
specifically   reflected   and   included   in   the   Final   Bill   in
accordance   with   the   provisions   of   Clause   6.6.3.0   shall
be   deemed   to   have   been   waived   by   the   contractor   and
the   owner   (IOCL)   shall   have   no   liability   in   respect
thereof  and  the  contractor  shall  not  be  entitled  to  raise
or   include   in   the   Final   Bill   any   claims   other   than   a
Notified   Claim   conforming   in   all   respects   and   in
accordance with the provisions of Clause 6.6.3.0.
11.4 Clause   6.6.4.0   provides   that   n o   claim   shall   on   any
account be made by the contractor after the Final Bill. It
further provides that any such claim shall be deemed to
have   been   waived   and   with   respect   to   all   such   claims
not   included   in   the   Final   Bill,   the   owner   (IOCL)   is
absolved and discharged, even if not including the same,
the contractor shall have acted under the mistake of law
or fact. 
Thus, on a fair reading of the aforesaid provisions,
it can be seen that only those claims which are Notified
after   following  the   procedure as  referred  to  hereinabove
shall be considered as “Notified Claim” and in respect of
any   claim   other   than   the   Notified   Claim,   the   owner   is
not liable to pay and as such is absolved and discharged

//  53  //
under the said clauses. 
11.5 The next important clause is 6.7.0.0 with respect to the
discharge of owner’s liability. As per Clause 6.7.1.0, the
acceptance by the contractor of any amount paid by the
owner   to   the   contractor   in   respect   of   the   final   dues   of
the   contractor   under   the   Final   Bill   upon   condition   that
the   said   payment   is   being   made   in   full   and   final
settlement   of   all   said   dues   to   the   contractor   shall,
without   prejudice   to   the   Notified   Claims   of   the
contractor included in the Final Bill in accordance with
the provisions of Clause 6.6.3.0, be deemed to be in full
and  final  satisfaction  of  all such  dues  to  the contractor
notwithstanding   any   qualifying   remarks,   protest   or
condition   imposed   or   purported   to   be   imposed   by   the
contractor relative to the acceptance of such payment.
11.6 Clause   6.7.2.0   provides   that   the   acceptance   by   the
contractor   of   any   amount   paid   by   the   owner   (IOCL)   to
the   contractor   in   respect   of   the   Notified   Claims   of   the
contractor included in the Final Bill in accordance with
the   provisions   of   Clause   6.6.3.0   and   associated
provisions   thereunder,   upon   the   condition   that   such
payment is being made in full and final settlement of all
the   claims   of   the   contractor   shall,   subject   to   the
provisions of Clause 6.7.3.0, be deemed to be in full and
final   satisfaction   of   all   claims   of   the   contractor
notwithstanding   any   qualifying   remarks,   protest   or

//  54  //
condition   imposed   or   purported   to   be   imposed   by   the
contractor   relative   to   the   acceptance   of   such   payment
with   the   intent   that   upon   acceptance   by   the   contractor
of   any   payment   made,   the   Contract   (including   the
arbitration   clause)   shall   stand   discharged   and
extinguished   insofar   as   relates   to   and/or   concerns   the
claims of the contractor.
11.7 The   next   important   clause   to   be   considered   would   be
Clause   9.0.0.0.   The   said   clause   is   for   Alternative
Dispute   Resolution   Machinery.   As   per   Clause   9.0.1.0,
subject   to   the   earlier   Clauses,   namely   Clauses   6.7.1.0,
6.7.2.0   and   9.0.2.0,   any   dispute   arising   out   of   a
NOTIFIED   CLAIM   of   the   contractor   included   in   the
Final   Bill   of   the   contractor   in   accordance   with   the
provisions   of   Clause   6.6.3.0   and   if   the   contractor   has
not   opted   for   the   Alternative   Dispute   Resolution
Machinery referred to in Clause 9.1.1.0 and any dispute
arising   out   of   any   Claim   of   the   owner   against   the
contractor   shall   be   referred   to   the   arbitration   of   a   Sole
Arbitrator.   It   also   further   provides   that   the   owner   may
prefer   its   Claims   against   the   contractor   as   counter­
claims   if   a   Notified   Claim   of   the   contractor   has   been
referred   to   arbitration.   It   also   further   provides   that   the
contractor   shall   not,   however,   be   entitled   to   raise   as   a
set­off, defence or counter­claim any claim which is not
a   NOTIFIED   CLAIM   included   in   the   contractor’s   Final

//  55  //
Bill  in accordance with the provisions of Clause 6.6.3.0.
11.8 Clause  9.0.2.0 is  an  exclusion  clause  by  which,   certain
matters   are   specifically   excluded   from   the   scope,
purview and ambit of the Arbitration Agreement. It pro ­
vides that disputes or differences with respect to or con ­
cerning   or   relating   to   any   of   the   matters
mentioned/specified   in   Clause   9.0.2.0   are   excluded
from   the   scope,   purview   and   ambit   of   the   arbitration
agreement.   It   further   provides   that   any   such   matter
which   is   specifically   excluded   viz.   (i)   with   respect   to   or
concerning the scope or existence or otherwise of the Ar ­
bitration   Agreement;   (ii)   whether   or   not   a   Claim   sought
to be referred to arbitration by the contractor  is a Noti ­
fied   Claim;   (iii)   whether   or   not   a   Notified   Claim   is   in ­
cluded   in   the   contractor’s   Final   Bill   in   accordance   with
the provisions of Clause 6.6.3.0 and (iv) whether  or not
the contractor has opted for the Alternative Dispute Res ­
olution Machinery with respect to any Notified Claim in ­
cluded in the contractor’s Final Bill shall have to be de ­
cided   by   the   General   Manager   prior   to   the   arbitration
proceeding with or proceeding further with the reference
and the Arbitrator or the Arbitral Tribunal shall have no
jurisdiction to entertain the same or to render any deci ­
sion with respect to such matters. 

//  56  //
Thus,   on   a   fair   reading   of   clause   9.0.0.0,   only   the
dispute   arising   out   of   a   NOTIFIED   CLAIM   of   the   con ­
tractor   included   in   the   FINAL   BILL   in   accordance   with
the provisions of Clause 6.6.3.0 shall be referred to arbi ­
tration, that too, subject to Clause 9.0.2.0 and any dis ­
pute / matter falling within Clause 9.0.2.0 shall have to
be   first   decided   by   the   General   Manager,   including,
whether or not a Claim sought to be referred to arbitra ­
tion   by   the   contractor   is   a   Notified   Claim.   Therefore,   if
the  claim  is  not  a Notified Claim, as per  Clause  6.6.1.0
and   the   same   is   not   included   in   the   Final   Bill,   such   a
claim   is   outside   the   purview   of   the   arbitration   agree ­
ment.   Whether   or   not   a   claim   sought   for   arbitration   by
the  contractor  is  a Notified Claim   or  any   such  matter  /
dispute is specifically  excluded from  the  scope, purview
and   ambit   of   arbitration   agreement,   such   matter   /   dis ­
pute shall have to be first decided by  the General Man ­
ager   prior   to   the   arbitral   proceeding   with   or   proceeding
further with the reference. Thus, unless there is a deci ­
sion by the General Manager on whether or not a claim
sought to be referred to arbitration by the contractor is a
Notified Claim or not, the Arbitrator or Arbitral Tribunal
shall have no jurisdiction to entertain such a dispute. 
The   aforesaid   clauses   of   the   GCC   are   part   of   the
contract between the parties herein and both the parties
are bound by the aforesaid claims. 

//  57  //
12. It   is   the   case   on   behalf   of   the   petitioner   IOCL   that   the
IOCL   had   settled   the   claim   of   respondent   –   NCCL
accepting NCCL’s offer to grant extension of time; not to
give   price   adjustment   of   over   4%   of   the   total   contract
value   and   consequently   IOCL   condoned   the   delay   of
1493   days   and   granted   extension   of   time   without
applying any price discount.  Further for the delay of 65
days, IOCL applied the price discount of Rs.6,44,40,021
i.e. 4% of the total value of contract and thereafter IOCL
released   the   payment   of   Rs.4,53,04,021/­   against
NCCL’s   final   bill   (adjusting   price   discount   of   Rs.6.4
Crores   as   against   Rs.14.8   Crores)   and   also   returned
NCCL’s   Bank   Guarantee   which   came   to   be   fully
accepted by the respondent NCCL. It is the case of IOCL
that   thereafter,   it   was   not   open   for   the   respondent   to
raise   any   further   claim.   Therefore,   it   is   the   case   on
behalf   of   the   petitioner   that,   there   being   ‘accord   and
satisfaction’   for   the   claim,   being   an   ‘excepted   claim’,   it
was   not   open   for   the   respondent   to   invoke   the
arbitration agreement and request for appointment of an
Arbitrator. It is also the case on behalf of the petitioner
IOCL   that   in   view   of   the   specific   decisions   by   the
General Manager, on “Notified Claims”, in view of Clause
9.0.2.0,   for   the   same   claims   which   are   not   held   to   be
‘Notified   Claims’   by   the   General   Manager,   the   matter
cannot be referred to the Arbitrator in view of the clause
pertaining to excluded matters. 

//  58  //
On   the   other   hand,   it   is   the   case   on   behalf   of   the
respondent   that   acceptance   of   the   amount   of
Rs.4,53,04,021/­   was   under   duress   and   coercion.   It   is
also   the   case   on   behalf   of   the   respondent   that   earlier
offer dated 02.11.2016 was a conditional one and was in
the   nature   of   an   offer   and   subsequently   when   the   offer
was partially allowed, the respondent without any delay
communicated   that   the   decision   to   partially   allow   its
application   for   EOT   is   unacceptable   as   the   same   is   not
in   accordance   with   the   conditional   offer   given   by   the
respondent.
12.1 Now,   so   far   as   the   General   Manager’s   decision   on
Notified Claims is concerned, it is the case on behalf of
the   respondent   that   even   the   decision   of   the   General
Manager on the Notified Claims will always be subject to
the   decision   of   the   Arbitral   Tribunal.   By   the   impugned
judgment   and   order   the   High   Court   concluded   and
summed up as under:
“ 81. Having   regard   to   the   foregoing   discussion
hereinabove   my   conclusions   can   be   summed   as
follows: 
I)   Where   there   is   contestation   or   the   decision
rendered   by   the   General   Manager   leaves   scope   for
argument   as   to   whether   the   claims   lodged   by   a
Contractor can be categorized as Notified Claims is best

//  59  //
left to the Arbitral Tribunal.  In other  words, except for
the   situation   where   there   is   no   doubt   that   the   claims
were   not   lodged   with   the   Engineer   and   the   Site
Engineer   as   required   under   Clause   6.6.1.0   68   read
with   6.6.3.0   69,   the   matter   would   have   to   be   left   for
resolution by Arbitral Tribunal.
II) Aspects with regard to accord and satisfaction
of the claims or where there is a dispute will also have
to be left to the Arbitral Tribunal. The position in law in
this   regard   remains   the   same   both   pre   and   post
amendment   brought   about   in   the   1996   Act   after
23.10.2015.
III) After the insertion of Subsection (6A) in 11 of
the   1996   Act   the   scope   of   inquiry   by   the   Court   in   a
Section   11   petition,   (once   it   is   satisfied   that   it   has
jurisdiction in the matter) is confined to ascertaining as
to   whether   or   not   a   binding   arbitration   agreement
exists qua the parties before it which is relatable to the
disputes at hand.
IV)  The  space  for   correlating   the  dispute  at  hand
with   the   arbitration   agreement   is   very   narrow.   Thus,
except   for   an   open   and   shut   case   which   throws   up   a
circumstance   indicative   of   the   fact   that   a   particular
dispute   does   it   not   fall   within   the   four   corners   of   the
arbitration   agreement   obtaining   between   the   parties
the   matter   would   have   to   be   resolved   by   an   Arbitral
Tribunal.   In   other   words,   if   there   is   contestation   on
this score, the Court will allow the Arbitral Tribunal to
reach a conclusion one way or another. This approach
would   be   in   keeping   with   the   doctrine   of   Kompetenz

//  60  //
Kompetenz; a doctrine which has statutory recognition
under Section 16 of the 1996 Act.”  
13. Having   heard   learned   Counsel   appearing   for   the
respective parties and in the facts and circumstances of
the   case,   the   issue   /   aspect   with   regard   to   ‘accord   and
satisfaction’   of   claims   is   seriously   disputed   and   is
debatable.   Whether,   in   view   of   the   acceptance   of
Rs.4,53,04,021/­   by   the   respondent   NCCL   which   was
released   by   IOCL   on   the   offer   /   letter   made   by   the
respondent NCCL dated 02.11.2016 there is an instance
of   ‘accord   and   satisfaction’   of   the   claims   is   a   good   and
reasonably   arguable   case.   It   cannot   be   said   to   be   an
open and shut case. Therefore, even when it is observed
and held that such an aspect with regard to ‘accord and
satisfaction’ of the claims may/can be considered by the
Court at the stage of deciding  Section 11 application, it
is   always   advisable   and   appropriate   that   in   cases   of
debatable   and   disputable   facts,   good   reasonably
arguable   case,   the   same   should   be   left   to   the   Arbitral
Tribunal. Similar view is expressed by this Court in the
case of Vidya Drolia (supra). Therefore, in the facts and
circumstances   of   the   case,   though   it   is   specifically
observed   and   held   that   aspects   with   regard   to   ‘accord
and satisfaction’ of the claims can be considered by the
Court at the stage of deciding Section 11(6) application,
in   the   facts   and   circumstances   of   the   case,   the   High
Court   has   not   committed   any   error   in   observing   that

//  61  //
aspects   with   regard   to   ‘accord   and   satisfaction’   of   the
claims or where there is a serious dispute will have to be
left to the Arbitral Tribunal. However, at the same time,
we   do   not   agree   with   the   conclusion   arrived   at   by   the
High  Court  that   after  the  insertion   of  Sub­Section  (6­A)
in Section 11 of the Arbitration Act, scope of inquiry by
the   Court   in   Section   11   petition   is   confined   only   to
ascertain   as   to   whether   or   not   a   binding   arbitration
agreement   exists   qua   the   parties   before   it,   which   is
relatable to the disputes at hand. We are of the opinion
that though the Arbitral Tribunal may have jurisdiction
and   authority   to   decide   the   disputes   including   the
question   of   jurisdiction   and   non­arbitrability,   the   same
can   also   be   considered   by   the   Court   at   the   stage   of
deciding Section 11 application if the facts are very clear
and   glaring   and   in   view   of   the   specific   clauses   in   the
agreement   binding   between   the   parties,   whether   the
dispute   is   non­arbitrable   and/or   it   falls   within   the
excepted   clause.   Even   at   the   stage   of   deciding   Section
11 application, the Court may   prima facie   consider even
the aspect with regard to ‘accord and satisfaction’ of the
claims. 
13.1 Now,   so   far   as   the   submission   on   behalf   of   the
respective   parties   on   the   decision   of   the   General
Manager   on   Notified   Claims   in   Civil   Appeal
No.341/2022   arising   out   of   SLP   (C)   No.13161/2019   is
concerned, the General Manager has decided / declared

//  62  //
that   the   claims   are   not   arbitrable   since   they   had   been
settled   and   the   arbitration   agreement   has   been
discharged   under   Clause   6.7.2.0   of   the   GCC   and   no
longer existed / subsisted. As observed hereinabove, the
claims   had   been   settled   or   not   is   a   debatable   and
disputable question, which is to be left to be decided by
the   Arbitral   Tribunal.   Therefore,   matters   related   to   the
Notified   Claims   in   the   facts   and   circumstances   of   the
case   also   shall   have   to   be   left   to   be   decided   by   the
Arbitral   Tribunal   as   in   the   fact   situation   the   aspect   of
‘accord   and   satisfaction’   and   ‘Notified   Claims’   both   are
interconnected and interlinked. 
13.2 Now, so far as the Civil Appeal No.342/2022 arising out
of   SLP   (C)   No.13816/2019   is   concerned,   the   General
Manager in exercise of powers under Clause 9.0.2.0 had
declared   that   none  of   the   claims  of   the   respondent   is  a
Notified   Claim.   From   the   communication   dated
22.06.2018,   it   appears   that   the   General   Manager,   after
elaborately dealing with all the alleged Notified Claims of
the   respondent   has   thereafter   found   that   none   of   the
claims made by the respondent is a Notified Claim. On a
conjoint   reading  of  the  relevant  clauses  of  the  GCC  viz.
Clauses   9.0.1.0   and   9.0.2.0,   the   dispute   arising   out   of
Notified Claims only, which is included in the Final Bill
of the contractor can be referred to arbitration. However,
as   per   Clause   9.0.2.0,   any   dispute   or   difference   on
whether   or   not   a   claim   sought   to   be   referred   to

//  63  //
arbitration   by   the   contractor   is   a   Notified   Claim   falls
within   the   excluded   matters   and   the   Arbitrator   or
Arbitral   Tribunal   shall   have   no   jurisdiction   and/or
authority with respect thereto. The dispute or difference
whether   or   not   a   claim   sought   to   be   referred   to
arbitration   by   the   contractor   is   a   Notified   Claim   shall
not and cannot form the subject matter of any reference
or   submission   to   arbitration.   Therefore,   on   a   fair   and
conjoint   reading   of   Clause   9.0.1.0   and   9.0.2.0,   it   can
safely   be   concluded   that   (i)   only   the   Notified   Claims   of
the   contractor   included   in   the   Final   Bill   of   the
contractor   in   accordance   with   the   provisions   of   Clause
6.6.3.0   shall   have   to   be   referred   to   arbitration;   (ii)
whether   or   not   a   claim   sought   to   be   referred   to
arbitration   by   the   contractor   is   a  Notified  Claim   or   not,
the   Arbitrator   or   Arbitral   Tribunal   shall   have   no
jurisdiction   at   all;   (iii)   whether   or   not   a   claim   is   a
Notified   Claim   or   not   shall   have   to   be   decided   by   the
General   Manager   and   that   too,   prior   to   arbitration
proceeding   with   or   proceeding   further   with   the
reference.   Therefore,   once   the   General   Manager,   on   the
basis   of   the   material   on   record   takes   a   conscious
decision that a particular claim sought to be referred to
arbitration   is   not   a   Notified   Claim,   such   a   claim
thereafter   cannot   be   referred   to   arbitration.   The
language   used   in   Clauses   9.0.1.0   and   9.0.2.0   is   very
clear and unambiguous. 

//  64  //
13.3 As observed hereinabove, parties to the contract are free
to agree on applicability of  (1) proper law of contract, (2)
proper law of arbitration agreement and (3) proper law of
the   conduct   of   arbitration.   Parties   to   the   contract   also
may   agree   for   matters   excluded   from   the   purview   of
arbitration.   As   observed   by   this   Court   in   a   catena   of
decisions,   unless   the   effect   of   agreement   results   in
performance of an unlawful act, an agreement, which is
otherwise legal, cannot be held to be void and is binding
between   the   parties.   At   this   stage,   the   decision   of   this
Court   in   the   case   of   Sreekanth   Transport   (supra)   is
required to be referred to. In the case before this Court,
the contract provided for exclusion of some matters from
the   purview   of   arbitration.   A   senior   officer   of   the
department   was   given   the   authority   and   power   to
adjudicate   the   same.   One   of   the   clauses   provided   that
the decision of the Senior Officer, being the Adjudicator,
shall   be   final   and   binding   between   the   parties.   This
Court considered the same as ‘excepted matters’. In the
aforesaid decision, it is observed and held in paragraph
3 as under: 
“ 3. “Excepted   matters”   obviously,   as   the   parties
agreed,   do   not   require   any   further   adjudication   since
the   agreement   itself   provides   a   named   adjudicator   ­
concurrence   to   the   same   obviously   is   presumed   by
reason   of   the   unequivocal   acceptance   of   the   terms   of
the contract by the parties and this is where the courts
have   found   out   lacking   in   its   jurisdiction   to   entertain
an   application   for   reference   to   arbitration   as   regards
the   disputes   arising   therefrom   and   it   has   been   the

//  65  //
consistent   view   that   in   the   event   the   claims   arising
within   the   ambit   of   excepted   matters,   question   of
assumption of jurisdiction of any arbitrator either with
or   without   the   intervention   of   the   court   would   not
arise; The parties themselves have decided to have the
same   adjudicated   by   a   particular   officer   in   regard   to
these   matters:   what   are   these   exceptions   however   are
questions of fact and usually mentioned in the contract
documents   and   forms   part   of   the   agreement   as   such
there   is   no   ambiguity   in   the   matter   of   adjudication   of
these specialised matters and termed in the agreement
as the excepted matters.”
13.4 In   that   view   of   the   matter,   the   High   Court   has   misread
and  misinterpreted the  clauses  9.0.1.0  and  9.0.2.0  and
has   seriously   erred   in   holding   that   where   there   is
contestation   or   the   decision   rendered   by   the   General
Manager   leaves   scope   for   argument   as   to   whether   the
claims   alleged   by   the   contractor   can   be   categorized   as
Notified   Claim   is   best   left   to   the   Arbitral   Tribunal.   The
dispute   whether   the   claim   is   a   Notified   Claim   or   not   is
specifically excluded from the scope, purview and ambit
of   the   arbitration   agreement.   Therefore,   once   such   a
dispute falls within  the ‘excepted matters’, any  decision
by the General Manager on the issue of Notified Claims
cannot be the subject matter of arbitration proceeding. 
13.5 Therefore,   the   High   Court   has   erred   in   referring   the
dispute to arbitration and appointing a sole Arbitrator to
adjudicate   on   the   dispute   with   respect   to   the   claims
which as such are held to be not Notified Claims by the
General   Manager.   Therefore,   the   Civil   Appeal

//  66  //
No.342/2022   arising   out   of   SLP   (C)   No.13408/2019   as
well   as   Civil   Appeal   Nos.343/2022   and   345/2022
arising out of SLP (C) Nos.13813/2019 and 13816/2019
respectively   deserve   to   be   allowed   and   the   impugned
judgment   and   orders   passed   by   the   High   Court   in
respective   arbitration   petitions   deserve   to   be   quashed
and set aside. 
13.6 So   far   as   the   Civil   Appeal   No.344/2022   arising   out   of
SLP   (C)   No.13815/2019   arising   out   of   the   impugned
judgment   and   order   passed   by   the   High   Court   in
Arbitration   Petition   No.407/2018   is   concerned,   as   the
General   Manager   himself   has   declared   that   only   one
claim   of   the   respondent   was   /   is   a   Notified   Claim,   the
said appeal is to be allowed partly by observing that the
claim   which   is   declared   by   the   General   Manager   as   a
Notified   Claim   only   shall   have   to   be   referred   to
arbitration   and   the   learned   Arbitrator   shall   have   no
jurisdiction   to   adjudicate   the   disputes   with   respect   to
other claims which as such are not declared as Notified
Claims by the General Manager. 
14. In   view   of   the   above   and   for   the   reasons   stated   above,
following order is passed. 
(1) Civil   Appeal   No.341/2022   arising   out   of   the
impugned judgment and order passed by the High
Court   in   Arbitration   Petition   No.115/2018   is

//  67  //
hereby  dismissed. However, it is observed that the
learned Arbitrator shall first decide the aspect with
regard   to   ‘accord   and   satisfaction’   of   the   claims
and   arbitrability   of   the   disputes   with   regard   to
such   claims   by   deciding   an   application   under
Section 16 of the Arbitration Act, which is reported
to   be   pending.   The   learned   Arbitrator   shall   first
decide the jurisdiction of the Arbitral Tribunal and
the   arbitrability   of   the   claims   within   a   period   of
three   months   from   the   date   of   first   sitting   which
shall   be   within   a   period  of  one   month   from   today.
All the contentions and/or defences which may be
available to the respective parties are kept open to
be   considered   by   the   learned   Arbitrator   in
accordance   with   law   and   on   its   own   merits   and
considering   the   relevant   clauses   of   the   contract
and the material on record.
(2) Civil   Appeal   No.342/2022   arising   out   of   the
impugned judgment and order passed by the High
Court   in   Arbitration   Petition   No.356/2018   is
hereby   allowed.   Impugned   judgment   and   order
passed   by   the   High   Court   in   Arbitration   Petition
No.356/2018   referring   the   dispute   between   the
parties to arbitration and appointing the Arbitrator
is hereby quashed and set aside.
 
(3) Similarly,   Civil   Appeal   No.343/2022   arising   out   of

//  68  //
the   impugned   judgment   and   order   passed   by   the
High   Court   in   Arbitration   Petition   No.116/2018
and   Civil   Appeal   No.345/2022   arising   out   of   the
impugned judgment and order passed by the High
Court   in   Arbitration   Petition   No.406/2018   are
allowed   and   consequently,   the   impugned
judgments and orders passed by the High Court in
Arbitration Petition Nos.116/2018 & 406/2018 are
hereby quashed and set aside. 
(4) So   far   as   Civil   Appeal   No.344/2022   arising   out   of
the   impugned   judgment   and   order   passed   by   the
High   Court   in   Arbitration   Petition   No.407/2018   is
concerned,   the   same   is   partly   allowed.   The
impugned judgment and order passed by the High
Court   in   Arbitration   Petition   No.407/2018   is
hereby modified to the extent and it is directed that
only one claim of the respondent which is declared
by   the   General   Manager   as   a   Notified   Claim   shall
have   to   be   referred   to   arbitration   and   the   learned
Arbitrator shall adjudicate only that claim which is
declared   by   the   General   Manager   as   a   Notified
Claim   and   the   learned   Arbitral   Tribunal   shall   not
have   any   jurisdiction   to   adjudicate   on   any   other
claims   which   as   such   are   not   declared   as   Notified
Claims.
In   the   facts   and   circumstances   of   the   case,

//  69  //
there shall be no order as to costs. 
……………………………… .J.
      [M.R. SHAH]
      ……………………………… .J.
             [B.V. NAGARATHNA] 
NEW DELHI;
JULY 20, 2022.