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2015 DIGILAW 95 (JK)

Satya Paul Sharma v. Bharat Sanchar Nigam Limited

2015-03-13

N.PAUL VASANTHAKUMAR

body2015
Judgment : 1. This revision petition is filed against the order dated 13.02.2010 passed by the learned Munsiff, Jammu in allowing the application filed by the respondents under Section 8 of the Arbitration and Conciliation Act, 1997, seeking reference of the dispute raised in the suit for arbitration. 2. The brief facts necessary for disposal of this civil revision petition are as follows: The petitioners submitted tender for the work of construction of temporary store including C.C.Road at S.S.A Store Depot in Gole, Talab Tillo, Jammu, pursuant to the invitation made by Bharat Sanchar Nigam Limited. The tender submitted by the petitioners being found lowest, they were informed that their tender was accepted on 15.02.2008 and the petitioners were directed to submit Bank Guarantee. After verification of the Bank Guarantee the work order was issued vide order dated 15.03.2008 and the petitioners were requested to sign the formal agreement by communication dated 19.03.2008. The formal agreement was not signed and it has to be necessarily signed before payment of the first running account bill. The structural drawings were dispatched to the petitioners and the same were received on 08.09.2009. Vide letter dated 20.02.2009, the respondents intimated that in spite of issuance of work order, there was delay in commencement of the work and therefore the amount of EMD was forfeited. 3. The said order was challenged by the petitioners before the learned Munsiff, Jammu in Civil Suit No.145/civil. In the said suit the respondents filed an application under Section 8 of the Arbitration and Conciliation Act,1997, for referring the matter for adjudication through arbitration by a sole arbitrator to be appointed by the Chief Engineer (Civil) In-charge of the work, which is contained in Clause 25 of the work allotment order. 4. The said application was opposed by the petitioners as not maintainable, stating that neither formal agreement was executed between the parties, nor the tender notice contained any such arbitration clause. The respondents relied on the notice inviting tender wherein, in clause 19 it was stated that notice inviting tenders shall form part of the contract document and the contract shall be deemed to have come into effect from issuance of communication of acceptance of the tender in favour of the successful tenderer. The respondents relied on the notice inviting tender wherein, in clause 19 it was stated that notice inviting tenders shall form part of the contract document and the contract shall be deemed to have come into effect from issuance of communication of acceptance of the tender in favour of the successful tenderer. The acceptance of the tender having been communicated to the petitioners on 15.02.2008, the contract came into effect as per the NIT terms and conditions and signing of the formal agreement was merely to facilitate the first running account bill and as far as contract is concerned, it came into effect as soon as the communication of acceptance of tender was made on 15.02.2008. 5. The learned Munsiff accepted the said plea and allowed the application and referred the suit for arbitration as per arbitration agreement. The said order has been challenged. 6. The learned counsel for the petitioners contended that no formal agreement having been signed between the parties, there is no binding agreement for referring the matter for arbitration and, therefore, the suit filed by the petitioners has to be tried and the learned Munsiff was not right in referring the matter for arbitration on the basis of the application filed by the BSNL under Section 8 of the Act. 7. The said stand was opposed by the learned counsel appearing for respondents. He has also produced acceptance letter dated 15.02.2008 issued by the BSNL, the booklet issued for submitting the tender dated 16.01.2008 wherein it is stated that notice inviting tender shall form part of the contract document. The contract shall be deemed to have come into effect on issuance of communication of acceptance of the tender in favour of successful tenderer/ contractor. On such a communication of acceptance, the successful tenderer/contractor shall, within 30 days from such date, formally sign the agreement which must contain the Notice Inviting Tender, all the documents including additional conditions, specifications and drawings, if any, acceptance letter and first running account bill shall be paid only after signing the agreement / contract by both the parties. The petitioners have signed the terms contained in the Notice Inviting Tender and have submitted the tender form on 16.01.2008. In the General Conditions of Contract issued by the BSNL, clause 25 states about the settlement of disputes and arbitration. The petitioners have signed the terms contained in the Notice Inviting Tender and have submitted the tender form on 16.01.2008. In the General Conditions of Contract issued by the BSNL, clause 25 states about the settlement of disputes and arbitration. Learned counsel relied upon the said condition and submitted that general conditions being part of the tender document and the petitioners having agreed by signing the tender document, are bound by the terms and conditions and, therefore, the Court below was justified in accepting the application seeking reference of the matter to arbitration. 8. I have perused the documents, namely, the general conditions of contract issued by the BSNL along with the application inviting tender dated 11.01.2008 and the filled up application submitted by the petitioners dated 15.03.2008 as well as the acceptance order. In the general conditions issued along with the notice inviting tenders, in clause 19 it is stated that the notice inviting tender shall form part of the contract document and the contract shall be deemed to have come into effect on issuance of communication of acceptance of the tender to the successful tenderer. The acceptance of tender submitted by the petitioners was communicated on 15.02.2008 which is not in dispute. The petitioners are also not contradicting the fact about the applicability of clause 25 contained in general conditions of contract issued by the BSNL, which states as follows:- “CLAUSE 25: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, design, 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, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, 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 cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:- (i) . (ii) (iii) (iv) .. (v) .. (ii) (iii) (iv) .. (v) .. (vi) Except where the decisions have become final, binding and conclusive in terms of the contract, all disputes arising out of the notified claims of the contractor as aforesaid and all claims of the BSNL shall be referred for adjudication through the arbitration by the sole arbitrator appointed by the Chief Engineer, Bharat Sanchar Nigam Limited, in-charge of the work or if there be no Chief Engineer, the Administrative Head of the Bharat Sanchar Nigam Limited. It will also be no objection to any such appointment that the Arbitrator so appointed is a BNSL Employee and that he had to deal with the matters to which the Contract relates in the course of his duties as BSNL Employee. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever another sole arbitrator shall be appointed in the manner aforesaid by the said Chief Engineer. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each dispute along-with the notice for appointment of arbitrator. It is also a term of this contract that no person other than a person appointed by such Chief Engineer, Bharat Sanchar Nigam Limited or the administrative head of the Bharat Sanchar Nigam Limited as aforesaid should act as arbitrator and if for any reasons that is not possible, the matter shall not be referred to arbitration at all. The conciliation and arbitration shall be conducted in accordance with the provisions of the Arbitration & Conciliation Act 1996 or any statutory modification or re-engagement thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each disputes and claim referred to him. The arbitrator shall give reasons for the award for each dispute referred to him. It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each disputes and claim referred to him. The arbitrator shall give reasons for the award for each dispute referred to him. It is also a term of the contract that if any fees are payable to the arbitrator these shall be paid equally by both the parties. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any, by whom and in what manner, such costs or any part thereof, shall be paid and fix or settle the amount of costs to be so paid. 9. Thus, it is manifest that even though formal agreement was not signed, the acceptance of tender has to be treated as the date of entering into contract and the said issue was taken note of by the Court below while ordering the application seeking reference to the arbitration. 10. Hon’ble the Supreme Court in the decision reported in 2008 AIR SCW 6820 ( M/S Unissi (India) Pvt. Ltd. v. P. G. Institute of Medical Education & Research) considered as to whether execution of formal agreement is mandatory for referring the matter for arbitration. In the said judgment it is held that the term “agreement in writing” shall include an arbitral clause in a contract of an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. In the said judgment it is held that the term “agreement in writing” shall include an arbitral clause in a contract of an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. In the said case also the tender of the applicant was accepted and the tender agreement itself contained an arbitration clause and by reason of the explanation of the tender it must be held that there was an arbitration clause between the parties. The contra decision rendered by the High Court was set aside and direction was issued to the Chief Justice to appoint an arbitrator in accordance with law to resolve the dispute between the parties. 11. In the decision reported in 1995 AIR SCW 4111 ( J. K. Jain and ors v. Delhi Development Authority and ors) a similar issue arose as to whether the arbitrator gets jurisdiction to decide a dispute on the basis of clause contained in the tender form. In that case also it was held that though arbitration clause has not been included in the agreement but the same shall be deemed to be a part of the agreement as the agreement specifically stated that the terms and conditions contained in the tender form shall be binding on the parties wherein it was stated that dispute between the parties to be referred to an arbitration. In the decision reported in 2010 AIR SCW 909 (Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd. India), also a similar view was taken. 12. Thus the matter in issue, as to whether signing of formal agreement is mandatory for seeking reference of the matter to arbitration, is no longer res integra. Admittedly, the tender form contained a clause for referring the dispute to an arbitrator and the requirement of signing of formal agreement is necessary only before claiming the first payment bill. In such view of the matter the order of the court below is sustainable and no case is made out to interfere with the said order. The revision petition is dismissed. No costs.