Arbitration Agreement Overridden by Amendment: Court Invalidates Petition

The Supreme Court found that the arbitration agreement in the original Contract Agreement had been overridden by the Amendment of Agreement (AoA) executed after substantial completion of the project. As a result, the arbitration agreement was no longer in force when the arbitration petition was filed. Additionally, the Court ruled that the arbitration petition filed by SSPPL on behalf of SDJV was not valid as SSPPL had no authority after the revocation of the Power of Attorney by AIL. The High Court's decision allowing the arbitration petition was set aside, and parties were directed to seek other remedies as per the law.

---

---

Issues Involved:
1. Existence and subsistence of the arbitration agreement.
2. Validity of the arbitration petition filed by SSPPL on behalf of SDJV.

Detailed Analysis:

1. Existence and Subsistence of the Arbitration Agreement:

The Supreme Court examined whether the arbitration agreement in the Contract Agreement dated 09.03.2006 was still in force when the arbitration petition was filed on 15.12.2016. The court noted that the parties had executed an Amendment of Agreement (AoA) on 09.06.2015, which included revised rates and terms. The AoA explicitly stated that all pending claims of the contractor "stand buried" and there would be "no arbitration" for the settlement of claims. This was a critical point as it indicated that the arbitration clause in the original Contract Agreement had been overridden by the AoA.

The court emphasized that the AoA was executed after substantial completion of the project and included a steep revision of rates, which was a condition precedent. The court concluded that the terms of the AoA were unambiguous and intended to supersede the arbitration agreement in the original Contract Agreement. Thus, the arbitration agreement was no longer in existence or force when the arbitration petition was filed.

2. Validity of the Arbitration Petition Filed by SSPPL on Behalf of SDJV:

The court also examined whether the arbitration petition filed by SSPPL on behalf of SDJV was valid, given that AIL had revoked the Power of Attorney (PoA) granted to SSPPL. The court noted that AIL had informed WAPCOSL and the respective banks about the revocation of SSPPL's authority before the arbitration petition was filed. Despite this, SSPPL unilaterally appointed an arbitrator and filed the arbitration petition.

The court found that the High Court had incorrectly assumed that the AoA was executed in 2005 instead of 2015, leading to an erroneous conclusion. The court clarified that the AoA was executed in 2015, by which time 97% of the project was completed, and the project was inaugurated in 2016. The court held that the arbitration petition was not maintainable as the arbitration agreement had been annulled by the AoA, and SSPPL had no authority to file the petition on behalf of SDJV after the revocation of the PoA by AIL.

Conclusion:

The Supreme Court set aside the judgment of the High Court, which had allowed the arbitration petition and appointed a sole arbitrator. The court dismissed the arbitration petition filed by SSPPL on behalf of SDJV, stating that the arbitration agreement was no longer in existence or force, and SSPPL had no authority to file the petition. The court allowed the parties to pursue other remedies in accordance with the law. The appeals were allowed with no order as to costs, and all pending applications were disposed of.

---