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2025 Supreme(Online)(Ker) 47467
IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.A. ABDUL HAKHIM, J
M/S HEATHER CONSTRUCTIONS – Appellant
Versus
THE STATE MISSION DIRECTOR NATIONAL RURAL HEALTH MISSION (NRHM) – Respondent
AR NO. 80 OF 2025
For the Appellants/Petitioners: SRI.SABU GEORGE, SRI.P.B.SUBRAMANYAN, SRI.MANU VYASAN PETER
For the Respondents: SRI.ANIL S.RAJ, SMT.K.N.RAJANI, SMT.RADHIKA RAJASEKHARAN P., SMT.ANILA PETER, SMT.SIMI S. ALI, SMT.SARITHA K.S.
An arbitration request is premature if a dispute resolution mechanism in the agreement is not first followed.
Headnote:This is an application for appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 regarding a dispute arising from an agreement. The petitioner completed the work but alleges outstanding payments. The court found that the arbitration request was premature due to an existing dispute resolution mechanism in the agreement. The ruling emphasized that the parties must first exhaust the prescribed pre-arbitration processes and dismissed the application, allowing the petitioner to seek resolution under the agreement first.
| Table of Content |
|---|
| 1. arbitration request filed under relevant act for dispute arising from an agreement. (Para 1 , 2) |
| 2. opposition based on limitation and dispute mechanism in the agreement. (Para 4 , 5) |
| 3. court's observation on application of limitation principles. (Para 7 , 9) |
| 4. importance of exhausting dispute resolution mechanisms before arbitration. (Para 8) |
| 5. court's dismissal of arbitration request granting liberty for seeking resolution under agreement. (Para 10) |
O R D E R
1. This is an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 , to appoint an arbitrator to adjudicate the dispute that arose out of the Annexure-A Agreement.
2. The petitioner and the respondents had executed Annexure-A Agreement, by which certain items of work are to be done by the petitioner for the respondents. According to the petitioner, the work has been completed, and amounts are outstanding from the respondents, and they are refusing to pay the said amount. On the refusal of the respondents to pay the amount, the petitioner had approached this Court by filing a Writ Petition, and this Court, by Annexure-B judgment dated 02.07.2021, directed the 6th respondent therein/HSCC (India) Ltd., to pay an amount of ₹15 lakhs to the petitioner out of ₹30 lakhs which has been withheld from the final bill. Thereafter, the petitioner issued Annexure-C Notice dated 12.06.2024 to the respondents, expressing his intention to invoke the arbitration clause in Annexure-A, and the same was received by the respondents, but no reply was issued.
Hence, the present application for the appointment of an arbitrator is filed.
3. I heard the learned counsel for the petitioner, Sri. Sabu George, and the learned counsel for the respondents, Sri. Anil S. Raj.
4. The prayer is opposed by the learned counsel for the respondents on two grounds. Firstly, the Arbitration Request is ex facie barred by the law of limitation. The learned counsel for the respondents cited the decision of the Honourable Supreme Court inBharat Sanchar Nigam Ltd. and Another v. M/s. Nortel Networks India Pvt. Ltd. [2021 KHC 6156] in order to substantiate the point of limitation. Secondly, there is a dispute resolution mechanism provided in the Annexure-A Agreement, and without resorting to the same, the present Arbitration Request is filed, and the same is premature. Learned Counsel cited the decision of this Court in Indo Thai Calicut Private Ltd. v. Airport Director, Calicut [2025 KLT OnLine 2367] and the decision of the Delhi High Court inM/s. Chabbras Associates v. M/s. HSCC India Limited & Another [Arb.P. 782/2022] to substantiate the contention that where a dispute resolution mechanism is provided before invoking the arbitration clause, the arbitration could be initiated only after resorting to such dispute resolution mechanism.
5. In answer to the said objections, the learned counsel for the petitioner contended that the Annexure-B judgment is dated 02.07.2021, and the respondents have paid an amount of ₹15 lakhs to the petitioner as per the directions of this Court in Annexure- B. Annexure-C Notice was issued on 12.06.2024, i.e., within three years from the date of Annexure-B judgment. The present application is filed on 05.04.2025. Hence, there is no question of limitation. As regards the next contention, the learned counsel contended that there is no point in approaching the Reviewing Authority and the Appealing Authority of the 2nd respondent to resolve the dispute at this distance of time. The learned counsel cited the decision of the Honourable Supreme Court in Demerara Distilleries Private Limited and Another v. Demerara Distillers Limited [2015 KHC 4960], in which it is held that in view of the elaborate correspondence between the parties, any attempt at this stage to resolve the dispute by mutual discussions and mediation would be an empty formality. The said principle is squarely applicable to the case, according to the counsel.
6. I have considered the rival
