Case Note & Summary
The petitioner, M/s. Shilpi Constructions Engineers & Contractors, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate disputes arising from a contract for construction of a residence at Village Dhokawade, Alibaug, Maharashtra, for respondent no.2, Mrs. Deepali Balakrishna Goenka. The petitioner also impleaded respondent no.1, Welspun Group, alleging that representatives of the group were involved in the dealings. The court noted that respondent no.1 is not a legal entity, but the impleadment was permitted by an earlier order. The facts revealed that the petitioner submitted a quotation on 15 December 2015, and respondent no.2 issued a work order dated 21 December 2015, which contained an arbitration clause. The petitioner commenced work but disputes arose regarding payment. The petitioner invoked the arbitration clause, but respondent no.2 did not appoint an arbitrator. The court examined whether a valid arbitration agreement existed. It held that the work order, which was accepted by the petitioner, constituted a valid arbitration agreement under Section 7 of the Act, despite not being signed by both parties, as the work order was issued by respondent no.2 and the petitioner's acceptance was evident from conduct. The court rejected the argument that the arbitration clause was not binding. Accordingly, the court allowed the petition and appointed a sole arbitrator to adjudicate disputes between the petitioner and respondent no.2.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The petitioner sought appointment of an arbitrator for disputes arising from a construction contract. The court examined whether the work order containing an arbitration clause constituted a valid arbitration agreement between the parties. Held that the work order, which was accepted by the petitioner, contained an arbitration clause and thus constituted a valid arbitration agreement under Section 7 of the Act. The court rejected the contention that the arbitration clause was not binding as it was not signed by both parties, noting that the work order was issued by respondent no.2 and accepted by the petitioner. (Paras 5-10) B) Arbitration Law - Non-Signatory to Arbitration Agreement - Section 11 of the Arbitration and Conciliation Act, 1996 - Impleadment of Respondent No.1 - The petitioner impleaded respondent no.1 (Welspun Group) as a party, alleging involvement in the contract. The court noted that respondent no.1 is not a legal entity and no arbitration agreement exists with it. However, since respondent no.2 did not object to the impleadment and the court had earlier permitted it, the petition was maintainable against respondent no.2 alone. Held that the arbitration agreement is only between the petitioner and respondent no.2, and the appointment of arbitrator is made only for disputes between them. (Paras 2-4, 11)
Issue of Consideration
Whether an arbitration agreement exists between the petitioner and respondent no.2, and whether an arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The petition is allowed. A sole arbitrator is appointed to adjudicate the disputes between the petitioner and respondent no.2. The arbitrator shall be appointed by the court or as agreed by the parties. The petition is disposed of accordingly.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- existence of arbitration agreement
- appointment of arbitrator
- non-signatory to arbitration agreement
- reference to arbitration
