Page No.# 1/13 GAHC010109772024 undefined THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : FAO/40/2024 M/S H B ENGINEERS A REGISTERED PARTNERSHIP FIRM HAVING ITS PRINCIPAL PLACE OF BUSINESS AT HOUSE NO. 3 KAMALA PATH, AMBIKAGIRI NAGAR, PO AND PS GEETANAGAR, GUWAHATI , DIST KAMRUP M ASSAM 781024 AND IS REPRESENTED BY ONE OF ITS PARTNER SRI BINOY MALLA BUZAR BARUAH VERSUS MAHARISHI RAM RAJ VEDIC EDUCATION PVT LTD AND ANR A COMPANY REGISTERED UNDER THE ERSTWHILE COMPANIES ACT 1956 AND A CONTINUING COMPANY WITHIN THE MEANING AND PROVISIONS OF THE COMPANIES ACT 1913 HAVING ITS REGISTERED OFFICE AT 107, LAXMAN SINGH COMPLEX 1, MUNIRKA , NEW DELHI 110067 AND IS REPRESENTED BY ITS DIRECTOR SRI PRASHANTH RAMASAMY 2:SRI PRASHANTH RAMASAMY S/O CHIDAMBARAM RAMASAMY DIRECTOR MAHARISHI RAM RAJ VEDIC EDUCATION PVT. LTD. RESIDENT OF 1 CHELLAMMAL STREET SHENOY NAGAR CHENNAI TAMIL NADU 60003 Advocate for the Petitioner : MR. A DAS, MR. T SARMA,MR. N I KHAN,MS. M BORDOLOI,MR. A BISWAS Advocate for the Respondent : MR S M BARUAH, MRS R DEKA Page No.# 2/13 Linked Case : CRP(IO)/177/2024 M/S H B ENGINEERS A REGISTERED PARTNERSHIP FIRM HAVING ITS PRINCIPAL PLACE OF BUSINESS AT HOUSE NO. 3 KAMALA PATH AMBIKAGIRI NAGAR PO AND PS GEETANAGAR GUWAHATI DIST KAMRUP M ASSAM 781024 AND IS REPRESENTED BY ONE OF ITS PARTNER SRI BINOY MALLA BUZAR BARUAH VERSUS MAHARISHI RAM RAJ VEDIC EDUCATION PVT LTD AND ANR A COMPANY REGISTERED UNDER THE ERSTWHILE COMPANIES ACT 1956 AND A CONTINUING COMPANY WITHIN THE MEANING AND PROVISIONS OF THE COMPANIES ACT 1913 HAVING ITS REGISTERED OFFICE AT 107 LAXMAN SINGH COMPLEX 1 MUNIRKA NEW DELHI 110067 AND IS REPRESENTED BY ITS DIRECTOR SRI PRASHANTH RAMASAMY 2:SRI PRASHANTH RAMASAMY S/O CHIDAMBARAM RAMASAMY DIRECTOR MAHARISHI RAM RAJ VEDIC EDUCATION PVT. LTD. RESIDENT OF 1 CHELLAMMAL STREET SHENOY NAGAR CHENNAI TAMIL NADU 600030 ------------ Advocate for : MR. A DAS Advocate for : appearing for MAHARISHI RAM RAJ VEDIC EDUCATION PVT LTD AND ANR Page No.# 3/13 BEFORE HONOURABLE MR. JUSTICE ROBIN PHUKAN ORDER 12.06.2026 Heard Mr. A. Das, learned counsel for the appellant and Mr. S. M. Baruah, learned counsel for the respondents in FAO No. 40/2024. 2. Also heard Mr. A. Das, learned counsel for the petitioner and Mr. S. M. Baruah, learned counsel for the respondents in CRP (IO) No. 177/2024. 3. The subject matter of challenge in the appeal as well as the CRP(IO) is the order, dated 03.02.2024, passed by the learned Civil Judge (Sr. Div.), Nagaon, in Title Suit No. 98/2022. 4. It is to be noted here that vide impugned order, dated 03.02.2024, the learned Trial Court has held that there is no dispute to the fact that there is an agreement between the parties and in that agreement, the provision for referring the matter to the arbitration in case of any dispute is also incorporated and therefore, in view of the discussion made above, the Court had no option but to refer the matter to the arbitration and thereafter, directed the parties to appear before the appropriate forum for resolution of their disputes and returned the plaint to the plaintiff, as per Order VII Rule 10 of the CPC, for presenting it before the appropriate forum. 5. Mr. Das, learned counsel for the appellant/petitioner, submits that the appellant/petitioner has instituted one title suit, being T.S. No. 98/2022, for a decree declaring the plaintiff as an authorised contractor of the defendant company, who has constructed various buildings and houses described in the ‘Schedule-A’ of the plaint, at his own expenditure, by purchasing building Page No.# 4/13 materials, labour costs etc., for which, he is entitled to a sum of Rs. 7,30,61,558/-, which is the balance amount due for the work completed by the plaintiff from the defendant; compensation of a sum of Rs. 1,00,00,000/- for the damages caused by the plaintiff and also, compensation for recovery of damages, amounting to a sum of Rs. 14,00,000/-, etc. 5.1. Mr. Das further submits that the defendant has entered appearance and filed a petition, being Petition No. 179/2023, on 04.02.2023; under Section 8, read with Section 5 of the Arbitration and Conciliation Act, 1996, challenging the maintainability of the title suit, along with a prayer for returning the plaint under Order VII Rule 10 of the CPC, wherein, the appellant herein has filed objection. Thereafter, upon hearing the learned counsel for both the parties, the learned Trial Court has passed the impugned Order, dated 03.02.2024, by returning the plaint under Order VII Rule 10 CPC and by directing the parties to appear before the appropriate forum for availing appropriate remedy. 5.2. Mr. Das, learned counsel for the petitioner submits, that though, there is a provision for arbitration in the agreement, yet, the same is not binding upon the parties. In support of his submission, Mr. Das has referred to a catena of decisions of the Hon’ble Supreme Court in the case of – (i) Nagreeka Indcon Products Pvt. Ltd. -Vs- Cargocare Logistics (India) Pvt. Ltd., reported in 2026 0 INSC 384; (ii) BGM and M-RPL-JMCT (JV) –vs.-Eastern Coalfields Limited, reported in 2025 SCC Online SC 1471; (iii) Wellington Associates Ltd. –vs.-Mr. Kirti Mehta, reported in (2000) 4 SCC 272; (iv) M/s Alchemist Hospitals Ltd. –vs.- M/s ICT Health Technology Services India Pvt. Ltd., reported in 2025 INSC Page No.# 5/13 1289; (v) Jagdish Chander –vs.- Ramesh Chander and Others, reported in (2007) 5 SCC 719; and (vi) M/s. Linde Heavy Truck Division Ltd. –vs.-Container Corporation of India Ltd. and Anr., reported in 2012 (4) CurCC 349. 6. Per contra, Mr. Baruah, learned counsel for the respondents submits that both the appeal and the petition are not at all maintainable, in view of the fact that there was a clause in the agreement and as per said clause, the learned Trial Court has rightly directed the parties to avail the remedies before the appropriate forum and that, it has also rightly returned the plaint and the decisions relied upon by the appellant are factually distinguishable from the present case and as such, they have no application in the present case and under such circumstances, he has contended to dismiss both the petition and the appeal. 7. Having heard the submissions of the learned counsel for both the parties, this Court has carefully gone through the memo of appeal and the grounds mentioned therein, the petition and the documents placed on record. And also gone through the ‘Conditions of Contract’ and the ‘Contract Form’. Legal Trajectory: - 8. The relevant provision, to deal with the issue in hand is Section 7 of the Arbitration and Conciliation Act, 1996. This section reads as under – “ 7. Arbitration agreement. Page No.# 6/13 (1) In this Part, arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in- (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] [Inserted by Act No. 3 of 2016 dated 31.12.2015.] which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” Relevant precedents on the issue:- 9. There are umpteen numbers of decisions of Hon’ble Supreme Court and of different High Court on this issue. Amongst them the most referred and also relevant are discussed herein below:- 9.1. Jagdish Chander (supra), is one of the leading relevant as well as referred decision on this point. In this case Hon’ble Supreme Court has held that Page No.# 7/13 a dispute resolution clause, using permissive language such as "may be referred to arbitration" (or similar words like "can" or "if the parties so desire") does not constitute a binding arbitration agreement. It is merely an enabling or optional clause that contemplates the possibility of future mutual consent, rather than creating a present obligation to refer disputes to the alternative mechanism. Further, the Court emphasized that for a clause to be enforceable as a mandatory dispute resolution mechanism, it must show a clear intention and obligation to refer disputes to that process, not just a future possibility requiring fresh agreement. The following propositions can be culled out of the said decision:- (i) Mere use of words like "arbitration" or "mediator" does not suffice if the clause requires or contemplates further consent of the parties. (ii) Clauses indicating a "possibility" or "option" (e.g., "may," "can," "if parties so agree") are not binding agreements. (iii) Courts must examine the entire clause and contract for clear intent to make the process mandatory. 9.2. The aforesaid propositions are re-iterated in the case of BGM and M-RPL- JMCT (JV) (supra), it has been held by the Hon’ble Supreme Court that phrases, like "may be sought through arbitration" do not create a binding obligation. It is an enabling provision only. 9.3. The aforesaid proposition again finds reiteration in the case of Nagreeka Indcon Products Pvt. Ltd.(supra). In this case the Hon’ble Supreme Court has dismissed the appeal preferred by Nagreeka's, upholding the view that no enforceable arbitration agreement existed, so the matter could not Page No.# 8/13 proceed to arbitration on that basis. The following proposition can be culled out from this decision:- (i) An arbitration agreement must reflect a clear, unequivocal, and mandatory intention of the parties to refer disputes to arbitration (i.e., a binding obligation, not a mere possibility or option). (ii) The word "can" is permissive — it indicates a future possibility or capability but does not impose a binding commitment. It lacks the mandatory character required for a valid arbitration clause (contrast with words like "shall," "will," or "must"). 9.4. In the case of M/s Alchemist Hospital Ltd.(supra) also Hon’ble Supreme Court laid down following legal propositions:- (a) Section 7 requirements: Agreement to submit disputes to arbitration, in writing, in respect of a defined legal relationship. Form is secondary; substance and party intention are paramount. (b) Referring to precedents like Jagdish Chander vs. Ramesh Chander (2007) and K.K. Modi vs. K.N. Modi, it has been held that mere labeling or loose use of “arbitration” does not create an arbitration agreement if mandatory intent to be bound by an arbitral decision is absent. (c) Arbitration is a creature of contract; courts must discern true intent from the clause as a whole. (d) Subsequent conduct/correspondence cannot create an agreement where none existed originally. 9.5. In the case of Wellington Associates Ltd. (supra) Hon’ble Supreme Court, while dismissing the petition under Section 11, interpreted the Page No.# 9/13 Arbitration Clause (Clause 5) and then held that the clause stated that any dispute “may be referred to arbitration” (with each party appointing one arbitrator and the two selecting an umpire; venue Bombay), was not a valid or mandatory arbitration agreement under Section 7 (read with Section 2(b)) of the 1996 Act. (a) Use of "may" made it permissive/enabling/ optional, not compulsory. It contemplated a fresh agreement between the parties to refer a specific dispute to arbitration. It did not create a binding obligation to arbitrate. 9.6. In the case of M/s Linde Heavy Truck Division Ltd. (supra) Delhi High Court has laid down following principles:- (a) The court (relying on the decision of Supreme Court in Jagdish Chander v. Ramesh Chander reported in (2007) 5 SCC 719 and others) distinguished between mandatory and optional arbitration clauses. (b) Normal arbitration clauses use “shall” (mandatory obligation to refer disputes to arbitration). (c) Use of “may” indicates discretion/option, not a firm commitment. It contemplates a further agreement or fresh consent by the parties to refer the specific dispute to arbitration when it arises. (d) Such a clause is merely an “agreement to agree” to arbitration in the future (or an enabling/optional provision), not a binding arbitration agreement enforceable under the Act. (e) Therefore, the suit could not be stayed, and the application under Section 8 was dismissed. The parties were not bound to arbitrate without mutual fresh consent. 10. The legal proposition, which can be crystallized from the aforesaid decisions, is that - the words like “may”, “can”, or phrases implying Page No.# 10/13 option/future consent in an arbitration clause do not create a mandatory arbitration agreement. It requires parties to reach a subsequent consensus to arbitrate. In contract law, the word "may" in a dispute resolution clause - such as "the parties may refer the dispute to mediation" - is typically interpreted as permissive (optional), not mandatory (binding). It gives the parties the right or option to pursue mediation, but does not obligate them to do so. A distinction, between permissive languages, such as "May," "Can" and mandatory languages, such as "shall," "must," "will" has been made. The clause "May" grants discretion or permission; it does not create a contractual duty. A clause using "may" is unlikely to be enforced as a condition precedent to litigation or arbitration. This aligns with general contract interpretation such as "May" = permissive/discretionary; and "Shall/Must" = obligatory. Courts will not force arbitration, based solely on a "may" clause, though they may still encourage it under Section 89 CPC, independently of the contract. 11. This court has considered the submission of Mr. Baruah, learned counsel for the respondent in respect of the aforesaid decision so referred by the learned counsel for the appellant, are factually distinguishable from the case in hand and on such count the same would not advance the case of the appellant. There may be factual distinction, but the legal proposition, so laid down in the aforesaid case, in respect of the interpretation upon the clause “May/Can” and “Shall/Must” to the considered opinion of this Court, are applicable in the case in hand also. Therefore, this Court is unable to record concurrence with the submission of Mr. Baruah, learned counsel for the respondent. 12. Now, adverting to the case in hand, this Court finds from the record that the condition of contract are documented and relevant clauses are Clause Nos. Page No.# 11/13 23 & 25. These two clauses read as under:– “ 23. Dispute Settlement 23.1 The Employer and the Contractor shall attempt to settle amicably by direct negotiation any disagreement or dispute arising between them under or in connection with the Contract. 23.2 Any dispute between the parties as to matters arising pursuant to this Contract which cannot be settled amicably within thirty (30) days after receipt by one party of the other party's request for such amicable settlement may be referred to the Adjudicator or Dispute Resolution Committee (DRC) by either party as specified in the SCC within 15 days after the expiration of amicable settlement period. 25. Procedures for Disputes 25.1 If a dispute is referred to the Adjudicator or the DRC then the adjudicator or the DRC shall give a decision in writing within 30 days of receipt of a reference of the dispute. 25.2 Either party may refer a decision of the Adjudicator or DRC to an Arbitrator within 30 days of the Adjudicator's or DRC's written decision. If either party refers the dispute to arbitration within the above 30 days, the Adjudicator's or the DRC's decision shall be final and binding. 25.3 The Adjudicator or the DRC Members shall be paid by the hour at the rate specified in the SCC, together with Page No.# 12/13 reimbursable expenses of the types specified in the SCC, and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator or DRC. 25.4 In case of arbitration, the arbitration shall be conducted in accordance with the arbitration procedures in India.” 13. From a perusal of the relevant clause, especially Clause 25.2, indicates that there the word ‘may’ is used. The relevant sentence is “ Either party may refer a decision of the Adjudicator or DRC to an Arbitrator within 30 days of the Adjudicator’s or DRC’s written decision”. 14. Thus, applying the legal proposition, as discussed in the cases discussed herein above, to the given factual matrix of the case in hand, the conclusion that can logically be arrived at is the word ‘may’ in Clause 25.2 of the condition of contract, do not create a mandatory arbitration agreement between the appellant and the respondent herein this case. 15. And having arrived at such finding and having examined the impugned order dated 03.02.2024, passed by the learned Civil Judge (Sr. Div.), Nagaon, in Title Suit No. 98/2022, referring the matters to arbitration and returning the plaint under Order VII Rule 10 CPC, fails to withstand the legal scrutiny and on such count the same is liable to be interfered with. Conclusion:- 16. In the result, this Court finds sufficient merit in this appeal and accordingly the same stands allowed. The impugned order dated 03.02.2024, so passed by Page No.# 13/13 the learned Trial Court, is accordingly set aside. 17. Consequently, the learned Trial Court shall restore the Title Suit No. 98/2022, to file and proceed to here the same in accordance with law. 18. In view of setting aside of the impugned order dated 03.02.2024, no separate order is required to be passed in the connected CRP(IO) No. 177/2024, and accordingly, the same stands closed. JUDGE Comparing Assistant