Waiver of arbitration right and excepted-matter clause: contractual disputes remain arbitrable absent express finality language.

A writ proceeding does not by itself amount to submission of a dispute to arbitral adjudication, and omission to mention the arbitration clause in a counter-affidavit does not waive the right to seek reference under Section 8 unless the party has filed its first statement on the substance of the dispute. Clause 6 of the contract, which only permitted procurement of material at the other party's risk and cost on default, did not make any departmental computation final or binding and therefore did not exclude arbitral scrutiny. On that basis, the dispute remained arbitrable and was referable to arbitration under the contract.

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Issues: (i) Whether the defendant had waived its right to invoke Section 8 of the Arbitration and Conciliation Act, 1996 by not raising the arbitration plea in the writ proceedings. (ii) Whether Clause 6 of the agreement created an excepted matter outside the scope of arbitration.

Issue (i): Whether the defendant had waived its right to invoke Section 8 of the Arbitration and Conciliation Act, 1996 by not raising the arbitration plea in the writ proceedings.

Analysis: The filing of a writ proceeding does not amount to a submission of the dispute to arbitral adjudication, and failure to refer to the arbitration clause in the counter-affidavit in those proceedings did not amount to waiver. The application under Section 8 was considered maintainable because the defendant had not filed its first statement on the substance of the dispute in the suit so as to forfeit the contractual right to seek arbitration.

Conclusion: The right to invoke arbitration had not been waived.

Issue (ii): Whether Clause 6 of the agreement created an excepted matter outside the scope of arbitration.

Analysis: Clause 6 only enabled the first party to procure material at the risk and cost of the second party in the event of default. It did not confer finality on any departmental authority, nor did it provide that the computation or decision of the Superintending Engineer would be conclusive and binding so as to exclude arbitral scrutiny. The clause therefore did not fall within the category of disputes excluded from arbitration.

Conclusion: Clause 6 did not create an excepted matter and the dispute remained arbitrable.

Final Conclusion: The dispute was referable to arbitration, the civil suit and pending applications were sent to arbitration, and an arbitrator was to be appointed in terms of the contract.

Ratio Decidendi: A contractual dispute is not excluded from arbitration merely because a departmental authority has made a computation, unless the contract expressly gives that decision finality and binding force; waiver under Section 8 arises only when the party has submitted its first statement on the substance of the dispute in the judicial proceeding.

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