Arbitration clause to be invoked even in the absence of response from the defendant: Delhi High Court

The existence of arbitration clause in a contract offers guarantee to the parties that in the case of dispute, it shall be solved amicably however if one party fails to comply and adhere to the clause, this provides the right to seek its invocation in court. This was held in the judgment passed by a single bench judge comprising HON’BLE MR. JUSTICE C .HARI SHANKAR, in the matter of PINE LABS PRIVATE LIMITED V. ICP DIGITAL TECHNOLOGY PRIVATE LIMITED (ARB.P. 300/2021) dealt with an issue where the petitioner filed for invocation of the arbitration clause, for which the petitioner had earlier sent notice to the respondent for which there has been no response to date.

In the present case, the Respondent had approached Petitioner’s business of providing software and information technology solutions, for deployment of the devices supplied by Petitioner and availing its services in order to offer EMI schemes in relation to the goods sold at various merchant outlets to cardholders. Agreements were executed between the Respondent and Petitioner dated 01.05.2017,01.06.2017, 10.07.2017 and 18.06.2018. Under these Agreements, for the devices deployed and services rendered to the Respondent, Petitioner raised following invoices that amounted to Rs.6,65,635/-  which were duly received by the Respondent. Despite the receipt of the said invoices, the Respondent paid only a sum of Rs.27,869/- as against total outstanding amount of Rs.6,65,635/-, thus a sum of Rs.6,37,766/-  is due and payable by the Respondent. Under the terms of the Agreement(s) between the parties, the Respondent is not only liable to pay the said invoice amount but also interest @1.5% p.m. for the delayed period i.e. from the due date until paid.

Petitioner had diligently performed its part of obligations under the said Agreements and had made the delivery of the work to the satisfaction of the Respondent, thereby giving no reason for the respondent’s default. Thus, prima facie the non-payment of the above invoices is illegal and unwarranted.

The Petitioner tried its best to resolve the aforesaid dispute, by calling upon the Respondent in writing vide e-mails and also requesting the Respondent orally to resolve the same. The Petitioner had further requested the Respondent to give its consent for the appointment of ‘Mr. Atul Batra’ as the sole Arbitrator to adjudicate the aforesaid dispute regarding recovery of the aforesaid amount. The Respondent neither paid the amount nor made any effort to settle the aforesaid dispute despite receipt of the said Legal Notice by the Respondent.

After hearing both the parties The hon’ble Delhi High court allowed the petition and accordingly appointed Ms. Esha Mazumdar, Advocate as arbitrator to arbitrate on the disputes between the parties under Section 11(6) of the Arbitration and Conciliation Act, 1996. The court also held that the arbitrator would file the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on reference.

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