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Cannot arbitrate where there is no dispute with the contract or agreement

In Ahuja Builders Vs. Doonvalley Technopolis Pvt. Ltd., the Delhi High Court said that if there is an arbitration agreement between the parties and any dispute arising under the Contract is needed to be referred to the Arbitrator. Under Clause 13 of said Contract Agreement, what is referable is 'a dispute arising out of or in any way connected with Contract Agreement'. But for referral the existence of 'Dispute' is sine qua non. The money payable under the Contract was calculated by the Defendant and the calculation is accepted by the Plaintiff as it is, there exists no dispute between them in relation to the terms of Contract. The applicant/Defendant has also not contended anywhere that, there is any dispute between the parties relating to the amount payable under the Contract or of any other nature. Its plea is based on mere existence of arbitration Clause 13 in the Contract.

Therefore the present suit is filed for the recovery of the said amount under Order XXXVII of CPC. It is a simple case of recovery of money based on acknowledgement and undertaking to pay. In view of these facts, it is clear that none of the parties has raised any dispute arising out of the said Contract. When there is no dispute between the parties relating to the contract containing an arbitration clause, the arbitration clause cannot be invoked.

As a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration. In this case, the Defendant/Applicant has not so far raised any dispute relating to the terms and conditions of the Contract Agreement.

The law propounded in both Nathani case and National Insurance case by the Supreme Court is that, on voluntary settlement between the parties leaving no outstanding claim or pending disputes, the Contract stands discharged as to the satisfaction of both the parties and there exists no arbitrable dispute. In view of facts and circumstances of the case, there exists no dispute to refer for arbitration in terms of Section 8 of Act. The application has no merit and the same is dismissed.

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