The Calcutta High Court, while dismissing a petition for appointment of an arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996, observed that parties to an arbitration agreement must clearly state their intention to arbitrate through a resounding yes and there cannot be any ifs and buts or an undecided mumble.
Brief Facts:
The petitioner had approached the Court seeking the appointment of an arbitrator by relying on Clause 13 of the General Terms & Conditions (GCC) of an e-Tender notice dated 2019, issued by the respondent Eastern Coalfields Limited (ECL) for the removal and transportation of material for a project at Nakrakonda – Kumardih after a dispute arose on disagreement of the parties on changes made to the price component of the contract.
Contentions of the Applicant:
The learned counsel appearing on behalf of the petitioners submitted that t disputes have arisen between the parties pursuant to the petitioner being engaged as the contractor for the work described in the e-tender notice. The dispute allegedly revolves around the parties disagreeing about changes made to the price component of the contract.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent took a point of maintainability of the present application on the ground that there is no arbitration agreement between the parties.
Observations of the Court:
The court after going through the evidence noted that the parties, as per the GCC were obliged to resolve disputes in two stages and further stated that the presence of the word “may” in the arbitration clause in the matter at hand is required to be tested against the mindset of the parties to the agreement and the parties consenting to arbitration including to the mode and mechanism of the procedure forms the mainstay of the 1996 Act.
Further, the court relied on the decision in the case of Jagdish Chander vs Ramesh Chander, wherein it was held that the parties must be clear of their intention to arbitrate and ensure the same was expressed in writing within the arbitration agreement; there could not be any room for doubt or second-guessing.
The court further stated that referred to Section 11 and stated that such an intervention by the Court in appointing an arbitrator would presume the existence of a valid arbitration clause and that in this case, with the presence of the clause itself having been muddled due to the use of a vague reference such as "may," there could not be a definite conclusion on the intention of the parties to arbitrate.
Further, the court stated that Section 11 of the 1996 Act is one of the earlier interventions by a Court on the presumption of the existence of an arbitration clause and the court must hence ensure the existence of an arbitration agreement before flagging the road to the award and beyond and the parties cannot set forth on the procedural journey if there is no arbitration agreement and in the present case, the arbitration agreement muddies the waters with regard to the immediate and unequivocal reference of the dispute to arbitration. The word “may” in the relevant part of the clause gives an option to the parties to either refer the dispute to arbitration or hold back on the arbitration. The word “may” makes the clause conditional on a future event/s or to the other parts of the clause and gives the parties the option to resile from the clause.
The decision of the Court:
The court dismissed the petition on the ground of maintainability after concluding that t Clause 13 under the General Terms and Conditions of the e-tender document does not constitute or contain an arbitration agreement.
Case Title: BGM and M-RPL-JMCT (JV) Vs. Eastern Coalfields Limited
Coram: Hon’ble Mr. Justice Moushumi Bhattacharya
Case No.: AP 745 of 2023
Advocate for the Applicant: Mr. Debajyoti Basu, Mr. Diptomoy Talukdar, Mr. Dibyendu Ghosh and Ms. C. Chatterjee
Advocate for the Respondent: Mr. Debnath Ghosh, Mr. Sayed Nurul Arefin, Mr. Sayed M. Arefin and Ms. Rashmi Binayak
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