Meghalaya High Court
M/S Rabinderjit Singh And Sons vs . The Chairman And Managing on 1 August, 2018
Author: Mohammad Yaqoob Mir
Bench: Mohammad Yaqoob Mir
Serial No.16
Regular List
HIGH COURT OF MEGHALAYA
AT SHILLONG
Arb.P. No.8/2017
Date of Order: 01.08.2018
M/s Rabinderjit Singh and Sons Vs. The Chairman and Managing
Engineer and Builders Director (National Project
Construction Corporation Ltd)
Coram:
Hon'ble Mr. Justice Mohammad Yaqoob Mir, Chief Justice
Appearance:
For the Petitioner/Appellant(s) : Mrs. PD Bujarbaruah, Adv
For the Respondent(s) Mr. S Sen Gupta, Adv for R1
Ms. A Paul, Adv for R2
i) Whether approved for reporting in Yes Law journals etc.:
ii) Whether approved for publication in press: No
1. Instant petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) has been filed for appointment of Arbitrator.
2. In exercise of the powers conferred under sub-Section (10) of Section 11 of the Act of 1996, this Court has notified the scheme called as ―Appointment of Arbitrators by the High Court of Meghalaya Scheme, 2017‖, in accordance with the said Scheme, request for appointment of Arbitrator has to be considered.
3. Learned counsel for the respondent No.2 has vehemently opposed maintainability of the petition for appointment of Arbitrator on the ground that the ―Contract Agreement‖ does not contain the ―arbitration clause‖.
4. For proper disposal of this petition, precise factual matrix shall be advantageous to be noticed.
5. Petitioner participated in the tender process regarding various works. The petitioner has been informed that his offer of Rs.3,01,18,151.00/- (Rupees three crores one lakh eighteen thousand and one hundred fifty one) has been accepted for the works as reflected 1 in detail in the Letter of Intent (for short LOI) dated 04.10.2013.
Contract Agreement has been executed on 04.10.2013. Consequently, the ―work order‖ has been issued on 05.09.2014.
6. The disputes arose as referred to in the petition in respect of construction of 1 No. storage accommodation (G) in 02 Blocks with allied services and development works for ARTC&S at Diphu (Assam)
- Package No.507 under L.O.I. No.700001/NER(C)/572/1716 dated 04.10.2013. Petitioner in terms of clause 35.2(2) of the CPWD Works Manual 2014, requested the authorities for redressal of disputes through ―Disputes Redressal Committee‖ vide his letters dated 31.12.2016 and 14.04.2017, which were not responded. Finally, on 01.11.2017 the petitioner through his advocate has requested for appointment of Arbitrator same was responded by the respondent authorities on 07.12.2017 conveying therein that the concerned advocate has not provided any document to establish her authorization on behalf of the petitioner to invoke arbitration clause. In short, it had been conveyed that only party to the contract can invoke arbitration clause therefore, in view of the request of the advocate for appointment of Arbitrator in absence of authorization, the respondents are unable to appoint Arbitrator. Hence, the instant petition.
7. Learned counsel for the respondent No.2 contended that the petition is not maintainable because in the original Contract Agreement, the arbitration clause had been deleted. In this connection, referred to page 50 of the tender document providing for special terms and conditions of contract. Clause 18 reads as under:-
―18. Arbitration: Deleted.‖
8. Supporting the submission, referred to the letter sent by the petitioner to the Zonal Manager, NPCC dated 14.04.2017 requesting for redressal of disputes through Disputes Redressal Committee at Shillong prior to redressal through Court of Law in respect of construction of 1 No. storage accommodation (G) in 02 Blocks with allied services and development works for ARTC&S at Diphu (Assam) - Package No.507 under L.O.I. No.700001/NER(C)/572/1716 dated 04.10.2013. It is also mentioned in the letter that arbitration clause for redressal of any dispute 2 between the parties to the subject contract had been deleted and contractually only the Court at Shillong had the jurisdiction to settle any dispute as may be seen from clauses 18 and 18.1 on page 52 of the special terms and conditions of contract. Then, it has been stated that in terms of clause 35.2(2) of CPWD Works Manual 2014, the petitioner cannot take recourse to other measures until redressal through the channel of Disputes Rederssal Committee is exhausted.
9. She further contend that the ―work order‖ is simply a follow up action, after acceptance of tender and issue of LOI, therefore, the condition No.4 in the work order dated 05.09.2014 cannot be invoked for appointment of Arbitrator because clause 4 precedes with the words ―Except where otherwise provided in the contract‖. In the special terms and conditions of contract, ―arbitration clause‖ had been deleted therefore, no scope for referring the disputes to Arbitrator.
10. Learned counsel for the respondents in support of her contention that arbitration clause in the contract was deleted subsequently, it cannot be included even if included, same would not constitute an agreement. Supporting this contention placed reliance on the judgment rendered in the case of ―Jagdish Chander v. Ramesh Chander & ors‖: (2007) 5 SCC 719 but the said judgment is of no help to the respondents because in the reported judgment, it has been held that in absence of arbitration clause or mutual consent, appointment of arbitrator is not permissible. Para 11 of the said judgment is relevant to be quoted:
―11. The existence of an arbitration agreement as defined under Section 7 of the Act is a condition precedent for exercise of power to appoint an arbitrator/Arbitral Tribunal, under Section 11 of the Act by the Chief Justice or his designate. It is not permissible to appoint an arbitrator to adjudicate the disputes between the parties, in absence of an arbitration agreement or mutual consent. The designate of the Chief Justice of Delhi High Court could not have appointed the arbitrator in the absence of an arbitration agreement.‖
11. In the instant case, the conditions of contract were included in the work order with mutual consent of the parties, both parties signed each page of the work order containing the conditions incorporated therein, which include arbitration clause.3
12. Learned counsel projected that the conditions incorporated in the work order including reference to arbitration do not constitute arbitration agreement, in support whereof, placed reliance on the judgment rendered in the case of ―State of Rajasthan v. Nav Bharat Construction Co.‖: (2005) 11 SCC 197. In the reported judgment, there was no such condition similar to Clause 4 of the work order. When it is so, on facts, the reported judgment is not applicable to the present case.
13. In the judgment of ―Bharat Bhushan Bansal v. U.P. Small Industries Corporation Ltd.‖: (1999) 2 SCC 166, while referring to Clause 22 it did not contain arbitration agreement either expressly or by implication, which in effect, has no applicability to the position of the case in hand because Clause 4 of the work order clearly constitute agreement for reference of disputes to the arbitrator.
14. From the judgment ―State of U.P. v. Tipper Chand‖: (1980) 2 SCC 341. Para 6 is advantageous to be quoted:
―6. In the Jammu and Kashmir case the relevant clause was couched in these terms:
For any dispute between the contractor and the Department the decision of the Chief Engineer PWD Jammu and Kashmir, will be final and binding upon the contractor. The language of this clause is materially different from the clause in the present case and in our opinion was correctly interpreted as amounting to an arbitration agreement. In this connection the use of the words ―any dispute between the contractor and the Department‖ are significant. The same is true of the clause in Ram Lal case which ran thus:
In matter of dispute the case shall be referred to the Superintending Engineer of the Circle, whose order shall be final.
We need hardly say that this clause refers not only to a dispute between the parties to the contract but also specifically mentions a reference to the Superintending Engineer and must therefore be held to have been rightly interpreted as an arbitration agreement.‖
15. Applying the said law to the present case, Clause 4 of the work order clearly provides reference of disputes to the arbitrator. When it is so, the intention is clear and it is to be interpreted as an arbitration agreement.
16. Learned counsel for the petitioner would submit that the work order has 11 conditions and both the parties have signed the work order.
The condition No.4 of the work order clearly provides for referring of 4 disputes to the sole Arbitrator to be appointed by the Managing Director, NPCC Ltd. In effect, Arbitration has been included.
17. The LOI was issued on 04.10.2013 thereafter, agreement had been executed. Subsequent thereto, the work order had been issued binding the parties to adhere to the conditions incorporated in the ―work order‖ because both the parties have signed it. In essence, same will form part of the contract. The words used in condition No.4 ―Except where otherwise provided in the contract‖, are not applicable to the arbitration clause.
18. She would further submit that NPCC Ltd. while executing other works were tender documents contained, arbitration clause, did not incorporate the conditions in the work order. For bringing home the point, she has produced another tender document pertaining to some other works allotted to M/s Sarin's, Nongrim Hills, Shillong, in that tender document among special conditions of contract, arbitration clause exist. The work order has been issued unilaterally because no conditions requiring bilateral acceptance were incorporated therein.
19. The conditions incorporated in the ―work order‖ issued in favour of the petitioner being bilateral in effect will construe as an agreement supplemental to original agreement, which include arbitration clause.
20. In the tender documents at page 50 under the head ―Special Terms and Conditions of Contract‖ as against arbitration clause, it is recorded as:-―Deleted‖. But in the ―work order‖ as issued, arbitration clause has been included which in effect shall form part of special terms and conditions of contract. The wording in condition No.4 of the work order ―Except where otherwise provided in the contract is relatable to the specifications, contract designs, drawings and estimate instructions, quality of workmanship or materials used on the work‖, for which if in the original contract nothing contrary is provided then those disputes have to be referred to the arbitrator. The condition No.4 has to be read conjointly with condition No.3 which provides that the work shall be executed strictly according to the specifications.
21. It appears that the respondents were conscious of the same that is why while responding to the notice served by the petitioner through 5 advocate, they have conveyed to the petitioner vide letter dated 07.12.2017, that it is clear from clause 4 of the work order that the provisions of Arbitration and Conciliation Act, 1996 along with any statutory modification or re-enactment thereof and rules made therein for the time being in force shall apply to the arbitration proceeding. The parties to the contract can invoke arbitration. Parties means a party to an arbitration agreement as defined under Section 2(1)(h) of the Act of 1996. On such premises, it has been conveyed to the petitioner that the respondents are unable to appoint Arbitrator on the request of Ms. PD Bujarbaruah, advocate in absence of authorization to her on behalf of the petitioner. The respondents in their reply have not taken the stand that, arbitration clause as incorporated in clause 4 of the work order, is not applicable.
22. It has been rightly pointed out that regarding any tender where in the original agreement, arbitration clause exist then work order is issued without any conditions not requiring bilateral acceptance, same position is supported by another documents issued by the respondents regarding another work in favour of M/s Sarin's, Nongrim Hills, Shillong. In the case in hand, though ―arbitration clause‖ in special conditions of contract had been deleted but subsequently, while issuing work order, the conditions have been incorporated which include reference of disputes to the Arbitrator. The work order was signed by both the parties means in effect the conditions incorporated therein have a character of ―agreement‖ that is why both the parties have signed each page of work order. Section 7 of the Act of 1996 envisages as to what ―Arbitration Agreement‖ means. Section 7 is relevant to be quoted:-
―7. Arbitration agreement.--(1) In this Part, ―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.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in--
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication 1[including communication through 6 electronic means] which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.‖
23. The signing of work order by both parties in view of the conditions incorporated therein to be adhered to by both parties in essence constitute ―Arbitration Agreement‖.
24. Scope for interpreting ―Arbitration Agreement‖ is wide in terms of Section 7 of the Act of 1996 as referred to hereinabove, therefore, to say clause 4 of the work order does not constitute ―Agreement‖ is misplaced.
25. The contention of learned counsel for the respondents that work order is a printed form. In short, according to her, it is a format part of the tender documents therefore, it does not construe as separate agreement submission is misplaced. When both parties have signed the work order in view of contractual conditions incorporated therein, had its character of ―Agreement‖ supplemental to the original Agreement cannot be questioned.
26. Learned counsel for the respondents next contended that when there is conflict between general conditions of contract and special conditions of contract, special conditions of contract prevails. According to her, clause 4 of the work order falls within the general conditions of contract therefore, being in conflict with the special conditions of contract will not prevail. Such an argument is totally unacceptable because arbitration clause originally was in the special terms and conditions of the contract which had been deleted. In clause 4 of the ―work order‖, arbitration clause is included same will automatically fall within the special terms and conditions of the contract. Therefore, the contention, ―that in terms of clause 4 of the ―special terms and conditions of contract‖, the arbitration clause included in terms of condition No. 4 of the ―work order‖, has to be ignored, because special 7 conditions of contract shall override the general conditions of contract‖, has to be rejected.
27. Clause 4 of the work order in effect constitutes an ―Agreement‖ within the meaning of Section 7 of the Act of 1996. In this behalf learned counsel for the petitioner has rightly placed reliance on the judgment rendered in the case of ―Powertech World Wide Limited v. Delvin International General Trading LLC‖ in Arbitration Petition No.5 of 2010 decided on 14.11.2011 by the Supreme Court of India. Para 18 of the judgment is relevant to be quoted:
―18. The next question that falls for consideration is what should be the approach of the Court while construing a contract between the parties containing an arbitration agreement. In the case of Rickmers Verwaltung GMBH v. Indian Oil Corp. Ltd. [(1999) 1 SCC 1], this Court took the view that ‗it is the duty of the court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of minds between the parties, which could create a binding contract between them. Unless from the correspondence, it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence.' Still in the case of Unissi (India) Pvt. Ltd. V. Post Graduate Institute of Medical Education and Research [(2009 1 SCC 107], where the appellant had given his tender offer which was accepted by the respondent and the tender contained an arbitration clause, this Court, considering the facts of the case, the provisions of Section 7 of the Act and the principles laid down by it, took the view that though no formal agreement was executed but in view of the tender documents containing the arbitration clause, the reference to arbitration was proper. In the case of Shakti Bhog Foods Ltd. V. Kola Shipping Ltd. [(2009) 2 SCC 134], this Court held that from the provisions made under Section 7 of the Act, the existence of an arbitration agreement can be inferred from a document signed by the parties or exchange of e-mails, letters, telex, telegram or other means of telecommunication, which provide a record of the agreement.‖
28. It shall also be relevant to quote the following portions from para 21 of the said judgment:
―21. ..... But once the correspondence between the parties and attendant circumstances are read conjointly with the petition of the petitioner and with particular reference to the purchase contract, it becomes evident that the parties had an agreement in writing and were ad idem in their intention to refer these matters to an arbitrator in accordance with the provisions of the Act. .....
.......... .......... ..........8
...... ―Replying to this letter vide letter dated 27th June, 2008, the respondent had neither denied the existence nor the binding nature of the arbitration clause.‖ .....
.......... .......... ..........
..... ―This letter conclusively proves that the respondent had admitted the existence of an arbitration agreement between the parties and consented to the idea of appointing a common/sole arbitrator to determine the disputes between the parties. .....‖
29. The objections raised by the learned counsel for the respondents regarding maintainability of the petition for the stated reasons and law is not tenable, as such rejected.
30. The respondents in effect while conveying to the petitioner vide letter dated 07.12.2017 have denied to appoint Arbitrator on the ground that the request for arbitration has been made by the advocate of the petitioner without any authorisation. The approach of the respondents clearly implies that they have refused to appoint Arbitrator. Once an advocate has sent a request for arbitration on behalf of the petitioner, same cannot be said to be without any authorisation because she could not send the letter of request on her own. It is only when she has been authorised by the petitioner, she has sent a request for appointment of Arbitrator. That being so, the disputes have to be referred for arbitration as such Arbitrator is required to be appointed. Learned counsel for the parties were asked to suggest names of Arbitrators, they seek two weeks' time, granted. List on 16.08.2018 for appointment of Arbitrator.
(Mohammad Yaqoob Mir) Chief Justice Meghalaya 01.08.2018 "Lam AR-PS"
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