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G. Kapoor Vs. Reacon Engineers Pvt. Ltd. - (High Court of Delhi) (22 Oct 2019)

To constitute an arbitration agreement, there has to be statement of claim containing a specific allegation about existence of an arbitration agreement by one party and non denial thereof by other par



Present petition has been filed by the Petitioner under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. The facts as noted from the petition and contended by Mr. Kapur are, the petitioner is the sole proprietor of JPE International and is engaged in business of contracts for electrical work, structural and other business related to electrical works.

The issue which arises for consideration is whether the parties have incorporated in the LOI, the arbitration clause/agreement as existed in the contract between the ESIC and the TCIL.

There is no dispute that the TCIL was allotted the work of construction by the ESIC. The TCIL has in turn appointed the respondent herein as an agency to carry out the construction. The respondent had outsourced the electrical works of the project to the petitioner herein. There is also no dispute that there is an agreement between the ESIC and the TCIL, and clause 20.6 thereof relates to arbitration. The respondent also does not dispute the presence of an arbitration clause in its agreement with TCIL.

Clause 2 of the LOI, states that the scope of work, commercial and technical terms and conditions including payment terms will be on back-to-back basis. That apart, LOI also depicts that the mobilization advance of 3% paid to the petitioner by the respondent was to be recovered from monthly RAR Bills as per the terms of ESIC/TCIL @ 12% of gross bill. Clause 5 of the LOI also stipulates that the work will be executed as per the conditions laid out in the contract/agreement between the respondent and the TCIL. There are certain other terms and conditions based on the norms, as agreed by TCIL/ESIC, which clearly suggest, that the parties have consciously decided to govern themselves with same terms and conditions as agreed between TCIL/ESIC/respondent.

Further, the exchange of notice and reply between the parties clearly suggests exchange of settlement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. If in the application filed under Section 11 of the Act, the Applicant asserts the existence of an arbitration agreement with each of the Respondents and if the Respondents do not deny the said assertion, in their statement of defence, the Court can proceed on the basis that, there is an arbitration agreement in writing between the parties.

In present case, it is the notice invoking arbitration clause/agreement, (which is in the nature of request under Section 11(4) (a) of the Act, before filing of the petition under Section 11(6) of the Act), which refers to Clauses 2 and 5 of the LOI dated September 18, 2013 and also to Arbitration Clause 20.6 of the main contract between the TCIL and the Respondent, followed by a clear statement that, the arbitration clause is applicable between them. This statement of the Petitioner is not controverted, rather it is stated by the Advocate of the respondent that the rTspondent prefers to suggest his own list of arbitrators, if at all the dispute is relegated to arbitration.

It is clear, that to constitute an arbitration agreement under Section 7(4)(c) of the Act, there is a statement of claim containing a specific allegation about the existence of an arbitration agreement by the Petitioner and non denial thereof by the other party. The said requirement is fulfilled in this case, as the Respondent did not dispute the existence of an arbitration clause. Present Court appoints Justice Manmohan Singh, a retired Judge of this Court, as a sole Arbitrator, who shall adjudicate the inter-se disputes between the parties. Petition is disposed of.

Relevant : S.N. Prasad vs. Monnet Finance Ltd. and Ors. MANU/SC/0881/2010


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