Arbitration clause interpretation: departmental supervision clause did not create arbitral jurisdiction over contract disputes.

A conjoint reading of Clauses 29 and 30 showed that the Superintending Engineer had supervisory and administrative control over execution of the works and could decide matters concerning specifications, designs, drawings and workmanship, but the clause did not evince an agreement to refer present or future disputes to arbitration. It therefore created a departmental mechanism for expert determination rather than a private judicial tribunal. Earlier decisions on similar clauses were followed, and State circulars could not alter the agreement's legal construction. Clause 30 was held not to be an arbitration clause, so appointment of the Chief Engineer as arbitrator was not justified.

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Issues: Whether Clause 30 of the B-1 Agreement constituted an arbitration clause and, if not, whether the appointment of the Chief Engineer as arbitrator could be sustained.

Analysis: A conjoint reading of Clauses 29 and 30 showed that the Superintending Engineer was given supervisory control over execution of the works and authority to decide questions relating to specifications, designs, drawings, quality of workmanship and similar matters for smooth and expeditious implementation of the contract. The clause did not disclose an agreement to submit present or future disputes to arbitration, nor did it indicate the creation of a judicially functioning private tribunal. The language reflected a departmental mechanism for administrative decision-making and expert determination rather than adjudication of formulated disputes. Earlier decisions construing similar clauses were followed, while the cases relied upon for the appellant were distinguished because they involved clauses expressly or materially different in their reference to disputes and the role of the named officer. The Court also held that the State Government circulars could not control the legal construction of the agreement.

Conclusion: Clause 30 was not an arbitration clause, and the referral of the disputes to the Chief Engineer as arbitrator was not justified. The appeal failed.

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