If The Agreement Stipulates For Reference To Dispute Resolution Committee (DRC), The Claimant Must Exhaust That Remedy Before Seeking Arbitration : Chhattisgarh High Court

The Chief Justice Mr. Arup Kumar Goswami held that the remedy of arbitration would only come into the picture after the Petitioner has successfully exhausted the other dispute resolution remedy provided in the agreement. Failure of the Petitioner to comply with a contractual stipulation would render the application for appointment of an arbitrator as pre-mature.

Facts

The Parties entered into an agreement for the "Construction of Boundary Wall for the land of CRPF Battalion Camp at Mendrakalan, Ambikapur, District Surguja, Chhattisgarh." The agreement had a dispute resolution clause.

Some dispute arose between the parties regarding the execution of the work and the issue of payment, the Petitioner filed the application for appointment of the arbitrator.

Contention Of The Parties

The Respondent raised a preliminary objection to the maintainability of the petition on the following grounds:

• The petition is premature as it has not exhausted its remedy before the Dispute Resolution Committee (DRC).
• The Petitioner cannot be permitted to jump the gun and straightaway file an application for the appointment of an arbitrator. The petition is contrary to the terms of the agreement.

The Petitioner controverted the objections of the Respondent on the following grounds:

• The dispute fell outside the scope of the part of the clause that required the dispute to referred to DRC before referring the same to arbitration.
• The clause only provided for referring the dispute to be DRC in matters relating the meaning of the specifications, designs, drawings and instructions and the dispute raised by the Petitioner is related to non-payment, therefore, the Petitioner can straightaway invoke the jurisdiction of the court for appointment of the arbitrator.

Analysis By The Court

The Court observed that the clause in the agreement is all embracing and takes within its fold all kinds of disputes that can possibly arise out of the agreement, therefore, the argument that the dispute is outside the clause is wholly unmerited.

The Court held that a S. 11 application is not maintainable if the Petitioner before invoking the jurisdiction of the Court has not complied with the pre-condition of referring the dispute to the Dispute Resolution Committee as provided under the Agreement.

The jurisdiction of the Court can only be invoked in cases where the DRC fails to make a determination within the stipulated time or when any party is not satisfied with the decision of the DRC.

The Court also held that the remedy of arbitration would only come into the picture after the Petitioner has successfully exhausted the other dispute resolution remedy provided under the agreement. Failure of the Petitioner to comply with a contractual stipulation would render the application for appointment of an arbitrator as pre-mature.

Accordingly, the Court dismissed the petition as being mis-conceived.

Case Title: Devanshi Construction v. CPWD and others, ARBR No. 28 of 2020.

Citation: 2022 LiveLaw (Chh) 29

Date: 14.01.2022

Counsel for the Petitoner: Mr. Raj Shengale, Advocate

Counsel for the Respondents: Mr. Ramakant Mishra, Assistant Solicitor General.

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