High Court Appoints Arbitrator to Decide No Claim Certificate Validity & Financial Duress

The High Court allowed the application under Section 11(6) and appointed Hon'ble Shri Justice S.C. Malte (Retired) as Arbitrator. The Arbitrator will determine the validity of the no claim certificate, existence of financial duress, and whether the claims fall within the arbitration clause. The court confirmed its jurisdiction, noting the applicant's residence in Nanded. Proceedings charges are to be deposited within two weeks.

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Issues Involved:
1. Appointment of Arbitral Tribunal
2. Validity of No Claim Certificate
3. Financial Duress Allegations
4. Applicability of Arbitration Clause
5. Jurisdiction of the High Court

Detailed Analysis:

1. Appointment of Arbitral Tribunal:
The applicant filed an arbitration application seeking the appointment of an Arbitral Tribunal to adjudicate disputes with the respondent. The applicant, a registered government contractor, was allotted work under an agreement dated 9.5.2007. Despite extensions, the work was completed on 15.4.2009. The applicant claimed delays were due to the respondent's actions and requested arbitration as per the contract terms. The respondent failed to appoint an arbitrator, leading to this application under Section 11 of the Arbitration and Conciliation Act, 1996.

2. Validity of No Claim Certificate:
The applicant denied issuing a no claim certificate, alleging it was signed under threats and financial duress. The respondent argued the certificate was issued voluntarily, precluding arbitration. The court noted that the applicant had consistently claimed the certificate was obtained under duress, making it a matter for the Arbitral Tribunal to decide. The Supreme Court in National Insurance Company Limited vs. Boghara Polyfab Private Limited held that disputes over the validity of such certificates are arbitrable.

3. Financial Duress Allegations:
The applicant alleged financial duress, stating the respondent withheld payments and threatened penal action to obtain the no claim certificate. The court found prima facie evidence supporting the applicant's claim of duress, warranting arbitration. The court referred to the Supreme Court's guidelines in National Insurance Company Limited, which recognized that certificates obtained under duress do not bar arbitration.

4. Applicability of Arbitration Clause:
The contract included an arbitration clause applicable to disputes not exceeding 20% of the contract value. The applicant restricted claims accordingly, reserving the right to seek legal recourse for additional claims. The respondent argued that the no claim certificate and clause 63 of the General Conditions of Contract (GCC) barred arbitration. The court held that whether the claim falls within the arbitration clause or is an excepted matter should be determined by the Arbitral Tribunal.

5. Jurisdiction of the High Court:
The court confirmed its jurisdiction, noting the applicant's residence in Nanded, within its territorial limits. The court found that the applicant had approached the appropriate High Court and that there was an arbitration agreement between the parties, satisfying the requirements for intervention under Section 11 of the Arbitration and Conciliation Act, 1996.

Conclusion:
The court allowed the application under Section 11(6), appointing Hon'ble Shri Justice S.C. Malte (Retired) as Arbitrator. The Arbitrator is to decide on the validity of the no claim certificate, the existence of financial duress, and whether the claims fall within the arbitration clause. The application was disposed of, with proceedings charges to be deposited within two weeks.

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