(Prayer: Petition filed under Section 11(6) of The Arbitration and Conciliation Act, 1996 praying to appoint an arbitrator to hear and adjudicate the disputes between the Petitioner and the Respondent arising out of the LOI L&T/B&F/RB&F/NDCL/MTLS/LOI-03 dated 05.05.2014 and to direct the Respondents to pay cost.)

1. Relying on clauses 23 and 24 of the contract between the parties, the petitioner has applied for appointment of an arbitrator after issuing notice dated 22.11.2024 under Section 21 of the Arbitration and Conciliation Act, 1996 (The A & C Act).

2. Learned counsel for the petitioner invited my attention to the arbitration clause and to the Section 21 notice. He pointed out that such notice was replied to by the respondent on 14.01.2025 stating that the notice had been issued after the lapse of more than three years and that the cause of action does not survive.

3. Learned counsel for the respondent responded to these contentions by referring to the earlier suit filed by the petitioner before the District Judge, Commercial Court, Delhi in C.S.(Comm.) No.606 of 2024. Learned counsel points out that said suit was withdrawn by the petitioner herein/plaintiff therein without obtaining leave of the Commercial Court to initiate arbitral proceedings. Relying on Order XXIII Rule 1(3) and (4) of Code of Civil procedure, 1908, learned counsel submits that without obtaining leave, the petitioner is not entitled to initiate arbitral proceedings and that the filing of a civil suit tantamounts to giving a go-by to the arbitration clause. He has relied on the following judgments in support of the contention:

               (i) Magma Leasing Limited vs. NEPC Micon Limited and another (1997 SCC OnLine Cal 268)

               (ii)Raj & Associates vs. Videsh Sanchar Nigam Limited and others (2004 (76) DRJ 60)

4. According to learned counsel, the proposition laid down in both these judgments is that a party choosing to institute a civil suit in spite of an arbitration agreement does not have the option thereafter to seek a reference either under Section 8 of the statute or otherwise.

5. Considering the rival contentions, the question that falls for consideration is whether the request for appointment of an arbitrator should be declined in view of the defence raised by the respondent. The scope of Section 11 of A & C Act has been elucidated in multiple judgments, including judgments of the Supreme Court. In Vidya Drolia and Others Vs. Durga Trading Corporation [(2021) 2 SCC 1] (Vidya Drolia), the Supreme Court held that while considering such a petition, the Court should examine whether an arbitration agreement exists between the parties and whether the dispute is manifestly non-arbitrable. It was also held that refusal to refer should be limited to removal of dead wood. Both parties agree that Clauses 23 and 24 provide for resolution of disputes by arbitration. For the sake of clarity, said clauses are set out below:

               23. RESOLUTION OF DISPUTES:

               All disputes of difference of opinions, on account of interpretation of clauses, technical specifications etc shall be resolved through direct and mutual discussions, in the case of difference of opinion is still persisting, then the matter shall be referred to arbitration in accordance with the provision of the Arbitration and Conciliation Act 1996 as amended from time to time. Such arbitration proceedings will take place in Chennai and shall be subject to jurisdiction of the Courts in Chennai.

               24.ARBITRATION

               All disputes and differences arising out of the connections(s) with this order failing amicable settlement shall be referred to be arbitration under the Indian Arbitration & Conciliation Act 1996 or any statutory modification thereof in force at that time. The venue of such arbitration shall be at Chennai. However the work as contracted shall not be suspended during the proceedings.

6. The principal ground on which the request for appointment of an arbitrator is resisted is the filing of a civil suit by the petitioner. Such civil suit was withdrawn by the petitioner after realising that there is an arbitration agreement in clauses 23 and 24 of the agreement. The statement of the petitioner is set out below:

               ‘23.09.2024

               Statement of Mr.Piyush Upadyay, Ld. Counsel for plaintiff (Enrol. No.D/5590/2021, Office at P-5, LGF South Extension Part-II, New Delhi – 110 049. Mobile No.9811105891)

               ON SA

               I am counsel for plaintiff. I have received instructions from the plaintiff firm to withdraw the present suit against the defendant on the technical ground as there is an arbitration agreement in clause 23 & 24 of the agreement/LOI dated 05.05.2014 executed between the parties and the plaintiff wants to take recourse to the arbitration for resolving the dispute between the parties. Court fees may be refunded.’

7. On the basis of such statement, the Court issued the following order:

               ‘On the last date of hearing, postal receipt and postal tracking report were filed on behalf of the plaintiff showing that summons have been served on the defendant on 27.08.2024.

               Today, the above-named advocate has appeared on behalf of the defendant and filed memo of appearance.

               It is stated by Ld. Counsel for plaintiff that plaintiff wants to withdraw the present suit as there is arbitration agreement in clauses 23 & 24 of the agreement/LOI dated 05.05.2014 executed between the parties and the plaintiff wants to take recourse to the Arbitration for resolving the dispute between the parties.

               His separate statement is recorded to this effect.

               In view of the separate statement of Ld. counsel for plaintiff, the present suit is dismissed as withdrawn.

               Court fees be refunded as per law.

               File be consigned to Record Room after due compliance.’

8. While the agreement to resolve disputes by arbitration is prima facie enforceable, the Project Manager/Project Director cannot be the arbitrator as per applicable law. In my view, in the facts and circumstances outlined above, the request for appointment of an arbitrator cannot be refused on the basis of the defence raised by the respondent. Such pleas may be raised by the respondent before the Arbitral Tribunal.

9. Accordingly, Mr.V.Kuberan, Advocate, No.25, Bazulla Road, Jains Anjana, T.Nagar, Chennai – 600 017 (Mobile No.9840043486), is appointed as the Arbitrator to adjudicate the dispute. Learned Arbitrator is requested to enter upon reference. The fees and expenses may be fixed by the Arbitrator in consultation with the parties. All contentions, including contentions raised herein, are left open to be raised in course of arbitral proceedings.

10. This petition is disposed of on the above terms.