ARB.P. 36/2026 Page 1 of 20

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 01

st

April, 2026

Pronounced on: 10

th

April, 2026

+ ARB.P. 36/2026

LIFEWELL DIAGNOSTICS PRIVATE LIMITED .....Petitioner

Through: Mr. Nawaz Sherif, Mr. Rishabh, Mr.

Arun Prakash, Advs.

Email:

sherifandassociates@gmail.com

versus

MICRON LABORATORY .....Respondent

Through: Mr. Akshay Makhija, Sr. Adv. with

Mr. Aayushman Shukla, Adv.

Mob: 8860555644

Email: aayushman247@gmail.com

CORAM:

HON'BLE MS. JUSTICE MINI PUSHKARNA

JUDGMENT

MINI PUSHKARNA, J.

1. The present petition has been filed seeking appointment of a sole

arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996

(“Arbitration Act”), on the basis of disputes having arisen between the

parties pertaining to a Revenue Sharing Agreement (“Agreement”) dated

01

st

September, 2023, whereby, the petitioner was granted the right to

operate the pathology lab of the respondent situated at D-10, LGF, Green

Park, New Delhi, in the name and style of „Micron Laboratory‟.

2. As per the petitioner, issues have arisen between the parties on

ARB.P. 36/2026 Page 2 of 20

account of various defaults by the respondent in payment obligations under

the Agreement, with an outstanding of Rs. 23,93,916/- (Rupees Twenty

Three Lacs Ninety Three Thousand Nine Hundred Sixteen) being due to the

petitioner.

3. The petitioner relies upon Clause 29 of the Agreement, which

contains the provision for dispute resolution, for seeking appointment of an

arbitrator. The said Clause 29 of the Agreement reads in the following

manner:

“xxx xxx xxx

xxx xxx xxx”

4. On the other hand, the respondent has resisted appointment of an

ARB.P. 36/2026 Page 3 of 20

arbitrator in the present case by pleading that it is not liable to make any

payments to the petitioner as both the parties had mutually terminated the

Agreement on 03

rd

May, 2024. It was further mutually decided between the

parties that the account of both the parties will be treated to be settled, and

accordingly, no party will raise any claim against the other in the future. As

per the respondent, in terms of the said mutual understanding, no dispute

survives between the parties.

5. Further, the respondent has also disputed the Arbitration Clause relied

upon by the petitioner, on the ground that the same does not constitute a

binding Arbitration Agreement between the petitioner and the respondent. It

is the case of the respondent that Clause 29 of the Agreement between the

parties does not make the recourse to arbitration mandatory, as the use

of/reference to the phrase „may be referred to the arbitration‟, clearly shows

that there is no binding Arbitration Agreement between the parties.

Moreover, in view of the use of the word „may‟, there is no clear intention of

the parties to submit the disputes between them to arbitration.

6. Having heard learned counsels for the parties, this Court notes that it

is a settled legal position that existence of a valid, written Arbitration

Agreement, which shows the ad idem intention of the parties to submit to

arbitration as the dispute resolution mechanism, is a sine qua non for

referring the parties to arbitration.

7. Section 2(b) of the Arbitration Act defines an Arbitration Agreement

to mean an Agreement referred to in Section 7 of the Arbitration Act. In

terms of Section 7 of the Arbitration Act, an Arbitration Agreement is an

agreement by and between the parties to submit to arbitration, all or certain

disputes which have arisen or which may arise between them. Further, while

ARB.P. 36/2026 Page 4 of 20

Section 7(2) of the Arbitration Act stipulates that an Arbitration Agreement

may be in the form of Arbitration Clause in a contract or in the form of a

separate agreement, Section 7(3) of the Arbitration Act clearly states that an

Arbitration Agreement between the parties shall be in writing.

8. For the sake of convenience, Section 7 of the Arbitration Act is

reproduced as under:

“xxx xxx xxx

7. Arbitration agreement:- (1) In this Part, “arbitration agreement”

means an agreement by the parties to submit to arbitration all or

certain disputes which have arisen or which may arise between them

in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration

clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of

telecommunication [including communication through

electronic means] which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the

existence of the agreement is alleged by one party and not

denied by the other.

(5) The reference in a contract to a document containing an

arbitration clause constitutes an arbitration agreement if the contract

is in writing and the reference is such as to make that arbitration

clause part of the contract.

xxx xxx xxx”

(Emphasis Supplied)

9. Outlining the essential elements of an Arbitration Agreement,

Supreme Court in the case of Bihar State Mineral Development

Corporation and Another Versus ENCON Builders (I) (P) Ltd., (2003) 7

SCC 418, has held as follows:

“xxx xxx xxx

ARB.P. 36/2026 Page 5 of 20

13. The essential elements of an arbitration agreement are as

follows:

(1) There must be a present or a future difference in

connection with some contemplated affair.

(2) There must be the intention of the parties to settle such

difference by a private tribunal.

(3) The parties must agree in writing to be bound by the

decision of such tribunal.

(4) The parties must be ad idem.

xxx xxx xxx”

(Emphasis Supplied)

10. Underscoring that an Arbitration Agreement must necessarily include

a clear intent to arbitrate and a binding adjudicatory process, Supreme Court

in the case of South Delhi Municipal Corporation of Delhi Versus SMS

Limited, (2026) 1 SCC 545, has held as follows:

“xxx xxx xxx

46. Considering the global position on the validity of arbitration

agreements in tandem with the settled law that holds the field in India,

we find that the existence of an arbitration agreement necessarily

postulates the presence of the following ingredients:

(i) Clear intent to arbitrate

The agreement must reflect a definitive and mutual intention

to refer disputes to arbitration, excluding the jurisdiction of civil

courts in respect of such matters. Consensus ad idem or “meeting of

the minds” of the respective parties towards settling any disputes

that may arise between them through the process of arbitration must

be made out from the form and substance of the legal agreement or

contract. This ideally entails the parties reducing their intention of

entering into an arbitration agreement into some tangible medium.

(ii) Binding adjudicatory process

The arbitration agreement must contemplate a binding and

enforceable resolution of disputes. The process must culminate in a

final and conclusive award, not a non-binding recommendation or

mediation outcome. In essence, the result of the arbitral process

should be final and binding on both the parties.

(iii) Compliance with arbitration norms

ARB.P. 36/2026 Page 6 of 20

While the statutory minimums do not universally require

specification of seat, venue, or applicable procedural rules, best

practices and several foreign jurisdictions encourage clarity in these

respects to ensure legal certainty. The agreement should allow for

party autonomy in the appointment of arbitrators and procedural

conduct, subject to statutory safeguards. The adversarial process,

which inheres in the institution of arbitration, must also be given

due credence via provision for an impartial adjudicatory body,

whose decisions involve deference to the principles of natural

justice.

xxx xxx xxx”

(Emphasis Supplied)

11. Likewise, laying down the pre-requisites of a valid and binding

Arbitration Agreement, Supreme Court in the case of Powertech World

Wide Limited Versus Delvin International General Trading LLC, (2012) 1

SCC 361, has held as follows:

“xxx xxx xxx

16. Now, I may refer to the prerequisites of a valid and binding

arbitration agreement leading to an appropriate reference under the

Act. Section 2(1)(b) defines “arbitration agreement” to be an

agreement referred to in Section 7. Section 7 of the Act states that an

“arbitration agreement” is an agreement by the parties to submit to

arbitration all or certain disputes which have arisen or which may

arise between them in respect of a defined legal relationship,

whether contractual or not. The arbitration agreement may be in the

form of an arbitration clause in a contract or in the form of a

separate agreement and shall be an agreement in writing. An

arbitration agreement is in writing if it is contained in any of the

clauses i.e. clauses (a) to (c) of sub-section (4) of Section 7 of the

Act. Once these ingredients are satisfied, there would be a binding

arbitration agreement between the parties and the aggrieved party

would be in a capacity to invoke the jurisdiction of this Court under

Section 11(6) of the Act.

17. In K.K. Modi v. K.N. Modi [(1998) 3 SCC 573] this Court, while

differentiating an “arbitration agreement” from a “reference to an

expert” for decision, contained in an MoU recording a family

settlement, enumerated the essential attributes of a valid arbitration

agreement: (SCC p. 584, para 17)

“(1) The arbitration agreement must contemplate that the

ARB.P. 36/2026 Page 7 of 20

decision of the tribunal will be binding on the parties to the

agreement;

(2) that the jurisdiction of the tribunal to decide the rights of

the parties must be derived either from the consent of the

parties or from an order of the court or from a statute, the

terms of which make it clear that the process is to be an

arbitration;

(3) the agreement must contemplate that substantive rights of

parties will be determined by the agreed tribunal;

(4) that the tribunal will determine the rights of the parties in an

impartial and judicial manner with the tribunal owing an equal

obligation of fairness towards both sides;

(5) that the agreement of the parties to refer their disputes to

the decision of the tribunal must be intended to be enforceable

in law and lastly;

(6) the agreement must contemplate that the tribunal will

make a decision upon a dispute which is already formulated at

the time when a reference is made to the tribunal.”

18. Also in Smita Conductors Ltd. v. Euro Alloys Ltd. [(2001) 7 SCC

728] where no contract, letter or telegram confirming the contract

containing the arbitration clause as such was there, but certain

correspondences which indicated a reference to the contract

containing arbitration clause for opening the letter of credit addressed

to the bank, were there. There was also no correspondence between

the parties disagreeing either with the terms of the contract or the

arbitration clause. The two contracts also stood affirmed by reason of

their conduct as indicated in the letters exchanged between the

parties. This Court construed it to be an arbitration agreement in

writing between the parties and referred to Article II Para 2 of the

New York Convention, which is in pari materia with Section 7 of the

Act and observed as under: (Smita Conductors Ltd. case [(2001) 7

SCC 728], SCC pp. 734-35, para 6)

“6. What needs to be understood in this context is that

the agreement to submit to arbitration must be in writing.

What is an agreement in writing is explained by Para 2 of

Article II. If we break down Para 2 into elementary parts, it

consists of four aspects. It includes an arbitral clause (1) in a

contract containing an arbitration clause signed by the parties,

(2) an arbitration agreement signed by the parties, (3) an

arbitral clause in a contract contained in exchange of letters

or telegrams, and (4) an arbitral agreement contained in

exchange of letters or telegrams. If an arbitration clause falls

ARB.P. 36/2026 Page 8 of 20

in any one of these four categories, it must be treated as an

agreement in writing.”

19. This Court, in Bihar State Mineral Development Corpn. v. Encon

Builders (I) (P) Ltd. [(2003) 7 SCC 418] has also taken the view that

the parties must agree in writing to be bound by the decision of such

tribunal and they must be ad idem.

xxx xxx xxx”

(Emphasis Supplied)

12. Emphasizing that the deficiency of words in an agreement, which

otherwise fortifies the intention of the parties to arbitrate their disputes,

cannot legitimize the annulment of an Arbitration Clause, Supreme Court in

the case of Babanrao Rajaram Pund Versus Samarth Builders and

Developers and Another, (2022) 9 SCC 691, has held as follows:

“xxx xxx xxx

15. It may be seen that Section 7 of the Act does not mandate any

particular form for the arbitration clause. This proposition was settled

by this Court way back in Rukmanibai Gupta v. Collector

[Rukmanibai Gupta v. Collector, (1980) 4 SCC 556], while viewing

erstwhile Section 2(a) of the Arbitration Act, 1940 which contained

the definition of “arbitration agreement”. It was held that: (SCC p.

560, para 6)

“6. … Arbitration agreement is not required to be in any

particular form. What is required to be ascertained is whether

the parties have agreed that if disputes arise between them in

respect of the subject-matter of contract such dispute shall be

referred to arbitration, then such an arrangement would spell

out an arbitration agreement. A passage from Russell on

Arbitration, 19th Edn., p. 59, may be referred to with

advantage:

If it appears from the terms of the agreement by which a

matter is submitted to a person's decision that the intention of

the parties was that he should hold an inquiry in the nature of a

judicial inquiry and hear the respective cases of the parties and

decide upon evidence laid before him, then the case is one of an

arbitration.”

xxx xxx xxx

18. Encon Builders [Bihar State Mineral Development Corpn. v.

Encon Builders (I) (P) Ltd., (2003) 7 SCC 418] placed reliance on

ARB.P. 36/2026 Page 9 of 20

K.K. Modi case [K.K. Modi v. K.N. Modi, (1998) 3 SCC 573] and

further condensed the essential features of an arbitration agreement

into four elements i.e. : (Encon Builders case [Bihar State Mineral

Development Corpn. v. Encon Builders (I) (P) Ltd., (2003) 7 SCC

418] , SCC p. 423, para 13)

“13. The essential elements of an arbitration agreement are as

follows:

(1) There must be a present or a future difference in

connection with some contemplated affair.

(2) There must be the intention of the parties to settle such

difference by a private tribunal.

(3) The parties must agree in writing to be bound by the

decision of such tribunal.

(4) The parties must be ad idem.”

xxx xxx xxx

23. Adverting to the case in hand, it may be seen that the contents and

the nature of Clause 18 are substantially different from the dispute

resolution pacts in K.K. Modi [K.K. Modi v. K.N. Modi, (1998) 3 SCC

573] , Jagdish Chander [Jagdish Chander v. Ramesh Chander, (2007)

5 SCC 719] , or Encon Builders [Bihar State Mineral Development

Corpn. v. Encon Builders (I) (P) Ltd., (2003) 7 SCC 418] . We say so

for three reasons. Firstly, apart from the fact that Clause 18 of the

development agreement uses the terms “arbitration” and

“arbitrator(s)”, it has clearly enunciated the mandatory nature of

reference to arbitration by using the term “shall be referred to

arbitration of a sole arbitrator mutually appointed, failing which,

two arbitrators, one to be appointed by each party to dispute or

difference”. Secondly, the method of appointing the third arbitrator

has also been clearly mentioned wherein the two selected arbitrators

are to appoint a third arbitrator. Finally, even the governing law was

chosen by the parties to be “the Arbitration and Conciliation Act,

1996 or any re-enactment thereof.” These three recitals, strongly

point towards an unambiguous intention of the parties at the time of

formation of the contract to refer their dispute(s) to arbitration.

24. We are, therefore, of the firm opinion that the High Court fell in

error in holding that the appellant's application under Section 11 was

not maintainable for want of a valid arbitration clause. We find that

Clause 18 luminously discloses the intention and obligation of the

parties to be bound by the decision of the tribunal, even though the

words “final and binding” are not expressly incorporated therein. It

can be gleaned from other parts of the arbitration agreement that

the intention of the parties was surely to refer the disputes to

ARB.P. 36/2026 Page 10 of 20

arbitration. In the absence of specific exclusion of any of the

attributes of an arbitration agreement, the respondents‟ plea of non-

existence of a valid arbitration clause, is seemingly an afterthought.

25. Even if we were to assume that the subject clause lacks certain

essential characteristics of arbitration like “final and binding” nature

of the award, the parties have evinced clear intention to refer the

dispute to arbitration and abide by the decision of the tribunal. The

party autonomy to this effect, therefore, deserves to be protected.

26. The deficiency of words in agreement which otherwise fortifies

the intention of the parties to arbitrate their disputes, cannot

legitimise the annulment of arbitration clause. A three-Judge Bench

of this Court in Enercon (India) Ltd. v. Enercon GmbH [Enercon

(India) Ltd. v. Enercon GmbH, (2014) 5 SCC 1: (2014) 3 SCC (Civ)

59] dealt with an arbitration clause that did not provide for a method

of electing the third arbitrator. The Court held that “the omission is

so obvious that the court can legitimately supply the missing line.”

The line “the two arbitrators appointed by the parties shall appoint

the third arbitrator” was read into the clause so as to give effect to it.

It was further held that: (SCC p. 39, para 88)

“88. In our opinion, the courts have to adopt a

pragmatic approach and not a pedantic or technical approach

while interpreting or construing an arbitration agreement or

arbitration clause. Therefore, when faced with a seemingly

unworkable arbitration clause, it would be the duty of the

court to make the same workable within the permissible limits

of the law, without stretching it beyond the boundaries of

recognition. In other words, a common sense approach has to

be adopted to give effect to the intention of the parties to

arbitrate. In such a case, the court ought to adopt the attitude

of a reasonable business person, having business common

sense as well as being equipped with the knowledge that may

be peculiar to the business venture. The arbitration clause

cannot be construed with a purely legalistic mindset, as if one

is construing a provision in a statute.”

xxx xxx xxx”

(Emphasis Supplied)

13. Applying the settled principles of law, as noted hereinabove, it has to

be construed whether the Clause in the present case constitutes a valid and

binding Arbitration Agreement between the parties. Clause 29, containing

the dispute resolution clause in the present case, firstly, mandates resolution

ARB.P. 36/2026 Page 11 of 20

of disputes through amicable discussion. In the event the parties are unable

to resolve their disputes by amicable discussion, the parties will be free to

avail their legal remedies. The said Clause further proceeds to record that in

the event of the parties being unable to resolve the disputes by amicable

discussion, the disputes may be referred to arbitration, in terms as elucidated

in sub-clause (d) of the said Clause.

14. It is further to be seen that the dispute resolution clause in the present

case, after recording that the disputes may be referred to arbitration, has

detailed the procedure for conduct of the arbitration in sub-clause (d), which

clearly stipulates that the arbitration award shall be final and binding on the

parties. Further, the said sub-clause also lays down the venue and seat of the

arbitral tribunal.

15. Therefore, it is apparent that in the present case, there is a clear intent

of the parties to resolve the disputes through arbitration. The dispute

resolution clause is also in compliance with the norms of arbitration and

contemplates a binding adjudicatory mechanism.

16. Such intent of the parties is manifest from a holistic reading of the

dispute resolution clause (Clause 29), which elucidates the specific and

elaborate terms and procedure agreed upon between the parties for conduct

of arbitration. At the cost of repetition, it is noted that the parties have

agreed that they shall be bound by the arbitral award and shall act in

accordance with the same. The parties have further agreed upon the

language of the proceedings, as well as the liability of the party to pay cost

and expenses of the proceedings to be undertaken.

17. The dispute resolution clause, by elucidating the detailed procedure

for conduct of arbitration and using the terminology that, „arbitration shall

ARB.P. 36/2026 Page 12 of 20

be conducted as follows‟, as also by stipulating the governing law and

making the arbitration award final and binding on the parties, strongly points

towards the unambiguous intention of the parties to refer the disputes to

arbitration.

18. Mere use of the prefix „may‟, which is followed by a detailed binding

adjudicatory mechanism, shall not make the dispute resolution clause in the

present case as a non-binding Arbitration Clause. Thus, a comprehensive,

harmonious and wholesome construction of Clause 29 makes clear the intent

of the parties to refer the disputes to arbitration, in the eventuality the same

are not resolved amicably.

19. Accordingly, prima facie, all the pre-requisites of a valid and binding

Arbitration Agreement are fulfilled in the present case and it is manifest that

the dispute resolution clause contemplates settlement of the disputes

between the parties through the process of arbitration.

20. In this regard, reference may be made to the judgment in the case of

Mahanagar Telephone Nigam Limited Versus Canara Bank and Others,

(2020) 12 SCC 767, wherein, the Supreme Court laid down that an

Arbitration Agreement between the parties must be understood and

interpreted in terms of the intention between the parties. Furthermore, in

interpreting or construing an Arbitration Agreement, it would be the duty of

the Court to make the same workable within the permissible limits of the

law. Thus, it was held as follows:

“xxx xxx xxx

9. A valid arbitration agreement constitutes the heart of an

arbitration. An arbitration agreement is the written agreement

between the parties, to submit their existing, or future disputes or

differences, to arbitration. A valid arbitration agreement is the

foundation stone on which the entire edifice of the arbitral process

ARB.P. 36/2026 Page 13 of 20

is structured. A binding agreement for disputes to be resolved

through arbitration is a sine qua non for referring the parties to

arbitration.

xxx xxx xxx

9.2. The arbitration agreement need not be in any particular form.

What is required to be ascertained is the intention of the parties to

settle their disputes through arbitration. The essential elements or

attributes of an arbitration agreement is the agreement to refer their

disputes or differences to arbitration, which is expressly or impliedly

spelt out from a clause in an agreement, separate agreement, or

documents/correspondence exchanged between the parties.

9.3. Section 7(4)(b) of the 1996 Act, states that an arbitration

agreement can be derived from exchange of letters, telex, telegram or

other means of communication, including through electronic means.

The 2015 Amendment Act inserted the words “including

communication through electronic means” in Section 7(4)(b). If it can

prima facie be shown that parties are ad idem, even though the other

party may not have signed a formal contract, it cannot absolve him

from the liability under the agreement [Govind Rubber Ltd. v. Louis

Dreyfus Commodities Asia (P) Ltd., (2015) 13 SCC 477 : (2016) 1

SCC (Civ) 733] .

9.4. Arbitration agreements are to be construed according to the

general principles of construction of statutes, statutory instruments,

and other contractual documents. The intention of the parties must

be inferred from the terms of the contract, conduct of the parties,

and correspondence exchanged, to ascertain the existence of a

binding contract between the parties. If the documents on record

show that the parties were ad idem, and had actually reached an

agreement upon all material terms, then it would be construed to be

a binding contract. The meaning of a contract must be gathered by

adopting a common sense approach, and must not be allowed to be

thwarted by a pedantic and legalistic interpretation. [Union of India

v. D.N. Revri & Co., (1976) 4 SCC 147]

9.5. A commercial document has to be interpreted in such a manner

so as to give effect to the agreement, rather than to invalidate it. An

“arbitration agreement” is a commercial document inter partes, and

must be interpreted so as to give effect to the intention of the parties,

rather than to invalidate it on technicalities.

9.6. In Khardah Co. Ltd. v. Raymon & Co. (India) (P) Ltd. [Khardah

Co. Ltd. v. Raymon & Co. (India) (P) Ltd., (1963) 3 SCR 183 : AIR

1962 SC 1810] , this Court while ascertaining the terms of an

arbitration agreement between the parties, held that: (AIR p. 1820,

ARB.P. 36/2026 Page 14 of 20

para 30)

“30. … If on a reading of the document as a whole, it can

fairly be deduced from the words actually used therein, that the

parties had agreed on a particular term, there is nothing in law

which prevents them from setting up that term. The terms of a

contract can be express or implied from what has been expressed. It

is in the ultimate analysis a question of construction of the

contract.”

(emphasis supplied)

9.7. In interpreting or construing an arbitration agreement or

arbitration clause, it would be the duty of the court to make the same

workable within the permissible limits of the law. This Court in

Enercon (India) Ltd. v. Enercon GmbH [Enercon (India) Ltd. v.

Enercon GmbH, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59] , held that

a common sense approach has to be adopted to give effect to the

intention of the parties to arbitrate the disputes between them. Being

a commercial contract, the arbitration clause cannot be construed

with a purely legalistic mindset, as in the case of a statute.

xxx xxx xxx”

(Emphasis Supplied)

21. Similarly, holding that Courts must adopt a pragmatic and

commercially efficacious approach to uphold and operationalise Arbitration

Clauses, ensuring that intention to arbitrate is not defeated merely due to

inartistic drafting or apparent un-workability, Supreme Court in the case of

Enercon (India) Limited and Others Versus Enercon GMBH and

Another, (2014) 5 SCC 1, has held as follows:

“xxx xxx xxx

88. In our opinion, the courts have to adopt a pragmatic approach

and not a pedantic or technical approach while interpreting or

construing an arbitration agreement or arbitration clause.

Therefore, when faced with a seemingly unworkable arbitration

clause, it would be the duty of the court to make the same workable

within the permissible limits of the law, without stretching it beyond

the boundaries of recognition. In other words, a common sense

approach has to be adopted to give effect to the intention of the

parties to arbitrate. In such a case, the court ought to adopt the

attitude of a reasonable business person, having business common

sense as well as being equipped with the knowledge that may be

ARB.P. 36/2026 Page 15 of 20

peculiar to the business venture. The arbitration clause cannot be

construed with a purely legalistic mindset, as if one is construing a

provision in a statute. We may just add here the words of Lord

Diplock in Antaios Compania Naviera S.A. v. Salen Rederierna A.B.

[1985 AC 191 : (1984) 3 WLR 592 : (1984) 3 All ER 229 (HL)] ,

which are as follows: (AC p. 201 E)

“… if detailed semantic and syntactical analysis of words

in a commercial contract is going to lead to a conclusion that

flouts business commonsense, it must be made to yield to

business commonsense.”

We entirely agree with the aforesaid observation.

89. This view of ours is also supported by the following judgments

which were relied upon by Dr Singhvi:

89.1. In Visa International Ltd. [Visa International Ltd. v. Continental

Resources (USA) Ltd., (2009) 2 SCC 55 : (2009) 1 SCC (Civ) 379], it

was inter alia held that: (SCC pp. 64-65, paras 25-26)

“25. … No party can be allowed to take advantage of

inartistic drafting of arbitration clause in any agreement as

long as clear intention of parties to go for arbitration in case

of any future disputes is evident from the agreement and

material on record including surrounding circumstances.

26. What is required to be gathered is the intention of the

parties from the surrounding circumstances including the

conduct of the parties and the evidence such as exchange of

correspondence between the parties.”

89.2. Similar position of law was reiterated in Nandan Biomatrix Ltd.

[Nandan Biomatrix Ltd. v. D1 Oils Ltd., (2009) 4 SCC 495: (2009) 2

SCC (Civ) 227], wherein this Court observed inter alia as under:

(SCC pp. 501-02, paras 28-30)

“28. This Court in Rukmanibai Gupta v. Collector [(1980)

4 SCC 556] has held (at SCC p. 560, para 6) that what is

required to be ascertained while construing a clause is

„whether the parties have agreed that if disputes arise

between them in respect of the subject-matter of contract such

dispute shall be referred to arbitration, then such an

arrangement would spell out an arbitration agreement‟.

29. In M. Dayanand Reddy v. A.P. Industrial

Infrastructure Corpn. Ltd. [(1993) 3 SCC 137] this Court has

held that: (SCC p. 142, para 8)

ARB.P. 36/2026 Page 16 of 20

„8. … an arbitration clause is not required to be stated in

any particular form. If the intention of the parties to refer the

dispute to arbitration can be clearly ascertained from the terms

of the agreement, it is immaterial whether or not the

expression arbitration or “arbitrator” or “arbitrators” has

been used in the agreement.‟

30. The Court is required, therefore, to decide whether the

existence of an agreement to refer the dispute to arbitration can

be clearly ascertained in the facts and circumstances of the

case. This, in turn, may depend upon the intention of the parties

to be gathered from the correspondence exchanged between the

parties, the agreement in question and the surrounding

circumstances. What is required is to gather the intention of the

parties as to whether they have agreed for resolution of the

disputes through arbitration. What is required to be decided in

an application under Section 11 of the 1996 Act is: whether

there is an arbitration agreement as defined in the said Act.”

(emphasis in original)

90. It is a well-recognised principle of arbitration jurisprudence in

almost all the jurisdictions, especially those following the

UNCITRAL Model Law, that the courts play a supportive role in

encouraging the arbitration to proceed rather than letting it come to

a grinding halt. Another equally important principle recognised in

almost all jurisdictions is the least intervention by the courts. Under

the Indian Arbitration Act, 1996, Section 5 specifically lays down that:

“5.Extent of judicial intervention.—Notwithstanding anything

contained in any other law for the time being in force, in matters

governed by this Part, no judicial authority shall intervene except

where so provided in this Part.”

Keeping in view the aforesaid, we find force in the submission of

Dr Singhvi that the arbitration clause as it stands cannot be frustrated

on the ground that it is unworkable.

xxx xxx xxx

96. Similarly, other provisions contained in Sections 8, 11 and 45 of

the Indian Arbitration Act, 1996 are machinery provisions to ensure

that parties can proceed to arbitration provided they have expressed

the intention to arbitrate. This intention can be expressed by the

parties, as specifically provided under Section 7 of the Indian

Arbitration Act, 1996 by an exchange of letters, telex, telegrams or

other means of telecommunication which provide a record of the

agreement. Such intention can even be expressed in the pleadings of

the parties such as statements of claim and defence, in which the

ARB.P. 36/2026 Page 17 of 20

existence of the agreement is alleged by one party and not denied by

the other. In view of the above, we are of the opinion that the parties

can be permitted to proceed to arbitration.

xxx xxx xxx”

(Emphasis Supplied)

22. In regard to interpretation of contracts/clauses, this Court also notes

the judgment in the case of Infrastructure Leasing and Financial Services

Ltd. Versus HDFC Bank Ltd. and Another, 2023 SCC OnLine SC 1371,

wherein, the Supreme Court has succinctly recapitulated the principles of

interpretation of contract, and held that it is the effect of all the terms of the

document, which brings out the true purport and intention of the parties. The

relevant portion of the aforesaid judgment, is extracted as follows:

“xxx xxx xxx

29. The effect of these documents is what the court is concerned

with. It is a known principle of contract interpretation, that the

substance of a document, is discernible from its terms, rather than

the label or its nomenclature. In Yellapu Uma Maheswari v. Buddha

Jagadheeswararao [(2015) 11 SCR 849], the court held:

“It is well settled that the nomenclature given to the

document is not decisive factor but the nature and substance

of the transaction has to be determined with reference to the

terms of the documents and that the admissibility of a

document is entirely dependent upon the recitals contained in

that document but not on the basis of the pleadings set up by

the party who seeks to introduce the document in question.”

30. In Assam Small Scale Ind. Dev. Corp. Ltd. v. J.D.

Pharmaceuticals [2005 Supp (4) SCR 232] the court stated as follows:

“The nature of transaction is required to be determined

on the basis of the substance there and not by the

nomenclature used. Documents are to be construed having

regard to the contexts thereof wherefor „labels‟ may not be of

much relevance.”

31. This was also stated in V. Lakshmanan v. B.R. Mangalagiri [1994

Supp (6) SCR 561] (that the “nomenclature or label given in the

agreement as advance is not either decisive or immutable.”). This

principle of substance, over the form, was followed in Super Poly

ARB.P. 36/2026 Page 18 of 20

Fabriks Ltd. v. Commissioner of Central Excise, Punjab [(2008) 6

SCR 1076].

32. That one document is styled or described in a certain manner, or

that it uses a certain expression, or term is not conclusive; it is the

effect of all the terms, of the documents, which bring out the true

purport and intention of the parties. Likewise, another allied

principle of contract interpretation, is that where the transaction is

not the subject of one document, but several, which refer to each

other, or a reading of all, describe the entire contract, then, it is open

to the court to consider all of them together. This principle was stated

in S. Chattanatha Karayalar v. The Central Bank of India wherein this

court held that:

“The principle is well-established that if the transaction is

contained in more than one document between the same parties

they must be read and interpreted together and they have the

same legal effect for all purposes as if they are one document. In

Manks v. Whiteley, [1912] 1 Ch. 735 Moulton, L.J. stated:

“Where several deeds form part of one transaction and

are contemporaneously executed they have the same effect for

all purposes such as are relevant to this case as if they were one

deed. Each is executed on the faith of all the others being

executed also and is intended to speak only as part of the one

transaction, and if one is seeking to make equities apply to the

parties they must be equities arising out of the transaction as a

whole.”

xxx xxx xxx”

(Emphasis Supplied)

23. In the light of the above discussion, this Court is of a prima facie view

that the intention of the parties to resolve their disputes by way of arbitration

is palpable from a bare reading of the dispute resolution clause governing

the parties. Consequently, Clause 29 of the Agreement between the parties is

held to be a valid Arbitration Clause, which is binding on the parties before

this Court.

24. The judgments relied upon by the respondent are clearly

distinguishable, as the dispute resolution clause contained in the said

judgments are distinct and entirely different from the dispute resolution

ARB.P. 36/2026 Page 19 of 20

clause existing in the present case. Besides, in the present case, the parties

have already agreed upon the terms of arbitration at length, unlike in the

cases as relied upon by the respondent, wherein the terms of conduct of

arbitration had been left to be determined at a later stage.

25. Though the dispute resolution clause in the present case envisages

amicable discussion between the parties, however, it is a settled legal

position that any pre-arbitral mechanism making it obligatory to seek

resolution of disputes through mediation, conciliation or the like, is directory

and not mandatory. (See: Hindustan Unilever Limited Versus Jagdeesh

Kumar Sole Proprietor of Hari Ram Dharam Pal, 2024 SCC OnLine Del

7522)

26. Accordingly, there is no impediment before this Court in appointing

an arbitrator. Since the petitioner herein has already invoked the Arbitration

Clause, this Court proceeds to appoint an arbitrator in terms of the Clause 29

between the parties.

27. Considering the submissions made before this Court, following

directions are issued:

i. Mr. Amrit Pal Gambhir, Advocate, (Mobile No.: +91-9810082347

and +91-9999983935) is appointed as a Sole Arbitrator to adjudicate

the disputes between the parties.

ii. The remuneration of the Arbitrator shall be in terms of Schedule IV of

the Arbitration Act.

iii. The Arbitrator is requested to furnish a declaration in terms of Section

12 of the Arbitration Act prior to entering into the reference. In the

event, there is any impediment to the Arbitrator‟s appointment on that

count, the parties are given liberty to file an appropriate application

ARB.P. 36/2026 Page 20 of 20

before this Court.

iv. It shall be open to the respondent to raise counter-claims, if any, in the

arbitration proceedings.

v. It is made clear that all the rights and contentions of the parties,

including, the arbitrability of any of the claims and/or counter-claims,

any other preliminary objection, as well as claims on merits of the

dispute of either of the parties, are left open for adjudication by the

learned Arbitrator.

vi. The parties shall approach the Arbitrator within two (2) weeks, from

today.

28. It is made clear that this Court has not expressed any opinion on the

merits of the case.

29. The petition is disposed of in the aforesaid terms.

30. The Registry is directed to send a copy of this order to the learned

Sole Arbitrator, for information and compliance.

MINI PUSHKARNA

(JUDGE)

APRIL 10, 2026

Kr/Au/Ak/Sk