Whether Claims Prior To Work Order Are Covered By The Arbitration Clause Or Not Is To Be Decided By The Arbitrator: Allahabad High Court

The Bench of Justice Rajnish Kumar also reiterated that after the judgment in Perkins an interested party cannot act as or appoint a sole arbitrator.

Facts

The respondent issued a work order dated 05.11.2020 in favour of the petitioner in relation to supply of earth moving device for execution of work at Ekana Stadium, Lucknow. The agreement contained an arbitration clause which provided for arbitration before the Respondent's Director.

A dispute arose between the parties. Accordingly, the petitioner issued a notice of arbitration and requested the respondent to mutually appoint the arbitrator. Upon failure, the petitioner approached the High Court for the appointment of a sole independent arbitrator.

Submissions of the Parties

The respondent made the following objections:

• The claims mentioned in the notice of arbitration do not co-relate with the work order and are prior to the issuance of the work order.
• Only those claims which are from the work order can be referred to arbitration.

The petitioner made the following counter-submissions:

• The existence of the arbitration agreement is not disputed.
• The arbitration clause covers the claims even prior to the issuance of the work order, therefore, the entire dispute must be referred to arbitration.

Analysis by the Court

The Court observed that admittedly, the few of the claims are prior to the issuance of the work order containing the arbitration clause. It perused the arbitration clause which provided that any dispute, whether prior to or during the execution or after the completion of the project work, must be referred to arbitration.

The Court held that the issue whether claims between the parties prior to the work order is question are covered by the arbitration clause or not is to be decided by the arbitrator and not by the Court at pre-arbitration stage under Section 11 of the A&C Act.

The Court also reiterated that Respondent's director cannot act as an arbitrator an independent person has to be appointed as an arbitrator. Accordingly, the Court referred the dispute to Justice (Retd.) Brijesh Kumar Shrivastava as the sole arbitrator.

Case Title: Blacklead Infratech Pvt. Ltd. vs. Ekana Sportz City Pvt. Ltd 2024 LiveLaw (AB) 236 Civil Misc. Arbitration Application No. 94 of 2023

Case Citation: 2024 LiveLaw (AB) 236

Date: 10.04.2024

Counsel for the Petitioner: Ankit Singh

Counsel for the Respondent: Ritesh Kumar Srivastava and Lakshayadeep Srivastava

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