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As per case facts, the Applicant was a successful bidder for a contract with the Respondent Railways, which was later terminated. The Applicant challenged the termination through a Writ Petition
...and was granted liberty to file an application under Section 11 of the Arbitration Act. The contract included an arbitration clause, but it specified that arbitration was only applicable for disputes with a value less than or equal to 20 percent of the total contract value, while claims exceeding this threshold would not be arbitrated. The Applicant's estimated claim significantly exceeded this 20 percent limit. The question arose whether the court could constitute an Arbitral Tribunal under Section 11, considering the Applicant's claim exceeded the contract's arbitration cap, and if this restrictive covenant was discriminatory or arbitrary. Finally, the High Court held that the restrictive covenant was not discriminatory or arbitrary as it did not prevent the Applicant from seeking legal remedies; it only limited the arbitration mechanism to claims below a certain value, leaving other claims to be pursued in a Civil Court. Therefore, in the absence of an arbitration agreement for the Applicant's higher claim, the court lacked jurisdiction under Section 11, and the application was dismissed.
Bench
Applied Acts & Sections
Section 11
–The Arbitration And Conciliation Act, 1996
Section 21
–The Arbitration And Conciliation Act, 1996
Section 28
–The Arbitration And Conciliation Act, 1996
Legal Notes
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