Delhi High Court
Capacite Infrapojects Limited vs Ramprastha Promoters & ... on 30 November, 2017
$~30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB. P.218/2017
Date of decision: 30th November, 2017
CAPACITE INFRAPOJECTS LIMITED ..... Petitioner
Through Mr.Rishi Bhatnagar and
Ms.Tarinia Sahai, Advs.
versus
RAMPRASTHA PROMOTERS & DEVELOPERS LIMITED
..... Respondent
Through Mr.Anil Airi, Sr. Adv. with
Mr.Harpreet Singh Popli,
Ms.Sukanya Lal, Ms.Sadhna
Sharma and Ms.Kamakshi,
Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition under Section 11 of the Arbitration & Conciliation
Act, 1996 (hereinafter referred to the 'Act') has been filed by the
petitioner praying for appointment of an Arbitrator for adjudication of
the disputes that have arisen between the parties under the agreement
dated 22.03.2013 for "Construction of Multistoried Housing Complex,
"Rise" at Ramprastha City, Sector 37-D, Gurgaon, Haryana".
Arb.P.218/2017 Page 1
2. It is contended by the learned counsel for the petitioner that the
said agreement contains an Arbitration Agreement in Clause 69 of the
General Condition of Contract-Part-1 of the Agreement. Relying upon
the Clause 68,69 and 70, it is submitted that while Clause 68 provides
for settlement of disputes through the intervention of the Chairman of
the respondent, Clause 69 provides for resolution of the disputes
through Arbitration and the Chairman of the respondent has been
designated as the Arbitrator. He further submits that Clause 70 of the
Agreement provides for venue for the arbitration to be at New Delhi
and therefore this Court would have jurisdiction to entertain this
request for appointment of an Arbitrator. It is further submitted that
the petitioner had invoked the Arbitration Agreement vide its notice
dated 06.02.2017, however, as respondent has failed to appoint an
arbitrator, the present petition under Section 11 of the Act has been
filed
3. Learned senior counsel for the respondent submits that, in fact,
there is no Arbitration Agreement between the parties. It is submitted
that Clause 69 of the Agreement referred by the petitioner is not an
Arbitration Agreement; it is only a mode of further settlement of the
disputes. He relies upon the judgments of Supreme Court in P.
Dasaratharama Reddy Complex v. Government of Karnataka,
(2014) 2 SCC 201; International Amusement Ltd. v. India Trade
Promotion Organization, (2015) 12 SCC 677 and M/s Master Tours
and Travels v. The Chairman, Shri Amarnath Ji Shrine Board &
Ors, 2016(1) SCALE 69 in support of his submission. He further
submits that merely because the heading of Clause 69 of the
Arb.P.218/2017 Page 2
Agreement reads "Arbitration", the same would not make this an
Arbitration Agreement. He relies upon the judgment of the Supreme
Court in M/s H.M.Kamaluddin Ansari and Co. v. Union of India and
Ors.(1983) 4 SCC 417 to submit that the heading of a Clause will not
control the plain meaning of the words of the Clause. He submits that
use of words "venue of Arbitration", by themselves cannot amount to
an Arbitration Agreement. In this regard, he relies upon the judgment
of Karnataka High Court in Durha Constructions Pvt. Ltd v. Bateman
Engineering (India) Pvt.Ltd., MANU/KA/2252/2011.
4. I have considered the submissions of the learned counsel for the
parties. For answering the submissions made by the parties, I first
reproduced Clause 68, 69 and 70 of the Agreement as under:
"68. SETTLEMENT OF DISPUTES BETWEEN EMPLOYER &
CONTRACT:
If any dispute or difference of any kind whatsoever
arises between the Employer and the Contractor in
connection with, or arising out of the Contract,
whether during the progress of the works or after
their completion and whether during the progress
of the works or after their completion and whether
before or after the termination, abandonment or
breach of the Contract, it shall in the first place, be
referred to and settled by the Chairman of M/s
Ramprastha Promotors and Developers Pvt.
Ltd.(Employer) who shall, within a period of thirty
days after being requested by the contractor to do
so, give written notice of his decision to the
Contractor and the employer. Upon receipt of the
written notice of the decision of the Employer the
Contractor shall promptly proceed without delay
to comply with such notice of decision.
Arb.P.218/2017 Page 3
69. ARBITRATION
All question & dispute relating to the meaning of
specification, designs, drawings and instructions
and to the quality of workmanship or materials
used in the work or as to any other question, claim,
right, matter of thing whatsoever in any way
arising out of or relating to Contract,
specifications, instructions whether arising during
the progress of work or after the completion or
abandonment of work cannot be settled between
the parties, it shall be referred to the Chairman of
M/s Ramprastha Promotors and Developers Pvt.
Ltd.(Employer) and his decision will be final and
binding to the Contractor.
70. JURISDICTION
The venue of arbitration shall be New Delhi
Only the courts in Delhi shall have jurisdiction in
any cases related to this contract."
(emphasis supplied)
5. There is no dispute that Clause 68 merely provides for
settlement of the disputes between the parties under an aegis of the
Chairman of the respondent. Clause 69 of the Agreement which has
the heading "Arbitration", again refers the 'disputes' to the Chairman
of the respondent. Both Clauses 68 and 69 use the words "decision".
In P.Dasaratharama Reddy Complex (supra) Supreme Court after
analyzing various judgments on the issue of existence of Arbitration
Agreement under different contracts, held as under:
"27. To the aforesaid proposition, we may add that in
terms of Clause 29(a) and similar other clauses, any
dispute or difference irrespective of its nomenclature in
matters relating to specifications, designs, drawings,
Arb.P.218/2017 Page 4
quality of workmanship or material used or any question
relating to claim, right in any way arising out of or
relating to the contract designs, drawings etc. or failure
on the contractor's part to execute the work, whether
arising during the progress of the work or after its
completion, termination or abandonment has to be first
referred to the Chief Engineer or the Designated Officer
of the Department. The Chief Engineer or the Designated
Officer is not an independent authority or person, who
has no connection or control over the work. As a matter
of fact, he is having over all supervision and charge of
the execution of the work. He is not required to hear the
parties or to take evidence, oral or documentary. He is
not invested with the power to adjudicate upon the rights
of the parties to the dispute or difference and his decision
is subject to the right of the aggrieved party to seek relief
in a Court of Law. The decision of the Chief Engineer or
the Designated Officer is treated as binding on the
contractor subject to his right to avail remedy before an
appropriate Court. The use of the expression 'in the first
place' unmistakably shows that non-adjudicatory
decision of the Chief Engineer is subject to the right of
the aggrieved party to seek remedy. Therefore, Clause 29
which is subject matter of consideration in most of the
appeals and similar clauses cannot be treated as an
Arbitration Clause."
6. In International Amusement Limited (supra) Supreme Court
construed the following Clauses and held that the same do not amount
to an Arbitration Agreement between the parties therein:
"28. In case of any dispute arising out of or in
connection with this agreement the disputes shall be
referred to the sole arbitration of the Chairman, India
Trade Promotion Organization or his nominee whose
decision/award shall be final, conclusive and binding
on the parties. Application for reference to arbitration
Arb.P.218/2017 Page 5
shall be made by either party within two months of
arising of the dispute".
7. Similarly, in M/s Master Tours and Travel(supra) Supreme
Court held that Clause 13 of the work order therein, which read as
under, cannot be construed an Arbitration Agreement:
"In case of any dispute the matter shall be referred to
the Chief Executive Officer-Shri Amarnathiji Shrine
Board, whose decision in the matter shall be final."
8. In the present case, under Clause 68 and 69, the disputes are to
be "referred" to the Chairman of the respondent. As noted above, both
the clauses state that his "decision" shall be final and binding. In that
view of the matter, it cannot be said that Clause 69 was inserted in the
agreement to provide the power of arbitration to the same person
against whose decision, which he would take under Clause 68 first
trying under settlement procedure, would be under challenge. No one
can be a judge of his own cause. Clause 69, to my mind, therefore,
appears to be an extension of Clause 68 which is a settlement process.
It cannot be disputed that the agreement, as far as these two clauses is
concerned, is not happily drafted. Given the fact that the power to
thrive at a settlement under Clause 68 is given to the same person who
then, if the submission of the petitioner is to be accepted, is vested
with the power to adjudicate the disputes against his own decision, it
would be an antitheses in terms and cannot be accepted. As rightly
contended by the learned senior counsel for the respondent, merely
because Clause 69 has a heading "arbitration" or Clause 70 uses words
Arb.P.218/2017 Page 6
"venue of the arbitration", the said Clause cannot amount to an
Arbitration Agreement between the parties.
9. Even if I assume that Clause 69 is an Arbitration Agreement
between the parties in terms thereof, the disputes are to be referred to
the Chairman of the respondent, who would be disqualified to act as
an Arbitrator under Section 12(5) of the Act. In Newton Engineering
and Chemicals v. Indian Oil Corporation Limited, (2013) 4 SCC 44
Supreme Court held that if a person named as an Arbitrator in the
Arbitration Agreement cannot act as an Arbitrator, the Arbitration
Agreement between the parties would stand terminated and the parties
cannot be referred to an Arbitrator who they never intended to appoint
as an Arbitrator. In such circumstances, the arbitration clause would
not survive and has to be treated as having worked its course.
10. In view of the above, the present petition is dismissed with no
order as to cost.
NAVIN CHAWLA, J
NOVEMBER 30, 2017/vp
Arb.P.218/2017 Page 7
