WRITTEN SUBMISSIONS
Introduction:
The Petitioner humbly submits to the Hon'ble Court that the present petition for appeal arises
from a contractual dispute between Ignited Construction Private Limited (ICPL), the
Appellant, and Vidyut Shakti Corporation of India Limited (VSCIL), the Respondent. The
dispute pertains to the interpretation of the arbitration clause and the jurisdiction of the
Hon'ble Madras High Court to pass the impugned order. This submission aims to elaborate
on the appellant's arguments, supporting the assertion that the High Court has exceeded its
jurisdiction and thereby misinterpreted the arbitration clause.
ISSUE II:
Whether the term “not thereafter” used in the Dispute Resolution Clause can be interpreted
to restrict the Petitioner ICPL from invoking Successive Arbitration for subsequent disputes
arising between the same parties under the same contract?
Misinterpretation of Arbitration Clause:
The Appellant submits that the arbitration dispute clause 251 contained in the arbitration
agreement of construction of 30 transmission towers, does not prohibit successive
arbitrations which are separate and distinct forms of disputes arising under the same
contract.
The Hon’ble High Court’s interpretation of the term "not thereafter" in the clause 25 of the
said agreement conclusively bars successive arbitrations is flawed. The term "not thereafter"
does not indicate an intention of parties to prohibit the invocation of arbitration for the distinct
nature of disputes that arise subsequently in the matter of dispute.
As in the 1st arbitral proceeding, the issue was the deduction of money due to unsatisfactory
work of the appellant. Whereas the ground of deduction in the 2nd dispute is of completely
different nature i.e., unilateral deduction due to appointment of an Independent Engineer to
supervise the Second and Third phases of the project. Further, the said deduction was made
without issuing any invoice to the appellant for the payment to the Independent Engineer.
Thus, the interpretation of the term “not thereafter” to bar the petitioner to invoke the 2nd
arbitration proceeding is erroneous and impaired.
Interpreting the term "not thereafter" within the context of the arbitration clause requires an
overall analysis of the principles of contract interpretation. Such principles of contract
interpretation aim to discern the intent of the involved parties in an agreement. In this
context, the phrase "not thereafter" constitutes a pivotal element in the arbitration clause,
and its interpretation plays a pivotal role in determining the permissibility of successive
arbitrations. Following are the principles involved in contract interpretation -
1. Plain Meaning Rule: One of the fundamental tenets of contract interpretation is
the plain meaning rule. This principle dictates that contract words are to be
1 Clause 25 of the Moot Proposition in Para 4.
attributed their ordinary and customary meanings, unless an opposing intent is
evident. Within the arbitration clause, "not thereafter" implies a specific temporal
constraint on initiating arbitration; any invocation beyond this timeframe is
precluded.
2. Surrounding Circumstances: While the literal sense of the term is crucial,
comprehending contractual terms necessitates weighing the surrounding
circumstances. The purpose of the arbitration clause and the intent of the parties
during contract formation become pertinent considerations in ascertaining the
genuine intent behind the term "not thereafter."
3. Parties' Intention: The intent of the parties is paramount in contract interpretation.
If it can be established that the parties intended to confine arbitration invocation
to a delimited timeframe, the term "not thereafter" might be construed as
prohibiting the instigation of arbitration proceedings after this designated
timeframe.
4. Presumption Against Absurdity: Courts generally assume that parties do not
seek absurd outcomes when making contracts. If interpreting "not thereafter" as
an outright bar to invoking arbitration for distinct disputes arising after the initial
instance leads to an absurd result, the term could potentially be construed more
flexibly to accommodate successive arbitrations.
5. Doctrine of Ejusdem Generis: This doctrine posits that when general terms
follow specific ones in a contract, the general terms are to be construed to
encompass only matters of the same category as those specified. If the
arbitration clause stipulates specific conditions for invoking arbitration and
subsequently employs the term "not thereafter," the doctrine of ejusdem generis
might indicate that "not thereafter" pertains to conditions of a similar nature.
Legal precedents, including “S.B.P. & Co vs Patel Engineering Ltd. & Anr on 26 October,
2005”2 establish that parties should not be constrained in their ability to invoke arbitration for
separate claims arising from the same contract.
Legitimate Concerns and Implications:
Upholding the impugned order would establish a dangerous precedent that allows courts to
delve into the merits of arbitration agreements, contrary to the legislative intent of Section
11(6A).
It would undermine the principle of party autonomy, which forms the bedrock of arbitration,
and create an environment of uncertainty, inefficiency, and multiplicity of proceedings.
Inference and Conclusion:
Interpreting the term "not thereafter" necessitates synthesising these principles of contract
interpretation and the above judicial precedent. While the term's apparent meaning implies
temporal limitations, the encompassing circumstances, parties' intent, and the prospect of
illogical outcomes also bear relevance. A comprehensive grasp of the entire arbitration
clause, its purpose, and the contextual backdrop in which it was formulated will ultimately
guide the interpretation of the term "not thereafter."
2 S.B.P. & Co vs Patel Engineering Ltd. & Anr on 26 October, 2005
ISSUE III:
Whether invocation of subsequent arbitration by giving 2nd notice is estopped by Order 2
Rule 2 of Code of Civil Procedure, and further barred by principle of Res Judicata?
Estoppel by Order 2 Rule 2
Order 2 Rule 23 of the Code of civil procedure states where a plaintiff omits to sue in respect
of any portion of his claim or intentionally relinquishes any portion of his claim. Then, he is
debarred from suing in respect of the portion so omitted or relinquished. It is worth noting
that omission or relinquishment of claim is made on a cause of action in a dispute. Where
there is an entirely different cause of action the above said rule does not apply. In the
instance case, the issue arising in 2nd dispute is wholly different from that of 1st dispute, as
in this dispute the deduction was made on the appointment of an Independent Engineer
without communicating his invoices of fees, forms a different cause of action.
The view is taken by the Delhi High Court in the case of “Delhi Development Authority, New
Delhi and Anr. V. Alkarma, New Delhi reported in MANU/DE/0204/1984 : AIR 1985 DELHI
132”4 where at para-16 it is held as under:
The view that in no case would the provisions of Order 2, Rule 2 be applicable to arbitration
proceedings cannot be accepted. The provisions of Order 2, Rule 2 would apply if the
request for referring more disputes to arbitration is made after the making of the award.
Once an award has been made a party cannot be permitted to raise more disputes which
he/she could and ought to have raised earlier. Where however, an award has not been
made, it is open to a claimant to ask for far more disputes to be referred to arbitration
provided the arbitration proceedings are not yet over. In such an event, if the authority
competent to appoint an arbitrator and to refer the disputes, fails to do so, the Court has the
jurisdiction to order the filing of the arbitration agreement and to direct the Engineer Member
(competent authority under arbitration clause) to refer the disputes to arbitration.
The Delhi High Court in “Panipat Jalandhar NH1 Tollway Pvt Ltd V. NHAI”5, held that
multiple arbitrations are permissible if the cause of action arises after the constitution of a
tribunal. However, to avoid the constitution of separate arbitral tribunals for separate claims
in respect of the same contract, it would be appropriate to raise the claims before the tribunal
where proceedings are in progress.
3 Order 2 Rule 2 CPC, 1908
4 Delhi Development Authority, New Delhi and Anr. V. Alkarma, New Delhi
5 Panipat Jalandhar NH1 Tollway Pvt Ltd V. NHAI
