Veer Construction Co. vs Saraswati Enclave

Jaspal Singh, J.

(1) The Special Conditions of Contract has a clause bearing No. 60. It reads :

"AFTER the payment of the amount of the final bill payable as aforesaid has been made, the Contractor may, if he so desires, reconsider his position in respect of the disputed portion of the final bill and take step for settlement of arbitration and if he fails to do so within 30 days, his disputed claim shall be deemed to have been waived and abandoned, by the Contractor."

Does this clause contain an arbitration agreement ? This question has led me to pen this order.

(2) Before I venture to answer the question posed, let me say, by way of preliminaries, that though some judgments do lead one to believe that the so-called arbitration clause should be strictly construed, I do feel that such a clause cannot be treated as a class apart. Rather, it too has to be construed like any other clause of the Contract with a view to fathom the intention of the parties. To gather such an intention the court would bank upon the particular words used. if the words are clear, precise and unambiguous so much the better. But then, the form of the clause may not be that material for, courts prefer to look to the substance. In short thus, it is the discovery of the intention which matters.

(3) An arbitration agreement, as we know, arises either by reason of an agreement between the parties or on the foundation of certain statutes. In order to constitute a valid arbitration agreement of the former type, among other things, there should be a valid agreement, the terms of which are reduced to writing, and the parties thereto should be ad idem. It matters not whether the arbitrator is named therein or not.

(4) In Ram Lal vs. Punjab Slate Air 1966 P&H 486 (F.B.) Dua J. (as his Lordship then was) while speaking for the Beech said :

"NO particular form appears to me to have been laid down as universal for framing an arbitration agreement ; the only certain thing being that the words used for the purpose must be words of choice and determination to go to arbitration and not problematic words of mere possibility."

The Supreme Court in Smt. Rukmanibai Gupta Vs. Collector Jabalpur and Others, observed that :

"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 refer- red to arbitration, then such an arrangement would spell out an arbitration agreement."

(5) The Supreme Court also quoted with approval the following passage from Russell on Arbitration :

"IF it appears from the terms of the agree- ment 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."

(6) The law, I have noticed above. What remains is its application. However, before, I proceed further I may mention that none of the judgments which find mention in the preceding paragraphs was referred to. The only judgment which found mention was of this court in M/s. Garg Builders and Engineers Vs. U.P. Rajkiya Nirman Nigam Ltd., and others, . However it related to a clause which was entirely different from the one before me. It does, however ,reiterate the position that the parties must be shown to have intended to get their dispute deter- mined through arbitration.

(7) Can it be said that Clause 60 contains an arbitration agreement ? It does not speak of the parties. It speaks about "the contractor" only. It docs speak of a dispute but that dispute remains confined to the Contractor alone. The words "take step for settlement arbitration" leave the feeling of there being something amiss. Though the word "arbitration" finds its place, read as a whole, the words used cannot be termed as "words of choice and determination to go to arbitration.'' The presence of the lonely word "arbitration" is immaterial. I feel its use without anything more to show agreement between the parties to allow the matter to be decided by an arbitrator, would not be of much consequence. As I said earlier, the courts prefer to look at the substance and looking at it, I gather no intention on the part of the parties to allow the disputes to be referred to a person of their own selection. There is also nothing to show that it confers authority on any such person to adjudicate upon disputes. It also no where states that the decision of said person is made final [See Rukmanibai (supra) Gov. Gen. v. Simla Banking Industrial Co. (supra) : Praharaj Partners Vs. State of Orissa and Another, ; Chabbel Dass and Co., Sultanpur Vs. The State of U.P. and Others, . This being the position, I am inclined to hold that Clause 60 does not contain an arbitration agreement. With this falls the entire edifice raised by the petitioner.