Important Point—The important consideration is whether the clause/clauses in contention in the respective agreements can be said to contain an arbitration clause in terms of which the parties can be referred to arbitration.

R.M. Savant, J.

1. This Full Bench is constituted by the Hon'ble the Chief Justice pursuant to the Reference made by a Division Bench of this Court D.K. Deshmukh and V.R. Kingaonkar, JJ, (as their Lordships then were), by the order dated 18/03/2010 passed in the above Appeal.

2. The said Division Bench made the Reference in view of the divergence of views between two Division Benches of this Court in the case of Municipal Corporation of Greater Bombay & others v/s. Atlanta Infrastructure Ltd. & others reported in 2006(2) Bom. C.R. 596 and the unreported decision of the Division Bench in M/s. M.S. Chavan Construction Company v/s. The Municipal Corporation of Greater Bombay in Arbitration Suit No.3540 of 1992. The divergence of views between the two Division Benches of this Court was as regards interpretation of Clauses 96 and 97 of the General Conditions of Contract which govern the relations between the parties i.e. the Municipal Corporation of Greater Mumbai (“MCGM” for short) and the contractors.

3. Pursuant to the Reference made, this Court has framed two issues for consideration which are as follows :-

(i) Whether it is necessary to comply with Clause 96 (pre arbitration condition) of the General Conditions of the contract to invoke arbitration under Clause 97 in the context of the jurisdiction of the Arbitral Tribunal ?

(ii) Whether the decision of the Division Bench in the case of “Municipal Corporation of Gr. Bombay & Ors. v/s. Atlanta Infrastructure Ltd. & Ors. 2006(2) Bom. C.R. 596)” or in the case “M/s. M.S. Chavan Construction Company v/s. The Municipal Corporation of Greater Bombay” lays down the correct position in law?

4. Before proceeding to answer the aforesaid two issues it would be apposite to refer to the two judgments of the Division Benches of this Court in Atlanta Infrastructure Ltd's case (supra) and M/s. M.S. Chavan Construction Company's case (supra). In Atlanta Infrastructure Ltd.'s case (supra) the contractor i.e. Atlanta Infrastructure Ltd. had raised a dispute regarding the payments made to it before the Municipal Commissioner of the Municipal Corporation of Greater Mumbai. The dispute as regards the payments had arisen in view of the fact that the MCGM had discontinued the payments as per the contractual terms on the ground that it had over paid the contractor in respect of the earlier running bills. The said dispute did not get resolved before the Municipal Commissioner resulting in the said Atlanta Infrastructure Ltd invoking Clause 97 and proceeding to arbitration. It seems that before the learned Arbitrator the claim was made under 5 heads by the said Atlanta Infrastructure Ltd. The MCGM had filed its reply to the said claim made by the said Atlanta Infrastructure Ltd. and had also filed a Counter Claim. The learned Arbitrator had allowed the claims of the Atlanta Infrastructure Ltd whereas had rejected the Counter Claim of the MCGM. This resulted in the MCGM filing an Arbitration Petition in this Court being No.184 of 1992 challenging the Award. A learned Single Judge of this Court did not find any reason to interfere with the Award dated 30/09/1992 passed by the learned Arbitrator and accordingly dismissed the said Arbitration Petition. The MCGM carried the matter in Appeal by way of Appeal No.662 of 1995 and companion Appeals. The said Appeals came up before a Division Bench of this Court. Before the Division Bench a contention was raised on behalf of the MCGM that having not raised the dispute before the Municipal Commissioner by invoking Clause 96 the contractor could not have raised the claims by invoking the Arbitration Clause. It was the contention of the MCGM that since no communication was received from the Municipal Commissioner, the same would mean that the claims have been rejected and therefore the disputes are not arbitrable. It was alternatively contended on behalf of t