1997 Supreme(Bom) 594

IN THE HIGH COURT OF BOMBAY
M.B. Shah, C.J.
Smt. Satya w/o Kailashchandra Sahu others ..... Applicants.
Versus
M/s. Vidarbha Distillers others .... Non-applicants.
Misc. Civil Application No. 89 of 1997, decided on 7-11-1997.
Advocates appeared :
V.V. Tulzapurkar with Mahesh Singh, for applicants.
V.R. Manohar with Dharmadhikari and Anand Jaiswal, for respondents 1 to 5.
MS. Usha K. Dhanuka, for respondents 6 to 8.
A.S. Kaushik, for respondent No. 9.

Headnote:Section 10-Arbitrators in equal number-Arbitration agreement cannot be invalid.

       Sections 11 and 7(5)-Relevance of terns and conditions-As per Section 7(5) of the Act more reference of arbitration clause would be sufficient to form the Contract, and the intention of parties is presumed to be that Arbitration clause is also applicable.- The learned counsel for the applicant submitted that there is a specific agreement between the parties to incorporate all the conditions of Contract as per the Tata Electric Companys Tender Documents. He further submitted that the respondents has specifically carved out the conditions which were not applicable. He, therefore, submitted that what is excluded is specifically provided by the respondent in its letter dated 19th September, 1995 and the parties have taken a conscious decision to incorporate rest of the terms and conditions of Contract as per the Tata Electric Companys Tender Documents. It will be necessary to refer to the definition of "Arbitration Agreement" provided in Section 2(1)(b) to mean "an agreement referred to in Section 7". Section 7 provides that "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". From the aforesaid sub-section .5 it is clear that reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing, as in the present case, and the reference is such as to make that arbitration clause part of the contract.

       From the facts stated above, it would hardly lie in the mouth of the respondent to say that the arbitration clause contained in the TECL agreement was not incorporated in the agreement between the parties. The letter dated 19th September, 1995 is written by the respondent. From the terms and conditions mentioned in the letter dated 19th September, 1995 written by the respondent, it is apparent that the respondent had placed an order for item Nos. 1 to 6 as mentioned in the said letter is and the estimated value of the items is shown as Rs. 1,65,92,650/-. Thereafter, there is a specific condition which is stated above, and that provides that all conditions of Contract as per Tata Electric Companys Tender Document which is attached as Annexure A to the said letter, were made applicable on back to back basis. The terms which were excluded are also specifically mentioned therein. It should be noted that in the letter dated 24th September, 1997 the respondent has specifically stated that "the TECL Agreement is a separate and distinct agreement and some of the clauses under the TECL "Agreement were agreed to be incorporated into the Agreement". After admitting this fact, it is stated that "It was always the understanding between the parties that the terms incorporated into the Agreement were merely the technical clauses, excluding in particular the arbitration clause in the said Agreement." In view of Court, this statement is without any basis because whatever was required to be excluded is specifically excluded in the respondents letter by stating that "all conditions of Contract as per Tata Electric Companys Tender Document", except conditions Nos. 1 to 12 mentioned therein, will be applicable. Result of the exclusion of the specific conditions would mean that the other conditions of the TECL Agreement are agreed upon by the parties. In the present case, as there is a specific mention that all terms and conditions of the Tata Electric Companys Tender Document will be applicable except those specified therein, the intention of the parties is clear that arbitration clause would also be applicable.

       Sections 11, 14 and 15-Application for appointment of arbitration under Section 100 Number of arbitrators shall not be even number-Agreed to refer the dispute before arbitrator-Named persons as arbitrator refused to act-Arbitration clause is not wiped out.- That there is no similar provision to Section 8(1)(b) of the Arbitration Act, 1940 which empowers the Court to appoint the Arbitrator. In case the appointed Arbitrator refuses to act as Arbitrator. Section 11 provides exhaustive procedure for appointment of Arbitrator to a case where there is an arbitration agreement between the parties. This section is to be read along with Sections 14 and 15 of the Act which provide for termination of mandate of the Arbitrator in a case where he withdraws from office for any reason to arbitrate the dispute.

       Sections 11, 15 and 14- Named persons refusal to act as arbitrator-Necessary measurer to be taken by Court under Section 11Chief Justice is empower to appoint arbitrator.-When an arbitration agreement makes a provision for appointment of named persons as arbitrators and when the named persons refuse to act as arbitrators, when the procedure which is required to be followed is provided in Section 11 of the Act, that is to say, if the named persons refuse to act as Arbitrators, the arbitration clause is not wiped out. What is exhausted in the authority of the named persons to act arbitrator.

       Reading sub-section (b) of Section 11 and Section 15 together it would be clear that the Chief Justice required to take necessary measure for appointment of arbitrator, unless the agreement on the appointment procedure provides other means for securing appointment. Admittedly, in the present case, no other means or procedure are prescribed for securing the appointment of arbitrators, further under subsection (6) of Section 11, if there is failure on the part of the parties to agree on a person for appointment as Arbitrator, then the Chief Justice is empowered to make the appointment of Arbitrator.