Incorporation by reference of an arbitration clause under a scheme extends to disputes from transactions made under it.

An arbitration clause in a separate scheme can be incorporated into written sale orders by reference where the contractual language makes the scheme part of the transaction. Here, the sale orders were governed by the guidelines and instructions issued under the 2007 Scheme, and the clause covering disputes arising out of or in relation to the Scheme was read broadly to include disputes from transactions undertaken under it. The SC held that the arbitration clause stood incorporated into the sale orders, so refusal to appoint an arbitrator under Section 11(6) was erroneous and the dispute was referred to arbitration.

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Issues: Whether the arbitration clause contained in the 2007 Scheme stood incorporated by reference into the individual sale orders issued under that Scheme, so as to permit appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Analysis: The governing principle is that an arbitration clause in a separate document can be incorporated into a contract by reference when the contract is in writing and the reference is such as to make that clause part of the contract. A general reference to a standard form document is sufficient in a single contract case, whereas a reference to a separate contract ordinarily requires specific reference to the arbitration clause. The sale orders here expressly stated that they were governed by the guidelines, circulars, office orders, notices and instructions issued from time to time by Coal India Ltd. and other concerned authorities. The sale orders emanated from the 2007 Scheme, and the arbitration clause in that Scheme covered disputes arising out of, or in relation to, the Scheme. The expression "in relation thereto" was construed broadly, and was held to extend to disputes arising from the transactions undertaken under the Scheme.

Conclusion: The arbitration clause in the 2007 Scheme was incorporated into the sale orders, and the refusal to appoint an arbitrator was erroneous. The appeal was allowed and the matter was referred to arbitration.

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