Parkash Singh, Capt. vs Power Grid Corporation of India & Ors.

This civil appeal has arisen from an order passed by the Principal District Judge, Jammu dated 26.9.2007 rejecting the application of the

appellant filed under section 9 of the Arbitration and Conciliation Act, 1997 (hereinafter for short referred as 'the Act'). The appellant was allotted

contract for providing security to Power Grid Corporation in September 2005 for a period of two years. The contract came to an end in

September 2007 and was not further extended by the respondents. It is not in dispute that the power to grant extension of the contract was to be

done by the respondents within a period of 30 days from the date the contract came to an end. Such an extension could be granted only if the

respondents found the work of appellant as satisfactory. The option to extend the contract was with the respondents and the same could be

extended for a period of one year. Since the contract was not extended the appellant invoked section 17 of the agreement seeking reference to the

arbitrator, as according to him, there was a dispute which was referable to the arbitrator. It is also not in dispute that the contract has been allotted

to some other agency and the said agency is operating the contract from September 2007.

The appellant had raised a dispute regarding the aforementioned contract having not been extended in his favour and feeling aggrieved of the

same filed an application under section 9 of the Act seeking direction not to allot contract till the matter was decided by the arbitrator.

The trial court rejected the application of the appellant. The questions which are required to be considered in the appeal are:

(A) whether any dispute had arisen which was referable to an arbitrator in face of this fact that the contract came to an end in September 2007 and

the option to extend the contract lies with the respondents.

(B) whether the respondents could be compelled to extend the contract of the appellant after it was satisfied that the service provided by the

appellant was not satisfactory.

In other words, whether the Corporation can be compelled by an injunction or interim relief in any other form to conclude with the service to be

provided by the appellant. Coming to the first question, it is not in dispute that the contract had come to an end in September 2005 and the same

could be extended at the option of the respondents. It is at the option of respondents that the contract would have beerr extended. In the present

case, contract was not extended because the service provided by the appellant was not found to be satisfactory. This, in my opinion did not

constitute any dispute.

Section 7 of the Act defines an arbitration agreement:

(1) In this part, 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.

The wording of this section clearly mentions that there has to be an arbitration 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. In essence there

has to be a dispute which is referable to an arbitrator. Sub clauses (1) and (2) of clause 14 of contract agreement clearly envisage that the contract

had come to an end after the period of two years and this extension is at the option of the respondents. Respondents have not granted any

extension in the matter. The effect was that contract had come to an end and consequently by referring to the said clause no dispute had arisen.

It is not the case of the appellant that the respondents had exercised option in extending the contract or there is any interpretation required to be

made in respect of the terms of the agreement which is construed to be matter of dispute between the parties. It is pure and simple conclusion of

the contract where no dispute can be referred to the arbitrator. Appellant's case is also based on the facts that no extension was granted by the

respondents. Appellant has in his memo of appeal clearly stated that the period of contract could be extended for a period of one year on

satisfactory performance. In my opinion application under section 9 was misconceived as there was no dispute referable to the arbitrator.

The appellant has not raised any dispute regarding the interpretation of the agreement nor has he complained of any breach on this count. The

appellant has tried to raise a dispute which did not arise after scanning through the contents of the contract agreement. It is only said that the

contract has to be extended for a further period of two years after admitting the fact that the option to extend the same lies with the respondents.

This, in my opinion would not constitute any dispute.

Second question relates as to whether contract of personal service can ordinarily and specifically be enforced against the respondents. The trial

court has very elaborately dealt with this question. The trial court has held that service rendered by the appellant to the corporation involves private

security for their lives and property by deploying security guards at Power Grid Kishenpur Sub Station and T/L Office Batote as per terms and

conditions of the contract.

The Corporation has in its written statement referred to number of instances to support its view that the services provided by the appellant

during the contract period of two years were not satisfactory. In such circumstances the Corporation could not be compelled by any injunction or

any other interim relief to continue the service being provided by the appellant.

The contract in question involves providing of security personnel by the appellant. It cannot be compelled to allot the contract to the appellant

after it has been found that their services were not satisfactory. In view of this I do not find any merit in this appeal which is dismissed along with

connected CMP.