Arbitration and conciliation Act - Request for appointment of Arbitrator under sec.11 was rejected by High court - Apex court held that as both parties mutually agreed for arbitration by retired Hon’ble Judge of the Kerala High Court, without going into the question of merit, we set aside the impugned order dated 19th July, 2010 and refer the matter to Hon’ble Mr. Justice K. John Mathew (retired). The parties will negotiate and settle the terms and conditions of arbitration. It is expected that the arbitration proceeding will be concluded at an early date. The appeals stand disposed of with aforesaid observations. =
the appellant’s prayer under Section 11 (6) of the
Arbitration and Conciliation Act, 1996 for appointment of arbitrator has
been rejected by the High Court.=
In view of stand taken by the parties and as they mutually agreed for
arbitration by retired Hon’ble Judge of the Kerala High Court, without
going into the question of merit, we set aside the impugned order dated
19th July, 2010 and refer the matter to Hon’ble Mr. Justice K. John Mathew
(retired). The parties will negotiate and settle the terms and conditions
of arbitration. It is expected that the arbitration proceeding will be
concluded at an early date.
16. The appeals stand disposed of with aforesaid observations. No costs.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. OF 2014
(arising out of SLP(C) Nos.14947-14948 of 2011)
M/s Kaikara Construction Company … Appellant
VERSUS
State of Kerala and Ors. … Respondents
J U D G M E N T
Sudhansu Jyoti Mukhopadhaya, J.
Leave granted.
2. These appeals are directed against order dated 19.07.2010 passed by
the High Court of Kerala at Ernakulam in Arbitration Request No.39 of 2009.
By the impugned order, the appellant’s prayer under Section 11 (6) of the
Arbitration and Conciliation Act, 1996 for appointment of arbitrator has
been rejected by the High Court.
3. The factual matrix of the case is as follows:
On 27.1.2005, the appellant submitted tender, which was accepted by
the respondents on 21.7.2005. The possession of the work site was handed
over to the appellant on 2.9.2005. The period for completion of the
contract expired on 1.9.2007. The case of the appellant is that the Company
had completed a major part of the work. This was disputed by the
respondents. According to them, only 41% of the work was completed as on
22.12.2007, based on the original contract price. Based on the revised
contract price, the progress achieved was only 30% as on 22.12.2007; the
work carried out from 22.12.2007 to 1.3.2009 was only 12% as against 70%
target.
According to the appellant, a sum of Rs.1,18,87,265/- was payable to
it but the said amount was withheld by the respondents. As a condition for
releasing the amount, the appellant was compelled to execute a supplemental
agreement. The appellant sought extension of the period for completion of
the work which was granted up to 1.3.2009. On 7.3.2009, the appellant
requested for appointment of a ‘Dispute Review Expert’ as stipulated in the
General Conditions of Contract. On 9.5.2009, the appellant again made a
request for appointment of ‘Dispute Review Expert’ and also for extension
of the "intended completion period". Another letter dated 10.6.2009 was
written by the appellant to the Chairman of the Council of Indian Roads
Congress with similar prayer to appoint a ‘Dispute Review Expert’ as
stipulated in Clause 36.1 of ITB forming part of the agreement without any
delay, with due intimation to the appellant in writing.
On 7.08.2009, the Indian Roads Congress addressed a letter to the
Chief Engineer, PWD National Highways, Thiruvananthapuram to inform about
the appointment of Dispute Review Expert. On 6.10.2009, the Indian Roads
Congress wrote another letter to the Chief Engineer, Ministry of Road
Transport & Highways, New Delhi requesting him to inform about the
appointment of Dispute Review Expert. However, no reply was given to the
appellant.
4. In this background, the appellant moved before the High Court under
Section 11 (6) of the Arbitration and Conciliation Act, 1996 for
appointment of an arbitrator. The learned Single Judge of the High Court by
impugned order dated 19.07.2010 dismissed the request holding that no
arbitration agreement exists.
5. Review Petition filed by the appellant was also rejected by order
dated 2.02.2011.
6. The appellant relied upon Clauses 24 and 25 of the Standard Bidding
Document which forms part of the contract and read as follows:
"24. Disputes
24.1 If the Contractor believes that a decision taken by the
Engineer was either outside the authority given to the Engineer by the
Contract or that the decision was wrongly taken the decision shall be
referred to the Dispute Review Expert within 14 days of the notification of
the Engineer's decision.
25. Procedure for Disputes.
25.1. The Dispute Review Expert (Board) shall give a
decision in writing within 28 days of receipt of notification
of a dispute.
25.2 The Dispute Review Expert (Board) shall be paid daily at the
rate specified in the Contract Data together with reimbursable expenses of
the types specified in the Contract Data and the cost shall be divided
equally between the Employer and the Contractor, whatever decision is
reached by the Dispute Review Expert. Either party may give notice to the
other to refer a decision of the Dispute Review Expert to an Arbitrator
within 28 days of the Dispute Review Expert's written decision. If neither
party refers the dispute to arbitration within the next 28 days, the
Dispute Review Expert's decision will be final and binding.
25.3 The arbitration shall be conducted in accordance with
the arbitration procedure stated in the Special Conditions of Contract."
7. Detailed procedure has been stipulated in Sub clause (a) to (f) of
Clause 25.3 of the Standard Bidding document.
8. It appears that appellant by letter dated 11.8.2009 requested the
Superintending Engineer, National Highway, Central Circle, Kochi, to agree
to the appointment of a sole arbitrator mentioned in the letter. But no
reply was given.
9. The respondents in their counter affidavit opposed the prayer and
contended that if arbitration is the mode of settlement of disputes, the
names of Dispute Review Experts are to be specifically mentioned in the
contract data, which was not done in the present case. In the contract
entered into between the parties on 25.08.2005, there was a specific clause
which reads as follows:
"The parties to this contract agree and undertake the condition that
arbitration shall not be a means of settlement of dispute or claims or
anything on account of this contract."
10. It was contended on behalf of the respondents that in absence of
nomination of Dispute Review Expert, there is no valid arbitration
agreement.
11. Learned counsel for the appellant relied upon decision of this Court
in M.K. Abraham and Company v. State of Kerala and another, (2009) 7 SCC
636. In the said case, the Court noticed that a letter dated 28.9.1994 was
issued by the Ministry of Surface Transport, Government of India informing
all the State Public Works Departments and all Chief Engineers in all the
States dealing with National Highways, that a standard contract clause
prescribing the procedure to be followed for appointment of arbitrators was
to be incorporated in the bidding conditions for the National Highway works
and that the arbitration clause should be compulsorily made part of the
bidding conditions in the respective states. In said case, this Court
noticed the aforesaid letter dated 28.08.1994 and Clauses 24 and 24(a) of
the notice inviting tenders for works as printed in the standard form of
agreement executed between the parties and observed as follows:
“24. In the present case, as noticed above, the contract consists of a
typewritten contract agreement between the appellant and the second
respondent [which does not contain any terms and conditions, but which
merely states that the contract is for execution of the described work as
per the accompanying articles of agreement, plan, specification and
conditions of contract approved by the Project Director (SE), National
Highway (ADB), Circle Adappally, Cochin] with several printed forms with
cyclostyled additions as annexures and handwritten corrections. The printed
form of articles of agreement has an attachment slip.
25. The contract in the present case does not contain any handwritten terms
in regard to arbitration. The contract has printed clauses barring
arbitration [Clauses 24 and 24(a) of the notice inviting tenders for works
and a preamble clause and Clause 3 in the articles of agreement]. A
cyclostyled slip signed by both parties containing the words “arbitration
clause as per the Ministry of Surface Transport’s Letter No. RW/NH-
34041/3/94-DO-III dated 28-9-1994 will be applicable” is attached to the
printed articles of agreement.
26. By applying the well-settled principles relating to construction of
contract the following position will emerge:
(i) the terms of the articles of agreement will prevail over the terms of
notice inviting tenders for works, and
(ii) the term contained in the cyclostyled attachment to the printed form
of articles of agreement will prevail over the terms of the printed
articles of agreement.
Consequently, the contents of the attachment slip to the printed form of
articles of agreement providing for arbitration will prevail over the bar
on arbitration contained in the notice inviting tenders for works and the
articles of agreement. As a result, it has to be held that there is a
provision for arbitration in regard to the disputes between the respective
appellant and the respondents.”
However, the High Court distinguished the case relied upon by
the appellant.
12. In the letter of acceptance dated 21.07.2005, the Superintendant
Engineer intimated the appellant the acceptance of the offer given by the
appellant at paragraph 9 therein, it was specifically mentioned that all
terms and conditions of notice inviting tenders and tender documents shall
be binding on the said contract and the contractor. In the bidding document
supplied to the appellant by respondent no.3 arbitration clauses were
incorporated at clause 25 and 25.3 as noticed above. At Clause 36 the
provisions of Dispute Review Expert was mentioned as follows:
“36. Dispute Review Expert
36.1 The Employer proposes that [name of proposed Dispute Review
Expert as indicated in Appendix] be appointed as Dispute Review Expert
under the Contract, at a daily fee as indicated in Appendix plus
reimbursable expenses. If the Bidder disagrees with this proposal, the
Bidder should so state in the Bid. If in the Letter of Acceptance, the
Employer has not agreed on the appointment of the Dispute Review Expert,
the Dispute Review Expert shall be appointed by the Council of Indian Roads
Congress at the request of either party.”
13. In the agreement clause (3) it was mentioned that the parties to the
contract agreed and undertake the conditions that arbitration shall not be
means of settlement of disputes or claims or anything on account of the
said contract.
14. The case was heard and judgment was reserved. Subsequently, parties
have filed joint application showing the name of the arbitrator mutually
agreed to by the parties as under:
“Hon. Justice Mr. K. John Mathew
Former Judge of the Hon. High Court of Kerala,
Veekshanam Road, Kochi, 682018
Kerala State
Sd/-
Advocate for the Petitioner
Babu Thomas K
For Rabin Maujumdar
Sd/-
Adv. M T George
Advocate for the respondents”
15. In view of stand taken by the parties and as they mutually agreed for
arbitration by retired Hon’ble Judge of the Kerala High Court, without
going into the question of merit, we set aside the impugned order dated
19th July, 2010 and refer the matter to Hon’ble Mr. Justice K. John Mathew
(retired). The parties will negotiate and settle the terms and conditions
of arbitration. It is expected that the arbitration proceeding will be
concluded at an early date.
16. The appeals stand disposed of with aforesaid observations. No costs.
…………………………………………………………………….J.
(SUDHANSU JYOTI MUKHOPADHAYA)
…………………………………………………………………….J.
(DIPAK MISRA)
NEW DELHI,
JULY 01, 2014.
ITEM NO.1A COURT NO.6 SECTION XIA
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). …......../2014
(@ SLP (C) Nos. 14947-14948/2011)
M/S. KAIKARA CONSTRUCTION CO. Appellant(s)
VERSUS
STATE OF KERALA AND ORS. Respondent(s)
Date : 01/07/2014 These appeals were called on for pronouncement
of Judgment today.
For Appellant(s) Mr. Rabin Majumder ,Adv.
For Respondent(s) Mr. M. T. George ,Adv.
Hon'ble Mr. Justice Sudhansu Jyoti Mukhopadhaya pronounced the
reportable judgment of the Bench comprising His Lordship and Hon'ble Mr.
Justice Dipak Misra.
The appeals are allowed in terms of the signed reportable judgment.
(MEENAKSHI KOHLI) (USHA SHARMA)
COURT MASTER COURT MASTER
[Signed reportable judgment is placed on the file]
the appellant’s prayer under Section 11 (6) of the
Arbitration and Conciliation Act, 1996 for appointment of arbitrator has
been rejected by the High Court.=
In view of stand taken by the parties and as they mutually agreed for
arbitration by retired Hon’ble Judge of the Kerala High Court, without
going into the question of merit, we set aside the impugned order dated
19th July, 2010 and refer the matter to Hon’ble Mr. Justice K. John Mathew
(retired). The parties will negotiate and settle the terms and conditions
of arbitration. It is expected that the arbitration proceeding will be
concluded at an early date.
16. The appeals stand disposed of with aforesaid observations. No costs.
2014 – July. Part -http://judis.nic.in/supremecourt/filename=41711
REPORTABLEIN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. OF 2014
(arising out of SLP(C) Nos.14947-14948 of 2011)
M/s Kaikara Construction Company … Appellant
VERSUS
State of Kerala and Ors. … Respondents
J U D G M E N T
Sudhansu Jyoti Mukhopadhaya, J.
Leave granted.
2. These appeals are directed against order dated 19.07.2010 passed by
the High Court of Kerala at Ernakulam in Arbitration Request No.39 of 2009.
By the impugned order, the appellant’s prayer under Section 11 (6) of the
Arbitration and Conciliation Act, 1996 for appointment of arbitrator has
been rejected by the High Court.
3. The factual matrix of the case is as follows:
On 27.1.2005, the appellant submitted tender, which was accepted by
the respondents on 21.7.2005. The possession of the work site was handed
over to the appellant on 2.9.2005. The period for completion of the
contract expired on 1.9.2007. The case of the appellant is that the Company
had completed a major part of the work. This was disputed by the
respondents. According to them, only 41% of the work was completed as on
22.12.2007, based on the original contract price. Based on the revised
contract price, the progress achieved was only 30% as on 22.12.2007; the
work carried out from 22.12.2007 to 1.3.2009 was only 12% as against 70%
target.
According to the appellant, a sum of Rs.1,18,87,265/- was payable to
it but the said amount was withheld by the respondents. As a condition for
releasing the amount, the appellant was compelled to execute a supplemental
agreement. The appellant sought extension of the period for completion of
the work which was granted up to 1.3.2009. On 7.3.2009, the appellant
requested for appointment of a ‘Dispute Review Expert’ as stipulated in the
General Conditions of Contract. On 9.5.2009, the appellant again made a
request for appointment of ‘Dispute Review Expert’ and also for extension
of the "intended completion period". Another letter dated 10.6.2009 was
written by the appellant to the Chairman of the Council of Indian Roads
Congress with similar prayer to appoint a ‘Dispute Review Expert’ as
stipulated in Clause 36.1 of ITB forming part of the agreement without any
delay, with due intimation to the appellant in writing.
On 7.08.2009, the Indian Roads Congress addressed a letter to the
Chief Engineer, PWD National Highways, Thiruvananthapuram to inform about
the appointment of Dispute Review Expert. On 6.10.2009, the Indian Roads
Congress wrote another letter to the Chief Engineer, Ministry of Road
Transport & Highways, New Delhi requesting him to inform about the
appointment of Dispute Review Expert. However, no reply was given to the
appellant.
4. In this background, the appellant moved before the High Court under
Section 11 (6) of the Arbitration and Conciliation Act, 1996 for
appointment of an arbitrator. The learned Single Judge of the High Court by
impugned order dated 19.07.2010 dismissed the request holding that no
arbitration agreement exists.
5. Review Petition filed by the appellant was also rejected by order
dated 2.02.2011.
6. The appellant relied upon Clauses 24 and 25 of the Standard Bidding
Document which forms part of the contract and read as follows:
"24. Disputes
24.1 If the Contractor believes that a decision taken by the
Engineer was either outside the authority given to the Engineer by the
Contract or that the decision was wrongly taken the decision shall be
referred to the Dispute Review Expert within 14 days of the notification of
the Engineer's decision.
25. Procedure for Disputes.
25.1. The Dispute Review Expert (Board) shall give a
decision in writing within 28 days of receipt of notification
of a dispute.
25.2 The Dispute Review Expert (Board) shall be paid daily at the
rate specified in the Contract Data together with reimbursable expenses of
the types specified in the Contract Data and the cost shall be divided
equally between the Employer and the Contractor, whatever decision is
reached by the Dispute Review Expert. Either party may give notice to the
other to refer a decision of the Dispute Review Expert to an Arbitrator
within 28 days of the Dispute Review Expert's written decision. If neither
party refers the dispute to arbitration within the next 28 days, the
Dispute Review Expert's decision will be final and binding.
25.3 The arbitration shall be conducted in accordance with
the arbitration procedure stated in the Special Conditions of Contract."
7. Detailed procedure has been stipulated in Sub clause (a) to (f) of
Clause 25.3 of the Standard Bidding document.
8. It appears that appellant by letter dated 11.8.2009 requested the
Superintending Engineer, National Highway, Central Circle, Kochi, to agree
to the appointment of a sole arbitrator mentioned in the letter. But no
reply was given.
9. The respondents in their counter affidavit opposed the prayer and
contended that if arbitration is the mode of settlement of disputes, the
names of Dispute Review Experts are to be specifically mentioned in the
contract data, which was not done in the present case. In the contract
entered into between the parties on 25.08.2005, there was a specific clause
which reads as follows:
"The parties to this contract agree and undertake the condition that
arbitration shall not be a means of settlement of dispute or claims or
anything on account of this contract."
10. It was contended on behalf of the respondents that in absence of
nomination of Dispute Review Expert, there is no valid arbitration
agreement.
11. Learned counsel for the appellant relied upon decision of this Court
in M.K. Abraham and Company v. State of Kerala and another, (2009) 7 SCC
636. In the said case, the Court noticed that a letter dated 28.9.1994 was
issued by the Ministry of Surface Transport, Government of India informing
all the State Public Works Departments and all Chief Engineers in all the
States dealing with National Highways, that a standard contract clause
prescribing the procedure to be followed for appointment of arbitrators was
to be incorporated in the bidding conditions for the National Highway works
and that the arbitration clause should be compulsorily made part of the
bidding conditions in the respective states. In said case, this Court
noticed the aforesaid letter dated 28.08.1994 and Clauses 24 and 24(a) of
the notice inviting tenders for works as printed in the standard form of
agreement executed between the parties and observed as follows:
“24. In the present case, as noticed above, the contract consists of a
typewritten contract agreement between the appellant and the second
respondent [which does not contain any terms and conditions, but which
merely states that the contract is for execution of the described work as
per the accompanying articles of agreement, plan, specification and
conditions of contract approved by the Project Director (SE), National
Highway (ADB), Circle Adappally, Cochin] with several printed forms with
cyclostyled additions as annexures and handwritten corrections. The printed
form of articles of agreement has an attachment slip.
25. The contract in the present case does not contain any handwritten terms
in regard to arbitration. The contract has printed clauses barring
arbitration [Clauses 24 and 24(a) of the notice inviting tenders for works
and a preamble clause and Clause 3 in the articles of agreement]. A
cyclostyled slip signed by both parties containing the words “arbitration
clause as per the Ministry of Surface Transport’s Letter No. RW/NH-
34041/3/94-DO-III dated 28-9-1994 will be applicable” is attached to the
printed articles of agreement.
26. By applying the well-settled principles relating to construction of
contract the following position will emerge:
(i) the terms of the articles of agreement will prevail over the terms of
notice inviting tenders for works, and
(ii) the term contained in the cyclostyled attachment to the printed form
of articles of agreement will prevail over the terms of the printed
articles of agreement.
Consequently, the contents of the attachment slip to the printed form of
articles of agreement providing for arbitration will prevail over the bar
on arbitration contained in the notice inviting tenders for works and the
articles of agreement. As a result, it has to be held that there is a
provision for arbitration in regard to the disputes between the respective
appellant and the respondents.”
However, the High Court distinguished the case relied upon by
the appellant.
12. In the letter of acceptance dated 21.07.2005, the Superintendant
Engineer intimated the appellant the acceptance of the offer given by the
appellant at paragraph 9 therein, it was specifically mentioned that all
terms and conditions of notice inviting tenders and tender documents shall
be binding on the said contract and the contractor. In the bidding document
supplied to the appellant by respondent no.3 arbitration clauses were
incorporated at clause 25 and 25.3 as noticed above. At Clause 36 the
provisions of Dispute Review Expert was mentioned as follows:
“36. Dispute Review Expert
36.1 The Employer proposes that [name of proposed Dispute Review
Expert as indicated in Appendix] be appointed as Dispute Review Expert
under the Contract, at a daily fee as indicated in Appendix plus
reimbursable expenses. If the Bidder disagrees with this proposal, the
Bidder should so state in the Bid. If in the Letter of Acceptance, the
Employer has not agreed on the appointment of the Dispute Review Expert,
the Dispute Review Expert shall be appointed by the Council of Indian Roads
Congress at the request of either party.”
13. In the agreement clause (3) it was mentioned that the parties to the
contract agreed and undertake the conditions that arbitration shall not be
means of settlement of disputes or claims or anything on account of the
said contract.
14. The case was heard and judgment was reserved. Subsequently, parties
have filed joint application showing the name of the arbitrator mutually
agreed to by the parties as under:
“Hon. Justice Mr. K. John Mathew
Former Judge of the Hon. High Court of Kerala,
Veekshanam Road, Kochi, 682018
Kerala State
Sd/-
Advocate for the Petitioner
Babu Thomas K
For Rabin Maujumdar
Sd/-
Adv. M T George
Advocate for the respondents”
15. In view of stand taken by the parties and as they mutually agreed for
arbitration by retired Hon’ble Judge of the Kerala High Court, without
going into the question of merit, we set aside the impugned order dated
19th July, 2010 and refer the matter to Hon’ble Mr. Justice K. John Mathew
(retired). The parties will negotiate and settle the terms and conditions
of arbitration. It is expected that the arbitration proceeding will be
concluded at an early date.
16. The appeals stand disposed of with aforesaid observations. No costs.
…………………………………………………………………….J.
(SUDHANSU JYOTI MUKHOPADHAYA)
…………………………………………………………………….J.
(DIPAK MISRA)
NEW DELHI,
JULY 01, 2014.
ITEM NO.1A COURT NO.6 SECTION XIA
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). …......../2014
(@ SLP (C) Nos. 14947-14948/2011)
M/S. KAIKARA CONSTRUCTION CO. Appellant(s)
VERSUS
STATE OF KERALA AND ORS. Respondent(s)
Date : 01/07/2014 These appeals were called on for pronouncement
of Judgment today.
For Appellant(s) Mr. Rabin Majumder ,Adv.
For Respondent(s) Mr. M. T. George ,Adv.
Hon'ble Mr. Justice Sudhansu Jyoti Mukhopadhaya pronounced the
reportable judgment of the Bench comprising His Lordship and Hon'ble Mr.
Justice Dipak Misra.
The appeals are allowed in terms of the signed reportable judgment.
(MEENAKSHI KOHLI) (USHA SHARMA)
COURT MASTER COURT MASTER
[Signed reportable judgment is placed on the file]
