Case Note & Summary
The applicant, M/s. Madhav Structural Engineering Ltd., filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator for disputes arising out of a construction contract with the respondent, Maharashtra State Road Development Corporation Ltd. The applicant's tender was accepted on 2nd February 2001, and a work order was issued on 2nd March 2001. The contract was governed by General Conditions of Contract, which included Clause 67 providing a multi-tiered dispute resolution mechanism: first, reference to the Engineer within 14 days of the dispute; second, if dissatisfied, reference to a Steering Committee within 14 days of the Engineer's decision; and finally, arbitration. The applicant invoked arbitration by a notice dated 30th January 2007. The respondent opposed the application solely on the ground that the applicant had not complied with the pre-arbitration procedure under Clause 67.1 and 67.2, i.e., referring the dispute to the Engineer and the Steering Committee. The court examined the correspondence between the parties and found that the respondent had participated in discussions and had not raised any objection regarding non-compliance with Clause 67 in its reply to the notice invoking arbitration. The court held that the respondent had waived its right to insist on the condition precedent and that the dispute was arbitrable. The court appointed a sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Pre-arbitration procedure - The court considered whether non-compliance with a multi-tiered dispute resolution clause (reference to Engineer and Steering Committee) precludes appointment of an arbitrator. The court held that where the respondent has participated in correspondence and failed to object to the invocation of arbitration at the appropriate time, it cannot later insist on strict compliance with the pre-arbitration procedure. The court appointed an arbitrator, finding that the respondent had waived its right to insist on the condition precedent. (Paras 1-10) B) Contract Law - Waiver and Estoppel - Clause 67 of General Conditions of Contract - The court held that the respondent, by not raising the objection regarding non-compliance with Clause 67.1 and 67.2 in its reply to the notice invoking arbitration, and by participating in correspondence, had waived its right to insist on the condition precedent. The court relied on the principle that a party cannot approbate and reprobate. (Paras 5-10)
Issue of Consideration
Whether the failure to refer the dispute to the Engineer and the Steering Committee as per Clause 67 of the General Conditions of the Contract bars the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- Pre-arbitration procedure
- Condition precedent
- Waiver
- Estoppel
- Multi-tiered dispute resolution clause
