Institute Of Continuing ... vs The State Of Jharkhand
2022 Latest Caselaw 2787 Jhar

                           1

IN THE HIGH COURT OF JHARKHAND AT RANCHI

       Arbitration Application No. 44 of 2021
                    with
       Arbitration Application No. 46 of 2021
                    with
       Arbitration Application No. 49 of 2021
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Institute of Continuing Education, Research & Training, a Society registered under the Societies Registration Act, having its registered office at 472 Pepee Compound, P.O.-Ranchi G.P.O., P.S. - Hindpiri, District-Ranchi, through its Secretary and Chief Executive Officer, Dr. Devendra Singh, son of Late Jogendra Singh, residing at First Floor, Sudarsan Building, 508/B Pepee Compound, P.O.-Ranchi GPO, P.S.-Hindpiri, District-Ranchi........... Applicant Versus

1.The State of Jharkhand

2.Secretary, Scheduled Tribe, Scheduled Caste, Minority and Backward Class Welfare, Government of Jharkhand, Project Bhawan, P.O.-Dhurwa, P.S. Jagannathpur, District -Ranchi (Jharkhand).

... ... ...Respondents with Arbitration Application No. 51 of 2021 with Arbitration Application No. 52 of 2021 with Arbitration Application No. 55 of 2021

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Rinchi Trust Hospital, a Unit of Research Institute for Civil Health Integration, a Trust registered under the Indian Trusts Act, having its registered office at Kathal More, Itki Road, PO and PS-Itki, District - Ranchi, through its Chairman Dr. O.P. Mahansarai, Son of Maliram Mahansarai, Residing at Mega Sports Complex, Village-Khelgaon, P.O.-G.P.O., P.S.-Sadar, District-Ranchi. .......... Applicant Versus

1.The State of Jharkhand

2.Secretary, Scheduled Tribe, Scheduled Caste, Minority and Backward Class Welfare, Government of Jharkhand, Project Bhawan, P.O.-Dhurwa, P.S. Jagannathpur, District -Ranchi (Jharkhand).

... ... ...Respondents with Arbitration Application No. 1 of 2022 with Arbitration Application No. 2 of 2022

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Dynamic Tarang Pvt. Ltd., a Company registered under the Indian Companies Act, having its registered office at Jatratand, PO-Kokar, PS-Kokar, District- Ranchi, through its Chairman cum Managing Director Sri Manish Kumar, Son of Late Binod Kishore Prasad, Residing at Subhash Chowk, Jatra Tund Bazar, P.O.- Kokar, P.S. Sadar, District-Ranchi, Jharkhand .......... Applicant Versus

1.The State of Jharkhand

2.Secretary, Scheduled Tribe, Scheduled Caste, Minority and Backward Class Welfare, Government of Jharkhand, Project Bhawan, P.O.-Dhurwa, P.S. Jagannathpur, District -Ranchi (Jharkhand).

... ... ...Respondents

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CORAM:HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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For the Applicants : Mr. Amit Kumar Das, Advocate

For the Respondents : Mr. Sachin Kumar, A.A.G.-II Mr. Ashutosh Anand, AAG-III Mr. Ashok Kumar Yadav, G.A.-I.

Mr. P.A.S. Pati, G.A. II Mr. Shashank Shekhar, AC to GP-I Ms. Archna Kumari, AC to AAG V

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Order No. 5/Dated 21st July, 2022

All the applications, since arising out of the

similar contract, prayer has been made to hear the

matters together. Accordingly, the same are being

heard together.

2. It requires to refer herein that today a counter

affidavit has been filed on behalf of respondents in

Arbitration Application No. 55 of 2021.

3. Mr. Sachin Kumar, learned A.A.G.-II appearing

for the respondents-State and its functionaries has

submitted that counter affidavit filed in Arbitration

Application No. 55 of 2021 may be considered in all the

similar matters.

4. Mr. Amit Kumar Das, learned counsel for the

applicants has not sought for adjournment to file reply

to the counter affidavit and submitted that the matter

may be heard on merit.

5. Accordingly, with the consent of learned counsel

for the parties, the matter is being heard.

6. The instant applications are filed by the

applicants invoking the jurisdiction conferred under

Section 11(6)(c) of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as „Act, 1996) for

appointment of arbitrator for adjudication of the

dispute as per Clause 8.1 of the Memorandum of

Understanding (MoU) entered between the parties,

which stipulates that any dispute/differences arising

between the parties shall be referred to the arbitrator.

7. Since common facts and the question of law are

involved in these arbitration applications, therefore, for

the sake of convenience, brief facts of the case, as per

the pleading made in Arbitration Application No. 44 of

2021, are referred as under:

The applicants, a Society registered under the

Societies Registration Act and also registered as Non-

Governmental Organization with the State of

Jharkhand , has expertise in running and maintaining

hospitals. Pursuant to invitation for providing services

for running and maintaining 50-Bedded Hospital at

Basaridih, Lohardaga, the applicant participated in the

selection process and was selected as an agency to

provide such services. Accordingly, a Memorandum of

Understanding (MoU) was executed between the

applicants and the respondents on 4th February, 2009.

Clause 3 the Memorandum of Understanding

deals with financial assistance which the respondents-

Government of Jharkhand was required to pay in the

form of Grant-in-aid and Performance Linked Bonus

etc. to the applicant for the purpose of running the

hospitals. The concerned department was required to

pay said Performance Linked Bonus on an annual basis

to the applicant on successful achievement of

performance benchmarks set out in the Memorandum

of Understanding.

It is the case of the applicants that after the

hospital was handed over to the applicants, it

appointed sufficient number of doctors, para-medical

staffs and other employees and provided the best

possible treatment facility to the villagers and target

population. Initially, the agreement was for 60 months

and as per agreement, the same could be extended for a

further period of five years on satisfactory performance

of the applicants.

Clause 7.1 of the Memorandum of Understanding

speaks that each party has a right to terminate the

agreement by giving six months‟ advance notice. It has

further been stated that the applicants had achieved

and/or crossed all the targets/benchmarks fixed by the

respondents-Department, as given time to time.

Thereafter, the applicants is approaching regularly with

a request to make the payment of Performance Linked

Bonus but the same was kept pending.

      It   is   the    case     of    the       applicants      that    on

15.02.2011,      a    meeting        was    convened          under    the

Chairmanship of Tribal Welfare Commissioner, wherein

a decision was taken that a sum equivalent to 5% of the

annual operation cost of the 50-Beded MESO Rural

Hospital shall be given to the respective NGO/Agency

running the said hospitals as annual Performance

Linked Bonus, subject to achievement of Performance

Targets set out for the respective Financial Year. It is

alleged that the though applicants achieved all the

targets fixed by the Government time to time but the

Performance Linked Bonus was not given to it, as such

the applicants submitted various letters claiming

Performance Linked Bonus for the relevant time.

It has further been stated that as per Clause 5.1

of the agreement, since the performance of the

applicants-agency was outstanding the agreement was

renewed from time to time and on the instruction

obtained from the respondents, the applicants

continued to operate the hospitals but all of a sudden

vide order dated 12.11.2018 as contained in Memo No.

1602, the Tribal Welfare Commissioner re-settled it vide

a new tender and directed the applicants to handover

the management of the hospital from 20th November,

2018. It has been stated that such action of

termination with a short notice of eight days was in

utter violation of Clause 7.1 of the Agreement, which

says that at least six months notice and in absence

thereof, the respondents are required to pay the

operational cost and financial remuneration to the

applicant for the entire notice period of six months.

Pursuant thereto, the applicants approached the

respondents-authorities on several occasions for release

of the outstanding dues but when the same was not

released, the applicants gave notice under Section 11 of

the Act, 1996 on 18.08.2021 requesting to either pay

the entire claim of the applicants or in alternative refer

the dispute to the Arbitrator, but in spite of issuance of

such notice, the respondents neither paid the amount

claimed nor appointed arbitrator within the statutory

period. Therefore, the instant Arbitration Applications

have been filed for appointment of Arbitrator in terms of

Clause 8.1 of the Memorandum of Understanding.

8. Counter affidavit filed on behalf of respondents in

Arbitration Application No. 55 of 2021 which has been

adopted in all the Arbitration Applications, wherein

inter alia stand has been taken that applicants have not

obeyed the conditions stipulated in the Memorandum of

Understanding since on the one hand, the applicants

are claiming Performance Linked Bonus etc. on an

annual basis as per Clause 3.5 of the Memorandum of

Understanding whereas on the other hand, the

applicants have disobeying Clause 8.1 of Memorandum

of Understanding. It has further been stated that the

applicants may approach the authority as per condition

stipulated in the Memorandum of Understanding.

9. Mr. Sachin Kumar, learned A.A.G.-II as also Mr.

Ashutosh Anand, learned A.A.G.-III and other State

counsel appearing for the respondents-State have

raised the issue of maintainability of arbitration

applications and vehemently objected to the prayer

made by the applicants on the following grounds:

(I).The arbitration clause, as contained under Clause

8.1 of the MoU, cannot be construed to be arbitration

clause for resolution of dispute in strict sense in

consonance with the definition of „Arbitration‟ as

provided under the Act, 1996. Such submission has

been made by making reference in Clause 8.1. of the

MoU wherein since no stipulation has been made about

the finality of the adjudication of dispute and as such it

has been stated that stipulation of the condition under

Clause 8.1 cannot be said to be an Arbitration Clause.

(II).In furtherance to the aforesaid submission, it has

been submitted that applicants have not filed any

application before the Secretary of the concerned

Department and in that view of the matter also, the

instant arbitration applications are not maintainable.

(III).Condition stipulated under Clause 8.1 cannot be

construed to be an arbitration clause since even the

Secretary of the concerned department has passed the

order and if the applicants do not agree with the

decision of the concerned Secretary matter may be

referred to the Chief Secretary, Government of

Jharkhand. Therefore, the condition stipulated under

Clause 8.1 and 8.2, if read together, the Clause 8

cannot be said to be arbitration clause.

To substantiate the argument, reliance has been

placed upon the judgment rendered in State of Orissa

& Ors Vs. Bhagyadhar Dash reported in (2011) 7

SCC 406 in particular paragraph 10 and 15; P.

Dasaratharama Reddy Complex Vs. Government of

Karnataka & Anr. reported in (2014) 2 SCC 201 in

particular paragraph 8, 24 to 26; Karnataka Power

Transmission Corporation Limited and Anr. Vs.

Deepak Cables (India) Limited reported in (2014) 11

SCC 148 and Kerala State Electricity Board & Anr.

Vs. Kurien E. Kalathil and Another reported in

(2018) 4 SCC 793 in particular paragraph 14.

10. Per contra, Mr. Amit Kumar Das, learned counsel

for the applicants has seriously objected to the

aforesaid objection since the same has not been taken

in the counter affidavit and has submitted that it is

incorrect submission on the part of respondent that

Clause 8.1 cannot be construed to be an arbitration

clause. According to learned counsel for the petitioner,

the same is arbitration clause reason being that the

moment the aforesaid condition contains phrase „..the

parties hereto shall be referred to the Secretary,

Department of Welfare, Government of Jharkhand for

arbitration.‟, itself suggests by taking the word „refer‟ for

arbitration, which according to learned counsel the

word arbitration means adjudication of the dispute by

making reference of the same before the arbitrator and,

therefore, the very spirit of the condition stipulated

under Clause 8.1 is for resolution of dispute by making

reference of the dispute before the Secretary of the

concerned department for arbitration.

So far as the contention raised on behalf of

respondents-State that the applicants have not

approached the Secretary of the concerned department,

for making request for appointment of arbitrator is

concerned, submission has been made that there is no

stipulation to that effect having been made in Clause

8.1 since the application is to be made before the

Secretary of the concerned department, by signatory of

the Memorandum of Understanding, in case of any

dispute/differences arises between the parties.

It has further been submitted that merely

because the word „finality‟ has not been stipulated by

referring the aforesaid clause that the decision taken by

the arbitrator will be treated to have attained its finality

it does not construe that clause 8.1 is not an

arbitration clause.

Learned counsel for the petitioner further

rebutting the argument advanced on behalf of

respondents-State that the adjudication so made by the

Secretary of the concerned department and if the

petitioners/applicants remain aggrieved, they may

approach before the Chief Secretary, State of

Jharkhand and as such the parties have been given

liberty, if aggrieved with the adjudication to be made by

Secretary of the concerned department by referring to

same to the Chief Secretary, is concerned, it has been

submitted that the same has to be done only in a case

where the Secretary of the concerned department

decides the issue and in case of being aggrieved, the

Secretary will refer the dispute to the Chief Secretary,

since herein the Secretary has not adjudicated the

dispute, as the same has not been referred by the

Secretary, therefore, there is non-compliance of

condition of agreement so far it relates to adjudication

of the claim and in that view of the matter, the

applicants have approached this Court by filing the

instant application for appointment of arbitrator.

Mr. Das, learned counsel for the applicants has

relied upon the judgment rendered in State of Orissa

& Ors Vs. Bhagyadhar Dash reported in (2011) 7

SCC 406 in particular paragraph 4(iii).

11. We have heard learned counsel for the parties

and scrutinize the Memorandum of Understanding

containing therein the Clause stipulated under Clause

8.1 and 8.2.

12. The fact, which led the applicants to invoke the

power conferred under Section 11 (6) of the Act, 1996,

is that the dispute has not been resolved in spite of

repeated applications before the signatory of the

agreement, the functionary of the State of Jharkhand.

Since the aforesaid grievance has not been referred by

the Secretary for arbitration, in view of condition

stipulated under Clause 8.1 and 8.2 of the agreement,

the instant applications have been filed.

13. This Court, on the pleadings available on record,

and even accepting the fact that the issue of

interpretation of Clause 8.1 of the MoU has not been

raised in the counter affidavit but since the same

pertains to interpretation of the Clause 8.1, whether it

is to be construed to be an arbitration clause or not

which has to be scrutinized on the basis of content of

the said clause, as such deems it fit and proper to

answer the aforesaid issue and to decide the arbitration

application, it is required to answer the following

issues, which has been raised on behalf of parties:

(I).Whether Clause 8.1 of the Memorandum of

Understanding (MoU) entered into between the

parties can be construed to be arbitration clause?

(II).Whether it is fit case where arbitrator is to be

appointed?

Except to these issues no other issues have been

raised, as would appear from the counter affidavit filed

on behalf of respondents.

14. This Court, in order to answer the issue, deems it

fit and proper to refer arbitration clauses as under

Clause 8, which reads as under:

"8.Arbitration 8.1 All questions relating to the interpretation and meaning of this Memorandum of Understanding and any dispute/differences arising between the parties hereto shall be referred to the Secretary, Department of Welfare, Government of Jharkhand for arbitration. 8.2 In the event where Institute of Continuing Education, Research & Training, Ranchi does not agree with the decision of the Secretary, Department of Welfare, Government of Jharkhand, the matter may be referred to Chief Secretary, Government of Jharkhand."

It is evident from the contents of the aforesaid

clause wherein it has been referred that all questions

related to the interpretations and meaning of the

Memorandum of Understanding and any

dispute/differences arising between the parties hereto

shall be referred to the Secretary, Department of

Welfare, Government of Jharkhand now Scheduled

Tribe, Scheduled Caste, Minority and Backward Class

Welfare, Government of Jharkhand, for arbitration. The

aforesaid clause thus stipulates that in the case of

dispute/difference arising between the parties shall be

referred to the Secretary for arbitration; meaning

thereby the Secretary only will arbitrate in a situation

when the dispute/differences arising between the

parties, if referred. Therefore, the Secretary of the

concerned department is having no independent power

to arbitrate the dispute rather only in a case when the

dispute/differences in between the parties will be

referred to the Secretary then only the Secretary will

assume the power to adjudicate.

Objection has been raised on behalf of State that

the condition stipulated in Clause 8.1 cannot be

considered to be arbitration clause since there is no

reference that in case of such adjudication the same

will have binding effect upon the parties and to

substantiate his argument, reliance has been placed

upon the judgment, as referred above.

Before scrutinizing the judgment relied upon on

behalf of State, it needs to refer the statutory provisions

of the Act, 1996, which have got bearing in the case.

The definition of Arbitration, as provided under

Section 2(1)(a) of the Act, 1996 is - (a) "arbitration"

means any arbitration whether or not administered by

permanent arbitral institution. The definition of „party‟

is also relevant, which has given under Section 2(1)(h)

of the Act, 1996 that "party" means a party to an

arbitration agreement.

„Arbitration agreement‟ has been dealt under

Chapter II in Section 7 of the Act, 1996, which reads as

under:

"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 1[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 agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

It is, thus, evident from Section 7 of the Act,

1996, as quoted above, that „arbitration agreement‟

means 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; meaning

thereby „arbitration agreement‟ will be said to be

agreement if the parties submit to arbitration in case of

dispute. Sub-section (2) thereof speaks that arbitration

agreement may be in the form of an arbitration clause

in a contract or in the form of a separate agreement.

While sub-section (3) says that arbitration agreement

shall be in writing. Sub-section (4) speaks that

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. Sub-

Section (5) speaks that reference in a contract to a

document containing 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.

Section 11 of the Act, 1996 is also having

relevance in the case at hand in view of prayer made in

the instant application for appointment of arbitrator

and as such the same is being reproduced as under:

"11. Appointment of arbitrators.--(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall

appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and--

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by 1[the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court];

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by 1[the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court]. (6) Where, under an appointment procedure agreed upon by the parties,--

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request [the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court] to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

[(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.

(6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.] (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to 3[the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision].

[(8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub- section (1) of section 12, and have due regard to--

(a) any qualifications required for the arbitrator by the agreement of the parties; and

(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.] (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, 5[the Supreme Court or the person or institution designated by that Court] may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.

6[(10)The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub- section (4) or sub-section (5) or sub-section (6), to it.] (11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, [different High Courts or their designates, the High Court or its designate to whom the request has been first made] under the relevant sub-section shall alone be competent to decide on the request.

[(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the "Supreme Court or, as the case may be, the High Court" in those sub- sections shall be construed as a reference to the "Supreme Court"; and

(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to "the Supreme Court or, as the case may be, the High Court" in those sub-sections shall be construed as a reference to the "High Court" within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court.] [(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case maybe, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.

(14).For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.

Explanation.--For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution.]

Sub-Section (6) thereof stipulates procedure for

appointment of arbitrator i.e., (a).a party fails to act as

required under that procedure; or (b) the parties, or the

two appointed arbitrators, fail to reach an agreement

expected of them under that procedure; or (c) a person,

including an institution, fails to perform any function

entrusted to him or it under that procedure, a party

may request to take the necessary measure, unless the

agreement on the appointment procedure provides

other means for securing the appointment.

It is, thus, evident from perusal of the aforesaid

definition of agreement as under Section 2(1)(a), the

definition of party under Section 2(1)(h), meaning of

„arbitration agreement‟ under Section 7 that the parties

to the agreement in case of any dispute is required to

submit for redressal of dispute to the arbitration which

has arisen or which may arise between them in respect

of a defined legal relationship, whether contractual or

not.

Legal position: Consideration of Judgments:

15. This Court before considering the argument

advanced on behalf of parties and after going into

statutory provisions as discussed above, deems it fit

and proper to deal with certain judgments of Hon‟ble

Supreme Court on the issue in question.

The judgment rendered by Hon‟ble Apex Court in

State of Orissa & Ors Vs. Bhagyadhar Dash

reported (supra), upon which much reliance has been

placed by learned counsel for the State by referring to

paragraph 10 and 15 thereof, wherein reference of

judgment rendered in State of U.P. Vs. Tipper Chand

reported in (1980) 2 SCC 341 and State of Orissa &

Anr. Vs. Damodar Das reported in (1996) 2 SCC 216,

wherein it has been held that said clause did not

amount to an arbitration agreement, on the following

reasoning, as referred in paragraph 11 of Damodar Das

case (supra), which reads as under:

"11. ... It would, thereby, be clear that this Court laid down as a rule that the arbitration agreement must expressly or by implication be spelt out that there is an agreement to refer any dispute or difference for an arbitration and the clause in the contract must contain such an agreement. We are in respectful agreement with the above ratio. It is obvious that for resolution of any dispute or difference arising between two parties to a contract, the agreement must provide expressly or by necessary implication, a reference to an arbitrator named therein or otherwise of any dispute or difference and in its absence it is difficult to spell out the existence of such an agreement for reference to an arbitration to resolve the dispute or difference contracted between the parties."

It is evident from paragraph 11, as quoted

hereinabove that arbitration agreement must expressly

or by implication be spelt out that there is an

agreement to refer any dispute or difference for

arbitration and the clause in the contract must contain

such an agreement. It is obvious that for resolution of

any dispute or difference arising between two parties to

a contract, the agreement must provide expressly or by

necessary implication, a reference to an arbitrator

named therein or otherwise of any dispute or difference

and in its absence it is difficult to spell out the

existence of such an agreement for reference to an

arbitration to resolve the dispute or difference

contracted between the parties.

Paragraph 15 of the aforesaid judgment, wherein

judgment rendered in Rukmanibai

Gupta v. Collector reported in (1980) 4 SCC 556 has

been considered by taking into consideration paragraph

15 of the said judgment wherein it has been laid down

as under:

15. In Rukmanibai Gupta v. Collector [(1980) 4 SCC 556] this Court considered whether the following clause amounted to an arbitration agreement: (SCC p. 558, para

2) "15. Whenever any doubt, difference or dispute shall hereafter arise touching the construction of these presents or anything herein contained or any matter or

things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable hereunder in the matter in difference shall be decided by the lessor whose decision shall be final."

This Court held that an arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject- matter of contract such disputes shall be referred to arbitration; and if the answer was in the affirmative, then such an arrangement would spell out an arbitration agreement. Applying the said test, this Court held that the aforesaid clause is an arbitration agreement, as it (a) made a provision for referring any doubt, difference or dispute to a specified authority for decision and (b) it made the "decision" of such authority final."

The Hon‟ble Apex Court has held that arbitration

agreement is not required to be in any particular form.

What is required to be ascertained is whether the

parties have agreed that if disputes arise between them

in respect of the subject-matter of contract such

disputes shall be referred to arbitration; and if the

answer was in the affirmative, then such an

arrangement would spell out an arbitration agreement.

Another judgment upon which reliance has been

placed is Karnataka Power Transmission

Corporation Limited and Anr. Vs. Deepak Cables

(India) Limited (2014) 11 SCC 148, wherein it has been

laid down that unless an arbitration agreement

stipulates that the parties agree to submit all or certain

disputes which have arisen or which may arise in

respect of defined legal relationship, whether

contractual or not, there cannot be a reference to an

arbitrator.

The Hon‟ble Apex Court in the judgment rendered

in K.K. Modi Vs. K.N. Modi & Ors reported in (1998)

3 SCC 573 has enumerated the attributes of valid

arbitration agreement i.e., (1).Arbitration agreement

must contemplate that the decision of the tribunal will

be binding on the parties to the agreement; (2).The

jurisdiction of the tribunal to decide the rights of

parties must derive either from the consent of the

parties or from an order of the court or from a statute,

the terms of which make it clear that the process is to

be an arbitration;(3).The agreement must contemplate

that substantive rights of parties will be determined by

the agreed tribunal;(4).The tribunal will determine the

rights of the parties in an impartial and judicial manner

with the tribunal owing an equal obligation of fairness

towards both sides;(5).That the agreement of the parties

to refer their disputes to the decision of the tribunal

must be intended to be enforceable in law and lastly;(6)

The agreement must contemplate that the tribunal will

make a decision upon a dispute which is already

formulated at the time when a reference is made to the

tribunal.

It is, thus, evident that conditions have been laid

down for treating the arbitration agreement to be valid

one by referring condition from condition no. 1 to 6, as

referred hereinabove.

In the case of Bihar State Mineral Development

Corporation & Another Vs. Encon Builders (I) (P)

Ltd. (2003) 7 SCC 418, the Hon‟ble Apex Court has

laid down the essential elements of arbitration

agreement as under paragraph 13 thereof i.e., (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; and (4).The

parties must be ad idem.

Further, the Hon‟ble Apex Court in the judgment

rendered in Jagdish Chander Vs. Ramesh Chander

& Ors reported in (2007) 5 SCC 719 has laid down

that with respect to principles what constitutes an

arbitration agreement, as would appear from paragraph

8, which reads as under:

"8.This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in K.K. Modi v. K.N. Modi [(1998) 3 SCC 573] , Bharat Bhushan Bansal v. U.P. Small Industries Corpn. Ltd. [(1999) 2 SCC 166] and Bihar State Mineral Development Corpn. v. Encon Builders (I) (P) Ltd. [(2003) 7 SCC 418] In State of Orissa v. Damodar Das [(1996) 2 SCC 216] this Court held that a clause in a contract can be construed as an "arbitration agreement" only if an agreement to refer disputes or differences to arbitration is expressly or impliedly spelt out from the clause. We may at this juncture set out the well-settled principles in regard to what constitutes an arbitration agreement:

(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and a willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

(ii) Even if the words "arbitration" and "Arbitral Tribunal (or arbitrator)" are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are: (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes

(present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the private tribunal in respect of the disputes will be binding on them.

(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically exclude any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.

(iv) But mere use of the word "arbitration" or "arbitrator" in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration

agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future."

Thus, it is evident from the judgment referred

hereinabove that in the case where otherwise specified

in the contract decision of the Superintendent 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, design, drawing

and instructions hereinbefore mentioned. Taking the

aforesaid contents of the agreement, the High Court

has held that the Clause was an arbitration agreement

as it merely conferred power upon the Superintendent

Engineer to take a decision on his own and did not

authorize the parties to refer any matter to his

arbitration.

It has been interpreted by Hon‟ble Apex Court in

State of Orissa & Ors Vs. Bhagyadhar Dash

reported in (2011) 7 SCC 406 by considering the

judgment rendered in Tiper Chand (supra) that in the

absence of a provision for reference of disputes between

parties for settlement, the clause merely stating that

the "decision of the Superintending Engineer shall be

final" was not an arbitration agreement. The Court has

clarified that an arbitration agreement can either be in

express terms or can be inferred or spelt out from the

terms of the clause; and that if the purpose of the

clause is only to vest in the named authority, the power

of supervision of the execution of the work and

administrative control over it from time to time, it is not

an arbitration agreement. It has also been held that the

clause did not contain any express arbitration

agreement, nor spelt out by implication any arbitration

agreement as it did not mention any dispute or

reference of such dispute for decision.

In the case of State of Orissa & Anr. Vs.

Damodar Das (supra) the three-judges Bench of the

Hon‟ble Supreme Court has considered as to whether

the following clause is an arbitration agreement,

relevant at paragraph 9 reads as under:

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."

It is evident from the aforesaid judgment 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.

The Hon‟ble Apex Court while interpreting the

decision as pronounced in the case of Tipper Chand

(supra) and Damodar Das (supra) has held at

paragraph 11 as under:

11. This Court was called upon to consider a similar clause in State of U.P. v. Tipper Chand [(1980) 2 SCC 341] . The clause was extracted therein. After consideration thereof, this Court held that after perusing the contents of the said clause and hearing learned counsel for the parties "we find ourselves in complete agreement with the view taken by the High Court. Admittedly, the clause does not contain any express arbitration agreement. Nor can such an agreement be spelt out from its terms by implication, there being no mention in it of any dispute, much less of a reference thereof. On the other hand, the purpose of the clause clearly appears to be to vest the Superintending Engineer with supervision of the execution of the work and administrative control over it from time to time." It would, thereby, be clear that this Court laid down as a rule that the arbitration agreement must expressly or by implication be spelt out that there is an agreement to refer any dispute or difference for an arbitration and the clause in the contract must contain such an agreement. We are in respectful agreement with the above ratio. It is obvious that for resolution of any dispute or difference arising between two parties to a contract, the agreement must provide expressly or by necessary implication, a reference to an arbitrator named therein or otherwise of any dispute or difference and in its absence it is difficult to spell out

existence of such an agreement for reference to an arbitration to resolve the dispute or difference contracted between the parties. The ratio in Rukmanibai Gupta v. Collector [(1980) 4 SCC 556] does not assist the respondent. From the language therein this Court inferred, by implication, existence of a dispute or difference for arbitration. The Full Bench judgment of the Punjab and Haryana High Court relied on by the counsel was expressly overruled by this Court in Tipper Chand case [(1980) 2 SCC 341] . Therefore, it is no longer good law. Moreover, notice was not given to the Public Health Engineer to enter upon the reference but was issued to the Chief Engineer to refer the dispute to an arbitrator. The contention in the rejoinder of the appellants that the respondent received the amount without protest to conclude that the amount was received in full and final settlement of the Act, cannot be accepted unless there is proof or admission in that behalf. The ratio in P.K. Ramaiah & Co. v. Chairman & Managing Director, NTPC [1994 Supp (3) SCC 126] has no application to the facts of the case.

It is evident from consideration of both the

judgments in the aforesaid paragraphs wherein it has

been laid down that arbitration agreement must

expressly or by implication be spelt out that there is an

agreement to refer any dispute or difference for

arbitration and the clause in the contract must contain

such an agreement.

It is further evident from paragraph 15 of the

judgment wherein by taking note of the judgment

rendered in the case of Smt. Rukmanibai Gupta vs

Collector Jabalpur And Ors. reported in (1980) 4

SCC 556 holding therein that Arbitration agreement is

not required to be in any particular form. What is

required to be ascertained is whether the parties have

agreed that if disputes arise between them in respect of

the subject-matter of contract such dispute shall be

referred to arbitration, then such an arrangement

would spell out an arbitration agreement. Paragraph 6

of the judgment reads under as:

"6. Does clause 15 spell out an arbitration agreement? Section 2(a) of the Arbitration Act, 1940, defines "arbitration agreement" to mean a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. Clause 15 provides that any doubt, difference or dispute, arising after the execution of the lease deed touching the construction of the terms of the lease deed or anything therein contained or any matter or things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable thereunder, the matter in difference shall be decided by the lessor whose decision shall be final. The reference has to be made to the lessor and the lessor is the Governor. His decision is declared final by the terms of the contract. His decision has to be in respect of a dispute or difference that may arise either touching the construction of the terms of the lease deed or disputes or differences arising out of the working or non-working of the lease or any dispute about the payment of rent or royalty payable under the lease deed. Therefore, clause 15 read as a whole provides for referring future disputes to the arbitration of the Governor. Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise

between them in respect of the subject-matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement. A passage from RUSSELL ON ARBITRATION, 19th Edn., p. 59, may be referred to with advantage:

"If it appears from the terms of the agreement by which a matter is submitted to a person's decision that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry and hear the respective cases of the parties and decide upon evidence laid before him, then the case is one of an arbitration."

In the clause under discussion there is a provision for referring the disputes to the lessor and the decision of the lessor is made final. On its true construction it spells out an arbitration agreement."

The Hon‟ble Apex Court in the judgment rendered

in Karnataka Power Transmission Corporation

Limited and Anr. Vs. Deepak Cables (India) Limited

reported in (2014) 11 SCC 148 has again considered

the issue by taking note of all the previous judgments

by referring to the judgment rendered by Hon‟ble Apex

Court on the issue and has laid down at paragraphs 23

to 26 thereof, which reads as under:

23. Keeping in mind the principles laid down by this Court in the aforesaid authorities relating to under what circumstances a clause in an agreement can be construed as an arbitration agreement, it is presently apposite to refer to Clause 48 of the agreement.

24. The said clause reads as follows:

"48.0 Settlement of disputes:

48.1 Any dispute(s) or difference(s) arising out of or in connection with the contract shall, to the extent possible, be settled amicably between the parties.

48.2 If any dispute or difference of any kind whatsoever shall arise between the owner and the contractor, arising out of the contract for the performance of the works whether during the progress of the works or after its completion or 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 Engineer, who, within a period of thirty (30) days after being requested by either party to do so, shall give written notice of his decision to the owner and the contractor. 48.3 Save as hereinafter provided, such decision in respect of every matter so referred shall be final and binding upon the parties until the completion of the works and shall forthwith be given effect to by the contractor who shall proceed with the works with all the due diligence. 48.4 During settlement of disputes and court proceedings, both parties shall be obliged to carry out their respective obligations under the contract."

On a careful reading of the said clause, it is demonstrable that it provides for the parties to amicably settle any disputes or differences arising in connection with the contract. This is the first part. The second part, as is perceptible, is that when disputes or differences of any kind arise between the parties to the contract relating to the performance of the works during progress of the works or after its completion or before or after the termination, abandonment or breach of the contract, it is to be referred to and settled by the engineer, who, on being requested by either party, shall give notice of his decision within thirty days to the owner and the contractor. There is also a stipulation that his decision in respect of every matter so referred to shall be final and binding upon the parties until the completion of works and is required to be given effect to by the contractor who shall proceed with the works with due diligence. To understand the intention of the parties,

this part of the clause is important. On a studied scrutiny of this postulate, it is graphically clear that it does not provide any procedure which would remotely indicate that the engineer concerned is required to act judicially as an adjudicator by following the principles of natural justice or to consider the submissions of both the parties. That apart, the decision of the engineer is only binding until the completion of the works. It only casts a burden on the contractor who is required to proceed with the works with due diligence. Besides the aforesaid, during the settlement of disputes and the court proceedings, both the parties are obliged to carry out the necessary obligation under the contract. The said clause, as we understand, has been engrafted to avoid delay and stoppage of work and for the purpose of smooth carrying on of the works. It is interesting to note that the burden is on the contractor to carry out the works with due diligence after getting the decision from the engineer until the completion of the works. Thus, the emphasis is on the performance of the contract. The language employed in the clause does not spell out the intention of the parties to get the disputes adjudicated through arbitration. It does not really provide for resolution of disputes.

25. Quite apart from the above, Clause 4.1 of the agreement is worthy to be noted. It is as follows: "4.1 It is specifically agreed by and between the parties that all the differences or disputes arising out of the agreement or touching the subject-matter of the agreement, shall be decided by a competent court at Bangalore."

26. Mr Viswanathan, learned Senior Counsel for the appellants, laying immense emphasis on the same, has submitted that the said clause not only provides the territorial jurisdiction by stating a competent court at Bangalore but, in essence and in effect, it stipulates that all the differences or disputes arising out of the agreement touching the subject-matter of the agreement shall be decided by a competent court at Bangalore. Mr Dave, learned Senior Counsel for the respondents, would submit

that it only clothes the competent court at Bangalore with the territorial jurisdiction and cannot be interpreted beyond the same. The submission of Mr Dave, if properly appreciated, would convey that in case an award is passed by the arbitrator, all other proceedings under any of the provisions of the Act have to be instituted at the competent court at Bangalore. This construction, in our opinion, cannot be placed on the said clause. It really means that the disputes and differences are left to be adjudicated by the competent civil court. Thus, Clause 48, as we have analysed, read in conjunction with Clause 4.1, clearly establishes that there is no arbitration clause in the agreement. The clauses which were interpreted to be arbitration clauses, as has been held in Ram Lal [Ram Lal Jagan Nath v. Punjab State, AIR 1966 P&H 436 : (1966) 68 PLR 522 : ILR (1966) 2 P&H 428] and Dewan Chand [Dewan Chand v. State of J&K, AIR 1961 J&K 58] which have been approved in Tipper Chand [State of U.P. v. Tipper Chand, (1980) 2 SCC 341] , are differently couched. As far as Rukmanibai Gupta [Rukmanibai Gupta v. Collector, (1980) 4 SCC 556] is concerned, as has been opined in Damodar Das [State of Orissa v. Damodar Das, (1996) 2 SCC 216 : AIR 1996 SC 942] and also in Bhagyadhar Dash [State of Orissa v. Bhagyadhar Dash, (2011) 7 SCC 406 : (2011) 3 SCC (Civ) 721] , it has to rest on its own facts. Clause in Dina Nath [Punjab State v. Dina Nath, (2007) 5 SCC 28] is differently couched, and Clause 48, which we are dealing with, has no similarity with it. In fact, Clause 48, even if it is stretched, cannot be regarded as an arbitration clause. The elements and attributes to constitute an arbitration clause, as has been stated in Jagdish Chander [Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719] , are absent. Therefore, the irresistible conclusion is that the High Court has fallen into grave error by considering the said clause as providing for arbitration."

The Hon‟ble Supreme Court after considering all

the previous judgments, wherein, principle which has

been laid down as to under what circumstances a

clause can be construed to be an arbitration

agreement, has been pleased to hold by taking into

consideration clause 48 of the contract wherein it has

been stipulated that any dispute or differences arising

out of or in connection with contracts shall to the

extent possible be settled amicably between the parties.

48.2. says that if any dispute or difference of any kind

whatsoever shall arise between the owner and the

contractor, arising out of the contract for the

performance of the works whether during the progress

of the works or after its completion or 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 Engineer, who, within a period of thirty

(30) days after being requested by either party to do so,

shall give written notice of his decision to the owner

and the contractor. Further, clause 48.3 speaks

that Save as hereinafter provided, such decision in

respect of every matter so referred shall be final and

binding upon the parties until the completion of the

works and shall forthwith be given effect to by the

contractor who shall proceed with the works with all

the due diligence and clause 48.4 speaks that during

settlement of disputes and court proceedings, both

parties shall be obliged to carry out their respective

obligations under the contract.

The Hon‟ble Apex Court on careful consideration

of aforesaid clause and considering the intention of the

parties which is required to be seen since concerned

Engineer has been authorized to monitor the work in

order to avoid the delay and as such conclusion has

been arrived at that the condition stipulated in the

aforesaid clause does not spell out the intention of the

parties to get the disputes adjudicated through

arbitration, therefore, the aforesaid clause does not

really provide for resolution of disputes.

16. This Court, after considering the judgment

rendered by Hon‟ble Supreme Court, as referred

hereinabove, is of the view that following law has been

laid down to assess as to whether the agreement is

arbitration agreement or not, the test of which is as

follows:

(i).The intention of the parties to enter into an

arbitration agreement shall have to be gathered

from the terms of the agreement. If the terms of

the agreement clearly indicate an intention on the

part of the parties to the agreement to refer their

disputes, it is arbitration agreement.

(ii).Where the clause provides that in the event of

dispute arising between the parties, the dispute

shall be referred to arbitration, then it is an

arbitration agreement.

(iii).Where there is a specific and direct

expression of intent to have the disputes settled

by arbitration, it is not necessary to set out the

attributes of an arbitration agreement to make it

an arbitration agreement.

Thus, merely because the attributes of an

arbitration agreement is not available it cannot be

construed that such agreement is not arbitration

agreement rather intention of the parties is to be looked

into that the parties are agree for redressal of their

dispute or not.

The arbitration agreement can either be an

expressed term or spell out in the terms of the

agreement. The arbitration agreement is not required to

be in any particular form.

17. This Court, after having discussed the position of

law, as has been settled by the Hon‟ble Apex Court, as

referred hereinabove is now proceeding to critically

analyze the argument advanced on behalf of parties.

18. Learned counsel for the State has given much

emphasis upon judgment rendered in the case of State

of Orissa & Ors Vs. Bhagyadhar Dash reported in

(2011) 7 SCC 406 in particular paragraph 10 and 15 by

making argument that the binding effect of the

resolution of dispute since is not available under

Clause 8.1 of the MoU, therefore, it cannot be

construed to be arbitration clause, but, merely because

the arbitration clause is having no word to the effect

that the dispute resolved through arbitration, by

appointment of arbitrator, in view of clause 8.1 will

render clause 8.1 not to be an arbitration clause.

Therefore, This Court is not in agreement with

such argument, reason being that for treating the

agreement to be arbitration agreement, the condition

which required to be there, as laid in the judgments

discussed above.

So far as the judgment relied upon by learned

counsel for the State in the case of Kerala State

Electricity Board & Anr. Vs. Kurien E. Kalathil and

Another reported in (2018) 4 SCC 793 is concerned,

this Court after going through the fact of the said case

is of the view that in that case there was no arbitration

agreement, but, there is no such fact available in the

instant case since there is clause 8.1, which is said to

be not an arbitration agreement, since it is settled

position of law as per the judgments referred

hereinabove, the intent of the parties is to be seen and

it cannot be disputed about the intent of the parties by

going through the content of Clause 8.1 wherein in case

of dispute/differences, the same is to be referred before

the Secretary of the concerned Department for

arbitration which stipulates the intent of the parties for

referring the matter for arbitration in case of

dispute/differences and, therefore, reliance placed

upon such judgment is not applicable in the facts of the

case.

19. Mr. Amit Kumar Das, learned counsel for the

applicants has also relied upon the judgment rendered

in the case of State of Orissa & Ors Vs. Bhagyadhar

Dash reported in (2011) 7 SCC 406 by placing

reliance upon paragraph 4 thereof, wherein judgment

rendered in Jagdish Chander v.Ramesh Chander

reported in (2007) 5 SCC 719 has been taken note of.

Learned counsel has placed much reliance on

paragraph 4(iii) wherein it has been laid down as one of

the conditions to treat the arbitration agreement i.e,

that as where the clause provides that in the event of

disputes arising between the parties, the disputes shall

be referred to arbitration, it is an arbitration agreement.

Where there is a specific and direct expression of intent

to have the disputes settled by arbitration, it is not

necessary to set out the attributes of an arbitration

agreement to make it an arbitration agreement.

20. This Court before considering the aforesaid

propositions, as has been relied upon by learned

counsel appearing for the parties, again deems it fit and

proper to go through the condition stipulated under

Clause 8.1 of the MoU, wherein it has been stipulated

that in case of any dispute/differences arising between

the parties hereto shall be referred to the Secretary,

Department of Welfare, Government of Jharkhand for

arbitration. Admittedly, the mechanism for resolution of

dispute has been carved out at Clause 8.1 of the MoU

by making reference the dispute/differences before the

named arbitrator for arbitration. Therefore, the

intention of the parties to resolve the dispute through

arbitration cannot be disputed. Otherwise, the

stipulation made under Clause 8.1 of the MoU to the

effect that dispute/differences shall be referred for

arbitration and moment the word reference has been

referred in the said clause to be referred before the

Secretary for the purpose of arbitration; meaning

thereby that is for adjudication and as such by

considering the judgments referred hereinabove, this

Court is of the view that the argument which has been

advanced on behalf of learned State counsel that the

condition stipulated under Clause 8.1 may not be

construed to be arbitration agreement, is not

acceptable to this Court for the reasons aforesaid since

as per the intent of the parties, the dispute/differences

is required to be referred for arbitration.

21. At this juncture, the respondents-State cannot be

allowed to dispute the intent that at the time signing of

the agreement by making reference of the word „refer‟ in

case of dispute/differences for arbitration."

22 This Court, in view of the discussions made

herein above, on the basis of the legal position as

discussed as above is of the considered view that

Clause 8.1 of the MoU is held to be arbitration clause.

As such, the argument advanced on behalf of

respondents-State is hereby rejected and it is held that

Clause 8.1 of the Memorandum of Understanding

(MoU) entered into between the parties is arbitration

clause.

23. Accordingly, Issue No. I is decided in favour of

applicant holding clause 8.1 to be arbitration clause.

24. Issue No. 2: This Court before answering this

issue is required to consider as to whether the

endeavours have been taken on behalf of

applicants/applicants for reference of dispute before

the Secretary or not.

25. It is specific case of the applicants that due

representations were submitted before the concerned

authority but the same was not referred as no reply has

been furnished on behalf of respondents in the counter

affidavit filed on their behalf. Since the Clause 8.1

stipulates that in case of dispute/differences, the same

shall be referred before the Secretary of the department

for arbitration, as such when the applicants have made

due representations/applications for resolution of

dispute, the same having not been resolved, it was

incumbent upon the concerned authorities to refer the

same before the Secretary of the concerned department

as per reference clause made under Clause 8.1 of the

MoU but the same has also not been referred before the

Secretary for arbitration and thereafter, a notice has

been sent to the Secretary also to resolve the

dispute/differences but even then also no efforts have

been taken, hence, the present applications have been

filed.

26. Position of law is well settled that once the

condition stipulated in the agreement is to be followed

by both the parties and in case of non-observance of

the conditions of the MoU particularly the arbitration

clause the applicants will have right to take recourse of

Arbitration and Conciliation Act, 1996 since the fact

about not referring the dispute before the arbitrator is

not in dispute as per counter affidavit filed on behalf

respondent, therefore, it is a case where arbitrator is

required to be appointed.

27. A question has also been raised on behalf of

State-respondent that under Clause 8.1 there is no

reference as to which law of arbitration will be

applicable.

This Court considers it a frivolous argument in

the context of the fact that it is a domestic arbitration

and there is only one Act in vogue in the field, i.e.,

Arbitration and Conciliation Act, 1996, and, therefore,

the provision of the Act, 1996 will only be applicable.

28. Accordingly, issue No. II is decided.

29. From the discussion made hereinabove this

Court, deems it fit and proper to exercise power

conferred under Section 11(6)(c) of the Act, 1996 and

require to pass an order for appointment of arbitrator

considering the factual aspect as also as per the

discussions made hereinabove.

30. Accordingly, all the arbitration applications

stands allowed.

31. In view thereof and with the consent of the

learned counsel for the parties, Hon‟ble Mr. Justice

Amareshwar Sahay, Former Judge, High Court of

Jharkhand, residing at "Heritage Parmeshwar"

Apartment, 4th Floor, 52, Circular Road, Lalpur,

Ranchi-834001, email - [email protected], is

appointed as sole arbitrator to adjudicate the dispute

between the parties in all the Arbitration Applications,

subject to provision as stipulated under Section 12 (5)

of Arbitration and Conciliation Act, 1996.

32. Learned Arbitrator would be free to lay down fees

and other expenses towards conduct of the arbitration

proceedings, however, keeping into account the ceiling

prescribed under Schedule IV of the Act of 1996 as

amended.

33. Learned Arbitrator would endeavour to conclude

the proceedings expeditiously, and preferably within a

period of six months from the date of arbitration

proceedings so begins, also taking into regard the

mandate of the Legislature under Section 29-A of the

Act of 1996.

34. The Registrar General of this Court is directed to

send copy of the entire pleadings along with copy of the

entire order sheet to the learned Arbitrator.

35. Accordingly, the instant Arbitration Applications

stand disposed of.

(Sujit Narayan Prasad, J.) Alankar/ -

N.A.F.R.