Case Note & Summary
The Supreme Court of India heard appeals against the Delhi High Court's order appointing a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The dispute arose from a contract for the Salma Dam Project in Afghanistan, where WAPCOS Ltd. (a public sector undertaking) was the employer and Salma Dam Joint Venture (SDJV) was the contractor. SDJV was a joint venture between SSJV Projects Pvt. Ltd. (SSPPL) and Angelique International Ltd. (AIL), with SSPPL as lead partner holding 95% share. The original contract dated 09.03.2006 contained an arbitration clause (Clause 20.6 of CoPA). Later, on 09.06.2015, the parties executed an Amendment of Agreement (AoA) which provided for a Technical Committee to resolve disputes, replacing the earlier arbitration mechanism. After disputes arose, AIL revoked the Power of Attorney granted to SSPPL on 21.09.2016, and communicated this to WAPCOSL. Despite this, SSPPL unilaterally invoked arbitration on behalf of SDJV on 12.11.2016 and filed a petition under Section 11(6) on 15.12.2016. The High Court allowed the petition, holding that the arbitration agreement was still in force and SSPPL had authority. The Supreme Court reversed, holding that the AoA novated the original contract, extinguishing the arbitration clause, and that SSPPL lacked authority after revocation of the Power of Attorney. The appeals were allowed, and the High Court's order was set aside.
Headnote
A) Arbitration Law - Existence of Arbitration Agreement - Novation - The arbitration agreement in the Contract Agreement dated 09.03.2006 was novated by the Amendment of Agreement dated 09.06.2015, which provided a different dispute resolution mechanism through a Technical Committee, thereby extinguishing the original arbitration clause. The court held that the arbitration agreement was not subsisting on the date of filing the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996. (Paras 19-25) B) Arbitration Law - Authority to Invoke Arbitration - Revocation of Power of Attorney - SSPPL, as lead partner of SDJV, had authority under the Joint Venture Agreement and Power of Attorney to invoke arbitration, but AIL revoked the Power of Attorney on 21.09.2016, communicated before the petition was filed on 15.12.2016. The court held that the petition filed by SSPPL after revocation was not validly presented, as SSPPL lacked authority to represent SDJV. (Paras 26-30) C) Arbitration Law - Section 11(6) Petition - Locus Standi - The petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, filed by SSPPL on behalf of SDJV, was not maintainable because the arbitration agreement had been novated and SSPPL's authority had been revoked. The court set aside the High Court's order appointing an arbitrator. (Paras 31-35)
Issue of Consideration
Whether the arbitration agreement in the Contract Agreement dated 09.03.2006 was subsisting on the date of filing the arbitration petition, and whether the petition filed by SSPPL on behalf of SDJV was valid despite revocation of authority by AIL.
Final Decision
The Supreme Court allowed the appeals, set aside the High Court's order dated 25.01.2019, and dismissed the arbitration petition filed by SDJV through SSPPL under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Law Points
- Arbitration agreement novation
- Authority to invoke arbitration
- Revocation of power of attorney
- Section 11(6) Arbitration and Conciliation Act
- 1996
- Joint venture representation
