Delhi High Court: Arbitration Clause To Be Operative; Extension Of Period Of Agreement By Written Communication

The Delhi High Court in the case Unique Décor (India) Pvt. Ltd. v. Synchronized Supply Systems Ltd. observed and has held that if the parties in the case extended the period of agreement by written communications and that the arbitration clause being the part of the agreement continues to be operative.
The bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan in the case observed and has distinguished between the situations wherein an arbitration clause is being expired with the novation of the main agreement and that when the said arbitration clause continues to be operative when the original agreement is not being superseded by any other agreement but the same is extended by the parties through written communications.
Further, it has been held by the court that the court while exercising jurisdiction as it has been stated under Section 8 of the Act should refer the parties to arbitration where there being the substantial dispute whether the original contract contains the arbitration clause has been novated or being superseded as it would be outside the scope of interference permitted under the Section.
The court in the case observed that the original period of the agreement was only for 12 months that would expiry on June 30, 2018, thus, the parties in the case continued with the arrangement and in fact by their written communications which in the case extended the agreement till March in the yar 2019.
The court in the case also observed that where the agreement between the parties stands superseded by another agreement, the arbitration clause falls within the said agreement and where there is no new agreement which is being entered into between the parties and the original agreement is to be extended by written communications, thus, the arbitration clause would also continue to operate.
Further, it has also been held by the court that the court while exercising jurisdiction as it has been stated under Section 8 of the Act should refer the parties to arbitration where there being substantial dispute whether the original contract which contains the arbitration clause has been novated or superseded as it would be outside the scope of interference as it has been permitted under the section.
It has also been reiterated by the said court that the scope of interference as it has been stated under Section 8 and Section 11wherein both it stands on equal footing and it has to be on a prima facie threshold with regards to the examination of the existence of the agreement.
The counsel, Mr. Nishant Nigam and Mr. Aman Abbi appeared for the Appellant.
The counsel, Mr. Sushil Shukla represented the respondent.