The legal principle established is that a party's locus standi in seeking arbitration can be upheld based on the acceptance of work and payments, and the court's jurisdiction can be determined based on the contract's clause.

Manmohan Singh, J.

.1. The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short “the Act”) has been filed by the petitioner for appointment of an Arbitrator. There is a contract dated 5th December, 2000 having arbitration Clause 49 and 51 which read as under: Clause 49:

.Except where otherwise provided, all disputes arising out of or relating to the contract, instructions or orders of Site engineers/Architect, or the execution or failure to execute the same, whether arising during the progress of the work or after completion or abandonment thereof shall be referred to a Sole Arbitrator to be appointed by accepting authority. The Arbitrator shall conduct proceedings as per the Arbitration Act, 1940 or any statutory modification or amendment to it from time to time.” Clause 51: “This Contract shall be governed by the Indian Laws for the time being in force. Any legal proceedings related to this contract shall be limited to Courts of laws under jurisdiction of Delhi Courts.

2. The brief facts are that certain disputes arose in relation to two contracts regarding civil construction, fire fighting and plumbing work in terms of which an alleged claim of Rs. 3,21,11,007/- of the petitioner is outstanding towards respondents 1 and 2. M/s. Bestech India Pvt. Ltd. is a Pvt. Ltd. Company. According to the petitioner, the said company was earlier known as M/s. Bestech Engineers and Contractors (a Partnership firm) and the said Partnership Firm had originally executed a contract with the respondents. The said partnership firm was taken over by the petitioner as an ongoing concern on 1st October, 2001 which executed the work relating to the present contract.

3. The work of contract was completed on 1st May, 2003, 7th May, 2003, 31st May, 2003 and 19th September, 2003 as per the information given by way of the communications. The Project Manager also issued a completion certificate for plumbing and fire fighting work on 31st May, 2003 and the defect liability period expired on 31st May, 2004. Similarly the Project Manager on 19th September, 2003 certified the completion of civil and other related work and defect liability period of the said project expired on 15th September, 2004.

4. The final bill No. 7 and 8 were raised and certificate of payment was issued by the respondent through their Agent and Project Manager M/s. Vastu Kriti for a sum of Rs. 7,99,22,509/- and Rs. 1,03,69,650/- respectively. Against these bills, a sum of Rs. 5,81,81,000/- was released by respondent No. 1 and 2 in various instalments and balance of Rs. 3,21,11,007/- is outstanding towards respondents.

.5. The petitioner submits that it was repeatedly assured by respondents No. 1 and 2 that their pending payment would be released in instalments. However, after releasing a few instalments, no payment was received except false assurances. The petitioner thereafter sent reminders dated 20th October, 2003, 15th December, 2003 and 22nd March, 2004 followed by a legal notice dated 23rd October, 2004 to the respondents. However, no payment was received by the petitioner who ultimately gave a notice dated 28th February, 2005 for appointment of Arbitrator within 30 days of the receipt of the notice. The said notices were duly received by respondents No. 1 and 2. However, according to the petitioner, respondents No. 1 and 2 failed to give any reply or appoint any arbitrator. Thereafter, the petitioner filed the present petition under Section 11(6) of the Act.

6. Respondents No. 1 and 2 have filed their reply to the petition mainly contending that (a) the petitioner has no locus standi to seek arbitration since there is no arbitration agreement between the petitioner i.e. M/s. Bestech India Pvt. Ltd. and respondents No. 1 and 2 as the two contracts were between the respondents and erstwhile partnership firm i.e. M/s. Bestech Engineers and Contractors and therefore, the petition is not maintainable; (b) the respondents have appointe