Mr. Mukherjee, learned advocate for the petitioner submits that although
document. Terms relating to time for completion, compliances to be
were to be guided and governed by the provisions of the GCC. Mr. Mukherjee
76 of the GCC shall also govern the dispute between the parties. The disputes
payment of outstanding dues and non-refund of the security deposit. The
Mr. Basu, learned senior advocate appearing for the respondents, submits
applicable. The GCC was never signed by the petitioner.
completely academic. In two other matters, where interpretation of the
Corporation Limited (NPCCL) & Anr. decided in AP-COM 218 of 2025, the
"12.In the present case, clause 76 is incorporated under the
head Arbitrator, and provides that arbitration shall be
conducted in accordance with the Arbitration and Conciliation
Act, 1996, with all modifications, amendments and re-
enactments. This court is of the view that, a mere heading in a
clause will not make the said clause an arbitration
agreement.From a comprehensive reading of the entire
contract,it appears that there is no dispute resolution clause.
No choice of forum by the parties, is reflected either in the GCC
or in the Letter of Award. There is nothing on record to show
that the parties had agreed to resolve any dispute or difference
which may arise during the execution of the subject contract or
thereafter, by an independent, impartial and private tribunal.
Even if there is no mention that the arbitrator will be an
independent tribunal and the parties will be bound by the
award in the clause, at least, there should have been a clause
which would indicate that the parties were in agreement to
refer any dispute arising out of the said contract, to arbitration.
The GCC does not specifically contain an arbitration
agreement, but only refers to the statute. An agreement to refer
disputes to arbitration, should have been mentioned either in
the Letter of Award or in any communication between the
parties, i.e., letters, telex, telecommunications or email. This is
not the case here.
12. The law as laid down in Enercon (India) (supra) is
that, if a detailed semantic and syntactical analysis of words in
a commercial contract led to a conclusion that flouted business
common sense, the agreement must be made workable, so as
to yield to business common sense. However, in the instant
case, the GCC is devoid of any dispute resolution clause. There
is no indication at all that the parties had concurred to resolve
their dispute by reference to arbitration. It will not be a
pedantic approach on the part of the Court in holding that
there is no arbitration agreement. Such finding will not be
contrary to the accepted norm of "business common sense". In
fact, the GCC does not speak of any method and mechanism
for dispute resolution at all.
Relevant paragraphs of Enercon (India)(Supra) are quoted
below :-
"52. Dr Singhvi then submitted that leaving aside the question
of unworkability of the arbitration clause for the moment, the
intention of the parties in the instant case may be determined
from the following clauses of IPLA:
"17. Governing law
17.1 This agreement and any dispute of claims arising out of or
in connection with its subject-matter are governed by and
construed in accordance with the law of India.
18. Disputes and arbitration
18.1 All disputes, controversies or differences which may arise
between the parties in respect of this agreement including
without limitation to the validity, interpretation, construction
performance and enforcement or alleged breach of this
agreement, the parties shall, in the first instance, attempt to
resolve such dispute, controversy or difference through mutual
consultation. If the dispute, controversy or difference is not
resolved through mutual consultation within 30 days after
commencement of discussions or such longer period as the
parties may agree in writing, any party may refer dispute(s),
controversy(ies) or difference(s) for resolution to an Arbitral
Tribunal to consist of three (3) arbitrators, of whom one will be
appointed by each of the licensor and the licensee and the
arbitrator appointed by the licensor shall also act as the
presiding arbitrator.
18.2 ***
18.3 The proceedings in such arbitration shall be conducted in
English. The venue of the arbitration proceedings shall be in
London. The arbitrators may (but shall not be obliged to) award
costs and reasonable expenses (including reasonable fees of
counsel) to the party(ies) that substantially prevail on merit.
The provisions of the Indian Arbitration and Conciliation Act,
1996 shall apply.
The reference of any matter, dispute or claim or arbitration
pursuant to this Section 18 or the continuance of any
arbitration proceedings consequent thereto or both will in no
way operate as a waiver of the obligations of the parties to
perform their respective obligations under this agreement."
13. Interpreting the arbitration clause in the said
agreement, the Hon'ble Apex Court held that it was a well-
recognized principle of arbitration jurisprudence in almost all
jurisdictions, especially, those following the Uncitral Model
Law, that Courts should play a supportive role in encouraging
arbitration, by following the practice of least intervention by
Courts. Upon considering the principles behind the enactment
of the law, the Hon'ble Apex Court found that an arbitration
clause could not be frustrated on the ground that it was un-
workable and any obvious omission could be set right by
Court. The clause which was being considered by the Hon'ble
Apex Court is quoted below :-
"18 Disputes and arbitration
18.1 All disputes, controversies or differences which may arise
between the parties in respect of this agreement including
without limitation to the validity, interpretation, construction
performance and enforcement or alleged breach of this
agreement, the parties shall, in the first instance, attempt to
resolve such dispute, controversy or difference through mutual
consultation. If the dispute, controversy or difference is not
resolved through mutual consultation within 30 days after
commencement of discussions or such longer period as the
parties may agree in writing, any party may refer dispute(s) for
resolution to an Arbitral Tribunal to consist of three
93)arbitrators, of whom one will be appointed by each of the
licensor and the licensee and the arbitrator appointed by the
licensor shall also act as the presiding arbitrator.
18.2 * * *
18.3 The proceedings in such arbitration shall be conducted in
English. The venue of the arbitration proceedings shall be in
London. The arbitrators may (but shall not be obliged to) award
costs and reasonable expenses (including reasonable fees of
counsel) to the party(ies) that substantially prevail on merit. The
provisions of the Indian Arbitration and Conciliation Act, 1996
shall apply.
The reference of any matter, dispute or claim or arbitration
pursuant to this Section 18 or the continuance of any arbitration
proceedings consequent thereto or both will in no way operate as
a waiver of the obligations of the parties to perform their
respective obligations under this agreement."
14. The issue before the Hon'ble Apex Court was
unworkability of the arbitration clause on the ground that
there was a confusion with regard to venue and the governing
law.
15. In Visa International Ltd. Vs. Continental
Resources (USA) Ltd.reported in(2009) 2 SCC 55, it was held
that no party can be allowed to take advantage of an inartistic
drafting of the arbitration clause in any agreement, as long as,
there is a clear intention of the parties to go for arbitration in
case of future disputes. Here, such intention is missing.
16. In the present situation, the surrounding
circumstances do not persuade this court to hold that the
parties had intended to refer their disputes to arbitration. Such
agreement is absent. This is neither a case of inarticulate
drafting of an arbitration clause nor a case of ambiguity in the
said clause.
17. Under these circumstances, this Court does not find
Clause 76 to be a binding arbitration clause."
It is also submitted that the Special Leave Petition preferred from the
above decision was dismissed.
In the matter of Karma Norbu Bhutia vs National Projects
Construction Corporation Ltd. (NPCCL) & Anr. decided in AP-COM 1081 of
2024, the court again decided a similar issue. The relevant portions of the
judgment are quoted below:-
8. "Having considered the rival contentions of the parties and the
documents on record as also the GCC, this Court finds that
clause 76 has been incorporated just after clause 75. Clause 75
is the Force Majeure clause. Clauses 76.0 and 76.1 are quoted
below:
"76.0 ARBITRATION
The arbitration shall be conducted in accordance with the
provisions of the Arbitration and Conciliation Act 1996 (26 of
1996) or any statutory modifications or re-enactment thereof
and the rules made there under and for the time being in
force shall apply under this clause.
76.1 JURISDICTION
The agreement shall be executed at Kolkata on non-judicial
stamp paper and the Courts at Kolkata alone will have
jurisdiction to deal with matters arising there from, to the
exclusion of all other courts."
9. Clause 76 of the said agreement is not an arbitration clause as
defined under Section 7 of the Arbitration and Conciliation Act,
1996.
10. Section 7 of theArbitration and Conciliation Act, 1996 is
quoted below:-
" 7. Arbitration agreement:- (1) In this Part, "arbitration
agreement" means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not."
(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate
agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained
in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means
of telecommunication (including communication through
electronic means) which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in
which the existence of the agreement is alleged by one party
and not denied by the other.
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration clause constitutes
an arbitration agreement if the contract is in writing and the
reference is such as to make that arbitration clause part of the
contract."
11. Thus, the first ingredients of a valid arbitration agreement,
is a meeting of minds of the parties who are in a definite
commercial relationship, to refer all or certain disputes which
may arise between them in discharge of the legal business
relationship, to arbitration. It is not in doubt that the parties
hereto had entered into a business relationship and a contract
had been awarded to the petitioner. An agreement contained
the GCC was made applicable. However, clause 76 of the GCC,
which is quoted above and which is interpreted by the petitioner
to be an arbitration clause, does not indicate that the parties
had agreed to refer all present and future disputes arising
during or after the execution of the subject contract, to
arbitration.
12. The law is well-settled. The arbitration agreement does not
have to be in any particular form. It is also well-settled that,
words like "arbitrator or arbitration" were not required to be
mentioned for a clause to be an arbitration clause. What is
most important is that, either from the contract or from any
other written document, telex or telecommunications or email,
it should be evident that the parties were ad idem that, in case
there was any difference or dispute amongst them in the
discharge of their contractual obligation, they shall refer such
dispute for settlement by an arbitrator or by a private tribunal.
In the present case, although the clause provides that the
arbitration shall be conducted in accordance with the
Arbitration and Conciliation Act, 1996 with all modifications,
amendments and re-enactments, I hold that, a mere heading in
a clause, will not make the said clause an arbitration. I do not
find from a comprehensive reading of the entire contract that,
there is any clause which deals with dispute resolution. What
the parties had agreed to do, in case disputes and difference
arose, has not been stated either the GCC or in the letter of
intent. There is nothing on record to show that the parties had
either agreed or decided that any dispute or difference which
may arise during the execution of the said contract or
thereafter, shall be referred to arbitration. Even if the other
requirements, i.e., the Tribunal to be an independent Tribunal
andthat the parties had undertaken to be bound by the award
etc. were missing, at least, there should have been a clause
which indicated that the parties were in agreement to refer any
dispute arising out of the said contract, to arbitration. Even if
the GCC does not specifically contain an arbitration agreement,
but an agreement could have been entered into later by a
signed document or by exchange of letters, via telex or
telecommunications or email. This is not the case here.
13. In the decision of Enercon (India) Ltd. and Ors. (supra),
the Hon'ble Apex Court held that the courts have to adopt a
pragmatic approach and not a pedantic or technical approach
while interpreting or construing an arbitration agreement or an
arbitration clause. It is the duty of the Court to make the same
workable within the permissible limits of law, without stretching
it beyond the boundaries of recognition. A common sense
approach has to be adopted to give effect to the attitude of a
reasonable business person, having business common sense, as
well as being equipped with the knowledge that may be peculiar
to the business venture. However, the said judgment also
clarifies that the parties must express an intention to arbitrate.
The intention to arbitrate can be expressed by the parties in the
manner provided under Section 7, i.e., by exchange of letters,
telex, telegrams or other means of telecommunications which
can provide a record of such agreement. This has already been
discussed above. No such record of an agreement is available.
Mr. Roy has not referred to any such document, either. Thus,
one thing is clear from the above judgment relied upon by Mr.
Roy that, there has to be a meeting of minds between the
parties to a contract on the issue that, in the event of any
dispute or difference, the parties shall refer the dispute for
settlement by a tribunal.
14. The law as laid down by judicial authorities is that, if a
detailed semantic and syntactical analysis of words in a
commercial contract leads to a conclusion that flouts business
common sense, it must be made to yield to business common
sense. In the instant case, when the GCC is devoid of any
dispute resolution clause and the clauses do not indicate that
the parties had decided to resolve their dispute by reference to
arbitration, this Court will not be held guilty of taking a
pedantic approach, contrary to the accepted norms of "business
common sense". In fact, the GCC does not speak of any method
and mechanism for dispute resolution at all.
15. In Visa International Ltd. Vs. Continental Resources (USA)
Ltd. (supra), it was held that no party can be allowed to take
advantage of an inartistic drafting of the arbitration clause in
any agreement, as long as, there is a clear intention of the
parties to go for arbitration in case of future dispute. In the
instant case, there is no dispute resolution clause at all. What
is required to be gathered is the intention of the parties from
the surrounding circumstances, including the conduct of the
parties. In the instant case, the surrounding circumstances and
the conduct of the parties do not indicate that any such
intention to refer the dispute to arbitration ever existed.
16. The intention of the parties, as has already been discussed
hereinabove, can be gathered from the correspondence
exchanged between them and/or from surrounding
circumstances. In the present situation, the surrounding
circumstances do not pursue this court to hold that the parties
have intended to refer any dispute to arbitration."
Under such circumstances, this application is dismissed.
However, the petitioner is always at liberty to pursue appropriate remedy
in accordance with law before the appropriate forum.
(SHAMPA SARKAR, J.)
S. Kumar
