IMPORTANT POINT
When there is a choice between arbitration and court and one party invokes arbitration, it should be allowed.

JUDGMENT

Dipak Misra, CJI.

In the instant arbitration petition, preferred under Section 11(5) of the Arbitration and Conciliation Act, 1996 (for brevity, “the Act”), the petitioner seeks for constitution of an arbitral tribunal with a sole arbitrator to adjudicate the claims of the petitioner under the Commission Processing Contract dated 11.09.2014 and to pass such further order as may be deemed fit and proper in the facts and circumstances of the case.

2. The petitioner, company incorporated under the laws of People”s Republic of China having its office at Sanquiao Village, Fuchun Street, Fuyang, China, is engaged in the business of, inter alia, exporting and supplying high quality elevator guiderails, fish-plates, accessories and allied goods. The respondent, a partnership firm based in India having its office at Plot No.455, Road No.11, “A” Cross Road, GIDC, Kathwada, Ahmedabad – 382430, Gujarat, is engaged in the business of supplying elevator components for use in the modernization of existing lifts and the new design of the elevator.

3. The contract, namely, Commission Processing Contract (hereinafter referred to as “the Contract”) was entered into between the parties on 11.09.2014 in respect of supply of certain products under the Contract. In the course of performance of the Contract, as certain differences had arisen and the parties were unable to amicably settle the disputes which fell within the scope of the arbitration clause, the petitioner appointed Justice V.S. Agarwal, former Judge, High Court of Judicature at New Delhi as the sole arbitrator. On 30.03,2018, the petitioner called upon the respondent to consent to the appointment of the sole arbitrator within a period of thirty days from the receipt of the notice. The respondent received the said notice on 31.03.2018 and the respondent in its reply dated 05.04.2018 refused to concur and consent to the appointment of the sole arbitrator. Because of the aforesaid situation, the petitioner has been compelled to move this Court for appointment of the sole arbitrator. When the matter was listed before this Court after service of notice, the learned counsel for the respondent has placed reliance on the reply dated 05.04.2018 given by the counsel for the respondent. In the said reply, the facts asserted by the petitioner have been disputed. That apart, it has been stated that the claims put forth are beyond the provisions of the Contract.

4. To appreciate the controversy, it is required to be seen whether there is an arbitration clause for resolution of the disputes. Clause 15 of the agreement as translated in English reads as follows:-

“15. Dispute handling: Common processing contract disputes, the parties should be settled through consultation; consultation fails by treatment of to the arbitration body for arbitration or the court.”

5. It is submitted by learned counsel for the petitioner that if the clause of “dispute handling” is scrutinized appropriately, the disputes are to be settled through consultation and, if the consultation fails by treatment of to the arbitration body for arbitration or Court and, therefore, the matter has to be referred to arbitration. It is canvassed by him that the clause is not categorically specific that it has to be adjudicated in a court of law. It leads to choices and the choice expressed by the petitioner is arbitration.

6. Learned counsel for the respondent, in his turn, would urge that when it is stated arbitration or Court, the petitioner should knock at the doors of the competent court but not resort to arbitration, for the clause cannot be regarded as an arbitration clause which stipulates that the disputes shall be referred to arbitration.

7. To appreciate the clause in question, it is necessary to appositely understand the anatomy of the clause. It stipulates the caption given to the clause “dispute handling”. It states that the disputes should be settled through consultation and if the consultation fails by treatment of to the a