TaxTMI 
TaxTMI 
2000 (3) TMI 1117
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....r before or after the termination, abandonment or breach of the Contract, it shall, in the first place, be referred to and settled by the Engineer who shall, within a period of ninety days from the date of being requested by the Contractor to do so, give written notice of his decision of the Contractor. Subject to other form of settlement hereafter provided, such decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor. The said decision shall forthwith be given effect to, and the Contractor shall proceed with the execution of the works with all due diligence. In case the decision of the Engineer is not acceptable to the Contractor, he may approach the law Courts at Bangalore for settlement of dispute after giving due written notice in this regard to the Engineer within a period of ninety days from the date of receipt of the written notice of the decision of the Engineer. If the Engineer has given written notice of his decision to the Contractor and no written notice to approach the law Courts has been communicated to him by the Contractor within a period of ninety days from receipt of such notice, the said decision shal....
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....ute shall, in the first place, be referred to the Chief Engineer who has jurisdiction over the work specified in the contract. The Chief Engineer shall within a period of ninety days from the date of being requested by the Contractor to do so, given written notice of his decision to the Contractor. Chief Engineer's decision final (b) Subject to other form of settlement hereafter provided, the Chief Engineer's decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor. The said decision shall forthwith be given effect to and Contractor shall proceed with the execution of the work with all due diligence. Remedy when Chief Engineer's decision is not acceptable to contract (c) In case the decision of the Chief Engineer is not acceptable to the Contractor, he may approach the Law Courts at Karwar for settlement of dispute after giving due written notice in this regard to the Chief Engineer within a period of ninety days from the date of receipt of the written notice of the decision of the Chief Engineer. Time-limit for notice to approach law Court by Contractor (d) If the Ch....
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....e modified terms agreed. Petitioner claims that contrary to the terms of the Supplementary Agreements dated 7-8-1995 and 19-11-1997, KPC tried to claim from the petitioner, certain interest. Petitioner claims to have protested against such action, by letter dated 2-9-1999. 6. The petitioner made certain claims in regard to the said work. They were not admitted by KPC. The petitioner alleges that as a consequence disputes and differences have arisen between the parties in regard to the said claims and that it referred those disputes to the second respondent [Chief Engineer (Civil) (Kali), KPC] for his decision under Clause 29 of the Conditions of Contract, as per letter No. MCC 2183 of 1999, dated 3-9-1999 (Annexure-A1). The Chief Engineer, who is required to give his decision on the disputes raised, within ninety days failed to do so. Therefore, the petitioner has filed this petition on 7-3-2000 under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') for appointment of any one from the panel of Arbitrators suggested by the petitioner (Annexure-P) to be the sole Arbitrator for adjudication of the claims of the petitioner. 7. Respondents....
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.... word 'Arbitrator' to refer to the chosen private forum, is not compulsory. If the agreement or clause spells out the aforementioned attributes conditions, then, even if the words 'Arbitration' and 'Arbitrator' are not used, the agreement or clause will not be construed as an arbitration agreement. 11. It is well-settled that what is necessary to decide whether there is an arbitration agreement, is an intention of parties to a contract or disputes, to refer the disputes to arbitration and be bound by the decision of the Arbitrator. But, if the agreement is only intended to prevent litigation or disputes, by requiring a decision by a named authority, before the matter is taken to Court, and is not intended to finally settle the disputes, then it is not an arbitration agreement. A mere agreement to accept a valuation is also not an arbitration agreement. Nor is a certification by a named Authority is an arbitration. The following passage from Russell on Arbitration (19th Edition, page 59), is relevant: "If it appears from the terms of the agreement by which a matter is submitted to a person's decision, that the intention of the parties wa....
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....greements or not. 13.1 The learned Counsel for the petitioner relied on the decisions of the Supreme Court in Chief Conservator of Forests, Rewa v Ratan Singh Hans. Smt. Rukmanibai Gupta v The Collector, Jabatpur, and the decision of this Court in M. Keshava Raju v Karnataka State Road Transport Corporation and Lachmanna B. Horamani v State of Karnataka, to contend that the clause is an arbitration agreement. 13.2 The learned Counsel for the respondent relied on the decisions of the Supreme Court in State of Uttar Pradesh v Tipper Chand, State of Orissa v Damodar Das, K.K, Modi, supra and Bharat Bhushan Bansal v Uttar Pradesh Small Industries Corporation Limited, Kanpur. 14. In Ratan Singh's case, supra, the Supreme Court considered whether the following clause in a forest contract entered into between a forest Contractor and a State Government was an arbitration clause: "9. In the event of any doubt or dispute arising between the parties as to the interpretation of any of the conditions of this contract or as to the performance or breach thereof, the matter shall be referred to the Chief Conservator of Forests, Madhya Pradesh, Nagpur, whose decision sha....
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....e specifications, designs, drawings, and instructions hereinbefore mentioned; (ii) The quality of workmanship or materials used on the work; and (iii) Any other question, claim, right, matter, thing whatsoever, in any way arising out of our relating to the Contractor, designs, drawings, specifications, estimates, instructions or orders or those conditions or failure to execute the same whether arising during the progress of the work or after the completion, termination or abandonment thereof, the dispute shall, in the first place, be referred to the VC and MD who has jurisdiction over the work specified in the contract. The VC and MD shall, within a period of 90 days from the date of being requested by the Contractor to do so, give written notice of his decision to the Contractor. Managing Director's Decision Final: (b) Subject to the form of settlement hereafter provided, the VC and MD's decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor. The said decision shall forthwith be given effect to and Contractor shall proceed with the execution of the work with a....
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....hat an arbitration agreement can either be in express terms or can be inferred or spelled out from the terms of the clause; and that if the purpose of the clause is only to vest in the named Authority, the power of supervision of the execution of the work and administrative control over it from time to time, it is not an arbitration agreement, It also held that the clause did not contain any express arbitration agreement, nor spell out by implication any arbitration agreement as it did not refer to any dispute or reference of such dispute for decision. 18. In the case of State of Orissa, supra, the Supreme Court considered whether the following clause constitute an arbitration agreement: "25. Decision of Public Health Engineer to be final.--Except where otherwise specified in this contract, the decision of the public Health Engineer for the time being shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications; drawings and instructions hereinbefore mentioned and as to the quality of workmanship or material use on the work, or as to any other question, claim, right, matter or thing, whatsoe....
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....e in the implementation of the agreement by leaving it to the decision of the Chairman, IFCI. This clause does not contemplate any judicial determination by the Chairman of the IFCI. . . . Thus, Clause 9 is not intended to be for any different decision than what is already agreed upon between the parties to the dispute. It is meant for a proper implementation of the settlement already arrived at. A judicial determination, recording of evidence etc., are not contemplated". (emphasis supplied) 20. In Bharat Bhushan Bansal's case, supra, the question that arose for consideration was whether the following clauses amounted to an arbitration agreement: "Decision of the Executive Engineer of the UPSIC to be final on certain matters 23. Except where otherwise specified in the contract, the decision of the Executive Engineer shall be final, conclusive and binding on both the parties to the contract on all questions relating to the meaning, the specification, design, drawings and instructions hereinbefore mentioned, and as to the quality of workmanship or materials used on the work or as to any other question whatsoever in any way arising out of for re....
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.... the execution of the works or otherwise arising out of or in connection with the contract, and also as regards all matters of account, including the final balance payable to the contract, and the certificate of the engineer for the time being, given under his hand, shall be binding and conclusive on both parties". 21. The above decisions make it clear that an agreement or a clause in an agreement can be construed as an arbitration agreement, only if, (i) it provides for or contemplates reference of disputes or difference by either party to a private forum (other than a Court or Tribunal) or decision; (ii) it provides either expressly or impliedly, for an enquiry by the private forum giving due opportunity to both parties to put forth their cases; and (iii) it provides that the decision of the forum is final and binding upon the parties, without recourse to any other remedy and both would abide by such decision. Where there is no provision either for reference of disputes to a private forum, or for a fair and judicious enquiry, or for a decision which is final and binding on parties to the dispute, there is no arbitration agreement....
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....t it is binding on both the parties. (e) Clause (c) provides that if the Contractor is not satisfied with the decision of the Chief Engineer, he can approach the law Court at Karwar for settlement of the dispute. The clause requires the Contractor to approach the law Court for settlement of disputes. If as contended by the petitioner, the disputes are to be settled by way of arbitration by the Chief Engineer, acting as Arbitrator, then the question of one of the parties being permitted to approach the law Courts for settlement of the disputes does not arise. If the Chief Engineer is the Arbitrator and his decision is an award, then a party can approach the Civil Court only for setting aside the award and not for settlement of the disputes. This provision makes it clear that the decision of the Chief Engineer is not intended to be a decision by way of adjudication of the disputes/differences between the parties by way of arbitration but is intended to be merely a decision of the party (employer) which, when intimated to the other side, gives rise to a cause of action to the other party (Contractor) to approach the Civil Court for adjudication of its dispute/claim. ....