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Judgment
Regard being had to the similitude of the questions involved, both the applications were analogously heard on the joint request of the parties and are decided by this common order.
The facts are taken from A.C. No.65/2016.
The applicant contends that the Water Resources Department of state government published a Notice Inviting Tender (NIT) for disposal of machines Annexure A-1. The applicant submitted the tender form along with the earnest money and in turn, he was declared as successful bidder. The respondents by order dated 3.10.2013 informed the applicant to deposit Rs.40,72,930/- within 15 days so that the delivery of material can be made. This document dated 30.10.2013 is filed as Annexure A-2.
Shri V.R. Rao, learned Sr. Counsel placed heavy reliance on this document and contended that the applicant's tender is duly accepted by issuing the order dated 3.10.2013 Annexure A-2. Thus, this amounts to completion of agreement, as per Section 7(4)(b) of the Arbitration and Conciliation Act, 1996 (for short, "the Act").
Learned Senior Counsel submits that the aforesaid tender along with the another tender of the applicant was cancelled by the respondents by order dated 5.11.2013 Annexure A-8 and A-9. The reliance is also placed on General Rules and Direction (herein after referred to as "General Rules") for guidance of contractors, Annexure A-10. It is urged that Clause 40 of the General Rules provides the method of resolution of disputes and settlements. The respondents are bound by these General Rules and as per these rules, the direction to appoint arbitrator can be issued.
The stand of the applicant is that as per Clause 5 of the General Rules, the conditional tenders can be rejected after having received the amount as per the directions dated
3.10.2013. The applicant's agreements was finalised and respondents cannot be permitted to say that no agreement was entered into between the parties.
Learned Senior Counsel submits that petitioner earlier filed W.P.No.20996/2016. The said case was disposed of on
22.2.2014. Learned Single Judge reproduced Clause 40 of General Rules in the order and opined that the petitioner has an alternative efficacious remedy to settle the disputes. The Court refrains itself to entertain the petition questioning the cancellation of contract. It is contended that in W.A.No.727/2014 decided on 12.7.2016, no interference was made by the Division Bench on the order passed in W.P.No.20999/2013.
Shri V.R. Rao, learned Sr. Counsel submits that in the writ petition, the stand of the government was that the petitioner can invoke the arbitration Clause. He further submits that in view of the categorical stand taken in the reply in the aforesaid writ petition, the respondents are "estopped" from taking a different stand in this round of litigation. The attention of this Court is drawn to paragraph 5 of the return filed in W.P.No.20996/2013.
In nutshell, the contention of the applicant is that in the peculiar facts and circumstances of the case, it can be safely concluded that after issuing the order dated 3.10.2013 Annexure A-2 and receiving the amount directed therein, the agreement had taken place by implication. The said action amounts to entering into an ???Arbitration Agreement??? as envisaged in Section 7(4)(b) of the Act. As noticed, the second contention is based on the principle of "Estoppel".
Learned Senior Counsel for the applicant placed reliance on the judgments reported in (2015) 13 SCC 477 (Govind Rubber Limited v. Louis Dreyfus Commodities Asia Private Limited) and 2004 (2) MPLJ 228 (Prism Cement Limited Vs. Delta Construction Systems Limited).
Per contra, Shri Aditya Pyasi, learned G.A. relied on the averments of the reply. He submits that present application is not maintainable because no contract agreement had been entered into between the parties. He further submits that in view of the orders passed in W.P.No.20999/13 and W.A.No.727/2014, the applicant can seek redressal under the civil/common law. These applications under the Act of 2006 are not maintainable.
No other point is pressed by counsel for the parties.
The first contention of the applicant is that in view of Section 7 of the Act, it is not necessary that an arbitration agreement must contains signatures of both the parties. In the opinion of this Court, there cannot be any quarrel on this point. Curtains are finally drawn on this issue by the Supreme Court in Govind Rubber Limited (supra). Their Lordships held that the agreement even if not signed by the parties, can be spelt out from correspondence exchanged between the parties. The task is to examine the correspondence with a view to arrive at the conclusion whether there was any meeting of mind between the parties which could create a binding contract between them. Thus, when such a contention is raised, it is the duty of the Court to find out from the correspondence as to whether the parties were ad idem to the terms of the contract.
In 1980 (4) SCC 556 (Rukmanibai Gupta Vs.
Collector, Jabalpur), the Apex Court opined that the 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 dispute arises between them in respect of the subject matter of contract, such dispute shall be referred to arbitration, then such an arrangement would spell out in arbitration agreement. It is profitable to note that in Govind Rubber
Ltd. (supra), the Apex Court further held that ???in such agreement, the identity of the parties is established and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad item between the parties.??? Thus the Apex Court has done away with the formal requirement of signature of the parties etc.
There is no scintilla of doubt that the applicant's tender was duly accepted by the department by communication dated 03.10.2013 and in turn, the applicant deposited the requisite amount. Thus, as per Clause 7(b), the agreement had taken place between the parties. The terms and conditions are mentioned in NIT dated 13.07.2013. The said terms and conditions do not contain any arbitration clause. There is no material before this Court to connect the NIT (Annexure-A/6) and (General Rules and Directions for Guidance of Contractors).
Putting it differently, the applicant is unable to establish that the aforesaid general rules and directions became part of the agreement. In absence thereto, no arbitration clause in the agreement exists which shows that the parties were ad idem for the purpose of resolution of dispute through arbitration. This is trite law that in order to constitute a valid, binding and enforceable arbitration agreement, the requirements contained in Section 7 have to be applied strictly. These requirements, apart from this, are - (1) there has to be an agreement; (2) it has to be in writing; (3) parties must sign such agreement or the words the agreement must bear signatures of the parties concerned and (4) such agreement must contain an arbitration clause. The aforesaid four conditions are sine qua non for substituting a valid and enforceable arbitration agreement. Failure to specify any of the four conditions would render the arbitration agreement invalid and unforceable and in consequence would result in dismissal of the application filed under Section 11 of the Act. [See:
2016 (8) SCC 788 (Vimal Kishor Shah and others Vs.
Jayesh Dinesh Shah and others)]. In the light of this judgment of Supreme Court, the order of this Court passed in the case of Prism Cement Limited (supra) cannot be pressed into service.
The applicant has also contended that in view of the stand taken in the reply in earlier writ petition, the respondents are bound by principle of "estoppel". They cannot take a different stand in the present case.
True it is that in W. P. No.20999/2013, the reliance is placed on Clause 40 of the General Conditions. However, in the said order passed by the writ Court, no finding was given that said Clause 40 is part of the agreement entered into between the parties. Pertinently, the Division Bench while permitting withdrawal of W.P.
No.20999/2013 on 25.07.2016, observed that the petition is permitted to be withdrawn with liberty to the petitioner to avail remedy available under the common law or under the arbitration clause. This is well settled that the jurisdiction to decide a dispute cannot be assumed on the basis of consent or stand of the parties.
The jurisdiction of a Court or authority is to be traced from the enabling statutory provision. The defect of the jurisdiction whether it is pecuniary or territorial or whether it is in respect of the subject matter of the action, goes to the very authority of the Court/authority to pass any order. Such defect cannot be cured even by the consent of the parties. [See: AIR 1954 SC 340 (Kiran Singh Vs. Chaman Paswan)]. This Court in 2011 (4) MPLJ 683 (Goyolene Fibres (India) Pvt. Ltd. Vs. M.P.
State Electricity Board and another) held that arbitration agreement must disclose in fair and specific terms the intention of the parties entering into the agreement that the parties intend to resolve all their dispute by referring to an arbitral tribunal for adjudication. Mere use of word ???arbitration??? or ???arbitrator??? will not be sufficient to hold that an agreement exists between the parties. In this view of the matter, in absence of arbitration clause in the agreement, the powers under Section 11(6) of the Act cannot be exercised.
Consequentially, both the applications are not rejected. Liberty is reserved to the applicants to avail the remedy available under the civil/common law. The applications are accordingly dismissed with the aforesaid observation. No cost.