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2023 Supreme(Del) 766
IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Swift Securitas (p.)Ltd. – Appellant
Versus
M/s Delhi Msw Solutions Ltd. – Respondent
Arb.P. 1454 of 2022
Decided On : 27-03-2023
Mr. Deepak Khadaria, Advocate, for the Petitioner.
Mr. Matrugupta Mishra and Ms. Ishita Thakur, Advocates, for the Respondent.
The arbitration clause in a contract is independent and survives the termination of the main contract, as per the 'Doctrine of Separability'.
Headnote:
Arbitration - Security Contract - Arbitration and Conciliation Act, 1996 - Section 11
Fact of the Case:
The petitioner filed a petition under section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator for disputes arising from a Security Contract executed on 10th September, 2012. The respondent opposed the petition, arguing that the arbitration clause did not bind the parties due to inadequacy of reference in subsequent work orders.
Finding of the Court:
The court found that the arbitration clause in the Security Agreement was independent and survived the termination of the main contract. It held that the petition was not premature and appointed a sole arbitrator to adjudicate the disputes.
Issues: Interpretation of the Security Agreement and essentials under Section 7 of the Act, and whether the petition was premature.
Ratio Decidendi: The arbitration clause was deemed independent and not subject to the survival or termination of the main agreement. The court relied on the 'Doctrine of Separability' and held that the petition was not premature.
Final Decision: The court appointed a sole arbitrator to adjudicate the disputes arising from the Security Agreement dated 10th September, 2012.
ORDER
Chandra Dhari Singh, J. (Oral)
1. The present petition has been filed on behalf of the petitioner under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") seeking appointment of arbitrator for adjudication of disputes between the parties with respect to the Security Contract executed on 10th September, 2012.
2. Learned counsel appearing on behalf of the petitioner submitted that the petitioner is a company registered under the Companies Act, 1956 and is engaged in the business of providing security services.
3. It is submitted on behalf of the petitioner that the respondent, a company registered under the Companies Act, 1956 had availed the services of the petitioner for providing security services and thereby reduced their terms in writing vide Security Agreement dated 10th September, 2012.
4. Learned counsel appearing on behalf of the petitioner submitted that in the year 2016, issues emerged between the parties, and the petitioner issued a notice dated August 2016, which is attached as Document No. 8 to the petition, for the adjudication of those disputes. It is further submitted that respondent failed to give any response to the said notice and thereby the petitioner was constrained to file an arbitration petition bearing no. 561/2017 for appointment of an arbitrator in order to adjudicate the dispute between the parties before this Court.
5. It is submitted on behalf of the petitioner that the aforesaid petition was withdrawn vide order dated 6th March, 2018 in order to avail the appropriate legal remedy before the appropriate forum. It is further submitted that the petitioner, thereafter, filed a civil suit before the District Judge of the North District at the Rohini Courts in Delhi, bearing CS No. 924/2018 for the recovery of Rs.72,79,527.60/- from the respondent herein, together with future interest at 18% per annum. Learned counsel representing the petitioner further argues that in that suit, CS No. 924/2018, the respondent herein filed an application under Section 8 of the Act read with Section 151 of the Code of Civil Procedure, 1908, arguing that the suit was not maintainable based on Clause No. 15 of the agreement in relation to the arbitration.
6. Learned counsel appearing on behalf of the petitioner submitted that the on the first occasion, in the earlier petition under Section 11 of the Act, the respondent took the position that there was no arbitration clause in the agreement governing the parties' disputes, and in the civil suit bearing CS No. 924/2018, he took the position that since the arbitration clause was present in the agreement, the petitioner should be directed to invoke it.
7. Learned counsel appearing on behalf of the petitioner submitted that the learned additional District Judge-03, Rohini Courts, vide order dated 13th July, 2022 allowed the application filed by the respondent herein under section 8 of the Act and dismissed the suit of the petitioner herein with the following observation:
"6. Moreover, the contention of the Ld. Counsel for the defendants that the present suit should be bifurcated and the agreements/work orders which contain an arbitration clause should be segregated from those which do not contain an arbitration agreement, is not tenable. Such a bifurcation can lead to multiplicity of proceedings as well as conflicting judgments. Also, the plaintiff in his plaint clearly stated that the defendants used to take consolidated ledger and the plaintiff was maintaining a running account in their books in the name of the defendants. Plaintiff has also stated in his plaint that only for sake of convenience and internal accounting of defendants accounts for different project sites were given to the defendants.
7. Furthermore, this court is of the considered view that the Security Agreement dated 10.09.2012 is the main agreement from which the relationship between the parties emerged. In clause 3 of this agreement, the scope of work
