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GR Green Life Energy Pvt. Ltd. v. Leitwind Shriram Manufacturing Pvt. Ltd.

Civil Appeal · 2021 INSC 107Decided 22 Feb 2021
Civil Appeal No. 692 of 2021
Justice Indu Malhotra · Justice Ajay Rastogi

Background

GR Green Life Energy (the contractor/appellant) and Leitwind Shriram Manufacturing had signed a 2014 Development Agreement to set up a wind farm in Maharashtra, containing a three-member arbitration clause. After a payment dispute arose, the respondent invoked arbitration and sought appointment of an arbitrator from the Madras High Court when the appellant did not nominate its own arbitrator; meanwhile, the appellant separately registered under the MSMED Act and sought resolution through the Facilitation Council, Pune. The Madras High Court held that counter-claims could not be referred to the MSMED Facilitation Council and appointed an arbitration process under the 1996 Act, which the appellant then challenged before the Supreme Court.

Decision Breakdown

During the Supreme Court proceedings, both parties agreed to resolve their disputes through a Court-appointed Sole Arbitrator instead of the three-member tribunal originally envisaged in the contract. The Court accordingly appointed a former High Court judge as Sole Arbitrator to decide all claims and counter-claims arising from the Development Agreement, to be conducted by the Madras High Court Arbitration Centre under its rules and the appointee's Section 12 independence/impartiality declarations. As a consequence, the parallel proceeding the appellant had initiated before the MSMED Facilitation Council, Pune was directed to stand closed, and the appeal was disposed of in these agreed terms.

Lesson Learnt

Parties can modify their original arbitration clause by mutual consent even during litigation (here, moving from a three-member panel to a sole arbitrator), and registering under the MSMED Act does not allow a contractor to sidestep a validly invoked arbitration clause when the dispute involves counter-claims the MSMED Act's Facilitation Council has no power to adjudicate.

Official source (sci.gov.in)View Judgment (PDF)

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