Arbitration clause cannot be invoked by a non-party contractor merely because direct payments were made under the principal contract.

A contractor who is not a party to an agreement containing an arbitration clause cannot invoke that clause merely because the project owner made some payments directly to it. The contractual position remains governed by the principal agreement between the owner and the main contractor, and direct payment to a subcontractor does not by itself make the subcontractor a beneficiary under that contract for arbitration purposes. The operative point is that entitlement to rely on the arbitration clause depends on contractual privity or a clear contractual basis, not on payment mechanics alone.

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Issues: Whether a contractor who was not a party to the agreement containing the arbitration clause could be treated as a beneficiary under that contract merely because some payments were made directly to it.

Analysis: The agreement containing the arbitration clause was between the appellant and the main contractor. The second respondent was engaged by that contractor for electrical work and was not a party to the arbitration agreement. Direct payment by the appellant to the second respondent did not alter the contractual position or make the second respondent a beneficiary under the contract for purposes of the arbitration clause.

Conclusion: The second respondent could not invoke the arbitration clause on the footing that it became a beneficiary of the principal contract by reason only of direct payment.

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