Dhargalkar Technoesis (I) Pvt Ltd vs Mumbai Metropolitan Regional Development Authority

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Dhargalkar Technoesis (I) Pvt Ltd (“DTIPLâ€) applies for an order under Section 11 of the Arbitration & Conciliation Act, 1996, referring",

contractual disputes between it and the Mumbai Metropolitan Regional Development Authority (“MMRDAâ€)1 to arbitration. DTIPL says there is,

a valid and binding arbitration agreement. MMRDA says there is not.,

Sixteen years ago, in 2004, MMRDA invited Expressions of Interest from eligible consultants. They were to be empanelled as consultants for proof",

checking and supervision consultancy on rehabilitation tenement construction projects. DTIPL put in a bid. MMRDA accepted it by its letter of 31st,

May 2004. A formal contract followed on 21st June 2004. This is the subject matter of the present application. I am not concerned, in a Section 11",

application, with the minutiae of the disputes between these parties. The only question is whether or not there exists an arbitration agreement.",

There is the DTIPL-specific contract itself, and then there are the “General Conditionsâ€​.2",

Clause 8 of the Contract says this:3,

8 Settlement of Disputes,

8.1 Amicable Settlement,

The Parties shall use their best efforts to settle amicably all disputes arising out of or in connection with this Contract or the interpretation thereof,

8.2 Dispute Settlement,

Any dispute between the Parties as to matters arising pursuant to this Contract which cannot be settled amicably within thirty (30) days after receipt,

by one Party of the other Party’s request for such amicable settlement may be submitted by either Party for settlement in accordance with the,

provision specified in the SC.,

This clause was amended by the GC. It was substituted with the following:4,

8.2 Dispute Settlement,

For any dispute, matter will be referred to Jt. Metropolitan Commissioner and Project Director, MMRDA, and his decision will be final.",

Mr Sawant says this is a sufficient arbitration clause. Mr Khaire for MMRDA maintains that this does not satisfy the requirements of an arbitration,

agreement at all. same thing, viz., the conditions from page 71 of the paper book. The caption on that page is “General Conditionsâ€​.",

Clause 7.2 of the GC5 is part of a general section on “Fairness and Good Faithâ€​.6 Clause 7.2 says:,

7.2 Operation of the Contract,

The Parties will use their best efforts to agree on such action as may be necessary to remove the cause or causes of such unfairness, but no failure to",

agree on any action pursuant to this Clause shall give rise to a dispute subject to arbitration in accordance with Clause GC 8 hereof.,

Mr Sawant submits that the last portion of this clause makes it clear that it was always the intention of the parties that Clause 8.2 would be,

understood to mean the agreement of the parties to refer any disputes to arbitration. All that Clause 7.2 says is that a failure of good faith efforts is to,

be seen as an arbitrable dispute. But that does not mean there is no arbitration agreement. To the contrary; Clause7. 2 clearly posits that except for,

any failed good faith settlement, other disputes are specifically arbitrable.",

He invites my attention to the “Termination†clauses in the SC/GC. This is clause 2.9.7 It is in two parts. Clause 2.9.1 and its sub-clauses deal,

with termination by the client, i.e. MMRDA. Clause 2. 9.2 and its sub-clauses have corresponding provisions for termination by the Consultants,",

DTIPL. Clause 2.9.1(c)8 is one of the grounds on which MMRDA can terminate. It reads thus:,

2.9 Termination,

2.9.1 By the Client,

The Client may, by not less 1ess than thirty",

(30) days’ written notice of termination to the Consultants (except in the event listed in paragraph (f) below, for which there shall be a written",

notice of not less than sixty (60) days), such notice to be given after the occurrence of any of the events specified in paragraphs (a) through (g) of this",

Clause GC 2.9.1, terminate this Contract:",

(a) ... ...,

(b) ... ... ...,

(c) if the Consultants fail to comply with any final decision reached as a result of the arbitration proceedings pursuant to Clause GC 8 hereof.,

There is a corresponding provision for termination by DTIPL, in clause 2.9.2(d), i.e. if MMRDA “fails to comply with any final decision",

reached as a result of the arbitration proceedings pursuant to Clause GC 8â€​.,

Mr Sawant maintains that the reference in these sub-clauses is two-fold. First, it directly references Clause 8 (as substituted); and, second, it",

confirms or re-affirms that Clause 8.2 is indeed an arbitration clause.,

He invites my attention to the Supreme Court decision in Jagdish Chander v Ramesh Chander & Ors. 9 There, the Supreme Court analysed",

Section 7 of the Arbitration Act and reiterated settled principles.10 In paragraph 8(ii), on which Mr Sawant strongly relies, the Supreme Court held",

that the absence of words like ‘arbitration’ and ‘arbitral tribunal’ or ‘arbitrator’ are not determinative. An arbitration agreement,

may well be valid even without such wording. It must, however, have the element and attributes of a valid arbitration agreement. These are, the",

Present Case,Impact Design

8.2 Dispute Settlement

For any dispute, matter will be eferred to Jt.

Metropolitan Commissioner and Project Director,

MMRDA, and his decision will be final.","7.2 Dispute Settlement

Any dispute between the Parties as to matters

arising pursuant to this Contract which cannot be

settled within thirty (30) days after receipt by one

Party of the other Party’s request for such

amicable settlement may be submitted by either

Party for settlement in accordance with the

provisions specified in the SC.