Madhya Pradesh High Court
Ss Associates A Partenship Firm Having … vs Dilip Buildcon Limited on 6 April, 2026
NEUTRAL CITATION NO. 2026:MPHC-JBP:27588
1 AC-141-2025
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK JAIN
ON THE 6 th OF APRIL, 2026
ARBITRATION CASE No. 141 of 2025
SS ASSOCIATES A PARTENSHIP FIRM HAVING ITS OFFICE AND
OTHERS
Versus
DILIP BUILDCON LIMITED
Appearance:
Shri Subhojit Seal - Advocate with Shri Yogesh Soni - Advocate for
the petitioner No.1.
Shri Shreyas Dubey - Advocate for the respondent.
ORDER
The present petition has been filed under Section 11(6) of Arbitration
and Conciliation Act, 1996 for appointment of arbitrator to adjudicate upon
the disputes arising between the parties arising out of the purchase orders.
The arbitration clause in para 17 is as under:
“17.1. All disputes arising out of or in connection with this
order including any question regarding its existence, validity or
termination, shall, unless amicably settled between the parties, be
finally settled by arbitration. The parties shall mutually agree and
appoint a sole arbitrator. Notwithstanding to what is stated above,
if the parties cannot mutually agree on arbitrator within 4 (four)
weeks from the date of invocation of arbitration, then the
Arbitrator shall be appointed in accordance with rule ofSignature Not Verified
Signed by: SARSWATI
MEHRA
Signing time: 09-04-2026
11:02:48
NEUTRAL CITATION NO. 2026:MPHC-JBP:27588
2 AC-141-2025
Arbitration and Conciliation Act 1996. The arbitration proceedings
shall be conducted as per the Arbitration and Conciliation Act
1996, and any modifications thereto and re-enactments thereof.
The seat of arbitration shall be Bhopal. The language to be used in
arbitration proceedings shall be English.
17.2. Each party submits to the jurisdiction of courts of
Bhopal for the purposes only of compelling compliance with the
above arbitration provisions and for enforcement of any arbitration
award made in accordance with the above provision.
17.3. The Purchase Order shall be governed, construed and
shall take effect in accordance with the laws of India and Supplier
agrees to submit to the exclusive jurisdiction of the Courts in
Bhopal.”
2. Learned Counsel for the respondents has objected to the
appointment of the arbitrator on two grounds. Firstly, that as per the
aforesaid clause 17.1, the parties have to go for amicable settlement and if
amicable settlement dose not take place, then the matter has to be finally
settled by arbitration. It is argued that the petitioner did not try for any
amicable settlement.
3. The second objection taken is that there is criminality in the act of
the petitioner in the matter and once there is criminality involved in the
transaction, then arbitrator cannot be appointed.
4. Learned counsel for the petitioner refers to a letter written to the
Police authorities on 28.01.2025 wherein the Police Authorities have been
Signature Not Verified
Signed by: SARSWATI
MEHRA
Signing time: 09-04-2026
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NEUTRAL CITATION NO. 2026:MPHC-JBP:27588
3 AC-141-2025
called upon to investigate into the theft of materials amounting to
Rs.26,750/- by the petitioner or his staff members.
5. Learned counsel for the respondents has also referred to reply to
notice under Section 21 of The Act of 1996 wherein it was clearly mentioned
by the respondent in its reply dated 10.10.2025 that the acts of the petitioner
in the matter are tainted with Fraud, forgery, criminal breach of trust, malice,
dishonest, intent to defraud and unlawfully amass money which are all
offences under Bhartiya Nyaya Sahita.
6. Upon consideration of the aforesaid submissions, it is seen that so
far as the objection that there has to be amicable settlement is concerned,
clause 17.1 of the purchase order does not mention any particular process for
amicable settlement, before which arbitration cannot start but it only
mentions that the dispute shall be settled by arbitration, unless amicably
settled between the parties.
7. From the correspondence going between the parties, it is clear that
there cannot be any amicable settlement because the respondent has even
gone to the extent of making complaint to the police authorities against the
Petitioner and therefore, the hopes of amicable settlement cannot be inferred
by this Court. The only barring provision of Section 77 of Act of 1996 which
Bar initiation of arbitration proceedings during pendency of conciliation
proceedings. Section 77 is as under :-
” The parties shall not initiate, during the conciliation proceedings,
any arbitral or judicial proceedings in respect of a dispute that is
the subject-matter of the conciliation proceedings except that a
party may initiate arbitral or judicial proceedings where, in his
opinion, such proceedings are necessary for preserving his rights.”
8. In the present case, there is no mandatory provision in the
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Signed by: SARSWATI
MEHRA
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agreement to carry out any conciliation or amicable settlement process, and
the arbitration clause is unconditional in mentioning that unless amicable
settlement takes place, the dispute shall be settled by arbitration. Therefore,
this objection of the respondents is discarded.
9. So far as the question of there being criminality in the act of the
petitioner is concerned, no doubt that a complaint has been made by the
respondent to the Station Officer, Thana Chuna Bhatti, Bhopal (M.P.) but no
FIR or any other further actions seems to have been taken place on this
complaint which is sent on letterhead of the respondent to the police
authorities.
10. Be that as it may be, but it is settled in law that even where
criminal proceedings are pending parallelly, then also arbitration proceedings
can continue unless the criminal allegation is of such a nature that it amounts
to an allegation in rem , but where the criminal action or criminality alleged
by one party against the other party is criminality alleged in personam then
the arbitration proceedings cannot be scuttled.
11. In Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 , it was
held as under :-
62. Dr D.Y. Chandrachud, J. in his concurring judgment [Ed. : The opinion
authored by Sikri, J. in A. Ayyasamy , (2016) 10 SCC 386, is also signed by
Chandrachud, J. Chandrachud, J. delivered a supplementing opinion as well.]
unclasped the mandatory nature of Section 8 of the Arbitration Act to observe
that allegations of fraud can be made a subject-matter of arbitration by relying
o n Russell on Arbitration , Redfern and Hunter on International
Arbitration and Gary B. Born in International Commercial Arbitration .
Reliance was placed on the principle of separation and legal effect of the
doctrine of competence-competence, to observe : (A. Ayyasamy case [A.
Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386 : (2017) 1 SCC (Civ) 79] ,
SCC p. 414, para 44)
“44. … ’13. Once an application in due compliance with Section 8
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MEHRA
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of the Arbitration Act is filed, the approach of the civil court
should be not to see whether the court has jurisdiction. It should be
to see whether its jurisdiction has been ousted. There is a lot of
difference between the two approaches. Once it is brought to the
notice of the court that its jurisdiction has been taken away in
terms of the procedure prescribed under a special statute, the civil
court should first see whether there is ouster of jurisdiction in
terms or compliance with the procedure under the special statute.
The general law should yield to the special law — generalia
specialibus non derogant. In such a situation, the approach shall
not be to see whether there is still jurisdiction in the civil court
under the general law. Such approaches would only delay the
resolution of disputes and complicate the redressal of grievance
and of course unnecessarily increase the pendency in the court.’
[Ed. : As observed in Sundaram Finance Ltd. v. T. Thankam ,
(2015) 14 SCC 444, at p. 449, para 13.] “
“43. Hence, the allegations of criminal wrongdoing or of statutory
violation would not detract from the jurisdiction of the Arbitral
Tribunal to resolve a dispute arising out of a civil or contractual
relationship on the basis of the jurisdiction conferred by the
arbitration agreement.” (A. Ayyasamy case [A. Ayyasamy v. A.
Paramasivam, (2016) 10 SCC 386 : (2017) 1 SCC (Civ) 79] , SCC
p. 414, para 43)”
12. Recently, similar was held in Managing Director Bihar State Food
and Civil Supply Corporation Limited and Another Versus Sanjay Kumar,
2025 SCC Online SC 1604. In Avitel Post Studioz Ltd. v. HSBC PI
Holdings (Mauritius) Ltd. 2021 (4) SCC 713, it was clarified that
commercial frauds between private parties remain arbitrable, and only
frauds affecting public funds or involving elements of public law are not.
13. Therefore, this Court deems it fit to appoint an arbitrator into the
matter. This Court appoints Justice Shri K.K. Trivedi, Former Judge of High
of M.P. Jabalpur as sole arbitrator to adjudicate upon the dispute between the
parties.
14. The Register (Judicial-I) of this Court shall obtain the necessary
consent and disclosure of the learned arbitrator within 10 days and not later
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Signed by: SARSWATI
MEHRA
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NEUTRAL CITATION NO. 2026:MPHC-JBP:27588
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than by 24.04.2026.
15. If the consent and disclosure of the arbitrator is not received by
24.04.2026 then the case be listed on 27.4.2026 and in case, the consent and
disclosure is received then the case be treated as disposed off.
16. The Parties shall appear before the learned arbitrator firstly, on
28.04.2026 and on the such other further dates, as may directed by the
learned Arbitrator.
17. Accordingly, this application is allowed and disposed off.
(VIVEK JAIN)
JUDGE
sm
Signature Not Verified
Signed by: SARSWATI
MEHRA
Signing time: 09-04-2026
11:02:48
