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IN THE HIGH COURT OF DELHI
Sanjeev Sachdeva, J.
Sudhir Power Projects Ltd. - Appellant
Versus
Simplex Infrastructures Ltd. - Respondent
Arb.P. 424 of 2022
Decided On : 04-05-2022
The court ruled that pre-arbitration steps in arbitration clauses are facilitative, and one party's failure to respond does not prohibit the initiation of arbitration.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Disputes arising from work orders - The parties agreed to resolve disputes through direct mutual discussion and subsequently arbitration if unresolved - Petitioner initiated pre-arbitration steps but respondent failed to respond - Court found that arbitration clause was valid and applicable. (Paras 6, 12, 13)
(B) Pre-arbitration procedures - The stipulated pre-arbitration steps are facilitative and not jurisdictional, thus, failure of one party to engage cannot bar reference to arbitration. (Paras 7, 10)
Facts of the case:
The petitioner sought the constitution of an Arbitral Tribunal to resolve disputes following a work order dated 19.10.2015, citing non-response from the respondent to demands for payment.
Findings of Court:
The petitioner made all reasonable efforts to initiate the arbitration process and thus, the court ordered the formation of a Sole Arbitral Tribunal to adjudicate the disputes.
Issues: Whether the petitioner followed pre-arbitration steps outlined in the agreement and the effect of the respondent's failure to respond to demands.
Ratio Decidendi: The court held that the pre-arbitration procedures are not jurisdictional prerequisites for arbitration, citing that the petitioner's attempts to resolve the matter were sufficient.
Result: Petition allowed.
| Table of Content |
|---|
| 1. disputes arose from work order. (Para 1) |
| 2. parties dispute pre-arbitration communication. (Para 2 , 3 , 4) |
| 3. court finds efforts for arbitration were sufficient. (Para 5 , 7 , 8 , 9 , 10 , 11 , 12) |
| 4. arbitration clause mandates direct discussions followed by arbitration. (Para 6) |
| 5. court orders establishment of an arbitral tribunal. (Para 13 , 14 , 15 , 16 , 17 , 18) |
JUDGMENT
Sanjeev Sachdeva, J. Petitioner seeks reference of disputes that have arisen between the parties pursuant to work order dated 19.10.2015.
2. Learned counsel for the respondent submits that the petitioner has not followed the pre arbitration steps as per the arbitration clause.
3. He submits that the disputes were to be resolved through direct and mutual discussion at site level and thereafter the matters were to be referred to the regional heads of both the companies. He submits that petitioner has not approached the respondent for amicable/mutual discussion but has only made demands for payment of his amount.
4. Learned counsel for the petitioner, per contra, contends that several e-mails and notices were issued to the respondent requiring the respondent to pay the due amount, however, no settlement has taken place and even the emails and notices have not been even replied.
5. I am unable to accept the contentions of the learned counsel for the respondent for the reasons that there is no dispute that parties have agreed to resolve their disputes through arbitration.
6. The arbitration clause reads as under:
"Resolution of Disputes
All disputes and/or differences arising out of this work order or differences of opinions, interpretation of clause, technical Specifications etc. shall be resolved through direct and mutual discussions at site level.
In case, parties fail to reach amicable settlement, the above stated all disputes shall be referred to arbitration for adjudication. Each party shall nominate one Arbitrator and the Presiding Arbitrator shall be appointed by the two arbitrators so appointed by the parties. The Arbitration shall be governed as per Arbitration &Conciliation Act 1996 as amended from time to time. The seat and Venue of the Arbitration shall be New Delhi and subject the Arbitration Court at Delhi shall have exclusive Jurisdiction. The Language of Arbitration shall be English. The proceeding of the Arbitration unless extended shall be completed within one year.
You shall not stop the work during pendency of Arbitration or other dispute before any other forum."
7. The arbitration clause provides that all disputes and differences are to be resolved through direct and mutual discussion at site level and thereafter referred to arbitration.
8. The pre arbitration steps stipulated by the agreement are merely facilitative steps for amicable resolution of the disputes. Petitioner has placed on record several correspondences in the shape of e-mails and notices sent to the respondent making demand of the alleged due amount and raising grievance with regard to non-payment of the same.
9. As per the petitioner none of the e-mails or replies have been responded to by the respondent. Even the notice invoking arbitration has not been responded to.
10. Since the respondent has not even responded to any of the demands made by the petitioner, it would not be permissible for the respondent to contend that petitioner has not followed the pre arbitration steps for resolution of the disputes.
11. This is not a case where parties had agreed to refer the disputes to a third party or an expert for conciliation or resolution prior to arbitration. The pre arbitration steps envisaged in the agreement are merely steps for amicable resolution inter parties. Petitioner has sent several e-mails and reminders to the respondent and respondent has failed to even respond to the same. Petitioner cannot be left high and dry by the respondent failing to even respondent to the demands made by the petitioner.
12. In view of the above, I
