The court upheld the validity of an arbitration clause in a service agreement due to non-payment by the respondent.

JUDGMENT

Petitioner entered into a service agreement on

30.12.2023 with the respondent for the supply of diagnostic services on a credit basis. As per the agreement payments ought have been made within 90 days of availing each service. Petitioner states that the respondent failed to make payments as agreed. As of 01.01.2025, it is alleged that the respondent owed a sum of Rs.13,22,813/- (Rupees Thirteen Lakhs Twenty Two Thousand Eight Hundred and Thirteen only) towards the services rendered. Notice was issued demanding payment. However, there was no response from the respondent.

2. Annexure A1 agreement dated 30.12.2023 contains an arbitration clause. Invoking the arbitration clause, Annexure A5 notice was issued on 26.03.2025. However, there was no response from the respondent. Therefore, this arbitration request was filed.

3. Notice was issued and the respondent entered appearance through the learned Counsel. Though parties were referred for mediation, there was no positive outcome.

4. Heard the learned Counsel for the petitioner and the learned Counsel for the respondent. Perused the pleadings and documents. There is a valid arbitration clause in Annexure A1 agreement. It is not disputed by the respondent also. The respondent has filed a counter affidavit denying the allegations raised in the memorandum of arbitration request.

5. In the facts and circumstances of the case as it is clear that there are serious disputes between the petitioner and the respondent and in view of clause 11 of Annexure A1, the disputes are to be resolved through arbitration, I am of the view that, this arbitration request can be allowed.

6. The learned Counsel for the petitioner and the learned Counsel for the respondent submitted that, though the venue of arbitration is mentioned as Kollam in the agreement, parties are willing to conduct arbitration proceedings at Ernakulam and therefore, an Arbitrator from Ernakulam may be nominated.

Hence the following directions are issued:-

1. The Kerala High Court Arbitration Centre is directed to nominate a District Judge (Retd.) from Panel-III, preferably from Ernakulam, as the sole Arbitrator to resolve the disputes that have arisen between the petitioner and the respondents under Annexure A1 Agreement.

2. The learned Arbitrator may entertain all issues between the parties in connection with the said Agreements, including questions of jurisdiction and limitation, if any, raised by the parties. All contentions of the parties are left open and they are at liberty to raise their claims and counterclaims, if any, before the learned Arbitrator, in accordance with law.

3. The Registry shall communicate the substance of this order to the Kerala High Court Arbitration Centre within ten days and the Centre shall inform the learned Arbitrator within a further period of one week and shall obtain duly signed Form 3 as required under Rule 20(4) of the Kerala High Court (Arbitration Centre) Rules, 2025 and forward the same to this Court.

4. Upon receipt of the Form 3, the Registry shall issue a certified copy of this order with a copy of the Form 3 appended to the Kerala High Court Arbitration Centre. The original of the Disclosure Statement shall be retained by the Kerala High Court Arbitration Centre.

5. The fees of the learned Arbitrator of the Kerala High Court Arbitration Centre shall be governed by Rule 28 of the Kerala High Court (Arbitration Centre) Rules, 2025. The manner in which the fees and costs payable by the parties shall be governed by Rule 27 of the Kerala High Court (Arbitration Centre) Rules, 2025.

6. If the learned Arbitrator needs the assistance of an expert, then he is at liberty to seek such assistance in the course of the arbitration proceedings.

Sd/-