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2005 DIGILAW 109 (JHR)

Ujjwal Services Pvt. Ltd. v. Coal India Ltd.

2005-02-09

M.Y.EQBAL

body2005
JUDGMENT M. Y. Eqbal, J. 1. Heard Mr. Delip Jereath, learned counsel appearing for the petitioner and Mr. A.K. Mehta, learned counsel appearing for the respondents. 2. In the instant application filed under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996, the petitioner has prayed for issuance of appropriate order for appointment of an Arbitrator in terms of Arbitration Clause contained in the agreement and for reference of dispute to the appointed Arbitrator for the adjudication. 3. Petitioner entered into a contract with the respondent for the purchase of washery products from the different collieries. Subsequently a dispute arose with regard to the release of allotted quantity of slurry which was not settled between the parties. Petitioners case is that after sending several letters for settlement of the dispute a notice was served upon the respondents for appointment of an Arbitrator but nothing was done by the respondents. 4. Mr. A.K. Mehta, learned counsel appearing for the respondents, firstly, contended that Clause 24 of the agreement is not an Arbitration Clause and, therefore, the instant application is not maintainable. Learned Counsel relied upon a decision of the Supreme Court in a case reported in (1999) 2 SCC 166 . Learned counsel further submitted that the petitioner before filing the instant request petition has not complied the requirements of Section 11(4)(a) of the Act, and, therefore, the instant application is pre-mature. 5. Clause 24 of the agreement contains the Arbitration Clause which reads as under: "24. Any dispute(s) and/or difference(s) between seller and buyer arising out of sale of coal and its products under the above agreement shall be referred to Chief of Marketing, CIL, Calcutta, whose decision shall be final and binding on both the parties." 6. From bare perusal of the aforesaid Clause, it is manifest that parties have agreed to refer the dispute and differences to the Chief of Marketing, CIL, Calcutta, whose decision shall be final and binding on both the parties. 7. Section 7 of the Arbitration and Conciliation Act, 1996 (in short the Act) defines the term "Arbitration agreement" which 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. 7. Section 7 of the Arbitration and Conciliation Act, 1996 (in short the Act) defines the term "Arbitration agreement" which 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. The aforesaid Clause 24 very clearly provides not only reference of a dispute or differences but also specifically mentions a reference to the Chief of Marketing, CIL, Calcutta for adjudication of dispute. I have, therefore, no doubt in my mind that Clause 24 is an arbitration agreement. 8. In the case of Bihar State Mineral Dev. Corporation and Anr. v. Encon Builders (I) Pvt. Ltd., reported in 2003 (4) JCR 185 (SC) : (2003) 7 SCC 418 , the Supreme Court held that following are the essential elements of an arbitration agreement : (1) There must be a present or a future difference in connection with some contemplated affair. (2) There must be the intention of the parties to settle such difference by a private Tribunal. (3) The parties must agree in writing to be bound by the decision of such Tribunal. (4) The parties must be ad idem. 9. In the case of Mallikarjun v. Gul-barga University, reported in (2004) 1 SCC 372 , a similar question arose for consideration whether Clause 30 of the agreement entered Into between the parties is an arbitration Clause. (3) The parties must agree in writing to be bound by the decision of such Tribunal. (4) The parties must be ad idem. 9. In the case of Mallikarjun v. Gul-barga University, reported in (2004) 1 SCC 372 , a similar question arose for consideration whether Clause 30 of the agreement entered Into between the parties is an arbitration Clause. Clause 30 of the agreement reads as under : "The decision of the Superintending Engineer of Gulbarga Circle 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, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or material used on the work, or as to any other question, claim, right, matter, or thing whatsoever, in any way arising out of, or relating to the contract designs, drawings, specifications estimates, instructions, orders or those 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 of abandonment thereof in case of dispute arising between the contractor and Gulbarga University." Considering the aforesaid Clause Their Lordships observed : "Applying the aforesaid principle to the present case, Clause 30 requires the Superintending Engineer, Gulbarga Circle, Gulbarga to give his decision on any dispute that may arise out of the contract. Further, we also find that the agreement postulates present or future differences in connection with some contemplated affairs inasmuch as there also was an agreement between the parties to settle such difference by a private tribunal, namely, the Superintending Engineer, Gulbarga Circle, Gulbarga. It was also agreed between the parties that they would be bound by the decision of the Tribunal. The parties were also ad idem." 10. Next objection raised by Mr. Mehta, regarding non-compliance of Section 11, has also no leg to stand. From perusal of Annexure-11 to the request petition, it is evident that by the last notice dated 28.3.03 petitioner requested the authorities of the respondents to appoint the competent authority to decide the disputed matter as per terms and conditions of the tender so that petitioner may not suffer more. Inspite of the aforesaid notice the respondents neither referred the dispute to the named person nor took any step for resolving the disputes. 11. Inspite of the aforesaid notice the respondents neither referred the dispute to the named person nor took any step for resolving the disputes. 11. Having regard to the entire facts of the case, I hold that the agreement did contain, an Arbitration Clause and the petitioner complied the requirements as contemplated under Section 11 of the Act, by giving notice before approaching this Court. 12. This request petition is, therefore, allowed and the respondents are directed to refer the dispute to the Chief of Marketing, CIL, Calcutta, who shall enter into the reference and give an award within a period of four months from the date of reference of the dispute and/or differences.