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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. 422 of 2022
Decided On : 04-05-2022
Parties must follow agreed pre-arbitration steps; however, failure of one party to respond does not bar proceeding to arbitration.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Clause regarding pre-arbitration steps - Parties agreed to resolve disputes through mutual discussion, referring unresolved issues to arbitration - Petitioner made efforts to initiate such discussions, but respondent did not respond. (Paras 6, 8, 10)
(B) Arbitration clause stipulates that disputes must be first attempted to be resolved at site level before resorting to arbitration. (Paras 7, 9, 11)
Facts of the case:
Disputes arose from a work order dated 19.10.2015, with the respondent not responding to the petitioner's demands for payment or initiating required discussions.
Findings of Court:
Petitioner has adequately attempted to follow pre-arbitration steps and it is appropriate to constitute an Arbitral Tribunal to resolve disputes.
Issues: Whether the petitioner followed pre-arbitration steps and necessity for arbitration.
Ratio Decidendi: The court held that the respondent's lack of response justified the petitioner's entitlement to arbitration, confirming that pre-arbitration steps were facilitative and should not hinder the arbitrability of the disputes.
Result: Petition allowed, an Arbitral Tribunal appointed.
| Table of Content |
|---|
| 1. reference of disputes based on work order. (Para 1) |
| 2. arguments regarding pre-arbitration steps and communication failures. (Para 2 , 3 , 4) |
| 3. court's ruling on evidence and necessity for arbitration. (Para 5 , 8 , 9 , 10 , 11 , 12) |
| 4. interpretation of arbitration clause and dispute resolution process. (Para 6 , 7) |
| 5. conclusion for forming an arbitral tribunal. (Para 13 , 14 , 15 , 16 , 17) |
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 the case of difference of opinion still persists, then the matter shall be referred to Regional Head of both the companies.
In case, parties fail to reach amicable settlement, all above stated disputes shall be referred to arbitration for adjudication. The Arbitration shall be governed as per Arbitration &Conciliation Act 1996. 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 disputes 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 the regional heads of both the companies.
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 ab
