When there are disputes inter se parties, which could not be resolved through conciliation, are required to be resolved through arbitration: High Court of Delhi

Disputes inter se parties, which could not be resolved through conciliation, are required to be resolved through arbitration as upheld by the Hon’ble High Court of Delhi through the learned bench lead by Justice Suresh Kumar Kait in the case of Montecarlo Limited v. Regal Emporia Infratech Pvt Ltd (ARB.P. 787/2021).

The brief facts of the case are that the respondent had invited tender for erection, construction, execution and completion of relating to Civil & structural work for project known as “Regal Emporia” and petitioner, having substantial experience in this field, approached respondent for the said project. Respondent vide Letter of Intent awarded the said work to petitioner and so, the parties entered into an agreement dated 07.04.2015. The execution of work commenced on 10.04.2015, which was to be completed on 10.04.2018. According to petitioner, it suffered various losses due to the lapses on the part of respondent like delay in handing over of the drawings, payments etc. and also due to situation beyond the control of the petitioner like Covid pandemic. Therefore, petitioner sent an email to the respondent seeking extension for completion of project which was granted and the date of completion was extended to 05.04.2021. Petitioner issued a notice of dispute dated 30.03.2021 regarding the underutilized claim amounting to Rs.41,03,45,815.15/- for a period of July 2016 till March 2021. Once again, petitioner sought extension of time for completion of the project till 03.08.2021 citing reasons for Force Majeure, however, respondent refused to grant any further extension and also referred to Clause 20 (b) and 20 (c) of the Contract Agreement, which provides for termination of Contract Agreement by giving 30 days’ time in writing. Thereafter, petitioner requested respondent to clear all dues and reimburse the claims. The stand of petitioner is that since respondent is an interested party, against which petitioner has raised claims, therefore, respondent has no right to propose or appoint the Arbitrator.

Learned counsel appearing on behalf of respondent disputed the claims raised by the petitioner, however, very fairly conceded that the disputes inter se parties can be resolved through arbitration and prayed this Court that this Court may appoint sole Arbitrator.

After hearing the submissions advanced by both the sides, the Hon’ble High Court held, “Concurring with the decision in Perkins Eastman, the present petition is allowed. Accordingly, Mr. Justice (retd.) A. Ramalingeswara Rao is appointed sole Arbitrator to adjudicate the disputes between the parties. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration.”

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Judgment reviewed by Vandana Ragwani

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