Bombay High Court
Smc Infrastucures Private Limited vs Mahrashtra Jeevan Pradhikaran on 17 January, 2024
Author: Neela Gokhale
Bench: Neela Gokhale
2024:BHC-AS:2377 5-ASARP-118-2023.DOC
Gitalaxmi
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION PETITION NO. 118 OF 2023
SMC Infrastructures Private Limited ...Petitioner
Versus
Maharashtra Jeevan Pradhikaran ...Respondent
Mr. Shardul Singh, a/w Ms. Sayali Sawant & Mr. Anish
Shahapurkar, for the Petitioner.
Mr. Ajit Pitale, a/w Mr. Ameya Pitale & Mr. Siddharth Pitale, for
the Respondent.
CORAM Dr. Neela Gokhale, J.
DATED: 17th January 2024
PC:-
1. The Petitioner seeks appointment of an Arbitrator to
adjudicate the disputes that have arisen between the parties out of
the agreement dated 5th April 2013.
2. The Petitioner is a company registered under the Companies
Act, 1956 and the Respondent is the undertaking of the Government
of Maharashtra established under the Maharashtra Jeevan Authority
Act, 1976.
3. The Petitioner was a successful bidder in respect of a tender
floated by the Petitioner for the work of augmentation to Ambernath
Water Supply Scheme, Taluka-Ambernath, District-Thane,
construction of C.C. weir at Chikhloli Dam, designing, constructing
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and commissioning 7.20 ML capacity WTP at Chikhloli and other
allied works as mentioned therein.
4. It is the Petitioner's case that the contract is concluded and
the work was completed on 31st December 2018 itself. The dispute
between the parties is in respect of certain outstanding bills as
claimed by the Petitioner. The Petitioner has thus invoked the
arbitration agreement. Clause 20(b) of the agreement reads thus,
"20. LAWS AND REGULATIONS
b. Resolving the disputes :
In case of disputes, between a Contractor
decision of the Member Secretary, MJP,
shall be final and binding to both the
parties."
5. By notice dated 29th December 2022, the Petitioner invoked
the arbitration agreement contained in Clause 20(b) of the contract.
6. The Respondent issued a reply denying all the claims of
Petitioner and also objected to the arbitrability of the dispute.
7. Mr. Ajit Pitale, learned Counsel appearing for the Respondent
states that Clause 20(b) of the agreement does not fulfill the criteria
of an arbitration agreement since the word 'arbitration' does not
appear in the clause. Mr. Singh, learned Counsel appearing for the
Petitioner however contends that it is not necessary for the word
'arbitration' to be specifically contained in the arbitration clause as
long as the intention of the parties to refer to arbitration can be
clearly ascertained from the clause. He has placed reliance on the
following two decisions of the Supreme Court :
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1. Bihar State Mineral Development Corporation
and Another v. Encon Builders (I) (P) Ltd.1 and
2. State of Orissa and Others v. Bhagyadhar
Dash2.
8. In the matter of Bihar State Mineral Development Corporation
(supra), there was a clause similar to the one in the present
arbitration agreement of the matter. In this decision, the Supreme
Court held as follows :
"12. The short question which arises for consideration in this
appeal is as to whether the learned court below committed an illegality in
refusing to refer the matter to arbitration.
13. The essential elements of an arbitration agreement are as
follows:
(1) There must be a present or a future difference in
connection with some contemplated affair.
(2) There must be the intention of the parties to settle such
difference by a private tribunal.
(3) The parties must agree in writing to be bound by the
decision of such tribunal.
(4) The parties must be ad idem.
14. 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. The
High Court, however, proceeded on the basis that having regard to the
facts and circumstances of this case, the arbitration agreement could have
been given effect to. We may, therefore, proceed on the basis that Clause
60 of the Contract constitutes an arbitration agreement."
1. (2003)7 Supreme Court Cases 418.
2. (2011)7 Supreme Court Cases 406.
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9. Even in the matter of State of Orissa (supra), the Supreme
Court has interpreted same to be an arbitration clause and held as
under :
"17. In Encon Builders (supra) this court proceeded on the assumption
that the following clause was an arbitration agreement, as that issue was
not disputed:
"60. In case of any dispute arising out of the agreement, the
matter shall be referred to the Managing Director, Bihar State
Mineral Development Corporation Limited, Ranchi, whose
decision shall be final and binding."
The clause specifically provided for "disputes being referred to the
Managing Director" and made the said authority's decision not only final,
but also binding on the parties. Therefore it can be said that it answers the
tests of an arbitration agreement. The issue considered therein was
whether the High Court committed an error in refusing to refer the
dispute to arbitration, even after finding the clause to be an arbitration
agreement, by presuming bias in view of the fact that the named arbitrator
was an employee of one of the parties to the dispute. This Court held that
disputes were arbitrable in terms of the said clause. Be that as it may. A
similar clause was also considered in Punjab State Vs. Dina Nath ((2007) 5
SCC 28) and held to be arbitration agreement."
Hence, Mr. Shardul Singh submits that even though the word
'arbitration' is not contained in Clause 20(b) of the agreement, the
parties very much intended to refer their disputes to arbitration.
10. Mr. Ajit Pitale draws my attention to paragraph no. 21 of the
decision in the matter of Vishnu (Dead) by LRs. v. State of
Maharashtra and Others3, which reads thus,
"21. In State of Orissa v. Damodar Das ((1996)2 SCC 216), the three
Judge Bench interpreted Clause 21 of the contract entered into between the
appellant and the respondent for construction of sump and pump chamber
etc. for pipes W/S to Village Kentile. The respondent abandoned the work
before completion of the project and accepted payment of the fourth
running bill. Subsequently, he raised dispute and sent communication to the
Chief Engineer, Public Health, Orissa for making a reference to an
Arbitrator. The Subordinate Judge, Bhubaneswar allowed the application
filed by the respondent under Section 8 of the 1940 Act and the order
3. [2013]11 Supreme Court Reports 340.
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passed by him was upheld by the High Court. This Court referred to Clause
25 of the agreement, relied upon the judgment in State of U.P. v. Tipper
Chand ((1980)2 SCC 341) and held that the said clause cannot be
interpreted as providing resolution of dispute by an Arbitrator. Paragraphs
9 and 10 of the judgment, which contain discussion on the subject, are
extracted below:
"9. The question, therefore, is whether there is any arbitration
agreement for the resolution of the disputes. The agreement reads thus:
"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 materials used on the work, or as to any other
question, claim, right, matter or thing, whatsoever in any way
arising out of, or relating to, the contract, drawings,
specifications, estimates, instructions, orders or these
conditions, or otherwise concerning the works or the execution
or failure to execute the same, whether arising during the
progress of the work or after the completion or the sooner
determination thereof of the contract."
10. Section 2(a) of the Act defines "arbitration agreement" to mean
"a written agreement to submit present or future differences to
arbitration, whether an arbitrator is named therein or not". Indisputably,
there is no recital in the above clause of the contract to refer any dispute
or difference present or future to arbitration. The learned counsel for
the respondent sought to contend from the marginal note, viz., "the
decision of Public Health Engineer to be final" and any other the words
"claim, right, matter or thing, whatsoever in any way arising out of the
contract, drawings, specifications, estimates, instructions, orders or
these conditions, or otherwise concerning the works or the execution or
failure to execute the same, whether arising during the progress of the
work or after the completion or the sooner determination thereof of the
contract" and contended that this clause is wide enough to encompass
within its ambit, any disputes or differences arising in the aforesaid
execution of the contract or any question or claim or right arising under
the contract during the progress of the work or after the completion or
sooner determination thereof for reference to an arbitration. The High
Court, therefore, was right in its conclusion that the aforesaid clause
gives right to arbitration to the respondent for resolution of the
dispute/claims raised by the respondent......."
(emphasis supplied).
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11. I have gone through the decisions in all the matters and infact
the decision in Vishnu (supra) supports the contention of Petitioner
and it is of no assistance to the Respondent.
12. In view of the foregoing, I am of the view that Clause 20(b)
clearly reveals the intention of the parties to refer their disputes to
arbitration. The invocation of said agreement by the Petitioner by
notice dated 29th December 2022 is thus valid. In the result, I pass
the following order leaving all contentions of the parties open, to be
agitated before the arbitrator :
ORDER
a. Mr. M. G. Gaikwad, Former Judge, Bombay High Court
is appointed as a Sole Arbitrator to enter reference and
adjudicate the disputes between the parties out of the
Agreement dated 5th April 2013. The seat of the
arbitration shall be Thane as agreed by the parties in the
Clause 20(b) of the agreement.
b. The learned Sole Arbitrator shall forward a statement of
disclosure as per the requirement of Section 12(1) of
Arbitration and Conciliation Act, 1996 to the
Prothonotary and Senior Master of this Court to be
placed on record of this petition with a copy forwarded to
both the parties.
c. At the first instance the parties shall appear before the
learned Arbitrator within a period of ten days from the
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5-ASARP-118-2023.DOC
date of uploading of this order or on such date that may be
fixed by the Sole Arbitrator.
d. All contentions of the parties on merits of the disputes are
expressly left open.
e. The fees payable to the Arbitral Tribunal shall be in
accordance with the Bombay High Court (Fee payable to
the Arbitrator) Rules, 2018 which shall be borne by the
parties in equal proportion.
f. The petition is disposed of in the above terms. There will
be no order as to costs.
g. Office to forward a copy of this order to the learned Sole
Arbitrator on the following address :
104, Birya House, 1st Floor, 265 Perin Nariman Street,
Near Apna Bazar, Fort, Mumbai-400 001.
E-mail ID : [email protected]
Phone : +91-9167461686.
(Dr. Neela Gokhale, J.)
GITALAXMI
KRISHNA
KOTAWADEKAR
th
17 January 2024
