Bombay High Court
Pratibha Industries Ltd vs Municipal Corporation Of Greater ... on 12 September, 2017
Bench: K.R. Sriram
1 NMCDL407.17-27
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
NOTICE OF MOTION (L) NO.407 OF 2017
IN
COMMERCIAL ARBITRATION PETITION NO.426 OF 2017
Municipal Corporation of Greater Mumbai )....Applicant
IN THE MATTER BETWEEN :
Pratibha Industries Ltd. )....Petitioner
V/s.
Municipal Corporation of Greater Mumbai & Ors. )..Respondents
----
Mr.U.J.Makhija a/w Mr.Parag Khandar, Mr.Sohil Shah i/by DSK Legal
for petitioner.
Mr.E.P.Bharucha, senior advocate a/w Mr.R.Y.Sirsikar for
respondent/applicant.
----
CORAM : K.R.SHRIRAM,J
DATE : 12.9.2017
P.C.:-
1 This Notice of Motion is taken out by respondent to re-call
the order dated 27.6.2017 to the extent of appointment of the
Arbitrator. The Municipal Commissioner of the Corporation has also
filed an affidavit in support of this Notice of Motion.
2 The petitioner had filed the above arbitration petition to
restrain respondent nos.1 & 4 from encashing 3 bank guarantees.
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The above matter was listed for hearing on 27.6.2017 when the
advocate for the petitioner stated that they were ready and willing to
go for arbitration and had suggested the name of Mr.Justice
V.M.Kanade (Retd.) to be appointed as sole arbitrator. Counsel for
respondent Mr.E.P.Bharucha on instructions from one Mr.Agashe
Assistant Engineer (Meter Workshop City-BMC) who was
representing the respondent nos.1 & 4 and who was also present in
the court stated that said respondents have no objection to the
appointment of Mr.Justice V.M.Kanade (Retd.) as sole arbitrator.
Accordingly, the order dated 27.6.2017 was passed appointing
Mr.Justice V.M.Kanade (Retd.) as sole arbitrator and the petition was
disposed.
3 The respondent nos.1 & 4 have subsequently taken out
this Notice of Motion on the ground that the agreement as tendered
dated 19.9.2008 along with Corrigendum issued by respondent no.1
for supply, installation and maintenance of AMR water meters of
various sizes in the city area of Mumbai consisting of wards
A,B,C,D,E,F/North, F/South, G/North and G/South (the project)
expressly provides "no arbitration is allowed".
4 Mr.Bharucha senior counsel submitted that since the
agreement expressly provides "no arbitration is allowed" the
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petitioner could not have approached this court for the reliefs under
Arbitration & Conciliation Act 1996 and consequently the order of
27.6.2017 also could not have been passed. Mr.Bharucha
expressed regret that he agreed based on incorrect information
received from the officer who was present in court and requested the
order be recalled.
5 Mr.Makhija, per contra, submitted that the contract did
provide for arbitration and relied on clause-22 of the tender notice
with instructions to the bidders. Clause-22 reads as under :-
"IT.22 Jurisdiction of Courts
In case of any claim, dispute or difference arising
in respect of the contract, the cause of action thereof shall be
deemed to have arisen in Mumbai and all legal proceedings in
respect of any such claim, dispute or difference shall be
instituted in a competent court in the city of Mumbai only.
If any dispute, difference or claim is raised by
either party relating to any matter arising out of the contract,
the aggrieved party may refer such dispute within a period of 7
(seven) days to the concerned Deputy Municipal
Commissioner (DMC) of Municipal Corporation of Greater
Mumbai who shall constitute a committee comprising of 3
(three) MCGM officers i.e., concerned D.M.C or Dir (ES & P),
Chief Engineer other than the Engineer of contract &
concerned C.A the committee shall give decision in writing
within 60 (sixty) days.
Appeal for the order of the committee may be
referred to Municipal Commissioner (M.C) of Municipal
Corporation of Greater Mumbai within 7(seven) days.
Thereafter M.C shall constitute the committee comprising of 3
(three) D.M.C including D.M.C. in charge of finance
department. The decision given by this committee shall be
final & binding upon the parties/bidders."
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6 Relying upon a judgment of a single judge of this court
(S.J.Kathawala,J) in 1Tatva Global Environment (Deonar) Ltd. Vs.
The Municipal Corporation of Gr. Mumbai, Mr.Makhija submitted
that this clause-22 in effect constitutes an arbitration agreement and
therefore, there was an arbitration clause. Mr.Makhija also submitted
that it is now settled law that a party cannot appoint its own officer or
employee as an arbitrator.
7 Mr.Bharucha submitted that clause-22 is not an arbitration
clause and further submitted that clause-17 of general conditions of
the contract expressly provides "no arbitration is allowed". Clause-17
reads as under :-
"17. DISPUTES AND ARBITRATION
13.1 No Arbitration is allowed.
13.2 In case of disputes or difference of opinion arising
between the Hydraulic Engineer and the bidder, the bidder can
refer the matter to the Municipal Commissioner of Greater
Mumbai with an advance copy to the Hydraulic Engineer and
the decision of Commissioner will be final in such case."
8 Having heard the counsel and also considered the
judgment relied upon by Mr.Makhija, in my view, Tatva Global
(supra) is not applicable to the facts & circumstances of the present
case. Paragraph-15 of the said judgment reads as under :-
1 2015 SCC OnLine Bom 4144
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"15. I have considered the submissions advanced on behalf of the
Applicant as well as the Respondent. The main contention of the
Respondent is that Clause 21 of the said Agreement does not
amount to an arbitration clause/arbitration at all. Clause 21 of the
Agreement only refers to an internal procedure for any dispute,
difference or claim arising out of the Agreement. It does not
contemplate referral of any such difference or claim etc. to any
third party for adjudication. The contention raised for the first time
before the Court that Clause 21 provides for reference of the
dispute to a highly placed officer of the Respondent, who in turn is
required to constitute a Committee of three experts, is nowhere
mentioned in the Affidavit In Reply. The Hon'ble Supreme Court of
India has in its judgment in the case of Bihar State Mineral
Development Corporation & Anr. vs. Encon Builders (I) (P) Ltd.
(supra) laid down the essential elements of an arbitration
agreement. The Hon'ble Supreme Court has inter alia held that
the essential elements of an arbitration agreement are that:
(i) there must be a present or a future difference in
connection with some contemplated affair.
(ii) there must be an intention of the parties to settle such
differences by a private tribunal.
(iii) the parties must agree in writing to be bound by the decision
of such tribunal,
(iv) the parties must be ad idem.
In the case of Jagdish Chander vs. Ramesh Chander and others
(supra), it has been held that the intention of the parties to enter
into an arbitration agreement must be gathered from the terms of
the agreement and that it is not necessary that the words
"arbitration" and "Arbitral Tribunal (or arbitrator)" are used in the
agreement in order for it to constitute an arbitration agreement. In
the facts of the present case, I am satisfied from a perusal of
Clause 21 of the Agreement that it meets the test of an arbitration
agreement as laid down in the aforesaid judgments of the Hon'ble
Supreme Court and that the Parties intended that the disputes be
decided and adjudicated upon by arbitration. The fact that Clause
21 provides that the decision given by the Committee "shall be
final and binding upon the parties" establishes that Clause 21 has
to be construed as an arbitration agreement and not a mere
internal procedure. Even if there is an iota of doubt as to whether
Clause 21 of the Agreement can be construed as an arbitration
clause/agreement, the same is put to rest from a conjoint reading
of Clauses 21 and 23 of the Agreement between the Parties which
makes it clear that the Parties intended that their disputes be
determined and adjudicated upon by arbitration. Clause 23, while
making a reference to Clause 21 clearly "speaks of arbitration
between the parties". Therefore the contention of the Respondent
that Clause 21 of the said Agreement does not constitute an
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arbitration agreement and Clause 23 of the said Agreement lends
no assistance in interpreting Clause 21, cannot be accepted and
is hereby rejected.
9 Clauses-21 & 23 of Tatva Global (supra) is similar to
clause-22 of the present case. It is not identical. In Tatva Global
one of the reason why the court came to a conclusion that a conjoint
reading of clauses-21 & 23 of Tatva Global makes it clear that the
parties intended that the disputes be determined and adjudicated by
arbitration was because clause-23 while making a reference to
clause-21 clearly speaks of arbitration between the parties.
10 In the present case there are no such words used.
Moreover in Tatva Global there was no clause similar to clause-17 of
the general conditions of contract expressly barring arbitration.
11 In the circumstances, it is quite clear that the parties did
not intend their disputes be determined and adjudicated by
arbitration. In view of the above, the petition itself could not have
been filed under Section 9 of the said Act and consequently the order
dated 27.6.2017 could not have been passed.
12 The order dated 27.6.2017 is hereby recalled. Notice of
Motion is allowed and the petition accordingly stands disposed with
no order as to costs.
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13 It is open for the petitioners to take such steps in
accordance with law as available to them.
Notwithstanding disposal of the Notice of Motion
respondents to remove all office objections and get the Notice of
Motion numbered within a period of 3 weeks from today.
(K.R.SHRIRAM,J)
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