S AND S TECHNOCRATS PVT. LTD. Versus CLASSIC INFRASOLUTIONS PVT. LTD.
Court / Forum : High Court of Delhi
Citation : ARB.P. 322/2020
Coram : Justice C Hari Shankar
Subject : Territorial jurisdiction of arbitral proceedings and appointment of arbitrator
Date of Decision : 2021-01-18
- An agreement was executed between the Petitioner and the Respondent on May 4, 2015, for executing the finishing works for the “Paras Irene-Tower-N-6 & Tower-N-7” project of the Respondent at Sector-70A, Gurgaon, Haryana (“Parent Agreement”).
- The parties also executed a separate work order agreement on the same day i.e. May 4, 2015 (“Work Agreement”).
- As per Clause 8 of the Parent Agreement, the Work Agreement, to be executed thereunder, would be treated as an integral part of the Parent Agreement.
- After the work was completed, the Petitioner submitted its final bill on February 16, 2018, for a sum of Rs. 28,46,505/-, which, it was alleged, has not been paid. The Petitioner further contended that the Respondent is bound to refund retention money of Rs. 13,01,820/-, in respect of the work executed by the Petitioner and also averred that, against a second work order agreement dated May 16, 2015, the Rsespondent is liable to refund an amount of Rs. 6,17,082/-. Therefore, the total claim of the Petitioner is Rs. 47,65,406/-.
- The final bill was raised by the Petitioner on February 1, 2018 whereafter, vide communication dated June 2, 2018 and July 7, 2018, the Respondent wrote back to the Petitioner calling on the Petitioner to accept the deductions made by the Respondent for the final bill of the Petitioner. The petitioner rejoined to this request vide communication dated July 11, 2018, protesting against the recoveries effected from its bill. This was followed by emails dated June 11, 2020 and June 25, 2020, whereafter notice invoking arbitration was issued by the petitioner only on July 9, 2020.
- As per Clauses 9 (d) & (e) of the Parent Agreement, the Courts in Delhi shall have jurisdiction in respect of any arbitration proceedings.
- The Respondent contended that the present petition is not maintainable as “courts at Gurgaon” would have exclusive jurisdiction to adjudicate on the matter as per Clause 18 of the Work Agreement.
- The Petitioner pointed out that by virtue of Clause 8 of the Parent Agreement, the Work Agreement is an integral part of the parent agreement. It was further submitted that Clause 18 of the Work Agreement, merely stipulated the “venue of arbitration” as Gurgaon.
- Whether courts in Delhi have jurisdiction over the subject matter?
- Whether the Petitioner has approached the Hon’ble High Court at the appropriate stage of the arbitration proceedings?
- With reference to issue no. 1, the Hon’ble High Court held that a harmonious reading of Clause 9(d) of the Parent Agreement and Clause 18 of the Work Agreement indicate that the jurisdiction of Gurgaon courts is in respect of the subject matter of the dispute, and not with respect to arbitration and that in any event, in view of Clauses 8 and 9(e) of the Parent Agreement, no case for throwing out the present petition on the ground of territorial jurisdiction, can be said to exist.
- With reference to issue no. 2, the Hon’ble High Court held that as per Clause 9 (d) of the parent agreement, prior to initiating arbitration proceedings, the parties were required to attempt amicable resolution of the disputes. Significantly, however, the provision does not specifically contemplate issuance of a notice, seeking such amiable resolution, by one party to the other. Instead, it states that, in case the Contractor and Project Manager are unable to resolve the dispute amicably within 21 days from the date of receipt of “such communication” by the Project Manager, the same would be settled by way of arbitration. The word “such communication”, as used in the said clause, obviously relates to the communication, by the Contractor to the Project Manager, of the Contractor’s claims.
- No amicable resolution of the dispute, therefore, took place, within the period of 21 days contemplated by Clause 9(d) of the parent agreement. In any event, at this distance of time, when over two years and a half have elapsed since July 11, 2018, when the petitioner objected, in writing, to the deductions made by the respondent from its final bill, no scope, for attempting an amicable resolution of the dispute, remains.
- Accordingly, the Hon’ble High Court of Delhi allowed the Petition.
Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.