TaxTMI 
TaxTMI 
2007 (5) TMI 564
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....he appellants made running payments to the respondent during the period of execution of the works in terms of the Work Order. However, after completion of the work, the final measurements were not made, nor the final bills were prepared. The dispute remained pending with the department for which the respondent called upon the appellants to finalise the dispute and prepare the final bill as per the rates quoted by the respondent and accepted by the appellants. A final notice was issued on 16th April, 1990, calling upon the appellants to refer the dispute to an arbitrator as per Clause 4 of the Work Order. Since the appellants had failed to appoint an Arbitrator, the respondent filed an application before the Additional Senior Subordinate Judge, Ropar, Punjab under Section 20 of the Arbitration Act, 1940 (in short 'the Act') seeking appointment of an Arbitrator. 4. By an order dated 20th October, 1993 the learned Additional Senior Subordinate Judge, Ropar, Punjab after hearing both the parties, allowed the application filed by the respondent and referred the dispute for decision to the Superintending Engineer, Anandpur Sahib, Hydel Circle No. 1 Chandigarh. The Additional Senior Su....
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.... work as per the registered specifications, the department will have the option to employ its own labour or any other agency to being the work to the departmental specification and recover the cost therefrom." Clause 4: "Any dispute arising between the department and the contractor/society shall be referred to the Superintending Engineer, Anandpur Sahib, Hydel Construct Circle No. 1, Chandigarh for orders and his decision will be final and acceptable/binding on both parties." 6. As pointed out herein earlier, the trial court on consideration of Clause 4 of the Work Order held that Clause 4 of the Work Order must be held to be an arbitration agreement and accordingly an arbitrator was appointed in compliance with Clause 4 of the Work Order At this stage we feel it appropriate to examine in detail whether clause 4 of the Work Order can be held to be an arbitration agreement within the meaning of Section 2(a) of the Act. 7. Section 2[a] of the Act defines 'arbitration agreement' which means a written agreement to submit present or future differences to arbitration whether arbitrator is named therein or not. Mr. Tathore learned Additional Solicitor General appearing on behalf ....
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....this Court held that "there is no dispute with regard to the proposition that for the purpose of construing an arbitration agreement, the term "arbitration" is not required to be specifically mentioned therein." Looking to the opinion of the Hon'ble Judges in the said case and also considering clause 4 of the Work Order in depth, we are of the opinion that Clause 4 of the Work Order between the parties can be interpreted to be an arbitration agreement even though the term "arbitration" is not expressly mentioned in the agreement. In this decision of this Court the test of 'dispute' and 'reference' was again reiterated. In Para 17, it was stated that there cannot be any doubt whatsoever that an arbitration agreement must contain broad consensus between the parties that the disputes and differences should be referred to a domestic tribunal. 10. We have already noted Clause 4 of the Work Order as discussed hereinabove. It is true that in the aforesaid Clause 4 of the Work Order the words "arbitration" and "arbitrator" are not indicated; but in our view, omission to mention the words "arbitration" and "arbitrator" as noted herein earlier cannot be a ground to hold that the said clau....
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....perintending Engineer to specific issues only. d. That the agreement of the parties to refer their disputes to the decision of the Superintending Engineer is intended to be enforceable in law as it is binding in nature. 13. In view of the aforesaid conditions being satisfied, which were based on the principles laid down by this Court in K.K. Modi's case (supra), there cannot be any doubt in our mind that the arbitration agreement does exist. Clause 4 of the Work Order is an Arbitration Agreement. The learned Counsel appearing on behalf of the appellants contended that the ingredients laid down in the case of K.K. Modi are not satisfied in the present case and therefore following the principles laid down in that case, this Court must hold that clause 4 of the Work order cannot be construed as an arbitration agreement. We are unable to accept this contention of the learned counsel of the appellants for two reasons. First, in view of our discussions herein earlier, to the effect that all the ingredients to hold a particular agreement as an arbitration agreement have been satisfied in the preset case. Secondly, the factual situations in the case of KK Modi (supra) and in the case....
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.... all the parties to the contract upon all questions relating to the meaning of the specifications etc and the decision of the Superintending Engineer as to the quality, workmanship etc. shall be final, conclusive and binding between the parties does not constitute an arbitration agreement but while arriving at such a conclusion this Court referred to a decision of the Jammu and Kashmir High Court in the case of Dewan Chand v. State of Jammu and Kashmir [AIR 1961 J & K 58]. In the Dewan Chand case (supra) the relevant clause runs as follows:- " For any dispute between the contractor and the Department the decision of the Chief Engineer PWD Jammu and Kashmir, will be final and binding upon the contractor. This Court in that decision had put strong reliance on the expression "any dispute between the contractor and the department" and approved the conclusions arrived at by the J & K High Court. It came to the conclusion by interpretation of that clause that there did not exist any arbitration agreement as the decision of the Superintending Engineer in connection with the work done by the contractor was meant for supervision and execution of the work and administrative control over it f....
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....en full power to resolve any dispute arising between the parties which power in our view is wide enough to cover any nature of dispute raised by the parties. The Clause in the instant case categorically mentions the word "dispute" which would be referred to him and states "his decision would be final and acceptable/binding on both the parties." 18. That being the position, we are of the view that the clause in the case of Damodar Das and Clause 4 of the Work Order of the present case are totally different. We accordingly do not find any reason to hold otherwise. 19. At the risk of repetition we may also say before parting with this judgment that Clause 4 of the Work Order speaks for a dispute between the parties. It also speaks of a dispute and all such disputes between the parties to the Work Order shall be decided by the Superintending Engineer, Anandpur Sahib Hydel Circle No. 1. Obviously, such decision can be reached by the Superintending Engineer, Anandpur Sahib Hydel Circle No. 1 only when it is referred to him by either party for decision. The reference is also implied. As the Superintending Engineer will decide the matter on reference, there cannot be any doubt that h....
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....eding under Section 20 of the Arbitration Act, 1940 runs from the date when the dispute arises. It observed: "Reading Article 137 and Sub-section (1) of Section 20 together, it must be said that the right to apply accrues when the difference arises or differences arise, as the case may be, between the parties. It is thus a question of fact to be determined in each case having regard to the facts of that case." 24. Accepting the principles laid down in the case of S. Rajan (supra), this Court in the case of Hari Shankar Singhania and Ors. v. Gaur Hari Singhania and Ors. [(2006) 4 SCC 658] again reiterated the principle that an application under section 20 of the Act for filing the arbitration agreement in Court and for reference of the dispute to arbitration in accordance therewith is required to be filed within a period of three years when the right to apply accrues and that the said right accrues when difference or dispute arises between the parties to the arbitration agreement. Keeping the principles in mind, let us now examine as to when difference or dispute arises between the parties to the arbitration agreement, when the right to apply accrues. As noted herein earlier, ....