Delhi High Court Abdul Gaffar vs Delhi Development Authority on 24 November, 2000 Equivalent citations: 2001IIIAD(DELHI)192, 90(2001)DLT330, 2001(58)DRJ48, 2001RLR249 JUDGMENT Vikramajit Sen, J. 1. The present application has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) for the appointment of an Arbitrator. Briefly stated t he case of the petitioner is that he had entered into a contract with the respondent for carrying out sundry construction, in terms of the respondent's letter dated 23.7.1992. A Legal Notice dated 28.4.1997 had been issued on behalf of the petitioner notifying all is claims. In this Legal Notice it had been specifically stated that the Executive Engineer, Northern division Bench No. 10 of the respondent had deliberately avoided to issue a copy of the agreement. The Legal Notice was accompanied by a copy of a proposed application for appointment of an Arbitrator which also contained Claims 1 to 15. A copy of Clause 25, the Arbitration Clause, has also been filed by the petitioner. In its reply the DDA has categorically denied that any Arbitration Agreement exists between the parties, Clause 29 of the Arbitration Agreement has also been reproduced which has been heavily relied upon by learned Counsel for the petitioner. 2. The contention in support of the maintainability of the petition is, firstly, that a perusal of Clause 29, which has been reproduced in the reply of the DDA, will show that it was itself in nature of an Arbitration Clause. In order to substantiate this argument the learned Counsel for the petitioner had read out the first part of the first sentence of the second paragraph to the effect that the Engineer in charge would be competent to withhold or retain those monies over which he had lien. However, it is quite apparent that he deliberately failed to read the second apart of this sentence which clarifies that these monies will be withheld either till such time as the claims are determined by the Arbitrator, if the contract is governed by the Arbitration Clause, or "by the competent Court as the case may be". The Arbitration Clause is Clause 25. This argument on behalf of petitioner was necessitated because it had been pointed out by learned Counsel for the respondent that the said clause, Clause 25, Annexure 'C' to the petitioner , had been cancelled out between the parties. The original agreement had been produced in Court. I have perused the same and find that it had been duly initialled by the petitioner as well as by the Delhi Development Authority. Quite possibly this is the reason why thee was a specific statement to the effect that a copy of the agreement had not ben supplied to the petitioner. I am in no manner of doubt that Clause 29 is not an Arbitration Clause and merely sets out the circumstances justifying the retention of moines by way of lien. 3. Section 7 of the Act reads as follows: "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 contactual 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 which provide a record of the agreement; of (c) an exchange of statements of claim and defense 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". 4. Learned Counsel for the petitioner next argued that by operation of Subsection (4) of Section 7 of the Act, an Arbitration Agreement had come into effect. It was his contention that since the petitioner had cause a Legal Notice to be issued seeking initiation of all arbitration proceedings, duly accompanied by the claims, which notice was not replied to by the respondent, an Arbitration Agreement in writing had come into effect. 5. In reply Ms. Ansuya Salwan, learned Counsel for the DDA has argued that in its reply to the present application the DDA has categorically denied the existence of the Arbitration Agreement, and therefore, Subsection (4)(c) would have no application . I am not all satisfied that this is correct understanding of the said clause. It must be expected of a party denying the existence of an Arbitration Agreement, to state so immedia