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of <h1>Settlement agreement resolved all disputes; arbitration application deemed abuse of process under Section 11(6)</h1> <h3>NTPC LTD. Versus M/s SPML INFRA LTD.</h3> NTPC LTD. Versus M/s SPML INFRA LTD. - (2023) 9 SCC 385 Issues Involved:1. Existence of subsisting disputes post-Settlement Agreement.2. Adherence to pre-arbitration procedures.3. Allegations of coercion and economic duress in the execution of the Settlement Agreement.4. Arbitrability of the dispute under Section 11(6) of the Arbitration and Conciliation Act, 1996.Summary:Issue 1: Existence of Subsisting Disputes Post-Settlement AgreementThe Supreme Court examined whether there were any subsisting disputes between NTPC and SPML after the Settlement Agreement dated 27.05.2020. It was found that SPML had issued a No-Demand Certificate on 12.04.2019, and NTPC had released the final payment in April 2019. Despite the Settlement Agreement, SPML later repudiated it and filed for arbitration, claiming coercion and economic duress. The Court concluded that the allegations of coercion and economic duress were not bona fide and that there were no pending claims between the parties for submission to arbitration. The claims raised by SPML were deemed to be an attempt to initiate 'ex facie meritless, frivolous and dishonest litigation.'Issue 2: Adherence to Pre-Arbitration ProceduresNTPC argued that SPML failed to follow the mandatory pre-arbitration procedure of first referring the disputes to an Adjudicator as per the Dispute Resolution Clause. The High Court rejected this contention, noting that SPML had indeed requested arbitration earlier, but NTPC failed to respond. The Supreme Court, however, emphasized the importance of adhering to the pre-arbitration procedures stipulated in the contract.Issue 3: Allegations of Coercion and Economic DuressSPML alleged that the retention of the Bank Guarantees compelled them to accept the terms of the Settlement Agreement under coercion and economic duress. The Supreme Court found these allegations to be an afterthought, as the Settlement Agreement was executed and implemented during the subsistence of the Writ Petition, and SPML had the protection of the Court. The sequence of events, including the release of the Bank Guarantees and the subsequent withdrawal of the Writ Petition, indicated that the allegations lacked bona fide.Issue 4: Arbitrability of the Dispute Under Section 11(6)The Supreme Court underscored the limited scope of judicial scrutiny at the pre-referral stage under Section 11(6) of the Act. The Court's role is confined to examining the existence of an arbitration agreement and whether the dispute is prima facie arbitrable. The Court concluded that the High Court erred in allowing the application under Section 11(6) without adequately applying the prima facie test to screen and strike down the ex-facie meritless and dishonest litigation.Conclusion:The Supreme Court set aside the decision of the High Court of Delhi in Arbitration Petition No. 477 of 2020, dated 08.04.2021, and allowed Civil Appeal No. 4778 of 2022. The parties were directed to bear their own costs.
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