Kiran Raj

The High Court of Delhi, Single Bench of  Justice Manoj Kumar Ohri, delivered a judgment on March 10, 2025, dismissing a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996. The petition sought the appointment of an Arbitral Tribunal to adjudicate disputes arising from an EPC Agreement executed between the petitioner, M/s. ARSS Infrastructure Projects Ltd., and the respondent, National Highway and Infrastructure Development Corporation Ltd. The court held that the settlement agreement reached in conciliation meetings was binding and enforceable as an arbitral award, thereby precluding further arbitration.

The dispute arose from an Engineering, Procurement, and Construction (EPC) Agreement executed on December 9, 2020, between M/s. ARSS Infrastructure Projects Ltd. and the National Highway and Infrastructure Development Corporation Ltd. The agreement was related to the improvement of a section of NH-40 under the EPC mode. Disputes emerged during the execution of the contract, and on May 25, 2023, the respondent issued a notice terminating the agreement.

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Clause 26.2 of the contract provided for an initial attempt at conciliation, requiring the appointment of a conciliator to mediate and assist in reaching an amicable resolution before arbitration under Clause 26.3 could be invoked. The petitioner claimed that despite requesting the respondent to appoint a conciliator, the respondent failed to do so, forcing the petitioner to escalate the matter to the Chairman of the Authority.

Following this, conciliation meetings were conducted on October 6, 2023, October 19, 2023, and December 27, 2023. These meetings involved high-ranking officials from both parties. Subsequently, Minutes of Meeting (MoM) were signed on February 13, 2024, and forwarded to the petitioner on March 4, 2024. The MoM outlined the terms of settlement, including payment reconciliation and a full and final settlement clause. However, the petitioner later objected to the quantum of the settlement, claiming that it had not been appropriately calculated and issued further letters, including one dated July 8, 2024, seeking reconsideration of the settlement.

The respondent contended that the settlement reached through these conciliation meetings amounted to a binding agreement under Sections 73 and 74 of the Arbitration and Conciliation Act, making it enforceable as an arbitral award. The respondent also pointed out that the MoM included an explicit clause wherein the petitioner agreed not to pursue any further claims in court or arbitration.

On the other hand, the petitioner argued that the process did not amount to formal conciliation under Part III of the A&C Act since no independent conciliator was appointed. It further contended that it had signed the MoM under financial duress and that the terms of the settlement were unfair, justifying a fresh arbitration proceeding.

The court examined the dispute resolution mechanism outlined in the contract and noted that Clause 26.2 provided for conciliation before arbitration could be invoked. It observed:

“Clause 26.3 clearly states that only the disputes which could not have been resolved amicably by conciliation as provided in Clause 26.2, would be decided by arbitration. If the two clauses are read together, it would appear that no such distinction, as contended by the petitioner, has been made between the two parts of Clause 26.2 and rather, the Clause has to be read as a whole as pertaining to conciliation.”

The court further examined the MoM dated February 13, 2024, which repeatedly referred to the discussions as "Conciliation Meetings." The meetings were attended by senior officials of both parties, indicating that the process was conducted under the terms of the agreement. The court cited Section 74 of the A&C Act, which states:

“As per Section 74 of the A&C Act, the settlement agreement entered shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30.”

The court referred to previous judicial precedents, including Anuradha SA Investments LLC & Anr. v. Parsvnath Developers Limited & Ors., which upheld the enforceability of settlement agreements under Section 36 of the Act unless they were challenged and set aside under Section 34.

Regarding the petitioner's claim that the settlement was reached under financial duress, the court held that such an assertion could not be examined in a petition under Section 11(6) and would require a separate challenge under Section 34. The court stated:

“The veracity of the allegations of the petitioner qua the settlement agreement cannot be looked into by this Court in a petition under Section 11 of the Act.”

Additionally, the court observed that the petitioner had voluntarily participated in the conciliation meetings, raising no objections during the process. The MoM clearly recorded the petitioner's consent to the final settlement and its undertaking not to seek further litigation or arbitration.

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After examining the contractual provisions and the nature of the conciliation process, the court concluded that a valid settlement agreement had been reached under Clause 26.2. Consequently, the dispute was not arbitrable under Clause 26.3. The court directed that:

“Since a settlement agreement has been entered into under Clause 26.2, the dispute cannot be referred to arbitration leaving it open for the petitioner to challenge the said settlement in the appropriate proceedings, subject to limitation.”

Accordingly, the petition under Section 11(6) was dismissed.

Advocates Representing the Parties

• For the Petitioner: Mr. Ramesh Singh, Senior Advocate, with Ms. Monisha Handa, Mr. Rajul Shrivastav, and Ms. Hange Nanya, Advocates.

• For the Respondent: Mr. Mritunjay Kr. Singh, Mr. Saikat Khatna, Mr. Harsh Garg, Mr. Akash Soni, Mr. Rajiv Vijay Mishra, and Mr. Rajeev Kumar Gupta, Advocates.

Case Title: M/s. ARSS Infrastructure Projects Ltd. v. National Highway and Infrastructure Development Corporation Ltd.

Neutral Citation:2025: DHC:1570

Case Number: ARB.P. 1843/2024

Bench: Justice Manoj Kumar Ohri

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