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IN THE HIGH COURT OF DELHI AT NEW DELHI
ARUNA SURESH,J
M/S. SCON CONTRACTS .... PETITIONER
Versus
NEENA DHINGRA ..... RESPONDENT
Arb. P.No. 160/2007
Decided On : 5th October, 2007
Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996, Section 11 - 4, 7, 9, 15
Fact of the Case:
The petitioner sought the appointment of an arbitrator under section 11 of the Arbitration and Conciliation Act, 1996, due to a dispute arising from a civil work contract. The respondent contested the application, arguing the absence of an arbitration agreement between the parties.
Finding of the Court:
The court found that the draft Articles of Agreement lacked material particulars and was not duly executed, thus not constituting a valid arbitration agreement. The respondent's failure to reply to a notice did not imply an admission of the existence of an arbitration agreement. The petitioner's previous ex-parte order under section 9 of the Act did not grant the right to file the present section 11 petition.
Issues: Dispute over the existence of an arbitration agreement, validity of the draft Articles of Agreement, and the implications of the respondent's non-reply to a notice.
Ratio Decidendi: The court held that the draft Articles of Agreement did not constitute a valid arbitration agreement as it lacked material particulars and was not duly executed. The respondent's non-reply to a notice did not imply an admission of the existence of an arbitration agreement.
Final Decision: The petition was dismissed as not maintainable.
1. Present petition has been filed by the petitioner M/s. Scon ContractsA against the respondent under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act) for appointment of an arbitrator. The petitioner was granted civil work for the respondents building at Plot No.33- 34, Sector 5, IMT, Manesar, Gurgaon vide letter of intent dated 4th April, 2005. As per the terms of the letter of intent Articles of Agreement issued alongwith the tender documents were to be executed on stamp paper but the same could not be done. The petitioner executed more than 80% of the contracted work, however, dispute arose between the parties. As per the Arbitration Clause 15 contained in the Articles of Agreement all disputes arising inter se the parties related to the work awarded in terms of the letter of intent are referable for adjudication to the arbitrator only.
2. Respondent failed to appoint an arbitrator despite service of notice dated 10th January, 2007, hence this application.
3. Respondent though has not filed any formal reply to the application, has contested the same. One of the objections raised by the respondent is that there is no arbitration agreement between the parties and therefore the present application is not maintainable. Learned counsel for the petitioner has referred to letter of intent dated 4th April, 2005 to say that as per this letter, the petitioner was appointed as civil contractor by the respondent on the terms and conditions contained in clause 1 to 7 of the said letter of intent. According to him, Articles of Agreement issued alongwith the tender documents are a part of this letter of intent as is so specifically mentioned in the last line of the said letter dated 4th April, 2005. The relevant line of this letter reads as :- Apart from the above the Articles of Agreement issued along with tender documents shall be executed on stamp paper. After reading this line to say that Articles of Agreement form part of letter of intent is not correct. The petitioner was required to execute the Articles of Agreement on stamp paper. As admitted by the petitioner in para 9 of the application Articles of Agreement could not be executed on stamp paper.
4. Les of Agreement annexed to the letter of intent when perused is only a draft and lacks material particulars. All the blanks in this agreement which is a cyclostyle material have not been filled in by the employer or by the contractor. The first lines of this agreement are completely blank. Therefore, it cannot be said that this Les of Agreement was executed between the petitioner and the respondent. It is pertinent to mention here that subsequent two clauses of this agreement have been dully filled in. M/s. Architects Working Group is shown to be appointed as Architects and Consultant. The name of the petitioner nowhere finds mention in this draft agreement. Clause 10 of the agreement speaks about the payment terms. Even blanks in this clause are not filled in by the parties. This contract is not signed by any of the parties to the present petition. Therefore, this Articles of Agreement is only a draft and is not a duly executed document. Clause 15 contained in this agreement cannot be termed as arbitration agreement between the parties for referring their disputes connected with the agreement to the arbitration of sole arbitrator under the Act.
5. Schedule I General Conditions of Contract are equally blank and are devoid of material particulars. From this document it is difficult to say that there was an agreement inter se the parties to invoke provisions of Arbitration Act whenever there was a dispute.
6. Learned counsel for the petitioner has submitted that petitioner has executed more than 80% of the work as awarded by letter of intent dated 4th April, 2005. It may be that the petitioner has executed the work as awarded but then the execution of work as awarded by letter of intent does not in any manner raises the
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