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2022 DIGILAW 233 (JK)

Milestones through Mudasir Butt v. State of J. K.

2022-05-10

PANKAJ MITHAL

body2022
ORDER : 1. The petitioner, M/s Milestones through its Business Head, has applied under Section 11(6) of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, which is paramateria with the provisions of the Arbitration and Conciliation Act, 1996, for appointment of an independent arbitrator for resolving the disputes inter-se the parties. 2. The petitioner is a caterer and the respondent authorities resolved to allot the student canteen located at Government Medical College, Srinagar, to the petitioner. Accordingly, an agreement was executed between the petitioner and the respondents on 24th April, 2015 which inter-alia contains the terms and conditions for running of the said canteen for a period of eight months on a monthly rent of Rs.5000/-. The said agreement vide Clause 25 provides that the dispute, if any, between the parties shall be resolved amicably and finally by the Principal, Government Medical College, Srinagar. The aforesaid Clause 25 which is relevant for purposes of adjudication of the issue involved in the matter, is reproduced herein below: “25. In case of any dispute, the matter shall be resolved amicably. However, if the matter still remains unresolved, the same shall be resolved by Principal, GMC, Srinagar. The decision of the Principal, GMC, Srinagar shall be final and binding to both the parties.” 3. The petitioner alleges that at the time of allotment of the aforesaid canteen to the petitioner it was in shambles due to the devastating floods of September, 2014 and as such was in dire need of massive repairs/renovation work. The Principal, GMC, Srinagar, instructed the petitioner to carryout the repair/renovation work of the canteen and that the amount spent would be evaluated and reimbursed by adjustment towards the rent. Accordingly, extensive repairs/renovation of the canteen was carried out by the petitioner and on completion, the same was inaugurated on 10.08.2015 by none other than the Principal, GMC, Srinagar. However, the respondents have failed to reimburse/re-adjust the expenses incurred by the petitioner in carrying out the above repair/renovation work. 4. It is in the above backdrop that the petitioner states that it had invoked the above arbitration Clause-25 of the agreement vide his letter dated 11.04.2017 addressed to the Principal, GMC, Srinagar but in vain. 5. I have heard Ms. Arshie Zuhar, learned counsel for the petitioner and Mr. M. A. Chashoo, learned AAG, for the respondents. 6. Mr. 4. It is in the above backdrop that the petitioner states that it had invoked the above arbitration Clause-25 of the agreement vide his letter dated 11.04.2017 addressed to the Principal, GMC, Srinagar but in vain. 5. I have heard Ms. Arshie Zuhar, learned counsel for the petitioner and Mr. M. A. Chashoo, learned AAG, for the respondents. 6. Mr. Chashoo, learned counsel for the respondents at the very outset submits that the petitioner is not entitled for appointment of any arbitrator as there does not exist an arbitration agreement between the parties. The aforesaid clause-25 of the agreement is not an arbitration agreement. There is no agreement in connection with carrying out the repairs/renovation of the canteen in writing. The agreement referred to by the petitioner is an agreement under which the contract was awarded to the petitioner for running of the canteen and it is not in respect of any repairs/renovation of the said canteen. 7. Learned counsel for the petitioner in defence to the above objection submits that the intention of the parties to refer the dispute to arbitration is manifest from the said Clause-25 of the agreement and, as such, it is an arbitration agreement within the meaning of Section 7 of the Arbitration and Conciliation Act. 8. Section 7 of the Act defines “arbitration agreement” to mean an agreement by which the parties agree to submit disputes which have arisen in respect of a defined legal relationship, whether contractual or otherwise, to arbitration and that such an agreement shall be in writing whether as part of the contract or in the form of a separate agreement. 9. For the sake of convenience, Section 7 of the Act is quoted below: “7. Arbitration agreement.—(1) In this Part, “arbitration agreement” 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. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication 1 [including communication through electronic means] which provide a record of the agreement; or (c) 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. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” 10. In State of Orissa v. Damodar Das : AIR 1996 SC 942 , it was held that a clause in a contract can be construed as an ‘arbitration agreement’ only if an agreement to refer dispute or differences to arbitration is expressly or impliedly spelt out from the clause. 11. It may be pertinent to mention here that it is not necessary to use the word “arbitration” or “arbitrator” in a clause to make it an arbitration agreement rather it is the intention of the parties to refer the disputes in respect of the subject matter of a contract to the arbitration which is relevant and material to constitute an arbitration agreement. 12. In Punjab State and others v. Dina Nath : (2007) 5 SCC 28 , the Court held that the arbitration agreement need not be in any particular form. However, it must indicate that the parties have agreed that any dispute arising between them in respect of the subject matter of the contract, should be referred to arbitration provided it is in writing and indicate the intention of the parties to treat the decision of the arbitrator as final. If these requirements are fulfilled, mere absence of the words “arbitration” or “arbitrator” in the clause cannot be a ground to hold that the agreement in question was not an arbitration agreement. If these requirements are fulfilled, mere absence of the words “arbitration” or “arbitrator” in the clause cannot be a ground to hold that the agreement in question was not an arbitration agreement. In the said case, a clause in the work order provided that any dispute arising between the principal and the contractor would be referred to Superintending Engineer for his orders and that his decision would be final and binding on the parties. The said clause was held to be a binding arbitration agreement. However, a contrary view was expressed by the three judge’s bench of the Supreme Court in the case of P. Dasaratharama Reddy Complex v. Government of Karnataka & anr. : (2014) 2 SCC 201 . In the said case, it was held that the essence of the arbitration agreement is the adjudication of disputes by a neutral person but an officer or authority of one of the parties overseeing or having jurisdiction over the subject matter of the contract cannot be an arbitrator nor a clause empowering such a person to resolve the disputes can be construed as an arbitration clause. In the said case, clause-29 of the agreement provided for referring the dispute as to the contract in the first place to the Chief Engineer who had jurisdiction over the work. Thus, it was held that the said clause is not an arbitration clause since the Chief Engineer is not an independent authority and cannot be invested with the power to adjudicate upon the rights of the parties to the dispute or difference. Such an officer/authority is not required to hear the parties or to take evidence either oral or documentary before taking a final decision in the matter. Therefore, clause 29 of the agreement was held not to be an arbitration clause. 13. Similar is the situation before me. Clause 25 of the agreement, referred to above, only postulates that if the matter is not resolved amicably the same shall be resolved by the Principal, GMC, Srinagar, whose decision shall be final and binding upon both the parties. The Principal, GMC, Srinagar, himself happen to be a party to the contract having overall supervisory and final authority in the matter of repairs/renovation of the canteen and it was upon his instructions that the above work was carried out but without any order or agreement in writing. 14. The Principal, GMC, Srinagar, himself happen to be a party to the contract having overall supervisory and final authority in the matter of repairs/renovation of the canteen and it was upon his instructions that the above work was carried out but without any order or agreement in writing. 14. In view of the above, the Principal, GMC, Srinagar, happen to be the officer of one of the parties to the dispute having jurisdiction over the subject matter of the contract and as such cannot be recognized as an independent authority having the power to arbitrate. 15. Mr. M. A. Chashoo, learned AAG, has placed reliance upon a subsequent decision of the Supreme Court in Master Tours and Travels v. Chairman, Amarnath Shrine Board & Ors. : (2016) 16 SCC 661 . In the said case, the controversy which came up for consideration was as to what constitutes an arbitration agreement under Section 7 of the Act. Clause 13 of the work order in the said case was as under: “In case of any dispute the matter shall be referred to the Chief Executive Officer, Amarnath Shrine Board, whose decision in the matter shall be final.” 16. The Supreme Court declined to agree with the contention that the aforesaid clause was an arbitration agreement and preferred to follow the three judge bench decision of the Supreme Court in the case of P. Dasaratharama Reddy Complex (supra) wherein it was held that the reference of the dispute to the Chief Executive Officer, Amarnath Shrine Board, would not constitute an arbitration agreement. 17. In view of the aforesaid facts and circumstances, clause-25 of the agreement referred to above authorising the Principal, GMC, Srinagar, to resolve the dispute between the parties is not an arbitration agreement. This apart, the aforesaid agreement is totally separate and independent to the contract of repairs/renovation of the canteen. The said agreement was only in respect of the award of contract to run the canteen but with no stipulation to carry out any repairs/renovation thereon. The said work was carried out by the petitioner independently on the direction of the Principal, GMC, Srinagar, and as such, clause-25 of the aforesaid agreement cannot be read into the contract of any repair/renovation work of the canteen. 18. The said work was carried out by the petitioner independently on the direction of the Principal, GMC, Srinagar, and as such, clause-25 of the aforesaid agreement cannot be read into the contract of any repair/renovation work of the canteen. 18. In the above facts and circumstances, since the contract lacks an arbitration agreement, petitioner is not entitled for any reference to the arbitration or for appointment of an independent arbitrator. The petitioner may, however, pursue his remedy before the Principal, Government Medical College, Srinagar, or may take recourse to any other remedy that may be advised to him in law. 19. The petition stands dismissed accordingly in the aforesaid terms.