Quick Summary: On December 11, 2025, the Delhi High Court dismissed a request by Electro Mech Engineers to use arbitration to solve a contract disagreement with Nishant Promoters Pvt. Ltd. The court decided that the arbitration rule from a different contract couldn't be used for their agreement.
In this case, Electro Mech Engineers, a partnership firm, and Nishant Promoters Pvt. Ltd., a company, were involved in a project at Jamuria Industrial Area, Bardhaman, West Bengal. Electro Mech had an order from Gridhan Metal Pvt. Ltd. (GMPL) dated November 15, 2022, and hired Nishant Promoters on December 20, 2022, for part of the work.
Nishant Promoters finished the work and sent Electro Mech a bill for ₹72,47,805. However, only ₹44,77,939 was paid, leaving ₹29,82,953 unpaid. Electro Mech sent a formal warning on September 16, 2023, but Nishant Promoters did not pay the remaining amount, leading to a lawsuit to get the money back.
Nishant Promoters took the issue to the Saket Courts, Delhi, to get the unpaid money. Electro Mech tried to move the dispute to arbitration, arguing that the arbitration rule from their contract with GMPL should apply. However, the District Judge rejected this request on June 1, 2024.
Electro Mech argued that the agreement with Nishant Promoters was similar to the one with GMPL, meaning the arbitration rule should apply. They mentioned previous court decisions to support their argument.
"We would like to bring to your notice that we have been working at your organisation M/s Gridhan Metal Pvt. Ltd. (GMPL) under sub-contract of M/s Electro Mech Engineers according to GMPL terms and conditions."
Nishant Promoters argued that they had no direct agreement with GMPL and thus no binding arbitration rule. They pointed out the lack of a signed arbitration agreement and claimed that Electro Mech's request was a way to avoid going to court.
The court, led by Justices Anil Kshetrapal and Harish Vaidyanathan Shankar, found no direct agreement between Nishant Promoters and GMPL. They decided that just mentioning another contract does not automatically include its arbitration rule.
"The arbitration clause from another contract can be incorporated only by a specific reference to arbitration clause."
The request by Electro Mech Engineers was rejected, and the court agreed with the District Judge's decision. The arbitration rule from the GMPL contract could not be applied to Nishant Promoters.
The court decided that the arbitration rule from Electro Mech's contract with GMPL could not be used in their agreement with Nishant Promoters, emphasizing the need for clear and direct agreements about arbitration in contracts.
