Arbitration clause in 2007 Scheme validly incorporated into sale orders, Jharkhand High Court decision overturned.

The Court held that the arbitration clause in the 2007 Scheme was validly incorporated into the individual sale orders, covering disputes arising from the transactions. The decision of the Jharkhand High Court was overturned, and the appeal was allowed. The parties agreed to appoint a retired judge as the Sole Arbitrator for adjudicating the disputes under the 2007 Scheme, with proceedings to take place in Kolkata.

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Issues Involved:
1. Whether the arbitration clause contained in the 2007 Scheme stands incorporated by reference into individual sale orders.
2. The validity and scope of the arbitration clause under the 2007 Scheme.

Detailed Analysis:

1. Incorporation of Arbitration Clause by Reference into Sale Orders:
The primary issue before the Court was whether the arbitration clause in the 2007 Scheme was incorporated by reference into the individual sale orders. The Court noted that the 2007 Scheme included an arbitration clause in Clause 11.12, which mandated arbitration for all disputes arising out of or in relation to the Scheme. The Appellant participated in eAuctions under this Scheme and was issued sale orders by Respondent No. 2. The Appellant contended that these sale orders were governed by the 2007 Scheme, including its arbitration clause.

The Court referred to Section 7(5) of the Arbitration and Conciliation Act, 1996, which allows for the incorporation of an arbitration clause by reference if the main contract is in writing and the reference is such as to make the arbitration clause part of the contract. The Court also cited various precedents, including *M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd.*, which held that an arbitration clause from another document could be incorporated by reference if the contract clearly indicates an intention to incorporate the arbitration clause.

The Court found that Clause 7 of the sale orders explicitly stated that they would be governed by guidelines, circulars, office orders, notices, and instructions issued by Coal India Ltd. and Bharat Coking Coal Ltd., thereby incorporating the 2007 Scheme by reference. This made the arbitration clause in the 2007 Scheme applicable to the disputes arising under the sale orders.

2. Validity and Scope of the Arbitration Clause:
The Court examined the scope of the arbitration clause in the 2007 Scheme, which stated that "all disputes arising out of this scheme or in relation thereto in any form whatsoever shall be dealt exclusively by way of arbitration in terms of the Arbitration and Conciliation Act, 1996." The Court interpreted this clause broadly, citing *Renusagar Power Co. Ltd. v. General Electric Company* and *Doypack Systems Pvt. Ltd. v. Union of India*, which held that phrases like "arising out of," "in respect of," and "in connection with" are of the widest amplitude and must be construed expansively.

The Court concluded that the arbitration clause covered all transactions under the 2007 Scheme, including the sale orders in question. Therefore, the disputes between the parties were subject to arbitration as per the 2007 Scheme.

Conclusion:
The Court held that the arbitration clause in the 2007 Scheme was validly incorporated into the individual sale orders and covered the disputes arising from these transactions. The view taken by the learned Single Judge of the Jharkhand High Court was found to be erroneous and was set aside. The appeal was allowed, and the parties consensually agreed to appoint a retired judge as the Sole Arbitrator to adjudicate the disputes under the 2007 Scheme. The proceedings were to be conducted in Kolkata.

Ordered Accordingly.

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