An arbitration clause must clearly indicate the parties' intention to refer all disputes to an arbitrator; ambiguous clauses that limit scope to specific disputes do not constitute valid arbitration agreements.

1. The revisional application arises out of an order dated October 18, 2023, passed by the learned Judge, Commercial Court at Rajarhat in Money Suit No.38 of 2022. The learned court allowed an application dated December 16, 2022, filed by the opposite party under Section 8 of the Arbitration and Conciliation Act, 1996 , (hereinafter referred to as said Act of 1996).

2. The learned court observed as follows:-

a) A commercial agreement between the parties had to be construed in a way that the terms used were understood in its plain, ordinary and popular sense.

b) The immediate intention of the parties should be gathered from the plain reading of the terms of the agreement.

c) The clause should be interpreted in such a manner, so as to give effect to the same, rather than invalidate the same.

d) While construing an arbitration clause, a court must adopt a pragmatic and not a technical approach. Section 7 of the said Act, 1996, did not provide any particular form of the agreement. It would not be appropriate for the court to desist from upholding the validity of an arbitration agreement.

e) The essential elements of an arbitration agreement had been fulfilled in the instant case, namely, existence of a dispute between the parties and intention of the parties to settle such dispute by a private tribunal.

f) The agreement was in writing, and the parties were ad idem.

g) Thus, the clause dealing with settlement of dispute by a skilled person, namely, the architect, was an arbitration clause. Although, the same may not have been happily drafted.

3. Mr.

Aniruddha Chatterjee, learned Advocate for the plaintiff/petitioner/contractor, drew the attention of this Court to the plaint case. The case of the plaintiff is discussed hereunder.

4. The suit was filed for recovery of money valued at Rs.6,68,24,995/-. The plaintiff as the proprietor of Bharat Construction (contractor) and the defendant had entered into a development agreement for construction of a residential housing complex, namely, ‘Starwood’. The proposed project comprised of seven buildings. The location of the same was Chinar Park, Rajarhat. Total number of eight (08) towers were to be constructed in the said complex.

5. The contractor started work on the basis of a letter of acceptance issued by the defendant on December 18, 2015. The possession was handed over to the contractor. On March 20, 2016, additional miscellaneous piling work was further awarded, which resulted in enhancing the scope of the original contract. Along with the contract, the defendant also made over a copy of the bill of quantity and/or schedule of items as also the work order.

The bill of quantity and schedule of items were later modified to some extent. The work granted by the defendant to the plaintiff was such that time was the essence and the entire project was agreed to be completed with 20 months from December 18, 2015. As time was the essence of the contract, obligations were cast on both sides. The obligations, as entailed in the agreement, could be summed up as follows :-

a. The defendant would ensure a hindrance-free worksite immediately upon issuance of the letter of acceptance.

b. The defendant as the contractor would ensure smooth access to the worksite for the plaintiff to commence and carry on the project within the stipulated time.

c. The defendant would take all necessary steps to ensure that earth excavated at the construction site was shifted and disposed of at a suitable place.

d. The defendant would ensure reasonable land space for labour hutments at the project site.

e. The defendant would