The main legal principle established is that for referral to arbitration under Section 8 of the Arbitration and Conciliation Act, the existence of a 'dispute' is essential.

I.A. 13871/2016 (U/S 5 & 8 of the Arbitration and Conciliation Act)

1. This order shall dispose of the application of the defendant under Sections 5 & 8 of the Arbitration and Conciliation Act, 1996 for referring the dispute to the Arbitrator.

2. The undisputed facts relevant for the determination of the present application is that the defendant had awarded the Balance Civil & Structural Works, of Radisson Hotel & Metropolis Mall at Plot No. ‘A’, SIDCUL N.H. 87, IIE Pantnagar, Rudrapur, Uttrakhand, to the plaintiff vide Contract Agreement dated 08.12.2008. The said agreement contains the arbitration clause no. 13, pursuant to which, all the disputes arising out of the Contract had to be referred to the Arbitrator.

3. On the completion of the said work and after a discussion between the parties, the defendant determined a sum of Rs. 2,72,04,349/- as due and payable by them to the plaintiff. The defendant wrote a letter dated 01.04.2013 confirming the aforesaid outstanding amount towards running bills of the plaintiff and undertook to clear it by 15.05.2013. The plaintiff did not dispute the said amount and waited for the payment. The defendant, however, did not pay the said sum within the stipulated time and thereafter, the plaintiff served a legal notice dated 25.04.2015, calling upon the defendant to pay the said sum along with the interest at the rate of 18% per annum.

4. Upon failure of the defendant to make the payment pursuant to the legal notice, the present suit under Order XXXVII of the CPC has been filed.

5. Learned counsel for the defendant has argued that even if the liability to make the payment has been admitted, still the suit does not lie in view of Sections 5 & 8 of the Arbitration and Conciliation Act, 1996 and the dispute need to be referred to the Arbitrator. Reliance has been placed on the findings in the case of ION Exchange (India) Ltd. vs. MSK Projects (India) Ltd, 2005 (4) MhLj 921 and Novelty Jewellers vs. MMTC Limited (IA 2944 & 2945/2000), in CS(OS) No.1391/1999 decided on 23.08.2004. It is further argued that Section 8 of the Arbitration and Conciliation Act would have the primacy over Order XXXVII of CPC and if the conditions laid down in Section 8 of the Arbitration and Conciliation Act are fulfilled, the jurisdiction of the Civil Court is barred.

6. It is submitted that even on termination of a Contract, the arbitration clause does not get perished nor becomes inoperative rather it survives for resolution of disputes. Reliance is placed on the findings in the case of The Branch manager, Magma Leasing and Finance Limited and Anr. vs Potluri Madhavilata and Anr, (2009) 10 SCC 103. It is further argued that even if there is a settlement agreement or a discharge voucher executed by one party, the arbitration clause does not cease to be effective and the remedy available is only under Arbitration and Conciliation Act and the proceedings before Civil Court are barred. Reliance is placed on National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd, (2009) 1 SCC 267 and it is argued that in this case, Nathani Steels Ltd. vs. Associated Constructions, 1995 Supp (3) SCC 324 was discussed and differentiated. The applicant/defendant has also relied on the findings of the Supreme Court in the case of Chairman and M.D., N.T.P.C Ltd. vs. Reshmi Constructions, Builders and Contractors, (2004) 25 SCC 663 and argued that even in cases where there is full and final settlement between the parties, and there is an arbitration clause binding the parties, the Civil suits are barred by virtue of Section 5 of the Arbitration Act and the remedy available is to raise the dispute under Section 8 of the Arbitration and Conciliation Act.

7. On behalf of the plaintiff, it is argued that the case laws relied upon by the defendant/applicant are not applicable on the facts of this case. It is submitted that in all those cases, there was an existing dispute between the parties.

8. It is submitted that in none of the cited cases,