Contractual exclusion of non-notified claims limits arbitration; seriously disputed accord and satisfaction may be left to the tribunal.

At the Section 11 stage, a seriously disputed plea of accord and satisfaction based on acceptance of the final bill need not be finally decided and may be left to the arbitral tribunal on a debatable factual matrix. By contrast, where the contract limited arbitration to notified claims and expressly excluded disputes on whether a claim was a notified claim, that exclusion was binding. Claims finally determined by the General Manager to be non-notified claims were treated as non-arbitrable, and arbitration was confined only to the notified claim where such a finding existed.

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Issues: (i) Whether, at the stage of appointment of an arbitrator under Section 11, the Court could examine a serious dispute regarding accord and satisfaction arising from acceptance of the final bill amount. (ii) Whether claims held by the General Manager to be non-notified claims were arbitrable, having regard to the contractual exclusion of such matters from the arbitration agreement.

Issue (i): Whether, at the stage of appointment of an arbitrator under Section 11, the Court could examine a serious dispute regarding accord and satisfaction arising from acceptance of the final bill amount.

Analysis: The contractual scheme required notified claims to be raised, included in the final bill, and then dealt with under the arbitration clause. The dispute whether the final payment resulted in accord and satisfaction was held to be seriously contested and not an open-and-shut case. The Court accepted that, in a debatable factual matrix, such an issue may appropriately be left to the arbitral tribunal, even though a prima facie examination is not wholly excluded at the Section 11 stage.

Conclusion: The issue of accord and satisfaction was not finally decided at the Section 11 stage and was left open for determination by the arbitral tribunal in the lead matter.

Issue (ii): Whether claims held by the General Manager to be non-notified claims were arbitrable, having regard to the contractual exclusion of such matters from the arbitration agreement.

Analysis: The contract restricted arbitration to notified claims included in the final bill and expressly excluded disputes on whether a claim was a notified claim from the arbitral reference. The General Manager was designated as the authority to decide that excluded question before arbitration could proceed. Where the General Manager had consciously held that the claims were not notified claims, the Court treated the contractual exclusion as binding and outside arbitral jurisdiction. In one matter, where only a single claim was found to be notified, arbitration was confined to that claim alone.

Conclusion: Claims finally determined by the General Manager not to be notified claims were held to be non-arbitrable, and arbitration was confined only to the notified claim where such a finding existed.

Final Conclusion: The appeals were disposed of with one appeal left to arbitral determination on the accord and satisfaction issue, three appeals set aside, and one appeal sustained only to the extent of the notified claim.

Ratio Decidendi: Where parties by contract validly restrict arbitration to notified claims and exclude certain preliminary disputes from the arbitral reference, such excluded matters must be respected; however, a seriously disputed question of accord and satisfaction may still require adjudication on its own facts, with only a prima facie scrutiny permissible at the referral stage.

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