Back
IN THE HIGH COURT AT CALCUTTA
Moushumi Bhattacharya, J.
BGM and M-RPL-JMCT (JV) – Petitioner
Versus
Eastern Coalfields Limited - Respondent
AP 745 of 2023
Decided On : 19-01-2024
Arbitration - Appointment of Arbitrator - The Arbitration and Conciliation Act, 1996 - Section 11 - Clause 13 of the General Terms and Conditions - Settlement of Disputes - AMRCD - ARBITRATION AND CONCILIATION ACT, 1996 - [Section 11, Clause 13]
Fact of the Case:
The petitioner seeks appointment of an arbitrator under section 11 of The Arbitration and Conciliation Act, 1996, relying on clause 13 of the General Terms and Conditions of an e-tender notice issued by the respondent, Eastern Coalfields Limited (ECL), for a project. Disputes arose regarding changes to the price component of the contract.
Finding of the Court:
The court found that the clause in question did not constitute or contain an arbitration agreement, leading to the dismissal of the application on the ground of maintainability.
Issues: The main issue was whether the clause in the e-tender notice constituted an arbitration agreement as contemplated under section 7 of the 1996 Act.
Ratio Decidendi: The court emphasized the need for an unequivocal intention to arbitrate, as well as the absence of conditional or uncertain language in the arbitration clause. It referenced legal principles from Jagdish Chander vs. Ramesh Chander and other relevant cases to determine the parameters of what constitutes an arbitration agreement.
Final Decision: The application was dismissed on the ground of maintainability due to the absence of an arbitration agreement in the clause under the General Terms and Conditions of the e-tender document.
JUDGMENT :
Moushumi Bhattacharya, J.
1. The petitioner prays for appointment of an arbitrator under section 11 of The Arbitration and Conciliation Act, 1996. The petitioner relies on clause 13 under the General Terms and Conditions of an e-tender notice dated 8.5.2019 issued by the respondent, Eastern Coalfields Limited (ECL) for removal and transportation of material for a project at Nakrakonda – Kumardih. Clause 13 of the General Terms and Conditions, appended to the e-tender notice, provides for settlement of disputes and contains, according to learned counsel appearing for the petitioner, the arbitration clause.
2. Counsel submits that disputes have arisen between the parties pursuant to the petitioner being engaged as the contractor for the work described in the e-tender notice. The dispute allegedly revolves around the parties disagreeing to changes made to the price component of the contract.
3. Learned counsel appearing for the respondent takes a point of maintainability of the present application on the ground that there is no arbitration agreement between the parties.
4. The argument on maintainability is required to be answered first.
5. Clause 13 of the General Terms and Conditions which forms part of the e-tender notice – and the crux of the dispute - is set out below :
It is incumbent upon the contractor to avoid litigation and disputes during the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made first to settle the disputes at the company level.
The contractor should make request in writing to the Engineer-in-charge for settlement of such disputes/claims within 30 (thirty) days of arising of the cause of dispute/ claim failing which no disputes/ claims of the contractor shall be entertained by the company.
Effort shall be made to resolve the dispute in two stages.
In first stage dispute shall be referred to Area CGM, GM. If difference still persist the dispute shall be referred to a committee constituted by the owner. The Committee shall have one member of the rank of Director of the company who shall be chairman of the company.
If differences till persist, the settlement of the dispute shall be resolved in the following manner:
In the event of any dispute or difference relating to the interpretation and application of the provisions of commercial contract(s) between Central Public Sector Enterprises (CPSEs)/Port Trusts inter se and also between CPSEs and Government Departments/Organizations (excluding disputes concerning railways, Income Tax, Customs & Excise Departments), such dispute or difference shall be taken up by either party for resolution through AMRCD as mentioned in DPE OM No. 4(1)/2013-DPE (GM)/FTS-1835 dated 22-05-2018.
In case of parties other than Govt. Agencies, the redressal of the dispute may be sought through ARBITRATION AND CONCILIATION ACT, 1996 as amended by AMENDMENT ACT OF 2015”
6. It is evident from the above clause that the parties to the contract were under an obligation to resolve the dispute in 2 stages if the parties were unable to settle the disputes at the company level of ECL. The 2 stages are enumerated in the clause itself and is not being repeated. The second part of the clause begins with “In case of parties other than Govt. Agencies...” and is relevant for the present application. The petitioner is a non-government entity.
7. The point which arises for consideration is whether the part of the clause containing the word “may” can be construed to be an arbitration agreement as contemplated under section 7 of the 1996 Act.
8. Section 7(1) defines an “arbitration agreement” to mean an agreement by the parties to submit disputes which have arisen between them in respect of a defined legal relationship to arbitration. The section includes non-contractual relationships. Section 7(2) envisages agreements which are embedded in the contract or in the form of a separate agreement and section 7(3) stipu
The judgment emphasizes the need for a clear and unequivocal intention to arbitrate, as well as the absence of conditional language in the arbitration clause.
Appointment of Arbitrator – Arbitration agreement is foundation of arbitration – Referral Court before appointing Arbitral Tribunal will have to be prima facie satisfied that arbitration agreement as....
The judgment establishes the requirement of a written agreement for arbitration, the interpretation of settlement of disputes clauses, and the significance of party conduct in determining the existen....
The use of 'may' in arbitration agreements indicates optionality rather than obligation, requiring mutual consent for arbitration to be valid.
Arbitration agreement – Mere mentioning of terms ‘arbitration’ or ‘arbitrator’ in heading or existence of these terms in scattered manner in clauses of agreements between parties do not aggregate to ....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
