Settlement Agreement – Interplay of Sections 11(6), 73 & 74 of the Arbitration Act
The dispute arose out of EPC Agreement dated 9.12.2020 terminated by the respondent vide notice dated 25.5.2023.
Clause 26.3 of the Agreement provided for dispute resolution by arbitration. However, prior to such reference, the parties would attempt conciliation.
The authorities reached the settlement vide Minutes dated 13.2.2024. The respondent released Rs.10,52,71,116/-. The petitioner protested the same and issued another conciliation notice. It was denied. The petitioner invoked arbitration clause for appointment of Arbitrator contending that the settlement proceedings were vitiated because at that time, the petitioner was in financial duress.
HELD that as per Clause 26.3 of the Agreement, only those disputes may be referred to arbitration which could not be resolved by Conciliation under Clause 26.2. Since a settlement agreement has been entered into under Clause 26.2, as per section 74 of the AA the settlement agreement is an “arbitral award” if it is on agreed terms of the dispute rendered under Section 30 of the AA. The dispute cannot be referred to arbitration leaving it open to the petitioner to challenge the said settlement in the appropriate proceedings in Section 34 subject to limitation.
Judgment dated 10.3.2025 of the High Court of Delhi in ARB.P.1843/2024 of M/s. ARSS Infrastructure Projects Ltd Vs. National Highway and Infrastructure Development Corporation Ltd.
