Arun Srivastava vs. Larsen and Toubro Ltd. - (High Court of Delhi) (09 Nov 2021)

Once there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of the said agreement

MANU/DE/2959/2021

Arbitration

The present petition under Article 227 of the Constitution of India impugns the judgment passed by the Additional District Judge, whereby the application filed on behalf of the Respondent/ defendant under Section 8 of the Arbitration and Conciliation Act, 1996 ('Act') has been allowed.

Counsel for the Petitioner has placed reliance of the judgment of this Court in Fenner India Ltd. V. Bhramputra Valley Fertilizer Corporation Ltd. to contend that, when no disputes exist between the parties and the amount claimed by the Plaintiff is admitted by the Defendant, the same cannot be subject matter of arbitration proceedings.

In Deep Industries Ltd. v. Oil and Natural Gas Corporation Limited, the Supreme Court observed that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Arbitration Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy so that, interference is restricted to orders which are patently lacking in inherent jurisdiction. The reasoning given by the Supreme Court in Deep Industries Ltd. would be equally applicable in the context of orders passed by courts allowing application under Section 8 of the Act.

The Division Bench of this Court in Black Dimond Track Parts Private Limited vs. Black Diamond Motors Parts Private Limited, applying the ratio of the Supreme Court in Deep Industries Ltd. observed that, jurisdiction under Article 227 of the Constitution of India has to be sparingly exercised in respect of orders passed by the commercial court so that the legislative intent and purpose behind the Commercial Courts Act of expeditious disposal of commercial suits is not defeated.

The entire case of the Petitioner is based on the admission made by the Respondent in respect of its alleged liability towards the Petitioner. Nowhere has the Petitioner disputed the existence of the arbitration clause. The impugned order has correctly noted that there is no specific admission made by the Respondent. The Order 12 Rule 6 of Code of Civil Procedure, 1908 (CPC) application was filed by the Petitioner only after the Section 8 application had been filed by the Respondent. As is being observed by the Supreme Court in Hindustan Petroleum Corporation Ltd. v. Pink city Midway Petroleums, once there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of the said agreement. In the present case, the Petitioner has not denied the existence of the arbitration agreement. The only case put by the Petitioner is that in light of the admission made by the Respondent, there is no arbitrable dispute to be referred for arbitration. Petition dismissed.

Tags : EXISTENCE ARBITRATION CLAUSE JURISDICTION