IMPORTANT POINT
Ingredients of an arbitration clause discussed.

JUDGMENT

Dipak Misra, J. –

Leave granted in all the special leave petitions.

2. The controversy involved in these appeals, preferred by special leave, being similar, they were heard together and are disposed of by a common judgment. For the sake of convenience, we shall state the facts from Civil Appeal arising out of Special Leave Petition 29011 of 2013.

3. The appellant No. 1 is a company wholly owned by the Government of Karnataka and, being a State transmission utility, is a deemed licencee in the State. It invited tenders for establishing 2x8 MVA, 66/11 Sub-stations at Tavarekere in Channagiri Taluk, Davanagere District, which included the supply materials, erection and civil works on partial turnkey basis. The respondent-company participated in the bid and it was successful in the tender and, accordingly, a letter of intent was sent to it. After taking recourse to certain procedural aspects, a contract was entered into between the appellant-company and the respondent. During the performance of the contract, the respondent raised a claim before the engineer as per clause 48 of the general conditions of the contract and called upon the engineer to settle certain disputes arising in connection with the contract. As the concerned engineer did not do anything within the prescribed period of thirty days as provided under clause 48.2, the respondent filed CMP No. 62 of 2011 under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (for brevity “the Act”) before the High Court of Karnataka at Bangalore for appointment of an arbitrator.

4. The said application was resisted by the present appellants on the singular ground that clause 48 does not provide for arbitration and the same, under no circumstances, could be construed as an arbitration clause. To substantiate the said submission, reliance was placed on clause 4.1 of the agreement. It was put forth that as there is no arbitration clause, no arbitrator could be appointed. The designated Judge of the Chief Justice placed reliance on the proceedings in W.P. No. 28710/09 (M/s. Subhash Projects & Marketing Limited v. Karnataka Power Transmission Corporation Limited) disposed of on 10.6.2010 wherein the appellant-company, being a State owned Corporation, had not disputed clause 48.2 as an arbitration clause and, on that foundation, opined that it was precluded from denying the same in the case under consideration. The learned designated Judge interpreted clauses 48 and 4.1 of the agreement and came to hold that a plain reading of clause 48 would indicate that it partakes the character of an arbitration clause and, accordingly, appointed a sole arbitrator to adjudicate the matters in dispute.

5. We have heard Mr. K.V. Vishvanathan, learned senior counsel appearing for the appellants, and Mr. Dushyant Dave and Mr. Shyam Divan, learned senior counsel appearing for the respondents.

6. Mr. Vishvanathan, learned senior counsel appearing for the appellants, assailing the impugned order, has submitted that clause 48 of the agreement cannot be remotely construed as an arbitration clause and hence, the designated Judge could not have invoked the power under Section 11(5) & (6) of the Act for appointment of an arbitrator. It is urged by him that an order passed in a writ petition, which was instituted in a different context, could not have been placed reliance upon for construing the said clause as an arbitration clause. It is submitted by him that in the absence of an express intention for referring the matter to an arbitrator, it cannot be so inferred from such a clause and, more so, when there is a specific clause, i.e., clause 4 in the agreement which provides for settlement of disputes that stipulates that all the references and disputes arising out of the agreement or touching the subject-matter of the agreement shall be decided by a competent court at Bangalore. To bolster his contentions, he has commended us to the decisions rendered in M.K. Shah Engineers & Contractors v.