Skip to main content

For arbitration, there has to be a specific allegation about existence of an arbitration agreement by one party and non denial thereof by other party

In MS. G. KAPOOR vs M/S REACON ENGINEERS PVT. LTD., before the Delhi High Court in ARB.P. 131/2019, the petitioner and the respondent entered into an agreement for carrying out internal electrical works for renovation and expansion of ESIC Hospital, Okhla Project. The main contract was between ESIC and TCIL. A further sub-contract was between the respondent and TCIL. Due to payment dispute, the petitioner applied for appointment of arbitrator arguing that clause 2 of the LOI based on which the respondent had awarded contract to the petitioner clearly states that the scope of work, commercial and technical terms and conditions including payment terms of contract between the petitioner and the respondent is on back-to-back basis with the main contract between the ESIC and TCIL and as such all the terms and conditions will apply to the agreement between the petitioner and the respondent including the arbitration clause.

The respondent argued that any incorporation of an arbitration clause has to be by way of a specific reference to the arbitration clause. In other words, there has to be a specific incorporation of the arbitration clause and in the absence of such clause having been incorporated in the LOI, it cannot be said an arbitration clause / agreement binds the parties herein.

The High Court observed that the said clause 2 does mention 'back to back basis' and that the words ''back-to-back basis‟ has some meaning / relevance. The words ''back-to-back‟ means “consecutive” as per the Cambridge Guide (Ref: Cambridge Guide to English Usage), Cambridge University Press, South Asian Edition, 2004.

Further, in reply dated December 19, 2016 to the notice of the petitioner, the respondent had not disputed the existence of the arbitration clause between them. The relevant portion of which has been reproduced above does reveal that the respondent intended to suggest its own list of Arbitrators if at all dispute is relegated for arbitration. The words “if at all the dispute is relegated for arbitration” has to be read in the context that the respondent disputed the claim raised by the petitioner in its notice but not their arbitrability.

Referring to the judgment of the Supreme Court in S.N. Prasad, Hitek Industries (Bihar) Ltd. v. Monnet Finance Ltd. and Ors. (2011) 1 SCC 320, the High Court held that 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, inasmuch as the respondent did not dispute the existence of an arbitration clause.

Comments

Post a Comment

Most viewed this month

Michigan House Approves 'Right-to-Work' Bill

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...
Post a Comment
Read more

Power to re-assess by AO and disclosure of material facts

In AVTEC Limited v. DCIT, the division of the Delhi High Court held that AO is bound to look at the litigation history of the assessee and cannot expect the assessee to inform him.  In the instant case, the Petitioner, engaged in the business of manufacturing and selling of automobiles, power trains and power shift transmissions along with their components, approached the High Court challenging the re-assessment order passed against them. For the year 2006-07, the Petitioner entered into a Business Transfer Agreement with Hindustan Motors Ltd, as per which, the Petitioner took over the business from HML.  While filing income tax return for the said year, the petitioner claimed the expenses incurred in respect of professional and legal charges for the purpose of taking over of the business from HML as capital expenses and claimed depreciation. Article referred: http://www.taxscan.in/assessing-officer-bound-look-litigation-history-assessee-delhi-hc-read-order/8087/
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more