Back
2013 Supreme(Bom) 1329
In the High Court of Bombay at Nagpur
ANOOP V. MOHTA, J.
M/s Seema Constructions Engineers and Contractors
Versus
Vidarbha Irrigation Development Corporation & Another
MCA No. 102 of 2013
Decided On : 19-07-2013
For the Applicant:N.S. Deshpande, Advocate.
For the Respondents:R1, S.S. Godbole, S.G. Jagtap, Advocates, R2, Mrs. Maldhure, AGP.
In-house arrangements to settle a dispute without a specific arbitration agreement between the parties do not constitute an arbitration clause as contemplated by the Arbitration Act.
Headnote:
Arbitration Act - Dispute Resolution - The court held that in-house arrangements to settle a dispute without a specific arbitration agreement between the parties do not constitute an arbitration clause as contemplated by the Arbitration Act. The absence of an arbitration agreement rendered the application for arbitration not maintainable.
Fact of the Case:
The applicant invoked Section 11 of the Arbitration and Conciliation Act, 1996 based on clauses of the tender contract, claiming that the dispute should be resolved through arbitration. The non-applicant objected, stating that there was no arbitration clause or agreement between the parties as required by Section 7 of the Arbitration Act.
Finding of the Court:
The court found that the clauses in the tender contract, although intended to resolve disputes, did not constitute an arbitration agreement as required by the Arbitration Act. The court dismissed the application for arbitration, stating that it was not maintainable due to the absence of an arbitration clause.
Issues: The main issue was whether the clauses in the tender contract constituted an arbitration agreement as required by the Arbitration Act.
Ratio Decidendi: The court held that in the absence of a specific arbitration agreement between the parties, in-house arrangements to settle a dispute do not constitute an arbitration clause as contemplated by the Arbitration Act. Therefore, the application for arbitration was not maintainable.
Final Decision: The court dismissed the application for arbitration, stating that it was not maintainable due to the absence of an arbitration clause. However, the parties were given the liberty to settle the matter through arbitration proceedings or mediation by consent.
Heard finally with the consent of the parties.
2. Applicant has invoked Section 11 of the Arbitration and Conciliation Act, 1996 (for short 'Arbitration Act”) based upon the following clauses of tender contract – “Clause 30.1: Except where otherwise specified in the contract and subject to the powers delegated to him by Corporation under the code, rules then in force, the decision of Superintending Engineer of the Circle for the time being shall be final, conclusive and binding on all parties of the contract upon all questions relating to the meaning of the specifications, design, drawing and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other questions claim, right, matter or thing whatsoever if any way arising out of or relating to the contract designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works, or the execution or failure to execute same, whether arising during the progress of work or after the completion or abandonment of thereof. Clause 30.2 The contractor may within 30 days of receipt by him of any order passed by the Superintending Engineer of the Circle as aforesaid appeal against it to the Chief Engineer concerned with the contract work or project provided that –
a) The accepted value of the contract exceeds Rs.100 lakhs (Rs. one hundred lacks)
b) Amount of claim is not less than Rs.1.00 lakh (Rs. one lakh) Clause 30.3 If the contractor is not satisfied with the order passed by the Chief Engineer as aforesaid, contractor may within 30 days of receipt by him of any such order appeal against it to the Executive Director, Vidarbha Irrigation Development Corporation, Nagpur, who if convinced that prima facie the contractor's claim rejected by Superintending Engineer/Chief Engineer is not frivolous and that there is some substance in the claim of contractor as would merit a detailed examination and decision by the Executive Committee/Claim Committee, shall cause to put up it upto the Executive Committee/Claim Committee at corporation level for substantial decision.” Apart from the above, there is no other clause to deal with the arbitration to resolve the dispute.
3. Learned counsel for non-applicant no. 1 has rightly raised objection that there is no arbitration clause or agreement between the parties, as contemplated under Section 7 of the Arbitration Act.
4. After going through the clauses and considering the submissions made by the learned counsel appearing for the applicant that these clauses itself intend to have their dispute resolved through the arbitration and therefore be treated as arbitration agreement between the parties, is unacceptable submission. Any in-house arrangement to settle a dispute between the parties without making any reference or to resolve the dispute or decision taken by any officer, in no way is sufficient to hold that there exists “arbitration clause”, as contemplated by Section 7 or Section 11 of the Arbitration Act. Unless there exists an arbitration agreement between the parties and the arbitral dispute, the designated Judge just cannot appoint an Arbitrator to resolve the dispute. The parties are still at liberty to appoint Arbitrator by consent.
5. Learned counsel for the applicant submits that they are not deciding the dispute, though they have invoked these clauses. Learned counsel for non-applicant no.1 is not willing, on instructions, to appoint any sole Arbitrator to resolve the dispute. There is nothing to suggest that the provisions of Section 89 of Code of Civil Procedure (CPC) can be invoked or Section 151 of C.P.C. to appoint an Arbitrator in Section 11 arbitration petition. This issue is required to be addressed in detail.
6. In view of this, I am inclined to observe that for want of arbitration clause, the application so filed is not maintainable. It is accordingly dismissed.
7. However, parties are at liberty to settle the matt
