Madhya Pradesh High Court
Intelenet Global Services Pvt. Ltd. ... vs Madhya Pradesh Paschim Kshetra Vidyut ... on 18 December, 2017
1
HIGH COURT OF MADHYA PRADESH BENCH AT INDORE
(S.B.: HON. SHRI JUSTICE PRAKASH SHRIVASTAVA)
A.C. No. 79/2017, A.C. No. 80/2017, A.C. No. 81/2017 & A.C.
No. 82/2017
Intelenet Global Services Pvt. Ltd.
Applicant
Vs.
Madhya Pradesh Paschim Kshetra Vidyut Vitran
Company Limited
Respondent
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Shri R.S. Chhabra learned counsel for applicant.
Shri Prasanna Prasad learned counsel for respondent.
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Whether approved for reporting :
ORDER
(Passed on 18/12/2017 ) This order will govern disposal of AC Nos. 79/2017, 80/2017, 81/2017 & 82/2017 since it is jointly submitted by counsel for both the parties that all these arbitration cases involve same issue on the identical facts situation and identical documents are to be considered therein. 2/ For convenience, the facts have been noted from AC No. 79/2017.
3/ This AC has been filed under section 11 of Arbitration and Conciliation Act, 1996, for appointment of independent arbitrator to resolve the dispute between the parties. 4/ The case of applicant is that non applicant had floated tender for award of rate contract for outsourcing of unskilled manpower required for different operation and maintenance 2 work and clerical work. The applicant had participated in the process and was awarded the rate contract award No. CE/IR/14-15/TS-243/PUR/5851 vide communication dated 9/6/2014. The applicant had furnished earnest money deposit (EMD) of Rs. 50,000/- as per terms of the contract but before contract could be performed, the non application vide order dated 4/7/2014 had unilaterally terminated the contract. The application had made a request vide letter dated 7/7/2014 to reconsider the decision but to no avail. Thereafter repeated representations were given by applicant without any fruitful result and non applicant had issued letter dated 17/11/2014 blacklisting the applicant. Hence the applicant had sent the registered letter dated 18/2/2015 for appointment of arbitrator and no response was received. In the meanwhile the applicant had also approached the District Court for interim measure under Section 9 of the Act and order dated 27/2/2016 was passed by Additional District Judge staying operation of the order relating to blacklisting of applicant. The applicant thereafter has filed present application for appointment of independent arbitrator.
5/ The respondent has filed reply raising several objections such as there is no contract between the parties as the terms were not accepted add-idum, there was no contract in terms of Article 299 of Constitution of India; there is delay on the part of applicant in approaching this court and contract does not bear sufficient stamp duty.
6/ I have heard the learned counsel for the parties and perused the record.
7/ The applicant has filed a copy of order dated 27/2/2016 passed by Additional District Judge granting interim measure 3 under Section 9 of the Act and staying the operation of order relating to blacklisting of applicant. Against this order the non applicant had filed Arbitration Appeals No. 3/2016, 4/2016, 5/2016 & 6/2016, wherein on the basis of same documents an issue was raised by non applicant that no arbitration agreement had come into existence and this court after examining the matter in detail by a separate order passed today has reached to the conclusion that the arbitration agreement exists between the parties. In that AA No. 3/2016 by the order pronounced today, it has been held as under:-
" 10/ The core issue involved in this appeal is about existence of the arbitration agreement. 11/ Section 7 of the Arbitration and Conciliation Act, 1996 (for short the Act) defines arbitration agreement and in terms of subsection 4 thereof, the arbitration agreement can be contained in a document signed by the parties or exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or even 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. Hence in terms of Section 7 even in the absence of duly signed agreement by the parties, agreement can be inferred from other written communication exchanged between them. 12/ The Supreme Court in the matter of Trimex International FZE Limited, Dubai Vs. Vedanta Aluminium Limited, India reported in 2010(3) SCC 1 has considered the earlier judgment on the point and has ruled that signed agreement between the parties is not a must but from the other documents approved and signed by the parties in the formal exchange of e-mail, letters, telex, telegrams etc., the arbitration agreement can be inferred, by holding as under:-
52/ The Court of Appeal in the case of Pagnan SPA vs. Feed Products Ltd., [1987] Vol. 2, Lloyd's Law Reports at p. 619 observed as follows:
"It is sometimes said that the parties must agree on the essential terms and that it is only 4 matters of detail which can be left over. This may be misleading, since the word `essential' in that context is ambiguous. If by `essential' one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by `essential' one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by `essential' one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the Judge, "the masters of their contractual fate".
Of course, the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called `heads of agreement'."
The above principle has been consistently followed by the English Courts in Mamidoil-Jetoil Greek Petroleum Co. S.A. v. Okta Crude Oil Refinery AD, (2001) Vol. 2 Lloyd's Law Reports 76 at p. 89; Wilson Smithett & Cape (Sugar) Ltd. vs. Bangladesh Sugar and Food Industries Corporation, (1986) Vol. 1 Lloyd's Law Reports 378 at p. 386. In addition, Indian law has not evolved a contrary position. The celebrated judgment of Lord Du Parcq in Shankarlal Narayandas Mundade v. The New Mofussil Co. Ltd. & Ors. AIR 1946 PC 97 makes it clear that unless an inference can be drawn from the facts that the parties intended to be bound only when a formal agreement had been executed, the validity of the agreement would not be affected by its lack of formality.
53/ In the present case, where the Commercial 5 Offer carries no clause making the conclusion of the contract incumbent upon the Purchase Order, it is clear that the basic and essential terms have been accepted by the respondent, without any option but to treat the same as a concluded contract.
54/ Though Mr. C.A. Sundaram, learned senior counsel heavily relied on the judgment of this Court in Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751, the same is distinguishable because in that case only general conditions of purchase were agreed upon and no order was placed. On the other hand, in the case on hand, specific order for 5 shipments was placed and only some minor details were to be finalized through further agreement.
55/ This Court in Dresser Rand S.A. rejected the contention that the acceptance of a modification to the General Conditions would not constitute the conclusion of the contract itself. On the other hand, in the present case, after the suggested modifications had crystallized over several emails. Further in para 32 (at SCC p. 770) in Dresser Rand S.A. this Court held that "parties agreeing upon the terms subject to which a contract will be governed, when made, is not the same as entering into the contract itself" whereas in the case on hand, the moment the commercial offer was accepted by the respondent, the contract came into existence. Though in para 44 of the Dresser Rand S.A. it is recorded that neither the Letter of Intent nor the General Conditions contained any arbitration agreement, in the case on hand, the arbitration agreement is found in clause 6 of the Commercial Offer. In view of the same, reliance placed by the respondent on Dresser Rand S.A. is wholly misplaced and cannot be applied to the case on hand where the parties have arrived at a concluded contract.
56/ ********************************* 57/ ********************************* 58/ Smita Conductors Ltd. vs. Euro Alloys Ltd. (2001) 7 SCC 728 was a case where a contract containing an arbitration clause was between the parties but no agreement was signed between the paties. The Bombay High Court held that the 6 arbitration clause in the agreement was binding. Finally, this Court upholding the judgment of the Bombay High Court held that the arbitration clause in the agreement that was exchanged between the parties was binding.
59/ In Shakti Bhog Foods Limited vs. Kola Shipping Limited, (2009) 2 SCC 134, this Court held that from the provisions made under Section 7 of the Arbitration and Conciliation Act, 1996 that "the existence of an arbitration agreement can be inferred from a document signed by the parties, or an exchange of letters, telex, telegrams or other means of telecommunication, which provide a record of the agreement" (SCC p.142, para 14).
60/ It is clear that in the absence of signed agreement between the parties, it would be possible to infer from various documents duly approved and signed by the parties in the form of exchange of e- mails, letter, telex, telegrams and other means of telecommunication."
13/ Counsel for the respondent has placed reliance upon the judgment of the Supreme Court in the matter of U.P. Rajkiya Nirman Nigam Ltd. Vs. Indure Pvt. Ltd. and others reported in (1996) 2 SCC 667 but the said judgment in strict terms is not attracted in the present case because it was rendered keeping in view the provisions of the Arbitration Act, 1940 whereas in the present case the existence of the agreement is to be seen in the light of the provisions contained in Arbitration Act, 1996 and especially Section 7 thereof, which defines the arbitration agreement. Counsel for the respondent has placed reliance upon the judgment of the Supreme Court in the matter of M/s Vedanta Limited (Formerly known as Sesa Sterlite Limited and successor in interest of erstwhile Sterlite Industries (India) Ltd) Vs. M/s Emirates Trading Agency LLC Reported in 2017 SCC Online 454 but in that case there was proposal and counter proposal but no concluded contract had come into existence, whereas the present case stands on a different footing.
714/ In the present case the bid was submitted by respondent for rate contract award for outsourcing of skilled manpower required for ministerial office work and clerical work. The bid of respondent was accepted and vide communication dated 9/6/14 rate contract award was issued. The contract was for a period of 24 months and clause 4 of rate contract award makes it clear that extension was to be governed by terms and condition as specified in the bid document. 15/ Clause 8 of the rate contract award dated 9/6/14 contains the requirement of security deposit/contract performance guarantee and clause 8.3 reads as under:
"8.3 Failure by the successful bidder to furnish the prescribed security deposit/contract performance guarantee or to execute the agreement within the period specified in bid document after his/her bid has been accepted or notice to start the work within such time as is determined by the Engineer-in-Chief/Controlling officer after notification of the acceptance of the bid shall entail action as deemed appropriate by the purchaser/service recipient shall be initiated (including forfeiture of the earnest money deposit (EMD), cancellation of the contract, blacklisting of bidder, etc."
16/ The above clause by its very nature comes into operation on acceptance of bid and if the formalities as mentioned in this clause are not completed, then action including cancellation of contract, blacklisting etc. is contemplated.
17/ The order of the court below as well as the documents on record reveal that though no written agreement was signed between the parties but bid of respondent was duly accepted and rate contract award was issued. Not only this the appellant itself had treated it to be a concluded contract therefore, they had subsequently sent the communication dated 4/7/14 cancelling the rate contract award and forfeiting the EMD. Even the blacklisting vide communication dated 17/11/14 has been done on the ground of non compliance of rate contract award.
818/ Having regard to the aforesaid, I am of the opinion that an agreement and concluded contract had come into existence between the parties. 19/ The connected issue is if there was an arbitration clause in the agreement.
20/ The objection of counsel for the respondent is that the clause 15 contained in the general conditions of contract is not an arbitration clause but it is a clause relating to the binding nature of the decision by the departmental authority relating to resolution of dispute. 21/ Under Section 7 of the Act what is contemplated between the parties is "arbitration agreement" and not mere agreement, hence for attracting the provisions of Arbitration Act, 1996 the existence of the valid arbitration clause in the agreement is necessary.
22/ There is a distinction between arbitration clause and the clause empowering an expert or departmental authority to give a decision of binding nature. In the adjudicatory process the arbitrator is required to act judicially and impartially, where both the parties are given opportunity to put forth their claim. As against this, an agreement may contain a clause giving power to the departmental or other experts or authorities to give their decision in respect of supervision, drawing, design etc. of the work without following any adjudicatory process and attach finality to such a decision but such a clause relating to decision by the expert or the authority cannot be termed as arbitration clause in view of missing elements of judicious decision making process. 23/ The intention of the parties as regards the resolution of dispute by the arbitration can be inferred by the reading of the clause as a whole. The agreement should either expressly or by clear implication provide for referring the dispute to the arbitrator, distinct and different from mere one sided decision by the departmental authority.
24/ Hon'ble J. Murtaza Fazal Ali in the matter of State of U.P. Vs. Tipper Chand reported in (1980) 2 SCC 341 while considering the clause of the agreement which provides for giving finality to the decision of the Superintending Engineer as to the quality of workmenship, material used or any other question, claim, right, matter arising out of or relating to the 9 contract without any element of adjudication has held that the clause does not contain any arbitration agreement and it merely vests the Superintending Engineer with the supervision of execution of the work and administrative control over it from time to time. In the matter of Tipper Chand (supra) it has been held:-
"2. The suit out of which this appeal has arisen was filed by the respondent before us for recovery of Rs. 2,000/- on account of dues recoverable from the Irrigation Department of the petitioner State for work done by the plaintiff in pursuance of an agreement, Clause 22 of which runs thus :
Except where otherwise specified in the contract the decision of the Superintending Engineer for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, design, drawing and instructions herein before mentioned. The decision of such Engineer as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right, matter or things whatsoever, in any way arising out of or relating to the contract, designs, drawing specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the works, or the execution or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment of the contract by the contractor, shall also be final, conclusive and binding on the contractor.
3. The defendant respondent made an application under Section 34 of the Arbitration Act to the trial Court on the plea that the above extracted Clause 22 amounted to an arbitration agreement. The plea found favour with the trial Court as well of the appellate Court but was rejected by the High Court in revision on the ground that it merely conferred power on the Superintending Engineer to take decisions on his own and that it did not authorise the partis-to refer any matter to his arbitration. In this connection the High Court particularly adverted to the marginal note to the said clause which was to the following effect:10
Direction of work.
4. After perusing the contents of the said clause and hearing learned Counsel for the parties we find ourselves a complete agreement with the view taken by the High Court Admittedly the clause does not contain any express arbitration agreement. Nor can such an agreement be spelled out from its terms by implication, there being no mention in it of any dispute, much less of a reference thereof. On the other hand, the purpose of the clause clearly appears to be to vest the Superintending Engineer with supervision of the execution of the work as administrative control over it from time to time.
5. Mr. Dixit relied on Governor-General v. Simla Banking and Industrial Company Ltd. AIR 1947 Lah 215, Dewan Chand v. State of Jammu and Kashmir AIR 1961 J & K 58 and Ram Lal v.
Punjab State . In the first of these authorities the clause appearing in the contract of the parties which was held by Abdur Rahmaa, J., to amount to an arbitration agreement was practically, word for word, the same with which we are concerned here but we are of the opinion that the interpretation put thereupon was not correct. As pointed out by the High Court such a clause can be interpreted only as one conferring power on the Superintending Engineer to take decisions all by himself and not by reason of any reference which the parties might make to him.
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 11 true of the clause in Ram Lal's case (supra) 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.
7. Holding, in conformity with the judgment of the High Court, that Clause 22 above extracted does not amount to an arbitration agreement, we find no force in this appeal which is dismissed with the costs."
25/ In the matter of State of Orissa and another Vs. Damodar Das reported in (1996) 2 SCC 216 in a case where clause 25 of the agreement gives finality to the decision of the Public Health Engineering, it is held that the agreement must provide expressly or by necessary implication, a reference to an arbitrator named therein or otherwise of any dispute or difference and in its absence it is difficult to spell out existence of such an agreement for reference to an arbitration to resolve the dispute or difference contracted between the parties. 26/ In (1998) 3 SCC 573 in the matter of K.K. Modi Vs. K.N. Modi and others, the Hon'ble Supreme Court taking note of the earlier judgment on the point, has held that since the clause under consideration did not contemplate any judicial determination by the Chairman of IFCI therefore, it was not an arbitration clause. 27/ In the matter of Bharat Bhushan Bansal Vs. U.P. Small Industries Corporation Ltd., Kanpur reported in AIR 1999 SC 899 in a case where the clause did not mention that the dispute could be referred to arbitration of Managing Director, nor did it spelt any duty on him to record evidence or hear both parties before deciding the question before him, it is held that the Managing Director was more in the category of an 12 expert for deciding the matters pertaining to contract and the intention appear to be to avoid dispute than to decide the formal dispute in quasi judicial manner, hence the clause was not held to be an arbitration clause. Similarly in the matter of State of Rajasthan Vs. Nav Bharat Construction Co. reported in 2005(11) SCC 197 in a case where the contractual clause was in respect of the settlement of question relating to specification, design, quality and workmanship and other technical aspects by officer of one party, it has been held that such a clause is not an arbitration clause. In the matter of Jagdish Chander Vs. Ramesh Chander and others reported in JT 2007(6) SC 375 the principle in this regard have been culled out as under:-
"8. This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in K K Modi v. K N Modi [1998 (3) SCC 573], Bharat Bhushan Bansal vs. U.P. Small Industries Corporation Ltd. [1999 (2) SCC 166] and Bihar State Mineral Development Corporation v. Encon Builders (I)(P) Ltd. [2003 (7) SCC 418]. In State of Orissa v. Damodar Das [1996 (2) SCC 216], this Court held that a clause in a contract can be construed as an 'arbitration agreement' only if an agreement to refer disputes or differences to arbitration is expressly or impliedly spelt out from the clause. We may at this juncture set out the well settled principles in regard to what constitutes an arbitration agreement :
(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation 13 to refer disputes to arbitration, there is no valid and binding arbitration agreement.
(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are : (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.
(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.
(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or 14 fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises.
Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future."
28/ From the aforesaid principles it is clear that for ascertaining the nature of the arbitration agreement, the intention of the parties is relevant which is to be ascertained from the terms of the agreement and that the use or absence of the word 'Arbitrator', 'Arbitration' or 'Arbitration Tribunal' in the clause is immaterial but the clause should have the necessary ingredients to term as the arbitration clause and that the intention of the parties to refer the dispute to the arbitrator should be clear from the clause itself, without there being any requirement of further or fresh consent of the parties for reference to the arbitrator.
29/ What is culled out from the above pronouncements is that one of the distinguishing feature between the decision by the departmental expert or authority and the arbitrator is that the process before the arbitrator is adjudicatory process wherein the parties can put forth 15 their respective claim, lead evidence in support thereof and the award is passed in independent and impartial manner. In the case of missing adjudicatory process before the departmental authorities or experts, proceedings by them are not held to be arbitral proceedings.
30/ Counsel for appellant has placed reliance upon division bench judgment of this court in the matter of State of MP and another Vs. Dewas Udyog Indore and others reported in 2012(1) MPLJ 269 but the said judgment is distinguishable on facts because in that case it was found that the order was passed in wrong notion that there was a written arbitration clause for reference to the arbitrator. He has also placed reliance upon judgment of the Supreme court in the matter of International Amusement Ltd. Vs. Indian Trade Promotion Organization reported in (2015) 12 SCC 677 and Full Bench judgment of Patna High Court in the matter of State of Bihar and others Vs. M/s. Shiv Shankar Construction Co.(P) Ltd. reported in AIR 2008 Patna 143 and Allahabad High Court in the matter of M/s Ganga Plumbering Works Vs. Kanpur Development Authority Moti Jheel Kanpur and others Reported in AIR 2008 Allahabad 107 and has argued that dispute resolution clause cannot be termed as arbitration clause. But in the present case clause 15 under consideration is very differently worded. 31/ In the present case clause 15 of the General Condition of Contract provides for settlement of dispute and reads as under:
"15. Settlement of disputes 15.1 If any dispute or difference of any kind whatsoever arises between the purchaser/service recipient and the service provider in connection with or arising out of the contract, the parties will make every effort to resolve amicably such dispute or difference by mutual consultation. After seven (7) days from the date the dispute is first brought to the notice of either party, if the parties have failed to resolve their dispute or difference by such mutual consultation, then the dispute shall be referred in writing by either party to the adjudicator, with a copy to the other party.16
15.2 In the event of any dispute between the parties, resolution shall be done in following manner:
15.2.1 First Stage- The Superintending Engineer of the concerned circle shall be the dispute resolution authority.
15.2.2 Second stage- If dispute is not resolved in first stage then Chief Engineer (concerned region) shall be dispute resolution authority at second stage.
15.2.3 Third stage- If dispute is not resolved in second stage the corporate level authority (as decided by the Managing Director of authority designated by him) shall be the dispute resolution authority.
Section V of General Condition of Contract as contained in the tender document also provides that:-
"15.3 Notwithstanding any disputes with reference to the contract pending for arbitration, the contractor shall continue to perform his obligations in accordance with the purchaser/service recipient's decision or instruction, and purchaser/service recipient shall also continue to perform his obligations under the contract including payment of any undisputed monies due to the contractor."
32/ The aforesaid clause clearly reveals that at the first instance the parties are required to make an effort to resolve the dispute amicably through mutual consultation in three stages with dispute resolution authorities, failing which the dispute is to be referred to the 'adjudicator'. In place of "arbitrator" the parties have used the word "adjudicator" to convey the same meaning. The aforesaid clause makes it clear the intention of the parties is to resolve the dispute through the adjudicatory process in case of failure of consultation process. Clause 15.3 noted above makes the said intention further clear, hence the Clause 15 is not a clause relating to the one sided decision by the departmental authority or the expert but it is in fact an arbitration clause."
8/ Having regard to the aforesaid and considering the fact that same issue in respect of same contract on the basis of 17 same documents has been decided by this court, I am of the opinion that for detailed reasons assigned in the above order in AA No. 3/2016 the arbitration agreement exists between the parties.
9/ The next issue is whether applicant has approached this Court after following the procedure prescribed in arbitration agreement as per clause 15 of GCC which is quoted in the above order passed in AA No. 3/16. As per clause 15 firstly an attempt is required to make for resolving the dispute by mutual consultation in three stages with the dispute resolution authorities provided therein, failing which the dispute is required to be referred in writing by either party to the adjudicator with a copy to the other party. In the present case there is no authentic material on record to find that the appellant had made any effort to amicably resolve the dispute by following the process prescribed in clause 15. Except for making the bold assertion in the arbitration application, no communication or document has been placed on record by applicant to show that any attempt was made to resolve the dispute by mutual consultation.
10/ So far as registered letter dated 18/2/2015 Annex.A-7 sent by appellant to Chief Engineer is concerned this letter does not reveal that procedure for resolution of dispute by mutual consultation which is prescribed in clause 15 was followed before making a request for appointment of Former High court Judge or Senior Advocate as an independent Arbitrator.
11/ Section 11(2) of the Act gives liberty to the parties to agree on a procedure for appointment of arbitrator or arbitrators and sub-section (6) of Section 11 can be attracted only if the 18 condition mentioned in either of the clauses (a) to (c) are satisfied.
12/ Supreme court in the matter of Deep Trading Company Vs. Indian Oil Corporation and others reported in (2013) 4 SCC 35 considering the scope and applicability of Section 11 has held as under:
"11. Sub-sections (3), (4) and (5) of Section 11 have no application in the present case as the parties have agreed on a procedure for appointing the arbitrator in Clause 29. Sub-section (2) provides that subject to sub- section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Sub-section (6) makes provision for making an application to the Chief Justice concerned for appointment of an arbitrator in three circumstances, (a) a party fails to act as required under the agreed procedure or (b) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure.
If one of the three circumstances is satisfied, the Chief Justice may exercise the jurisdiction vested in him under Section 11(6) and appoint the arbitrator. In the present case, the dealer moved the Chief Justice of the Allahabad High Court under Section 11(6)(a) for the appointment of an arbitrator as the Corporation failed to act as required under Clause 29."
13/ Since in the present case the applicant has approached this court for appointment of arbitrator without exhausting the agreed procedure contained in clause 15 of GCC therefore, no case is made out to allow the prayer for appointment of arbitrator under Section 11 of Act. The arbitration cases are accordingly dismissed, however, with liberty to applicant to approach this court again if need so arises after taking recourse to the procedure contained in clause 15.
19The signed order be placed in the record of AC No. 79/17 and copy whereof be placed in the record of connected arbitration cases.
C.C. as per rules.
(Prakash Shrivastava)
Judge
BDJ
Bhun
Digitally signed by
Bhuneshwar Datt
DN: c=IN, o=High Court of
Madhya Pradesh,
ou=Administration,
eshwa postalCode=452001,
st=Madhya Pradesh,
2.5.4.20=3fb5bcda9fd75d9
5d6c7cdcbd092ee5a74a94
r Datt
a5534aed3a66d9385cfcfc2
01e0, cn=Bhuneshwar Datt
Date: 2017.12.23 15:41:44
-08'00'