Corrtech Energy Ltd v. Indian Oil Corporation Ltd & Anr.

(i) The erstwhile defendant no.2, who was retained as the

EPCM Consultant in the contract pertaining to Barauni Refinery, was deleted from the array of defendants vide order dated 19.12.2024 passed in CS(COMM) 1083/2024, therefore, IOCL is the sole defendant in this suit.

(ii) Defendant introduced a sub-contractor and a condition of requirement of a “No-Objection Certificate” from the said subcontractor before their Running Account Bills (hereinafter ‘RA Bills’) would be cleared by the defendant, was imposed.

(iii) Defendant re-tendered the project at the plaintiff’s risk and cost while explicitly barring the plaintiff from participating in the re-tendering process.

7. CS(COMM) 1083/2024 has been instituted seeking the following reliefs: “(a) A decree of permanent injunction restraining the Defendant(s), their agents, representatives, successors, or any other persons acting on their behalf, from adjusting, appropriating, or recovering any amount claimed by the Defendant(s) from the Plaintiff under any project of IOCL (from List at Document 38), where the Plaintiff is engaged as a “Contractor,” against / out of any dues or payments payable by IOCL to the Plaintiff in any other project of IOCL, or in any other manner whatsoever, unless: a. Such adjustment or recovery is expressly agreed to in writing by the Plaintiff, or b. The claim or adjustment is adjudicated and determined in accordance with law by a Court of competent jurisdiction; (b) A decree for a Permanent Injunction restraining the Defendant(s), their agents, employees, representatives, or any other person(s) acting on their behalf from undertaking any coercive and/or penal measures against the Plaintiff in connection with or arising out of the works awarded to the Plaintiff under the tender for BR-9 RFCC REVAMP PROJECT AT BARAUNI REFINERY OF M/S IOCL, CONTRACT NO.: TP/08175757C001/T/BR-9/03/AGT/2022-2023 (WO No.- 27663535 dated 17.03.2022);

(c) A decree for a Mandatory Injunction directing the other person(s) acting on their behalf to discharge the Plaintiff from all obligations under and to deliver up the ISD Bank Guarantee bearing No. 0064NDDG00007223 dated 16.06.2022, as amended on 28.10.2024, valid up to 07.08.2025, issued by ICICI Bank Ltd. in favour of Defendant No. 1;

(d) A decree declaring that the show-cause notice dated

17.07.2024 issued by the Defendant(s) to the Plaintiff in connection with the BR-9 RFCC Revamp Project at Barauni Refinery of M/s IOCL, Contract No.: TP/08175757C001/T/BR- 9/03/AGT/2022-2023 (WO No. 27663535 dated 17.03.2022), for holiday listing, and any subsequent or consequential actions arising therefrom, is bad in law, null, and void; (e) A decree declaring that any offloading or re-tendering of the works under the Tender BR-9 RFCC Revamp Project at Barauni Refinery of M/s IOCL, Contract No.: TP/08175757C001/T/BR-9/03/AGT/2022-2023 (WO NO. 27663535 dated 17.03.2022), by the Defendant(s), their agents, or representatives, shall not be at the risk and cost of the Plaintiff; (f) A decree for a Mandatory Injunction directing the other person(s) acting on their behalf to extend the tenure of projects other than the BR-9 RFCC Revamp Project at Barauni Refinery of M/s IOCL, Contract No.: TP/08175757C001/T/BR- 9/03/AGT/2022-2023 (WO No. 27663535 dated 17.03.2022), where the tenure has expired on any date after the debit declared by IOCL on 24.10.2024; (g) Pass a decree in favor of the Plaintiff and against the Defendant(s) for the recovery of a total sum of ₹ 17,87,96,569.14 (Rupees Seventeen Crores Eighty-seven Lakhs Ninety-six Thousand Five Hundred Sixty-nine and paise Fourteen) along with applicable taxes, as detailed in the statement of claims submitted herein, pertaining to various claims arising on account of works carried out by the Plaintiff towards BR-9 RFCC Revamp Project at Barauni Refinery of M/s IOCL, Contract No.: TP/08175757C001/T/BR- 9/03/AGT/2022-2023 (WO No. 27663535 dated 17.03.2022); (h) Pass a decree awarding interest on the amounts due as per Document 38 from the date of accrual till the date of payment at the rate of 24% p.a.” APPLICATIONS UNDER SECTION 8(1) OF THE ARBITRATION AND CONCILIATION ACT, 1996

8. The IOCL filed the captioned applications under Section 8(1) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘Act’) in both the suits for referring the matter to arbitration in view of the arbitration agreement incorporated in clauses 9.0.1.0 and 9.0.1.[1] of the General Conditions of Contract (hereinafter ‘GCC’).

9. Insofar as I.A. 32759/2024 in CS(COMM) 295/2024 is concerned, the defendant no.1/IOCL has prayed for referring the disputes raised in prayer (a) to (e) of the suit to the arbitration, while leaving out the disputes arising out of prayer (f). The prayer in I.A. 8561/2025 in CS(COMM) 1083/2024 shows that the defendant is essentially seeking reference of the disputes arising out of and in respect of all the prayers to the arbitration. I.A. 32759/2024 IN CS(COMM) 295/2024

10. Since the submissions by both sides were advanced in I.A. 32759/2024 in CS(COMM) 295/2024 and adopted for the I.A. 8561/2025 in CS(COMM) 1083/2024, therefore, the former application is first taken up for consideration.

11. It is stated in the application that the plaintiff, anticipating that the defendant no.1/IOCL will exercise its contractual remedies for the recovery of amounts claimed by it, has filed the suit incorporating prayers (a) to (e) to prevent the defendant no.1 from recovering from the plaintiff any amount under the contract.

12. It is further stated that since the amount to be claimed by the defendant no.1 from the plaintiff under or in respect of the contract is the subject matter of the arbitration agreement, the suit cannot proceed against the defendant no.1 insofar as prayers (a) to (e) thereof are concerned, which entirely arises out of the claims of the defendant no.1.

13. The plaintiff has resisted the aforesaid application by filing a reply. It is stated in the reply that the defendant no.1 has admittedly filed the application only in respect of the reliefs (a) to (e) in the suit and not in respect of prayer (f). It has been further elaborated that once the suit is filed for the reliefs all of which are not arbitrable under the arbitration agreement, the application is not maintainable.

14. It is further stated that defendant no.2 who is non-signatory to the arbitration agreement has not pressed for referring the suit to the arbitration. In that view of the matter also, the application is liable to be dismissed.

15. Mr. V.N. Koura, learned counsel for the applicant submits that the contract undisputedly contains an arbitration clause in Clauses 9.0.1.0 and 9.0.1.[1] of the GCC.

16. He submits that at the stage of Section 8, this Court only has to satisfy itself as to prima facie existence of a valid arbitration agreement in relation to the contract in question and nothing else. In case the Court comes to a positive finding with respect to the existence of a valid arbitration agreement then the Court is bound to refer the disputes to arbitration under Section 8 of the Act, leaving it to the arbitrator to decide every other issue including that of non-arbitrability.

17. In support of his above contention, he places reliance on the decisions of the Hon’ble Supreme Court in - (i) Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, (ii) Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1 and (iii) In Re: Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899, (2024) 6 SCC 1.

18. Mr. Koura also relies on the decisions of this Court in Hero Electric Vehicles Pvt. Ltd. v. Lectro E-Mobility Pvt. Ltd., 279 (2021) DLT 99 and Knowledge Podium Systems Pvt. Ltd. v. S.M. Professional Services Pvt. Ltd., 278 (2021) DLT 348 to contend that the role of the court at this stage of an application under Section 8 is highly restricted and the referral court is not the appropriate forum to conduct a mini-trial as to the validity of the arbitration agreement and such determination ought to be left to the Arbitral Tribunal.

19. Per contra, Mr. Dayan Krishnan, learned Senior Counsel for the plaintiff submits that all the claims in prayer (a) to (f) are the claims of the plaintiff and the same are not notified claims, therefore, the same are nonarbitrable. He contends that in Indian Oil Corporation Limited v. NCC Limited, (2023) 2 SCC 539, in which same clauses were interpreted, it was held that the claims which are not notified claims cannot be referred to arbitration.

20. He further contends that in the event present application is allowed, the defendant no.1 will raise the issue of non-arbitrability based on the aforesaid judgment and will get the claims dismissed, which in turn, will render the plaintiff remediless.

21. He further submits that the disputes in prayer (a) to (e) do not arise from any claim of the defendant no. l and such prayers have been sought on account of illegal threats of coercive measures by both the defendants, whereas prayer (f) pertains to the plaintiff’s claim for recovery of monies.

22. He further submits that the present application under Section 8(1) has been filed seeking to have the disputes arising out of prayers (a) to (e) referred to arbitration, leaving out the plaintiff’s claim in prayer (f). Placing reliance on the decision of the Hon’ble Supreme Court in Sukanya Holdings Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531, he contends that bifurcation of cause of action or the subject matter of dispute of the suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the court, is not permissible.

23. He further submits that Sukanya Holdings (supra) is still good law and continues to have binding effect over disputes including the present one. He contends that Sukanya Holdings (supra) has also been referred in latest decisions of the Hon’ble Supreme Court in Ameet Lal Chand Shah & Ors. v. Rishabh Enterprises, (2018) 15 SCC 678 and Gujarat Composite Limited v. A Infrastructure Limited and Ors., (2023) 7 SCC 193, as well as the decision of Division Bench of this Court in Canara Bank v. Sanjeev Sharma, 2025 SCC Online Del 4959.

24. Mr. Krishnan further submits that the present application deserves to be rejected also on the ground that the suit seeks relief against both the defendants including defendant no.2, who has issued show cause notices proposing to take action against the plaintiff, whereas the defendant no. 2 is not a signatory to the arbitration agreement, therefore, the disputes cannot be referred to arbitration insofar as defendant no.2 is concerned.

25. He invites attention of the Court to order dated 15.05.2025 in CS (COMM) 1083/2024 to contend that a submission was made by the plaintiff in the said suit that the relief/claims sought in the suit were not notified to the General Manager of Indian Oil Corporation Limited, accordingly, an apprehension was expressed that the defendant will non-suit the plaintiff in the arbitral proceedings relying upon the clauses of GCC which makes the unnotified claims of the contractor as non-arbitrable, leaving the plaintiff as remediless. In light of the said submission, the Court had directed the IOCL to get written instructions in that behalf, but no such instructions were submitted.

26. Mr. Vishal Gehrana, learned counsel for the defendant no. 2 submits that the defendant no.2 is a non-signatory to the arbitration agreement and is a stranger to the contract between the plaintiff and defendant no. 1, therefore, no reference to arbitration can be made insofar as defendant no.2 is concerned.

27. He submits that defendant no. 2 is neither necessary nor a proper party to the suit on account of non-disclosure of any cause of action against it. Further, the defendant no. 2 was deleted from the array of defendants in CS(COMM) 1083/2024 vide this Court’s Order dated 19.12.2024.

28. In rejoinder, Mr. Koura submits that the dictum in Sukanya Holdings (supra) has been overruled by the statutory amendment to Section 8 of the Act brought about by the Arbitration and Conciliation (Amendment) Act, 2015 i.e. Act 3 of 2016 (hereinafter, ‘amendment of 2015’), which restricts the referral court’s role only to examine the prima facie existence of a valid arbitration agreement. He places reliance on Vidya Drolia (supra).

29. As far as bifurcation of the claims is concerned, Mr. Koura argues that in (i) Taru Meghani and Ors. v. Shree Tirupati Greenfield and Ors., 2020 SCC OnLine Bom 110; (ii) Lindsay International Private Limited and Ors. v. Laxmi Niwas Mittal, MANU/WB/0487/2022, and (iii) Marine Infrastructure (Goa) Pvt. Ltd. v. Chowgule Lavgan Shiprepair Pvt. Ltd. and Ors., MANU/MH/2001/2023, the High Courts of Bombay and Calcutta have split the subject matter of the suits to give effect to the arbitration agreement with respect to matters which are prima facie capable of being covered by the arbitration agreement, therefore, bifurcation of arbitrable and non-arbitrable subject matter is legally permissible and this Court has the power to do so.

30. I have given anxious considerations to the rival submissions and have perused the relevant record.

31. For examining the question raised in the present application with regard to the reference to arbitration under Section 8 of the Act, appropriate it would be to take note of the relevant clauses of the GCC with regard to the notified claims as well as the clauses providing for arbitration, which read thus: “1.21.0.0 “Notified Claim” shall mean a claim of the CONTRACTOR notified in accordance with the provisions of Clause 6.6.1.0 hereof. xxxxx xxxxx xxxxx 6.6.1.0 Should the CONTRACTOR consider that he is entitled to any extra payment or compensation in respect of the works over and above the amounts due in terms of the Contract as specified in Clause 6.3.1.0 hereof or should the CONTRCTOR dispute the validity of any deductions made or threatened by the OWNER from any Running Account Bills, the CONTRACTOR shall forthwith give notice in writing of his claim in this behalf to the Engineer-in-Charge and the Site Engineer within 10 (ten) days from the date of issue of orders or instructions relative to any works for which the CONTRACTOR claims such additional payment or compensation or of the happening of other event upon which the CONTRACTOR bases such claim, and such notice shall give full particulars of the nature of such claim, grounds on which it is based, and the amount claimed. The OWNER shall not anywise be liable in respect of any claim by the CONTRACTOR unless notice of such claim shall have been given by the CONTRACTOR to the Engineer-in-charge and the Site-Engineer in the manner and within the time aforesaid and the CONTRACTOR shall be deemed to have waived any and all claims and all his rights in respect of any claim not notified to the Engineer-in-Charge and the Site Engineer in writing in the manner and within the time aforesaid. 6.6.3.0 Any claims of the CONTRACTOR notified in accordance with the provision of Clause 6.6.1.0 hereof as shall remain at the time of preparation of Final Bill by the contractor shall be separately included in the Final Bill prepared by the CONTACTOR in the form of a Statement of Claims attached thereto, giving particulars of the nature of the claim, grounds on which it is based, and the amount claimed and shall be supported by copy (ies) of the notice (s) sent in respect thereof by the CONTRACTOR to the Engineer-in-Charge and Site Engineer under Clause 6.6.1.0 hereof. In so far as such claim shall in any manner or particular be at variance with the claim notified by the CONTRACTOR within the provision of Clause 6.6..0 hereof, it shall be deemed to be a claim different from the notified claim with consequence in respect thereof indicated in Clause in 6.6.1.0 hereof, and with consequences in respect of the notified claim as indicated in Clause 6.6.3.[1] hereof. 6.6.3.[1] The OWNER shall not anywise be liable in respect of any notified claim not specifically reflected in the Final Bill in accordance with the provisions of Clause 6.6.3.0 hereof and any and all notified claims not specifically reflected and included in the Final Bill in accordance with the provisions of Clause 6.6.3.0 hereof shall be deemed to have been waived by the CONTRACTOR. Further the OWNER shall have no liability in respect thereof and the CONTRACTOR shall not be entitled to raise or include in the Final Bill any claim(s) other than a notified claim conforming in all respects and in accordance with the provisions of Clause 6.6.3.0 hereof. 9.0.1.0 Subject to the provisions of Clauses 6.7.1.0, 6.7.2.0 and 9.0.2.0 hereof, any dispute arising out of a Notified Claim of the CONTRACTOR included in the Final Bill of the CONTRACTOR in accordance with the provisions of Clause 6.6.3.0 hereof, and any dispute arising out of any claim(s) of the OWNER against the CONTRACTOR shall be referred to the arbitration of a Sole Arbitrator selected in accordance with the provisions of Clause 9.0.1.[1] hereof. It is specifically agreed that the OWNER may prefer its claim(s) against the CONTRACTOR as counter-claim(s) if a Notified Claim of the CONTRACTOR has been referred to arbitration. The CONTRACTOR shall not, however, be entitled to raise as a setoff, defence or counter-claim any claim which is not a Notified Claim included in the CONTRACTOR's Final Bill in accordance with the provisions of Clause 6.6.3.0 hereof. 9.0.2.0 Any dispute (s) or difference (s) with respect to or concerning or relating to any of the following matters are hereby specifically excluded from the scope, purview and ambit of the Arbitration Agreement embodied in Clause 9.0.1.0 with the intention that any dispute or difference with respect to any of the said following matters and/or relating to the Arbitrator’s or Arbitral Tribunal’s jurisdiction with respect thereto shall not and cannot form the subject-matter of any reference or submission to arbitration under Clause 9.0.1.0 and the Arbitrator or the Arbitral Tribunal shall have no jurisdiction to entertain the same or to render any decision with respect thereto, and such matter shall be referred to the General Manager for decision by the nominee, as the case may be (whose decision shall be final and binding on the OWNER and the CONTRACTO) prior to the Arbitrator appointed under Clause 9.0.1.0 proceeding with or proceeding further with the reference, as the case may be. The said excluded matters are:

(i) With respect to or concerning the scope or existence or otherwise of the Arbitration Agreement.

(ii) Whether or not to a Claim sought to be referred to arbitration by the Contractor under clause 9.0.1.0 is a Notified Claim;

(iii) Whether or not a Notified claim is included in the

32. As can be seen from above Clause 1.21.0.0 defines “notified claims” to mean a claim of the contractor notified in accordance with the provisions of Clause 6.6.1.0. Clause 6.6.1.0. provides that the contractor shall have to give notice with respect to his claim of the nature mentioned therein to the Engineer-in-Charge and the Site Engineer within the specified period of 10 days failing which the contractor shall be deemed to have waived any and all claims and all his rights in respect of any claim not so notified.

33. Clauses 9.0.1.0 and 9.0.2.0 were also subject matter of consideration before the Hon’ble Supreme Court in Indian Oil Corporation Limited (supra) wherein the Court, with reference to the said clauses, observed that only the notified claims of the contractor which have been included in the final bill of the contractor can be referred to arbitration. Further, for deciding the question as to whether or not a claim sought to be referred to arbitration by the contractor is a notified claim, the arbitrator or Arbitral Tribunal shall have no jurisdiction at all, and the same shall have to be decided by the General Manager and that too prior to arbitral proceedings. The relevant extract from the said decision reads thus:

34. The submission put forth on behalf of the plaintiff is that the disputes raised in the prayer (a) to (f) of CS(COMM) 295/2024 are the claims of the plaintiff and the same not notified claims, therefore, they are not arbitrable. As it is an admitted case of the plaintiff that the disputes raised in the prayer (a) to (f) of CS(COMM) 295/2024 are not notified claims, therefore, as per the Clauses 9.0.1.0 and 9.0.2.0 of the GCC as well as the dictum in Indian Oil Corporation Limited (supra) such disputes cannot be referred to arbitration, if the same are found to be the claims of the plaintiff i.e. the Contractor.

35. However, in the event this Court prima facie finds that the prayer (a) to (f) involves the disputes arising out of the claim(s) of the defendant no.1 i.e. the Owner, the same will have to be referred to the arbitration, as there is no pre-condition under clause 9.0.1.0 for notifying the claims of the Owner (defendant no.1), for referring the same to arbitration.

36. Therefore, the question that whether the claims in the prayer (a) to (f) are the claims of the plaintiff or of the defendant no.1 assumes relevance.

37. Upon reading of the prayer clause of the suit, this Court prima facie finds that -

(i) The plaintiff in prayer (a) of the suit seeks to restrain the defendants from adjusting or making any claim of any nature, whatsoever, raised by the defendants against the plaintiff, from the account of the plaintiff in any project other than the project of the subject contract. This prayer itself refers to the claim of the defendants against the plaintiff. In para C (viii) of the plaint, it has been elaborated that the defendants have unlawfully threatened the plaintiff to withhold money from their other projects with IOCL, in order to recover the dues of the workers who are required to be allegedly compensated by IOCL as the principal employer. This prayer apparently gives rise to a dispute as to whether the defendant no.1 is entitled to recover the dues paid to workers, from the money payable to the plaintiff under other projects.

(ii) In prayer (b), the plaintiff prays for permanent injunction to restrain defendants from undertaking any coercive and/or penal measures against the plaintiff in respect of or in connection with the works awarded under the subject contract. Likewise, this prayer also raises a dispute as to whether the defendants are entitled to take any proposed coercive or penal measures against the plaintiff under the contract.

(iii) In prayer (c), the plaintiff seeks mandatory injunction directing the defendants to deliver up the bank guarantee so as to discharge the same. This prayer raises a dispute as to the entitlement of the defendants to invoke bank guarantee in terms of the contract.

(iv) Prayer (d) is for declaration that show cause notices issued by defendants are bad in law and null and void. Likewise, in prayer (e), declaration is sought that any offloading or re-tendering of the works under the subject contract/tender by the defendants shall not be at the risk and cost of the Plaintiff. These two prayer clauses relate to the proposed action of the defendants to offload or retender the incomplete work at the risk and cost to the plaintiff as per clause no. 4.7.3.0 of GCC for which defendant no.2 also issued show cause notices. Thus, these two prayer clauses also raise the disputes concerning the defendant no.1’s contractual authority or competence to offload or re-tender the work at the risk and cost of the Plaintiff.

(v) Prayer in clause (f) is for recovery of a total sum of

Rs.9,56,71,682/-, which is possibly the aggregate amount of the nine claims made by the plaintiff in paras 6 to 14 of the plaint.

38. As can be seen, in the prayers (a) to (e) the plaintiff is only seeking to prevent defendant no.1 from recovering any amount or taking any other action proposed by the defendants under the contract. The said prayers do not pertain to the substantive claims of the plaintiff, rather they are the disputes arising out of the claims of, or action proposed to be taken by the defendant no.1 (owner) against the plaintiff (contractor) under the contract and are thus, arbitrable in the prima facie opinion of this Court.

39. Insofar as the payer (f) is concerned, the same pertains to disputes arising out of non-notified claims of the plaintiff, and are thus, nonarbitrable. The defendant no.1 has rightly not prayed in the application for having the dispute qua the said claims referred to the arbitration.

40. The next question which arises for consideration of this Court is that whether the defendant no.1/applicant could seek reference to arbitration only in respect of the disputes arising out of the prayers (a) to (e), leaving out the disputes arising out of prayer (f). The submission on behalf of the plaintiff premised on the dictum laid down in Sukanya Holdings (supra), is that bifurcation of cause of action/subject matter of dispute of the suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the court, is not permissible, and that the law laid down in Sukanya Holdings (supra) is still holding the field.

41. To appreciate the above submission, apposite would it be to advert to the provisions contained in Section 8 prior to the amendment of 2015; the amendments as proposed; and the provisions of Section 8 after its amendment.

42. Section 8 prior to its amendment read as under:

43. The proposed amendment of Section 8(1) of the Act as well as a Note referring to the decision in Sukanya Holdings (supra) as mentioned in Report no. 246 of the Law Commission of India dated 05.08.2014, reads as under: “5. In section 8 of the Act,

(i) In sub-section (1), after the words “substance of the dispute, refer” add “to arbitration, such of” and after the words “the parties to” add “the action who are parties to the” and after the word “arbitration” add the word “agreement”.

(ii) after sub-section (1), add “Provided that no such reference shall be made only in cases where –

(i) the parties to the action who are not parties to the arbitration agreement, are necessary parties to the action;

(ii) the judicial authority finds that the arbitration agreement does not exist or is null and void. Explanation 1: If the judicial authority is prima facie satisfied about the existence of an arbitration agreement, it shall refer the parties to arbitration and leave the final determination of the existence of the arbitration agreement to the arbitral tribunal in accordance with section 16, which shall decide the same as a preliminary issue; Explanation 2: Any pleading filed in relation to any interim application which has been filed before the judicial authority shall not be treated to be a statement on the substance of the dispute for the purpose of this section.” [NOTE: The words “such of the parties… to the arbitration agreement” and proviso (i) of the amendment have been proposed in the context of the decision of the Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh

44. However, Section 8 was amended by the amendment of 2015 i.e. Amendment Act 3 of 2016, and post amendment Section 8 reads as under: “8. Power to refer parties to arbitration where there is an arbitration agreement.—(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof: Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.” \

45. Since the submission of the plaintiff that there cannot be splitting of cause of action and the subject matter of the suit is essentially predicated on the decision of the Supreme Court in Sukanya Holdings (supra), therefore, the relevant paragraphs of the said decision are set out below for the ease of reference:

46. Notably, the decision in Sukanya Holdings (supra) was rendered prior to the amendment of Section 8 by the amendment of 2015. As borne out from the Note appended to the proposed amendment, a proviso was proposed to be incorporated in Section 8(1) with reference to Sukanya Holding (supra) to the effect that no reference shall be made where the parties to the action who are not parties to the arbitration agreement, are necessary parties to the action. However, this proviso did not find place in the amendment that was finally carried out. Rather, amended Section 8(1) is broader in terms having non-obstante clause which, in effect, provides that a judicial authority shall notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

47. After the amendment of Section 8(1), though reference was made by the Supreme Court to Sukanya Holdings (supra) in the subsequent decision in Ameet Lal Chand Shah (supra), but no observation was made therein that the law laid down in Sukanya Holding (supra) continues to hold the field even after the amendment.

48. However, in Emaar MGF (supra) the Supreme Court noted the decision in Sukanya Holdings (supra) in light of the 246th Report of the Law Commission as well as the consequent amendment carried out in Section 8 of the Act and observed that the insertion of words “notwithstanding any judgment, decree or order of the Supreme Court or any Court” were with intent to minimize the intervention of judicial authority in the context of arbitration agreement. Further, emphasizing on the pro-arbitration approach post amendment of Section 8(1) of the Act, it was observed that amended provision limits the intervention of the judicial authority only on one aspect i.e. when it finds that prima facie no valid arbitration agreement exists. The Court also opined that several conditions which were noticed by the Supreme Court in various pronouncements made prior to amendment were not to be adhered to and the intention of the Legislature as borne out from the amended provisions shows clear departure from adherence to the conditions as noticed in earlier two decisions of the Supreme Court including Sukanya Holdings (supra). The relevant extract from the said decision reads thus:

56. This Court, thus, in the above cases has noticed that amendments are expressed to apply notwithstanding any prior judicial precedents, but the scope of amendment under Section 8(1) was confined to three categories as has been noted in para 28 of Ameet Lalchand Shah v. Rishabh Enterprises [Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC 678: (2019) 1 SCC (Civ) 308: AIR 2018 SC 3041]. Amendments under Section 8, thus, were aimed to minimise the scope of judicial authority to refuse reference to arbitration and only ground on which reference could have been refused was that it prima facie finds that no valid arbitration agreement exists. Notwithstanding any prior judicial precedents referred to under Section 8(1) relates to those judicial precedents, which explained the discretion and power of judicial authority to examine various aspects while exercising power under Section 8.”

49. Further, post amendment of 2015 a clear shift can be seen in the legal position insofar as judicial interference at the stage of reference is concerned. A three Judges Bench of the Supreme Court in Vidya Drolia (supra) with reference to the legislative mandate of the Act 3 of 2016 and Act 33 of 2019, the principle of severability and competence-competence, emphasized that the arbitral tribunal is the first preferred authority to determine and decide all questions of non-arbitrability whereas the power conferred on the Court on the said aspect is of “second look” and that too post passing of the award. The Apex Court also held that the Court by default would refer the matter when contentions relating to non-arbitrability are arguable and the Court would not enter into a mini-trial or elaborate review. It was also observed that post amendment of 2015, the judicial interference at the reference stage has been substantially curtailed. The proarbitration approach is also evident from the conclusion of the Hon’ble Supreme Court that “when in doubt, do refer”. The relevant extracts from Vidya Drolia (supra) read thus: “154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competencecompetence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of nonarbitrability. The court has been conferred power of “second look” on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-clause

(i) of Section 34(2)(b) of the Arbitration Act.

154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of nonarbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably “non-arbitrable” and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism.

225.2. Post the 2015 Amendment, judicial interference at the reference stage has been substantially curtailed.

244.4. The court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above i.e. “when in doubt, do refer”.”

50. The Seven Judges Bench of the Hon’ble Supreme Court in In Re: Interplay (supra) while examining the scope of Sections 8 and 11 of the Act again made following pertinent observations which also shows tilt in favour of greater arbitral autonomy and extremely limited judicial interference:

52. A learned Single Judge of the Bombay High Court in Taru Meghani (supra) also had an occasion to consider the effect and import of Sukanya Holdings (supra). In the said decision the Court was confronted with the question as to whether by claiming additional relief not covered by the arbitration agreement, does the object of the Act which enjoins the Court to refer the disputes to arbitration in terms of the arbitration agreement, get diluted? The plaintiffs therein had relied upon Sukanya Holdings (supra) to contend that bifurcation of subject matter of the suit is impermissible. The Court endeavoured to find an answer to the above question in light of the legislative mandate of Section 8 of the Act, and the provisions contained in Rule 3 and 6 of Order II of the CPC, and observed that if such a submission is accepted, it has the propensity to give a long leash to the plaintiff to circumvent the arbitration agreement by uniting a cause of action which is beyond the purview of the arbitration agreement and by adding a party who is not a party to the arbitration agreement. The pertinent observations made in the said decision reads thus:

22. On the one hand, the Code permits the plaintiff to unite multiple causes of action against the same defendants in one suit. On the other hand, in the event of possibility of embarrassment, delay or inconvenience, the court is empowered to direct separate trials or pass such other order as would advance the cause of justice. If a Court is empowered to order separate trial when it finds that the joinder of causes of action would embarrass or delay the trial or it is otherwise inconvenient, a fortiori a Court cannot be said to be divested of the authority to direct separation of causes of action when the joinder of causes of action, in pursuance of an enabling provision like Rule 3 has the effect of defeating the provisions of a special law, like section 8 of the Act.

23. The aforesaid legal position is required to be considered coupled with the approach which is expected of the Court where an application seeking reference of the dispute to arbitration on the strength of an arbitration clause is preferred. Such an application, in substance, constitutes a plea of statutory exclusion of the jurisdiction of the court. A useful reference in this context can be made to the judgment of the Supreme Court in the case of Sundaram Finance Limited v. T. Thankam[2], wherein the Supreme Court delineated the approach expected of the Civil Court in dealing with an application under section 8 of the Act, in Paragraph 13:

24. In the light of the aforesaid exposition of the legal position, I am of the considered view that the broad submission on behalf of the plaintiffs that the reference of the dispute to arbitration as regards the first transaction, would entail the bifurcation of the subject matter of the suit and, thus, it is impermissible in law, cannot accepted in an unqualified manner. The submission is fraught with the danger of defeating an arbitration agreement by simply adding a cause of action the plaintiff may have against the defendants, which is not covered by the arbitration agreement. If such a course is readily accepted, it has the propensity to give a long leash to the plaintiff to circumvent the arbitration agreement by uniting a cause of action which is beyond the purview of the arbitration agreement. It would have the effect of denuding section 8 of the Act of its force and vigour. Such an interpretation would also derogate from the object which the Arbitration and Conciliation Act, 1996 is intended to achieve; of minimum judicial intervention where parties have agreed to arbitrate the dispute.

53. Again, in Marine Infrastructure (supra) the learned Single Judge of Bombay High Court was confronted with a situation where the suit covered certain matters, which were outside the subject matter amenable to the arbitration and also against the parties, who were not parties to the arbitration. The Court considered the controversy in the light of Sukanya Holdings (supra) and rejected the submission that the said decision continues to hold the field despite the legislative change brought about by the amendment Act and in the face of the observations of the Supreme Court in Emaar MGF (supra).

54. In Lindsay International (supra) the Calcutta High Court considered the amendment brought about in Section 8 of the Act by the amendment Act 3 of 2016, the decisions in Emaar MGF (supra) and Vidya Drolia (supra) to conclude that Sukanya Holdings (supra) is no longer a relevant factor for the Court to consider at the stage of reference in an application under Section 8 of the Act, though it may continue to be relevant for deciding applications under Section 8 filed prior to the amendment.

55. Having regard to the above discussion, more importantly, the amendment in Section 8 of the Act by the amendment Act of 2015; the tilt in favour of the greater arbitral autonomy and minimal judicial intervention post amendment as delineated in various decisions of the Supreme Court, as noted herein above; and the observation made in Emaar MGF (supra) that the pronouncements made prior to amendment of Section 8 were not to be adhered to and the legislative intent was to make clear departure from the conditions in Sukanya Holdings (supra), this Court is not persuaded to accept the submission of the plaintiff that Sukanya Holdings (supra) will still govern the situation at hand and bifurcation of subject matter of the suit is impermissible.

56. In so far as the submission of the Plaintiff that Sukanya Holdings (supra) has been relied upon in Ameet Lal Chand Shah (supra); Gujarat Composite Limited (supra) and Canara Bank (supra), this Court finds that in Ameet Lal Chand Shah[1] (supra) as well as in Gujarat Composite Limited (supra), there is reference of Sukanya Holdings (supra) but none of these decisions have specifically observed that the said decision continues to hold the field.

57. However, in Emaar MGF[2] (supra), which was rendered after Ameet Lal Chand Shah (supra), the Apex Court, as noted above, categorically observed that amendment in Section 8 brought about by the amendment of Act 3 of 2016 shows the legislative intent to move away from the conditions as noticed in Sukanya Holdings (supra). The decision in Emaar MGF (supra) was not brought to the notice of the Supreme Court in Gujarat Composite Limited (supra), which was a subsequent decision rendered on 01.05.2023. Likewise, Emaar MGF (supra) has also not been noticed by the Division Bench of this Court in Canara Bank (supra).

58. Lastly, submission of Mr. Krishnan on behalf of the plaintiff was that defendant no. 2 is not a party to the arbitration agreement; therefore, the Ameet Lal Chand Shah (supra) was rendered on 03.05.2018. Emaar MGF (supra) was rendered on 10.12.2018. dispute cannot be referred to arbitration. Likewise, on behalf of defendant no.2 also, similar submission was advanced.

59. This issue is no more res integra. The Supreme Court in Cox and Kings Ltd. v. SAP India P. Ltd., (2024) 4 SCC 1 has laid down that at the stage of Section 8 of the Act, what has to be seen by the referral Court is the prima facie validity or existence of the arbitration agreement. As regards the referral of non-signatory to arbitration agreement, the only aspect on which the referral Court is to prima facie rule is that whether or not the nonsignatory is a veritable party to the arbitration agreement, leaving it for the Arbitral Tribunal to decide on the basis of the factual evidence and application of legal doctrine that whether non-signatory is indeed bound by the arbitration agreement. The relevant extract from the said decision reads thus:

60. Recently, in Ajay Madhusudan Patel v. Jyotrindra S. Patel, (2025) 2 SCC 147 the Supreme Court ruled as to when it could be inferred that the non-signatory party was a veritable party. The relevant para from the said decision is reproduced herein below for the ease of reference: “83. It is evident that the intention of the parties to be bound by an arbitration agreement can be gauged from the circumstances that surround the participation of the nonsignatory party in the negotiation, performance, and termination of the underlying contract containing such an agreement. Further, when the conduct of the non-signatory is in harmony with the conduct of the others, it might lead the other party or parties to legitimately believe that the nonsignatory was a veritable party to the contract containing the arbitration agreement. However, in order to infer consent of the non-signatory party, their involvement in the negotiation or performance of the contract must be positive, direct and substantial and not be merely incidental. Thus, the conduct of the non-signatory party along with the other attending circumstances may lead the referral court to draw a legitimate inference that it is a veritable party to the arbitration agreement.”

61. Now reverting to the facts of the case at hand, it is not in dispute that the defendant no.2 is a non-signatory to the arbitration agreement. However, in the suit the plaintiff has directed all the prayers against both the defendants. It was argued on behalf of the plaintiff that the defendant no.2 has been threatening to suggest invocation of bank guarantee, adjustment of claims against plaintiff’s other contracts with defendant no.1 and termination of the contract, without consideration of the plaintiff’s request for extension of time [EOT]. It is to be noted that defendant no.2 has been retained as an Engineering, Procurement and Construction Management Consultant “EPCM Consultant”. Defendant no.2’s personnel is appointed as the Engineer-in-Charge under the contract terms between the plaintiff and defendant no.1. The show-cause notices which are subject matter of the controversy have been issued by the defendant no.2 whereby the plaintiff has been called upon to show-cause as to why the remaining work be not re-tendered at the risk and cost of the plaintiff. The circumstances prima facie suggests that the defendant no.2 is a veritable party to the arbitration agreement. However, in view of the above clear expositions a final call that whether defendant no.2 can be joined as party in the arbitration proceedings and whether the Arbitral Tribunal’s jurisdiction extend to the defendant no.2, shall be taken by the Arbitral Tribunal itself on the basis of the factual evidence and other attending circumstances.

62. In the earlier part of this judgment, this Court has also prima facie come to the conclusion that the disputes arising out of prayer (a) to (e) relate either to the claim(s) of defendant no.1 or to the action proposed to be taken by the defendant no.1 (owner) against the plaintiff (contractor) under the contract, hence, the same are arbitrable. However, even if there remains any doubt or factual controversy regarding their non-arbitrability, still this Court is obligated to refer the matter, regard being had to the statuory mandate of Section 8 of the Act, which is to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism, leaving it to the Arbitral Tribunal to decide the said controversy.

63. In view of the above discussion, the present application is partly allowed and the following order is passed: i) The parties are referred to arbitration in accordance with the arbitration clause contained in clause 9.0.1.0 of the GCC insofar as disputes arising out of prayer (a) to (e) are concerned. ii) The Arbitrator shall be appointed by the parties in accordance with the provisions of the Act. iii) As regards the claim made in prayer (f), the plaintiff is at liberty to prosecute the present suit against the defendants, and amend the plaint accordingly.

64. The application is disposed of in the above terms. I.A. 8561/2025 in CS(COMM) 1083/2024

65. The prayers made in clauses (a) to (c) and (e) in the present suit, in substance, are identical to the prayers (a) to (c) and (e) made in CS (COMM) 295/2024, and applying the same reasoning as discussed for the said prayers in CS (COMM) 295/2024, they are prima facie held to be arbitrable.

66. In clause (d), prayer has been made for a decree declaring that the show cause notice dated 17.07.2024 issued by the defendant(s) to the plaintiff for holiday listing, and any subsequent or consequential actions arising therefrom, is bad in law, null and void. This prayer relates to the proposed action of the defendant(s) to place the plaintiff on the “holiday list” (blacklisting), and raises a dispute involving the defendant’s competence under the contract to take such an action, which in the prima facie view of this Court, is an arbitrable dispute.

67. In prayer (f), the plaintiff prays for mandatory injunction seeking direction to the defendant/IOCL to extend the tenure of the projects other than the project at Barauni Refinery. Indubitably, such other projects are not the subject matter of the present contract, which only concerns the project at Barauni Refinery, therefore, the said other projects are not covered by the arbitration contained in clause 9.0.1.0 of the GCC. In that view of the matter, dispute referred to in the prayer (f) is held to be non-arbitrable under the contract.

68. The prayer in clause (g) pertains to disputes arising out of nonnotified claims of the plaintiff as detailed in para 7 of the plaint, and resultantly the same are non-arbitrable. Likewise, prayer (h), which is for the interest on the claim made in clause (g), is also non-arbitrable.

69. Under the above circumstances, the present application is partly allowed and following order is passed: i) The parties are referred to arbitration in accordance with the arbitration clause contained in clause 9.0.1.0 of the GCC insofar as disputes arising out of prayer (a) to (e) are concerned. ii) The Arbitrator shall be appointed by the parties in accordance with the provisions of the Act. iii) As regards the claim made in prayer (f), (g) and (h), the plaintiff is at liberty to prosecute the present suit against the defendant, and amend the plaint accordingly.

70. The application is disposed of in the above terms. JULY 27, 2026 N.S. ASWAL/jg

71. After the judgment was pronounced, Ms. Anushree Kapadia, learned counsel for the plaintiff submits that in both the suits, there is an interim protection available to the plaintiff, which may be extended for four weeks.

72. Attention of the Court has been drawn to orders dated 16.04.2024 and 20.08.2024 passed in CS(COMM) 295/2024, as well as orders dated 05.12.2024 and 19.12.2024 passed in CS(COMM) 295/2024.

73. Ms. Paramjeet Benipal, learned counsel for the defendant no.1, on instruction, submits that the defendant/IOCL shall not take any coercive action against the plaintiff for two weeks from today. The statement is taken on record. No further orders are called for. JULY 27, 2026 N.S. ASWAL/jg