2013 (4) TMI 234 - HC - Companies Law

Invocation of Arbitration clause - plaintiff states that defendant has waived its right to invoke the arbitration clause as plea of Section 8 of the Arbitration and Conciliation Act, 1996 was not taken in the writ proceedings filed by the plaintiff. - Held that - It is settled law that a writ petition cannot be referred to arbitration and consequently non reference to an arbitration clause in the counter affidavit filed by the Delhi Jal Board does not result in waiver of the defendant s right to rely upon the arbitration clause in the present suit. In Vishwanath Sood (1989 (1) TMI 314 - SUPREME COURT) the Supreme Court held that arbitrator could not decide those disputes which had to be decided by a third party and whose decision was final and binding on the parties - The Superintending Engineer has computed the amount payable by the plaintiff as compensation but in the opinion of this Court there is no clause in the contract which attaches any finality to the Superintending Engineer s decision. The plaintiff is free to challenge the decision of the Superintending Engineer after invoking the arbitration clause. Accordingly, the present suit of the plaintiff s as well as all the pending applications filed by the parties are referred to arbitration in terms of Arbitration Clause 9 of the agreement dated 3rd February, 2000 and the defendant is directed to appoint an arbitrator within four weeks - The present suit and all pending applications stand disposed of.

Summary

Issues:
Application under Section 8 of the Arbitration and Conciliation Act, 1996; Waiver of right to invoke arbitration clause; Interpretation of arbitration clause in contractual agreements; Applicability of arbitration clause to the dispute; Finality of decisions by specified authorities; Referral of suit to arbitration.

Analysis:
The judgment involves the interpretation of an arbitration clause in contractual agreements between the parties. The defendant, Delhi Jal Board, filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, seeking arbitration for disputes arising from the agreements. The plaintiff argued that the defendant had waived its right to invoke the arbitration clause by not raising it earlier. The plaintiff relied on a Supreme Court judgment regarding waiver of arbitration rights. However, the court held that the defendant had not waived its right to seek arbitration in this case.

The plaintiff contended that the dispute pertained to an "excepted matter" under the agreement, specifically related to risk purchase. The plaintiff referenced a clause in the agreement allowing the first party to purchase materials at the risk and cost of the second party in case of non-adherence to delivery schedules. The court analyzed this argument and concluded that the clause did not pertain to excepted matters and did not confer finality on any authority to decide disputes.

The court referred to a Supreme Court judgment regarding the role of arbitrators in deciding disputes that must be determined by third parties with final decision-making authority. In this case, the court found that the decision of the Superintending Engineer was not final as per the contract terms. Therefore, the plaintiff was deemed free to challenge the Engineer's decision by invoking the arbitration clause.

Consequently, the court referred the present suit and all pending applications to arbitration in accordance with the arbitration clause in the agreement. The defendant was directed to appoint an arbitrator within four weeks. The judgment disposed of the present suit and all pending applications by referring them to arbitration, emphasizing the enforceability of the arbitration clause in the agreements.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the court, including waiver of arbitration rights, interpretation of contractual clauses, and the applicability of arbitration in resolving disputes between the parties.