JUDGMENT

FACTUAL MATRIX

1. The present petition filed under section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred as ‘A&C Act’) seeks appointment of arbitrator(s) to adjudicate the disputes between the parties.

2. The disputes between the parties have arisen in the backdrop of a letter dated 24.10.2005, in terms of which the petitioner was awarded a tender for ‘Civil, Sanitary and Electrical work (bother external and internal electrification) including External Development work of 131 Dwelling Units of D.S.N.E.F Cooperative Group Housing Society Ltd. at plot no.1, Sector - 19, Dwarka, Phase-I, New Delhi’ (hereinafter ‘the project’) by the respondent.

3. Pursuant thereto, an agreement dated 31.10.2005 was executed between the parties for the execution of the project. Under the agreement, the drawings and specifications describing the work, were to be prepared by an architecture consultancy firm name and styled as M/s Khurmi Associates Pvt. Ltd (hereinafter ‘the architect firm’).

4. The disputes between the parties have arisen on account of alleged failure of the respondent to clear petitioner’s running account bills amounting to Rs. 80,92,26,992/-. It is stated that as per the agreement, the respondent was obligated to clear the outstanding dues within a month from receiving running bills from the petitioner. It is further submitted that the respondent during the subsistence of the agreement never disputed the aforesaid outstanding payment and time and again reassured the petitioner that the said outstanding amount will be duly paid.

5. Disputes having arisen between the parties, a conciliation notice dated 11.12.2018 was issued by the petitioner to the respondent. The respondent, vide letter dated 10.10.2019, vehemently opposed the averments made and advised the petitioner to recall/withdraw the aforesaid notice.

6. Since the disputes between the parties persisted, the petitioner vide a notice dated 22.02.2019, sought to invoke arbitration as per clause 39.1 of the agreement, for adjudication of disputes between the parties. The arbitration clause in the agreement executed between the parties reads as under:

“39. Dispute & Arbitration

39.1 In case of any dispute arising out of execution of this works, Items, Terms and Conditions of the Contract, at first instance it shall be decided by the Architects and Owner. In case of disagreement, the dispute shall be referred to arbitration. The panel of arbitrators shall comprise one person appointed by the Owner. One person appointed by the Contractor

and third shall be Architect. The provisions of the new Arbitration and Conciliation Act, 1996 and rules made there under shall apply to the arbitration proceedings. The decision of the Arbitrators shall be final and binding on both the parties.”

7. While respondent’s response to invocation notice was awaited, the petitioner vide letter dated 15.03.2019 also issued a notice to the architect firm seeking its consent to act as an arbitrator. The same reads as under :

“Date: 15.03.2019

To,

M/s. Khurmi Associates Pvt. Ltd.

Through: Managing Director

16, Jangpura Extension Market,

New Delhi-110014

SUBJECT: Seeking your consent to act as an arbitrator

Dear Sir,

As you are aware that Delhi States Employees Federation C.G.H.S. Ltd. (referred to as “Society”) was constructed by our company, Tirupati Constwell Pvt. Ltd. (referred to as “Company”). The payments of constructions were to be cleared by the Society in accordance with contract however, the Society has failed to make the complete payments. The company had sent notice dated 11.12.2018 to the Society for conciliation proceedings however, the said request of the company was rejected and therefore, in accordance with clause 39 of the Agreement between the company and society, the company vide its letter dated 22.02.2019 has invoked arbitration clause and nominated Shri Anil Sharma, Advocate to adjudicate disputes between the company and further requested the soci