M/s. Kailash Sharma v. South Eastern Coalfields Limited

1. Chairman-cum-Managing SECL, Seepat Road, Bilaspur (C.G.) Director,

2. The General Manager, Raigarh Area, SECL, Post: Raigarh, District Raigarh (C.G.) APPLICATION UNDER SECTION 11 (61 OF THE ARBITRATION AND CONCILIATION ACT. 1996 FOR APPOINTMENT OF SOLE ARBITRATOR

(SB: Hon'ble Mr. N.K. Aaarwal. J.) Present : Mr. RahulJha, counsel for the applicant. Shri R.K.Gupta, counsel for the Respondents. ORDER (Deliveredon I .01.2013)

The applicant has preferred application under Section 1 1 (6) of the 'the Act') for appointment Arbitration and Conciliation Act, 1996 (henceforth of Arbitrator. As per the provisions under the "NOTE" in the general terms and 2. conditions of the contract, it is provided that "in case of any ambiguity, the Civil Engineering Manual shall be referred to and the provisions in the Civil Engineer Manual shall prevail upon".

The provisions of Civil Engineering Manual of Coal India Limited contains arbitration clause, which reads thus: "14. Settlement of Disputes / Arbitration

14.1 disputes during It is incumbent upon the contractor to avoid litigations the course of execution. However, if such disputes take place between the contractor and the department, effort shall be made to settle the disputes through committees at [NiminiKiiUB different levels made for this purpose by the company. )M failing Incharge settlement disputes/claims If differences still persist The contractor should make request in writing to the Engineer disputes/claims within 30 (thirty) days of arising of the disputes/claims of the contractor shall be entertained by the company. in writing to the Engineer contractor may request Incharge for referring the matter to a sole Arbitrator. Such request shall be made by the contractor within 90 (ninety) days of receiving the intimation from the Engineer above committees in regard to the disputes/claims failing which the claim, difference or disputes of the contractor will be deemed to have been waived and the company shall be released and discharged of all liabilities under this contract in respect of this claims. the company to is the prerogative of However, accede request of appointment of a sole Arbitrator. the final decision of Incharge about contractor right, matter or

14.2 Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specification, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, whatsoever in any way arising out of or relating to the contract, design drawings specification, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to during execute commencement/the progress of the work or after the completion or abandonment thereof shall be referred to, on failure of settlement of disputes by the company and on request of the contractor as per clause 14.1 of the contract, the sole arbitration of the person appointed by the Chairman-cum-Managing Director of the company or any other person authorized by him, to appoint such arbitrator. whether arising There shall be no objection to any such appointment that the arbitrator so appointed is an employee of the company and that in the course of his duties as an employee of the company he had expressed views on all or any of the matters in dispute or difference. "

The applicant respondent agreement No. SECL/BSP/GM(Civil)/AGT/5/556 dated agreement for the execution of the "work of widening and strengthening of existing WBM approach road to Robertson Railway Siding

30.04.2005 entered l^ Dharamjaigarh-Kharsia State Highway at Raigarh Area, District: Raigarh (C.G.)"

According to the applicant, the respondents failed to adhere to the provisions of the contract and did not finalise/paid the final bill against work done by the applicant, which ultimately turned into dispute. The applicant, therefore, vide letter dated 12.01.2009 (Annexure A/4), Office of respondent No.2 with the endorsement to respondent No.1 for requested the finalizing the matter of disputes and differences and release payment within reasonable time and raised its claim in total amounting to Rs.48,55,500/- along with ante-lite, pendent elite and post-lite interest. -6. ,< The respondent No.2, vide its letter dated 04.02.2009 (Annexure A/5), denied all the claims raised by the applicant.

According to the applicant, as its claims were denied by the respondents and disputes and differences had arisen between them, therefore, the applicant, vide letter dated 30.03.2009, requested the competent authority in terms of the provisions of the agreement, Chairman-cum-Managing Director for finalization of disputes and/or to i.e., the appoint the sole Arbitrator in terms of the arbitration agreement. However, the respondents had not paid any heed to the above request made by the applicant. Hence, this petition.

In reply to the petition, the respondents denied existence of arbitration agreement pleading, as per clause 14 of the work order dated 22 March, 2005, any dispute between the parties has to be resolved by filing Civil Suit before the District Court, Bilaspur, and therefore, there is no scope to look into the Civil Engineering Manual to search arbitration agreement between the parties.

I have heard counsel for the parties and perused the material available on record.

This Court in MCC No. 128/2005 (Annexure A/3), while dealing with the similar contract and the similar provision of Civil Engineering Manual .^ ^^ ^ip^; ^../ ^ 4 ^ has reached to a finding that the agreement refers to applicability of the Civil Engineering Manual and agreement does have arbitration clause.

The respondents almost in the simjlar dispute raised in arbitration application No. 10/2008 have denied the existences of arbitration agreement, inter alia on the ground, the arbitration clause 14 contained in the Civil Engineering Manual is subject to revisions and modifications from time to time. The above clause stands amended w.e.f. July, 2004 and in place of clause 14.1, clause 15 has been inserted and in viewofclause 15, the matter cannot be referred for arbitration.

This Court, vide order dated 29.02.2012 having found, agreement refers to applicability of the Civil Engineering Manual and agreement does have arbitration clause, rejected the contention raised by |WnWWUUMWB' the respondents and appointed one former Judge of High Court of Madhya Pradesh and Calcutta as sole arbitrator in the matter to decide the claims and counter claims of the parties.

The matter can be looked into from another angle also. Clause

6.4.3 and 9.7.5 of the agreement clearly reveals existence of arbitration agreement whereas the arbitration agreement is contained only in Civil Engineering Manual and not in the agreement.

The Civil Engineering Manual is not another contract but a standard form of terms and conditions of respondents' regulatory institution, i.e. Coal India Limited, which publishes or circulates such standard terms and conditions for the benefit of respondents and its other subsidiaries. As per the provisions under the "NOTE" in the General Terms and Conditions of the Contract, in case of any ambiguity, the Civil Engineering Manual shall be referred to and the provisions in the Civil Engineering Manual shall prevail upon. Therefore, considering the ambiguity occurring in the terms of agreement in the light of "NOTE" appended therewith, it is crystal clear that reference in the agreement of Civil Engineering Manual containing arbitration clause constitutes an arbitration agreement, within the meaning of Section 7 (5) of the Act of 1996 in the facts and circumstances of the case and the contention raised by Shri R.K.Gupta, learned counsel for the respondents, regarding non-existence of arbitration agreement is devoid of merit. :^^ :.^s^^^ %^?.^ y1'/ ^.^•^ "^^•^^' ^3LJ

Now l shall examine the effect and import of clause 14 of Work Order, which reads thus: "That matters relating to any disputes or differences arising out of this work order and subsequent contract agreement entered, based on this tender and work order shall be subject to the jurisdiction of District Court, Bilaspur (CG) only. "

As per Section 85 of the Act of 1996, the Arbitration Act, 1940 has been repealed. Even prior to the judgment of Supreme Court in the case of SBP & Co. v. Patel Engineering Ltd. and another, (2005) 8 SCC 618, the petitions under Section 11 (6) of the Act of 1996 are being filed before the District Judge having territorial jurisdiction over the subject matter. An that a suit agreement between the parties to a contract concerning disputes arising between them on the basis of that contract to the effect should be instituted in one only, out of two competent courts having territorial jurisdiction over the subject-matter of that suit is valid and enforceable and is not void under Section 28 of the Contract Act, 1872. It the parties have It does not mean that is in this backdrop, vide clause 14 of the work order, agreed to confer jurisdiction to the Couri: at Bilaspur. by incorporating the same in the work order, the arbitration clause stands excluded by necessary implication.

Wellington Associates Ltd. v.Kirit Mehta, (2000) 4 SCC 272, on which, the respondents' counsel Shri R.K.Gupta placed his reliance, was a case wherein arbitration clause was worded, as under: "9. Before referring to the said sections, 1 shall refer to the relevant clauses 4 and 5 in the two agreements dated 15-8- 1995. They read as follows: "4. It is hereby agreed that, if any dispute arises in connection with these presents, only courts in Bombay would have jurisdiction to try and determine the suit and themselves to the exclusive the parties hereto submit jurisdiction of the courts in Bombay. It is also agreed by and between the parties that any 5. dispute or differences arising in connection with these presents may be referred to arbitration in pursuance of the Arbitration Act, 1940 by each party appointing one arbitrator and the arbitrators so appointed selecting an umpire. The venue of arbitration shall be at Bombay. " .^^ ^' ^. %.^^ '<^-^^^"

The Supreme Court, considering the fact that clause 4 precedes clause 5, has held in para 22 of the above judgment as under: "22. It is contended for the petitioner that the word "may" in clause 5 has to be construed as "shall". According to the petitioner's counsel, that is the true intention of the parties. The question then is as to what is the intention of the parties. The parties, in my view, used the words "may" not without reason. If one looks at the fact that clause 4 precedes clause 5, one can see that under clause 4 parties desired that in case of disputes, the civil courts at Bombay are to be approached by way of a suit. Then follows clause 5 with the words "it is a/so agreed" that the dispute "may" be referred to arbitration implying that parties need not necessarily go to the civil court by way of suit but can also go before an arbitrator. Thus, clause 5 is merely an enabling provision as contended by the respondents. in cases where there is a sole arbitration clause couched in 1 may also state that mandatory language, it is not preceded by a clause like clause 4 which discloses a general intention of the parties to go before a civil court by way of suit. Thus, reading clause 4 and clause 5 But together, 1 am of the view that it is not the intention of the parties that arbitration is to be the sole remedy. It appears that the parties agreed that they can "a/so" go to arbitration in case the aggrieved party does not wish to go to a civil court by way of a suit. to go to arbitration is necessary. Further, in the present case, the same clause 5, so far as the venue of arbitration is concerned, uses the word "shall". The parties, in my view, must be deemed to have used the words "may" and "shall" at different places, after due deliberation. " in that event, obviously, fresh consent

The facts in the instant case are totally different. There is no clause in the agreement in question as clauses 4 & 5, and therefore, the ratio of law laid down by the Supreme Court in the case referred herein above is of no help to the respondents. Therefore, in my considered opinion, contract entered into between the parties does have arbitration agreement. 7 1^>

Considering that the respondents have failed to act on the request of the applicant for appointment of arbitrator and also considering that the dispute had arisen out of contract agreement, this Court is of the opinion that a case for appointment of arbitrator is made out.

Considering the nature of dispute between the parties in the light of Section 11 (6) read with Section 11 (8) of the Act, l deem it fit to appoint a retired former Judge of High Court as sole arbitrator to adjudicate upon the dispute between the parties.

Therefore, 1 hereby appoint Hon'ble Shri Justice V.K.Shrivastava, former Judge of High Court of Chhattisgarh at Bilaspur, as sole arbitrator, subject to his consent.

The Hon'ble Arbitrator may settle his terms and conditions and remuneration.

Registry this Court intimate Hon'ble Shri Justice V.K.Shrivastava about his appointment as Arbitrator in the instant matter to resolve the dispute arose between the parties. Necessary papers be also sent to Shri Justice V.K.Shrivastava along with addresses of the parties.

Parties to the application are also directed to approach Hon'ble Shri Justice V.K.Shrivastava, Mridu Villa, Warehouse Road, Opp. State Legal Services, Bilaspur and to submit relevant papers and also to take part in arbitration proceedings.

In view of the above, this application for appointment of Arbitrator stands disposed of. __ Sd/- N.K. Agrawal Judge "-^' .....^:^-^ "^••^st:. '::^SB^V v| % | ^^^ Anjani