TaxTMI 
TaxTMI 
2019 (2) TMI 1913
X X X X Extracts X X X X
X X X X Extracts X X X X
....hanism. This system would provide an equal opportunity to purchase coal through a single window service to all intending buyers, and facilitate country wide access to booking coal online for all sections of coal buyers, through a simple, transparent system. Clause 11.12 of the 2007 Scheme contains an arbitration clause which reads as under "11.12 In the event of any dispute, Bidder/Buyer is necessarily required to represent in writing to the General Manager (Sales and Marketing) of the concerned Coal Company, who would deal with the same in a period of 1 month from such representation. Thereafter, if required the matter be determined by the DirectorIn Charge of Marketing of the concerned Coal Company. Any interpretation of this Clause will be subject to clarification by CIL, which will be deemed as firm and final. 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 arbitration shall be conducted at Kolkata at a place to be notified by CIL. The arbitrator shall be appointed by the Chairman and Managing Director, CIL upon written request in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....am Lal Das, Mr. Anirudh Singh and Mr. Krishanu Barua for the Respondents and perused the documents on record. 3.1. A copy of a Sale Order issued by Respondent No. 2 was brought to our notice, which contains Standard Terms and Conditions at the end. Clause 7 of the Terms and Conditions state that the sale orders would be governed by the Guidelines, Circulars, Notices, and Instructions issued by Coal India Ltd., Bharat Coking Coal Ltd. etc. Clause 7 is set out hereinbelow for ready reference " 7. The sale order will be governed by guidelines - circulars - office orders - notices - instructions, relevant law etc. issued from time to time by Coal India Ltd., Bharat Coking Coal Ltd., State Govts., Central Govt. and other statutory bodies. This is also subject to any future escalation in prices and or levies/or dutiestaxes etc. which may be imposed from time to time." (emphasis supplied) 4. The short question before this Court is whether the arbitration clause contained in the 2007 Scheme, would stand incorporated by reference in each of the sale orders. 4.1. The principle of incorporation by reference of an arbitration clause, from another document or contract is a wellest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n., 2010, Sweet & Maxwell) pg. 86, para 2022 has interpreted Article 7(2) to include incorporation by reference in the following words: "(d) Reference to a document containing an arbitration clause The third sentence of art. 7(2) is concerned with a contract containing a reference to a document that contains an arbitration clause. Provided that the main contract is in "writing" and that the reference "is such as to make that clause part of the contract", the arbitration agreement is valid. The necessity of including this provision arose from problems and divergent court decisions on this issue in the context of the New York Convention. The travaux explain that it is sufficient if the reference only refers to the document; specific mention of the arbitration clause therein is not necessary." (emphasis supplied) 4.5. Section 6(2) of the English Arbitration Act, 1996 is pari materia to Section 7(5) of the 1996 Act, and reads as under: "6. Definition of arbitration agreement. (1)..... (2) The reference in an agreement to a written form of arbitration Clause or to a document containing an arbitration Clause constitutes an arbitration agreement if the reference is such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contract to which there is a general reference in the contract between the parties. On the other hand, where the arbitration clause is contained in an earlier contract/ some other contract, and a reference is made to incorporate it in the contract between the parties, it is a 'twocontract case'. The Court held that incorporation by general reference in a single contract case is valid. However, in a 'twocontract case', where reference is made to an arbitration clause in a separate contract, the reference must be specific to the arbitration clause. The judgment in Habas (supra) has recently been affirmed by the Queen's Bench Division in SEA2011 Inc. v. ICT Ltd. [2018] EWHC 520 (Comm) 4.7. Russell in his commentary on arbitration Russell on Arbitration (24th Edn. ,2015, Sweet & Maxwell) pp. 52 - 54, para 2049 has commented on the single and two contract cases, and reference to standard form terms, in the following passage, which is instructive : "Reference to standard form terms, single and twocontract cases. If the document sought to be incorporated is a standard form set of terms and conditions the courts are more likely to accept that general words of incorporation w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated as "single contract" cases, even where there is in fact more than one contract; and those where the terms to be incorporated are contained in a contract between one or more different parties which are treated as the "two contract" cases. Extension of the single contract cases. Recently, the courts appear to have extended the "single contract" principle applicable to standard form contracts, where general words of incorporation will suffice, to other types of contract where the same rationale can be said to apply. Thus, if the document sought to be incorporated is a bespoke contract between the same parties, the courts have accepted this as a "single contract" case where general words of incorporation will suffice, even though the other contract is not on standard terms and constitutes an entirely separate agreement. The rationale for this approach is that the parties have already contracted on the terms said to be incorporated and are therefore even more likely to be familiar with the term relied on than a party resisting incorporation of a standard term. Put another way, if general words of incorporation are sufficient for the latter, they should be even more so for the for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aking a general reference to another contract, such general reference would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties. The arbitration clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause. (iii) Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/performance alone will apply, and not the arbitration agreement in the referred contract, unless there is special reference to the arbitration clause also. (iv) Where the contract provides that the standard form of terms and conditions of an independent Trade or Professional Institution (as for example the Standard Terms & Conditions of a Trade Association or Architects Association) will bind them or apply to the contract, such standard form of terms and conditions including any provision for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....early states 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." (emphasis supplied) Russell in his commentary on arbitration Russell on Arbitration (24th Edn. ,2015, Sweet & Maxwell) pg. 82, para 2103 has interpreted these words as follows : "Disputes "in connection with", "in relation to", or "regarding" a contract. These words, which are frequently encountered and are to be given the same meaning, were at one time given a restricted interpretation, but are now well established as having a broad meaning.....They may also be sufficient to catch disputes arising under another contract related to the contract containing the arbitration clause." (emphasis supplied) In Renusagar Power Co. Ltd. v. General Electric Company and Anr., [1985]1SCR432 this Court observed that expressions such as "arising out of", or "in respect of", or "in connection with", or "in relation to", the contract are of the widest amplitude, and content. In Doypack Systems Pvt. Ltd. v. Union of India and Ors., 1988 (36) ELT 201 (SC) this Court obse....