Pre-Requirement Of Conciliation Before Invoking Arbitration Can't Prevent Filing Of Application U/S 11 Of Arbitration Act: Delhi High Court

The Delhi High Court bench of Justice Subramonium Prasad has held that pre requirement of conciliation in an arbitration clause before invoking the arbitration cannot be a bar to file an application under section 11 of the Arbitration Act seeking appointment of an Arbitrator. That disputes have arisen between the parties regarding payment of dues.,the Petitioner herein invoked Clause 17.7 of the Power Purchase Agreement dated 14.10.2017 which provides for arbitration for adjudication of the disputes between the parties. The court in the above case while noting the observations of the learned single judge in Saraswati Construction Co. v. Cooperative Group Housing Society Ltd. 1995 held that existence of conciliation or mutual discussion procedure or similar other procedure though should not be held as a bar for dismissing of a petition which is filed under Sections 11 or 8 of the Act or for any legal proceeding required to be filed for preserving rights of the parties, however before formally starting effective arbitration proceedings parties should be directed to take up the agreed procedure for conciliation as provided in the agreed clause for mutual discussion/conciliation in a time bound reasonable period, and which if they fail the parties can thereafter be held entitled to proceed with the arbitration proceedings to determine their claims/rights etc. The court further referred to the Supreme Court judgment in Intercontinental Hotels Group Ltd. v. Waterline Hotels Ltd., wherein the court has held that the Court, under Sections 8 and 11, has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie case of non-existence of valid arbitration agreement, by summarily portraying a strong case that he is entitled to such a finding.