'May Refer To Arbitration' Clause Valid Where Agreement Shows Clear Intent: Punjab and Haryana HC

The Punjab and Haryana High Court has held that a clause in a Leave and License Agreement between Realsta Infratech Pvt Ltd and Pace Stock Broking Services Pvt Ltd constituted a valid arbitration clause, despite using the expression “may refer to arbitration," as the provision, read as a whole, reflected a clear intention to arbitrate upon failure of amicable settlement.

Justice Jasgurpreet Singh Puri appointed former Delhi High Court judge Justice Talwant Singh as the sole arbitrator to decide the disputes between the parties.

The Leave and License Agreement dated May 12, 2023 set out a two-step process for resolving disputes. Clause 9.1 required the parties to first try and settle issues through negotiation within 15 working days of notice.

If that failed, the party raising the dispute could take it to arbitration. The clause also spelled out how the process would work, including joint appointment of the arbitrator, Gurugram as the seat, English as the language, and a final and binding award.

Realsta Infratech sent a legal notice on August 27, 2025 seeking resolution of its claims. With no reply forthcoming, it invoked arbitration through a notice dated October 6, 2025. Pace Stock Broking did not respond to either communication, prompting the present petition.

Before the Court, Pace Stock Broking argued that the use of the word “may” meant arbitration was optional and that there was no binding agreement to arbitrate.

Rejecting this contention, the court held that the clause must be read as a whole. It noted that the provision did not leave arbitration to future agreement but incorporated a complete mechanism to resolve disputes through arbitration once negotiations failed.

The court observed, “In the first part, the parties are to amicably resolve the dispute by way of negotiation and in case this is not done, then the party raising a dispute may refer the dispute for resolution by arbitration and thereafter in the second part, the procedure and seat of arbitration have been prescribed. The aforesaid continuity in two phases itself clearly suggests the intention of the parties that in default of settlement through amicable negotiation, the parties may refer the dispute for resolution through arbitration.”

It further held that at the stage of appointing an arbitrator, the court is only required to examine the prima facie existence of an arbitration clause and not its validity.

Finding that such a clause existed and had been invoked, the court allowed the petition and appointed a sole arbitrator. It clarified that all objections regarding the existence or validity of the arbitration agreement may be raised before the arbitral tribunal.

For Petitioner (Realsta Infratech Pvt Ltd): Advocate Chandandeep Singh.

For Pespondent (Pace Stock Broking Services Pvt Ltd): Advocates Vishal Sodhi, Sourav Garg.