Case Note & Summary
The applicant, M/s. Jay Bhagwati Construction Co., a partnership firm, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate disputes arising from a Work Order dated 18th June 2013 issued by the respondent, Haware Engineers & Builders Pvt. Ltd. The Work Order appointed the applicant as a contractor for development of a building at Kasar Wadavali, Ghodbunder Road, Thane. Clause 32 of the Work Order provided: 'Incase of any dispute, our Managing Director's decision will be final and binding on both the parties any dispute shall be referred to arbitration or any court.' Disputes arose, and the applicant sent a legal notice dated 15th September 2017 demanding payment of Rs.5,13,29,560.49 with interest, invoking Clause 32 as an arbitration clause. The respondent did not respond. The court considered whether Clause 32 constitutes a valid arbitration agreement. The court noted that the clause uses the word 'arbitration' and indicates the parties' intention to refer disputes to arbitration. The reference to 'any court' does not render the clause invalid as an arbitration agreement. The court held that the clause is an arbitration agreement and appointed a sole arbitrator to adjudicate the disputes. The application was allowed.
Headnote
A) Arbitration Law - Existence of Arbitration Agreement - Section 11(6) Arbitration and Conciliation Act, 1996 - Clause 32 of Work Order stated 'any dispute shall be referred to arbitration or any court' - Court held that the clause contains an arbitration agreement as the parties intended to refer disputes to arbitration, and the reference to 'any court' does not negate the arbitration clause - Held that the applicant is entitled to appointment of a sole arbitrator (Paras 1-6).
Issue of Consideration
Whether Clause 32 of the Work Order dated 18th June 2013 constitutes a valid arbitration agreement under the Arbitration and Conciliation Act, 1996, and whether the applicant is entitled to appointment of a sole arbitrator under Section 11(6) of the Act.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties under the Work Order dated 18th June 2013.
Law Points
- Arbitration clause
- existence of arbitration agreement
- Section 11(6) Arbitration and Conciliation Act
- 1996
- appointment of arbitrator
- ambiguous clause
- intention of parties
Case Details
2018 LawText (BOM) (10) 75
Commercial Arbitration Application No.121 of 2018
Mr.Aditya Thakkar a/w Ms.Rishika Harish a/w Mr.Deepak Shukla a/w Ms.Swapna Samant i/by Vinod Mistry Co. for the applicant. Mr.Atul Rajadhyaksha, Senior Advocate a/w Mr.Nishant Tripathi a/w Mr.Somnath Iyer i/by M. Tripathi & Co. for the respondent.
M/s. Jay Bhagwati Construction Co.
Haware Engineers & Builders Pvt. Ltd.
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Nature of Litigation
Commercial arbitration application for appointment of sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Remedy Sought
Applicant seeks appointment of a sole arbitrator to adjudicate disputes arising from Work Order dated 18th June 2013.
Filing Reason
Disputes arose between the parties regarding payment under the Work Order; respondent did not respond to the applicant's notice invoking arbitration clause.
Issues
Whether Clause 32 of the Work Order dated 18th June 2013 constitutes a valid arbitration agreement under the Arbitration and Conciliation Act, 1996.
Whether the applicant is entitled to appointment of a sole arbitrator under Section 11(6) of the Act.
Submissions/Arguments
Applicant argued that Clause 32 is an arbitration clause and invoked it via legal notice dated 15th September 2017.
Respondent did not respond to the notice or appear to contest the application.
Ratio Decidendi
Clause 32 of the Work Order, which states 'any dispute shall be referred to arbitration or any court', constitutes a valid arbitration agreement as the parties intended to refer disputes to arbitration. The reference to 'any court' does not negate the arbitration clause. Therefore, the applicant is entitled to appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
Clause 32 of the said work order is extracted as under : - 'Incase of any dispute, our Managing Director's decision will be final and binding on both the parties any dispute shall be referred to arbitration or any court.'
The applicant vide its advocate's letter dated 15th September 2017 called upon the respondent to pay a sum of Rs.5,13,29,560.49 and with interest @ 18% p.a.
Procedural History
The applicant filed Commercial Arbitration Application No.121 of 2018 under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator. The application was reserved on 19th October 2018 and pronounced on 25th October 2018.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11(6)
- Indian Partnership Act, 1932:
- Indian Companies Act, 1956:
