CONTRACTUAL OBLIGATIONS & PENDING ARBITRATION

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 Can you force a party to perform the contractual obligation when period of contract is over during arbitration proceedings?

Shubham Budhiraja[1]





There is a contract between Company A & Company B whereby Company B has developed a software at Company A system as a part of contractual condition. There arises a dispute and matter referred to arbitration where Company B stating that contract is void or voidable. The matter is pending for cross examination of witnesses of Company A. Company A filed a Section 17 application before the arbitrator praying to get an order for disintegration of software from their system because contract period is over whereas Company B contended that disintegration of software should not be allowed because it contains essential data which is relevant for cross-examination. The tribunal refused the prayer and against which Section 37 petition filed by Company A. The HC allowed the Company A prayer for disintegration by holding that: once a contract is terminated by efflux of time then contractual obligations are also over. Mere because arbitration is pending does not mean that Company B can force Company A to perform the contractual obligations especially when Company B itself challenges the contract as void. The Company A being a prudent party seek liberty of arbitrator for disintegration because there was pending proceedings and arbitrator gave no finding to relief because arbitrator knew that Company A could easily disintegrate the software because contractual obligations are discharged[2].


[1] Company Secretary, LLB, BCOM(H), ShubhamBudhiraja02@gmail,com  

[2] (Delhi High Court, BSNL v. CVSIPL, 07.09.2021)

 

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