KARTICK CHANDRA DHAR v. DEVELOPMENT INVESTORS LIMITED
2005-03-28
ASHIM KUMAR BANERJEE
body2005
DigiLaw.ai
ASHIM KUMAR BANERJEE, J, J. ( 1 ) THE parlies entered into an agreement Clause 25 of the agreement stipulates as follows: 25. Any dispute in respect to this order the decision of our Managing director shall be final and binding on both the parties. " ( 2 ) DISPUTES and differences arose by and between the parties. In terms of the said Clause the petitioner wrote to the Managing Director of the respondents to settle the disputes within 30 days. The Managing Director did not respond, to the. same. However, the letter was replied to by the advocate for. the respondents, inter alia, contending that the disputes would be decided by the Managing Director of the respondents on december 27, 2004. Uptil date no decision has been arrived at by the managing Director of the respondents in this regard. At least no such communication has been made by the Managing Director. The present application has been made under Section 11 of the Arbitration and conciliation Act, 1996, inter alia, inviting this court to appoint an arbitrator through the Hon'ble Chief Justice in terms of Section 11 of the Act of 1996. ( 3 ) THE respondents have filed an affidavit, inter alia, contending that the sub-clause cannot be interpreted as a reference to arbitration. ( 4 ) MR. Sarkar, learned Counsel appearing for the petitioner, has relied on a Division Bench decision of this court, reported in AIR 1990 Cal 83 wherein the agreement stipulated that in the event of any dispute the decision of the Superintending Engineer of the Circle would be final and binding upon the parties. Such clause was interpreted as an arbitration clause which could be enforced. The Division Bench while doing so relied on a Three Bench decision of the Apex Court in the case of State of u. P. vs. Tipper Chand, reported in (1980) 2 SCC 341 . Paragraph 6 of the said judgment being relevant herein is quoted below: 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.
Paragraph 6 of the said judgment being relevant herein is quoted below: 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. " ( 5 ) 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 contract and the Department are significant. The same is true of the clause in Ram Lal case which run thus: in matter of dispute the case shall be referred to the Superintending engineer of the Circle, whose order shall be final. ( 6 ) 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 ) MR. Sarkar, also cites a two Bench decision of the Apex Court in the case of Bihar State Mineral Dev. Corporation and Anr. vs. Encon builders (I) Pvt. Ltd. , reported in 2003 (6) SC 671. In the said case, the apex Court was of the view that a person cannot be a Judge of his own cause. In the said case, it was provided that the decision of the Managing director of the appellant would be final binding upon the parties. Considering the facts and circumstances, Their Lordship held that there was element of bias. ( 8 ) MR. Lal, appearing for the respondents has relied on two other Apex court decisions, in the case of K. K. Modi vs. K. N, Modi and Qrs. , reported in (1998) 3 SCC 573 and in the case of Bharat Bhushan Bansai vs. 17. P. Small Industries Corporation Ltd. , reported in (1999)2 SCC 166 . ( 9 ) RELYING on these two decisions Mr. lal submits that this clause cannot be interpreted as clause for arbitration.
, reported in (1998) 3 SCC 573 and in the case of Bharat Bhushan Bansai vs. 17. P. Small Industries Corporation Ltd. , reported in (1999)2 SCC 166 . ( 9 ) RELYING on these two decisions Mr. lal submits that this clause cannot be interpreted as clause for arbitration. ( 10 ) IN the case of Bharat Bhushan Bansal (supra) a clause identifical to the clause set out in paragraph 2 in the Tipper Chand case was considered by Their Lordships and Their Lordships held following the Tipper chand's case that the same cannot be construed as a clause for arbitration. ( 11 ) IN the case of K. K. Modi (supra) another Two bench decision of the Apex Court prescribed the guideline to interprete a clause for arbitration. While doing so Their Lordships examined the clause 9 of the agreement between the parties which provided as follows: clause 9 provides as follows: implementation will be done in consultation with the financial institutions. For all disputes, clarifications etc. in respect of implementation of this agreement, the same shall be referred to the Chairman, IFCI or his nominees whose decisions will be final and binding on both the groups. " ( 12 ) THIS clause was considered by Their Lordships and Their Lordships ultimately held that the same cannot be construed as a clause for arbitration. In both the cases, paragraph 6 of the Three Bench decision in the case of Tipper Chand (supra) was not considered as was not relevant for the facts of the said cases. The Three Bench decision of the Apex court clearly distinguished two different clauses. In the later clause set out in paragraph 6 the Apex Court emphasized on the word "dispute" and ultimately, held that the same clause is a clause which can be safely interpreted as a clause for arbitration. In the instant case, it was provided that in case of any "dispute" the decision of the Managing Director would be final and binding upon the parties. Hence, this clause following the tipper Chand's case must be held as a clause for arbitration. ( 13 ) THE petitioner invited the Managing Director of the respondents to decide the issue within 30 days. He failed to do so. More over, relying the decision in the case of Bihar State Mineral Dev.
Hence, this clause following the tipper Chand's case must be held as a clause for arbitration. ( 13 ) THE petitioner invited the Managing Director of the respondents to decide the issue within 30 days. He failed to do so. More over, relying the decision in the case of Bihar State Mineral Dev. Corporation (supra)i am of the view that the Managing Director cannot be construed as an impartial authority to decide the issue. In any event, he has not done so. Hence, the parties are entitled to refer the dispute to an independent arbitrator to be appointed by this court. ( 14 ) HENCE, this application is allowed A. P. No. 10 of 2005 is disposed of by referring the dispute between the parties to arbitration ( 15 ) LET this matter be placed before the Hon'ble Chief Justice far naming the Arbitrator. ( 16 ) THERE would be no order as to costs. ( 17 ) LET urgent xerox certified copy of this order be supplied to the parties, if applied for, upon compliance of all the formalities. Petition allowed.