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Himachal Pradesh HC: Pre-Arbitration Reference is Only Directory for Invocation of Arbitration

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Paridhi Arya

Published on June 26, 2022 at 14:25 IST

The Single Judge of Chief Justice Mohammed Rafiq held that condition of pre-arbitration reference to adjudicator in case of arbitration is only directory in the contracts. This provision of pre-arbitration reference cannot be the ground to challenge the maintainability of petition even if no struggle made to solve the dispute.

The Petitioner had signed the contract with the respondent in which Petitioner has to make software for the respondent but respondent terminated the contract and issue of non-payment and non-completion of work arose between them.

The Petitioner sent a notice by invoking the dispute resolution clause of the contract and the respondent replied to it with objection that Petitioner first has to refer to the adjudicator at pre- arbitration stage.

Then petitioner filed petition under Section 11 of Arbitration and Conciliation Act for appointment of a arbitrator.

The Counsel of Petitioner contended that the dispute had arisen due to the non-payment from the side of respondent. The respondent also encashed the bank guarantee illegally and the adjudicator who was appointed by respondent is unilateral and law does not permit it. The clause of pre-arbitration reference to adjudicator is only directory.

The respondent challenged the maintainability of this Petition by contending that this Petition is pre-mature. The appointment of adjudicator is not unilateral as contract which signed by both the parties contain the adjudicator’s name. The respondent claimed that Petitioner has failed to fulfill the contract and pre-arbitration reference is mandatory to comply with.

The court observed that when contract provides the name of arbitrator containing the sign of the parties then appointment of arbitrator is not bad in law.

The Court held that one and a half years has passed since the Petition is filed so it is downgrade to put the case in arbitration and allowed the Petition and appointed a sole arbitrator.