Delhi High Court
Perfect Mechanical Industries vs Delhi Jal Board, Govt Of Nct Of ... on 14 March, 2018
$~32
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 831/2017
PERFECT MECHANICAL INDUSTRIES ..... Petitioner
Through: Mr Sougat Sinha, Advocate.
versus
DELHI JAL BOARD, GOVT OF NCT OF
DELHI .....Respondent
Through: Ms Sangeeta Bharti, Addl.
Standing Counsel with Mr
Krishanu Adhikary and Mr
Rameezudin Raja, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 14.03.2018
VIBHU BAKHRU, J
1. The petitioner has filed the present petition under Section 11 of
the Arbitration and Conciliation Act, 1996 (hereafter „the Act‟), inter
alia, praying that an arbitrator be appointed to adjudicate the disputes
that are stated to have arisen between the parties in connection with
the „Contract Agreement‟ dated 12.01.2016 (hereafter „the
Agreement‟).
2. The question to be addressed in the present petition is whether
an arbitration agreement exists between the parties.
3. The learned counsel appearing for the petitioner contends that
Clause 18.1.1 of the Agreement embodies an arbitration agreement
and clearly indicates the intention of the parties to refer their inter se
disputes to arbitration. He also contends that even if there is an
ambiguity in the relevant clause, the same must, by applying the Rule
of Contra Proferentem, be read against the respondent as the
Agreement drawn up by the respondent and the petitioner had no say
in the matter.
4. The learned counsel appearing for the respondent stoutly
disputes the aforesaid contentions. She states that the respondent had
deleted Clause 18.1.2, which was the arbitration clause and, thus,
clearly evincing the intention to not refer any disputes to arbitration in
the event the parties are unable to resolve the disputes amicably.
5. Clause 18.1.1 of the Agreement, which is at the centre of the
controversy involved in this petition, reads as under:-
"18.1.1 Amicable Resolution
(i) Save where expressly stated to the contrary in
this Contract, any dispute, difference or
controversy of whatever nature between the
Parties, howsoever arising under, out of or in
relation to this Contract (the "Dispute") shall in
the first instance be attempted to be resolved
amicably with the Employer.
(ii) In case of failure to amicably resolve the dispute
the procedure set forth in clause (iii) below can
be followed. The provision is only applicable in
contracts with Contract Price greater than Rs.
100 Cr.
(iii) Either Parties may require such Dispute be
referred to a 3-member Board consisting of one
member each from the Employer and the
Contractor and the third member will be selected
by both Parties after mutual agreement (the
"Dispute Adjudication Board" or "DAB"), for
the time being, for amicable settlement. Upon
such reference, both the Parties shall meet at the
earliest mutual convenience and in any event
within 15 (fifteen) days of such reference to
discuss and attempt to amicable resolve the
Dispute. If the Dispute is not amicably settled
within (fifteen) days of such meeting between the
Parties, either Party may refer the Dispute to
arbitration in accordance with the provisions of
Clause 18.1.2 below."
6. There is no clause, which is numbered as 18.1.2 and there is no
other clause which has any reference to arbitration.
7. It is clear from the plain language of sub-clause (ii) of Clause
18.1.1 that the provisions of sub-clause (iii) of clause 18.1.1 are
applicable only in the case where the Contract Price is greater than
₹100 crores. In the present case, it is admitted that the Contract Price
is below the said amount. Thus, on a plain reading of sub-clause (ii),
sub-clause (iii) of Clause 18.1.1 of the Agreement would be
inapplicable.
8. The contention that the last sentence of sub-clause (iii) of
Clause 18.1.1 indicates a clear intention of the parties to arbitrate is
unmerited. First of all, as stated above, sub-clause (iii) of Clause
18.1.1 is inapplicable to the contract in question as the contract value
is below ₹100 crores. Secondly, even if it is accepted that sub-clause
(iii) of Clause 18.1.1 is applicable, the same only refers to arbitration
in terms of Clause 18.1.2 of the Agreement, which does not exist.
9. The learned counsel appearing for the petitioner had referred to
the decision of the Supreme Court in Enercon (India) Ltd. and Ors. v.
Enercon GMBH and Anr.: (2014) 5 SCC 1 and had drawn the
attention of this Court to paragraph 83 of the said decision, wherein
the Supreme Court had held that the Courts must adopt a pragmatic
and not a pedantic or technical approach while interpreting or
constructing an arbitration agreement or an arbitration clause. Thus,
when faced with a seemingly unworkable arbitration clause, it would
be the duty of the Courts to make the same workable within the
permissible limits of law.
10. The said decision must be read in the context of the controversy
involved in that case. In that case, there was no dispute that the parties
had agreed to refer the disputes to arbitration. It was also specifically
provided that the dispute would be referred to an Arbitral Tribunal
consisting of three arbitrators. The controversy had stemmed from the
fact that the arbitration clause also provided that one arbitrator would
be appointed by one party (referred to as the Licensor) and the other
arbitrator would be appointed by the other party (referred as the
Licensee). It was further provided that the arbitrator appointed by the
Licensor would also act as the presiding arbitrator. There is no cavil
that once the intention of the parties to refer the disputes to arbitration
is clear and embodied in an agreement in writing, any ambiguity as to
the mechanism for making the reference can be resolved - within the
permissible limits of law - in favour of making the arbitration
workable.
11. In the present case, this Court is unable to accept that there was
any consensus between the parties to refer the disputes to arbitration.
No such intention is discernable from the language of Clause 18.1.1 of
the Agreement.
12. This Court is informed that Clause 18.1.2 was the standard
arbitration clause, which is included in other agreements entered into
by the respondent with other contractors in the past. And, it has been
specifically omitted from the Agreement. The said standard clause has
not been placed on record. This Court is not required to speculate as to
what Clause 18.1.2 is. However, it is clear that the Agreement does
not contain an arbitration clause and this Court is unable to accept that
an arbitration agreement exists between the parties.
13. The petition is, accordingly, dismissed.
VIBHU BAKHRU, J
MARCH 14, 2018
RK
