R.D. Dhanuka, J.@mdashBy this application filed u/s 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as ''the Act'' for short), applicant seeks appointment of arbitrator on behalf of the respondent. Some of the relevant facts which emerge from the pleadings filed by both the parties are as under. The applicant and her mother princess Sharda Raje Gaikwad were the owners of the land admeasuring 21706 sq. meters situated at Baroda, Gujrat. Sharda Raje passed away on 30th October 2012 leaving behind the applicant as her sole heir. It is the case of the applicant that out of the said land, appx. 4076 sq.mtr. were reserved as free hold by the Gujrat Municipal Corporation Town Planning Scheme Competent Authority and other Authority under Urban Land Ceiling and Regulation Act, 1976 (hereinafter ULCRA for short) which has been repealed. In the year 1995, the respondent approached the applicant and Sharda Raje to develop the property adm. 15980 sq.mts. It is the case of the applicant that negotiations were carried on in Mumbai between the parties. The applicant and Sharda Raje agreed to the respondent developing the said property by constructing the residential complexes thereon under the then applicable provisions of ULCRA. The applicant and Sharda Raje entered into 17 development agreements with the respondent at Mumbai between 2nd March 1995 and 18th March 1995 for development of each of the 17 plots comprising the said property. Parties thereafter entered into supplementary agreements. It is the case of the applicant that she always and continued to remain in exclusive possession of the said property and no possession was parted with in favour of the respondent.
2. By letter dated 8th June 1995, the respondent informed Shri Jai Vikram Sinhji that at the instance of the new State Government, the Collector of Baroda had issued show cause notices to most of the land owners and builders/developers who had built houses u/s 21 of the ULCRA. It was stated that it was thus, impossible and unwise to proceed further with the scheme, at least for time being.
3. By letter dated 26th June 1995, the applicant invited attention of the respondent to clause 3 of the supplemental agreements and made it clear that the consequences of any default in payment by the respondent to the applicant were clearly set out and were self operative. The applicant suggested an urgent meeting to be held to consider fresh proposal of the respondent. It was suggested that meeting to be held in the matter at Bombay along with the lawyer of the applicant.
4. By letter dated 26th June, 1995, the applicant informed the respondent that the entire transaction had become null and void and stood ipso facto terminated in view of default committed by the respondent.
5. The applicant through her Advocate''s letter dated 11th August 1995 to the respondent referred to the termination vide letter dated 26th June 1995 and made it clear that Power of Attorney and all other documents executed by the applicant had come to an end including license for occupation.
6. The respondent by letter dated 25th August 1995 to the applicant contended that all the agreements along with Power of Authority and writings still subsists and continued to be operative between the parties. The applicant was informed that the respondent was still ready to comply with their part of the contract reserving their right under it. The respondent informed that as provided in the agreement, disputes arising between the parties in that regard or regarding the Development Agreement have to be referred to arbitrators to be nominated by the respondent. The relevant paragraph of the said letter is extracted as under:
As also provided in the Agreement disputes arising between us in this regard or regarding the Development Agreement have to be referred to arbitrators to be nominated by us.
7. The applicant through her Advocate''s letter dated 6th September 1995 to the respondents, replied to the letter dated 25th August 1995 and informed that the applicant did not admit that the arbitration clause was applicable in the facts and circumstances of the present case. Paragraph 6 of the said letter reads as under:
6. So far as the penultimate para of your letter under reply is concerned, our clients do not admit that the Arbitration Clause is applicable in the facts and circumstances of the present case.
8. In the month of September, 1998, the respondent filed Special Civil Suit No. 671 of 1998 before the Civil Judge (S.D.) at Baroda inter alia praying for declaration that the development agreements were valid and for specific performance of the same. On 13th September 1998, the applicant preferred an application u/s 8 of the Arbitration and Conciliation Act, 1996, inter alia praying for referring the dispute to arbitration. The said suit as well as the said application is pending before the Civil Judge (S.D.) Baroda.
9. Applicant, by her Advocate''s letter dated 14th January 1999 to the respondents invoked arbitration clause and suggested the name of Shri Justice M.L. Pendse (retired) as sole arbitrator and called upon the respondent to agree to the same or in the alternate, to nominate any person to act as their nominee arbitrator. The respondent by their Advocate''s letter dated 24th February 1999 replied to the notice dated 14th January 1999 contending that the question of decree for performance can only be decided by the Civil Court and not by arbitrators. It is contended that the respondent seeks performance of the contracts and in that case, only the Civil Court will be competent to pass or to refuse to pass the decree. The substantive rights for performance of the contracts are statutory rights and the enforcement of the same is only to be decided by the Courts. It is submitted that the suit dispute pending in the Civil Court is not one which is ever contemplated within the ambit of clause 15. It is submitted that even in these situations, there cannot be said to be any agreement for reference to arbitration. There is no certain arbitration ever mentioned or contemplated to be mentioned. The respondent contended that demand of arbitration is baseless, illegal and against the terms of the contracts, not tenable and not acceptable to the respondent. The respondent refused to appoint arbitrator.
10. The applicant, by her Advocate''s letter dated 15th April 1999 replied to the letter dated 21st February 1999 and denied allegations made therein. The applicant contended that under clause-15 of the agreement, all disputes have to be referred to arbitration and therefore notice of arbitration was valid and binding upon the respondent. The applicant reiterated that she had validly invoked clause-15 of the agreement and reiterated the name suggested earlier.
11. The applicant, thereafter, filed application u/s 11 of the Act (63 of 1999) in this Court for appointment of arbitrator. By an order dated 9th February 2001 passed by Shri Justice P.S. Patankar (as His Lordship then was), the said application came to be rejected. Being aggrieved by the said order dated 9th February 2001, the applicant filed Writ Petition (1513 of 2001) in this Court. By an order dated 13th December 2011 passed by this Court, after considering the Judgment of Supreme Court in case of
12. On 11th January 2011, the applicant through her Advocate, appointed Shri Justice V.S. Shirpurkar (retired) former Judge of the Supreme Court as her nominee arbitrator and requested the respondent to appoint her nominee arbitrator within 30 days. The respondent vide its Advocate''s letter dated 7th February 2012 contended that there was no arbitration agreement and did not agree to the appointment of Shri Justice V.S. Shirpurkar (retired) as arbitrator.
13. The applicant vide her Advocate''s letter dated 13th February, replied to the letter dated 7th February 2012 and denied the contents thereof. The applicant thereafter filed this application u/s 11 of the Act inter alia praying for appointment of arbitrator on behalf of the respondent.
14. In arbitration application (63 of 1999) filed by the applicant, she annexed English translation of clause 15 of the development agreement dated 3rd March 1995 which reads as under:
15. For the decision of solution with regard to the dispute in case of differences of opinion, disputes, misunderstanding between the party of the first part and the party of the second part in respect of this agreement, both the parties shall refer the dispute or quarrel to two Arbitrators of their own and party of the first part and party of the second part agree to accept the Arbitration Award and if both the parties agree to accept the Award, then in such Arbitration in accordance with the provisions of Arbitration Act proceedings shall have to be carried out. However, negotiations were carried out mostly in Bombay, the dispute with regard to arbitration work can be of Bombay only. However, in case of dispute or on such occasion, Bombay Court shall have jurisdiction to dispose of the matter.
15. The respondent had filed an affidavit on 19th July 2000 in arbitration application (63 of 1999) alleging that clause 15 as referred by the applicant was not binding clause and the parties were not bound to refer the dispute to arbitration and it was only one of the modes for resolution of dispute which mode can be adopted only if both the parties accept the arbitration and not otherwise. Respondents contended that jurisdiction of Civil Court was not excluded under clause 15 of the Act and arbitration was optional.
16. The applicants filed rejoinder in the said proceedings and annexed a revised official translation of clause 15 dated 10th August 2000 obtained from the office of Chief Translator. The revised official translation of clause 15 dated 10th August 2000 obtained by the applicant reads as under:
15. For the purpose of any decision or solution of any dispute, difference of opinion, quarrel and misunderstanding between party of First Part and Partly of the Second Part, both the parties shall appoint one Arbitrator from their side and in so doing the Party of the First Part and Party of the Second Part agree to the decisions taken by the Arbitrators. Thus, both the parties agree to this Arbitration. In such Arbitration, the provisions of Arbitration Act shall be given effect to. Further as negotiations have been made at Bombay only, for any dispute the work of Arbitration shall be carried out at Bombay only. Inspite of that, for any kind of dispute or if such occasion arises, then the Court at Bombay alone shall have jurisdiction to dispose of any of the disputes that may arise.
17. The respondents by their Advocate''s letter dated 30th November 2000, addressed to the Chief Translator of this Court pointing out the alleged discrepancy in the said revised translation obtained by the applicant and requested to re-translate clause 15 of the said agreement. The Chief Translator of this Court issued revised translation of clause 15 on 1st December 2000. According to said revised translation dated 1st December 2000, clause 15 reads as under:
15. In respect of this Agreement and for the purpose of any decision or solution of any dispute, difference of opinion, quarrel and misunderstandings between party of First Part and Party of the Second Part, both the parties shall appoint one Arbitrator from their side and in so doing the Party of the First Part and Party of the Second Part agree to the decisions taken by the Arbitrators. Thus, both the parties agree to this Arbitration. In such Arbitration, the provisions of Arbitration Act shall be given effect to. However, as negotiations have been mostly made at Bombay, for any dispute the work of Arbitration shall be carried out at Bombay only. However, if any dispute arises or on that occasion, the Court at Bombay shall have jurisdiction to dispose of the same.
18. Mr. Kamdar, the learned counsel appearing on behalf of the applicant submits that existence of arbitration agreement is not disputed by the respondent and the same has been admitted in the correspondence exchanged between the parties. It is submitted that even the translation relied upon by the respondent indicates that arbitration agreement exists. The respondent had rejected for appointment of arbitrator based on their own interpretation of clause 15, but did not dispute the existence thereof. The dispute regarding existence came to be raised for the first time only on 7th February 2012. It is submitted that pendency of application u/s 8(3) of the Act filed by the applicant in Civil Suit filed by the respondent in the Court at Baroda, is not bar in entertaining this application by the Honourable Chief Justice or his designate. It is submitted that even dispute regarding termination can also be decided by arbitrator. It is submitted that agreement has been admitted signed. Negotiations took place at Mumbai. It is also recorded in clause 15 of the agreement. It is submitted that part of cause of action has arisen in Mumbai. It is submitted that as the applicant would be claimant and would file statement of claim before the arbitrator, if appointed by this Court, as negotiations had admittedly taken place at Mumbai and part of cause of action has arisen in Mumbai, present application filed in this Court is validly filed before the appropriate Court having jurisdiction. It is submitted that in any event, in view of the concurrent jurisdiction and in view of the parties having agreed under clause 15 that Court at Bombay shall have jurisdiction, this Court has jurisdiction to entertain and dispose of the said application. It is submitted that in the first round of litigation, the respondent did not dispute the existence of arbitration agreement. Though an assertion in respect of existence of registration of arbitration agreement is made in the petition filed u/s 9 of the Act by the applicant, no reply controverting the same averment has been file by the respondent. It is submitted that even otherwise, in view of Section 7(4)(b) and Section 7(4)(c) of the Act, arbitration agreement can be recorded by exchange of letters, telex, telegrams or by other means of telecommunication or it is alleged statement of claim by one party and not denied by other. The learned senior counsel submits that in the correspondence exchanged between the parties, respondent has admitted the existence of arbitration agreement. It was the only contention of the respondent that the claim for specific performance of agreement cannot be referred to arbitration and the same could be decided only by Civil Court. The learned senior counsel then submits that the applicant would have a money claim or claim for damages for breach of contract. It is submitted that termination of contract took place at Mumbai and therefore, in view of Section 2(1)(e) of the Act, only this Court would have jurisdiction to entertain this application. It is submitted that agreement is signed at Mumbai. The learned senior counsel submits that even if it is held that arbitration clause relied upon by both the parties is vague, validity of such clause has to be upheld and Court shall encourage arbitration between the parties.
19. The learned counsel placed reliance upon the Judgment of this Court in case of
9. It was also urged on behalf of the petitioner that considering the definition of the term "Court" appearing in Section 2(e) of the Act as no part of cause of action has arisen within the jurisdiction of this Court, this Court will not have jurisdiction to entertain the petition. Perusal of Section 2(e) of the Act quoted above shows that to find out whether this Court will have jurisdiction to entertain the petition, I will have to consider the question if instead of taking up arbitration proceedings a civil suit had been filed on the subject matter of the arbitration, whether that Civil suit could have been entertained by this Court. Before the Arbitrator, the respondent was the claimant, therefore, if the claimant instead of taking up arbitration proceedings had filed a civil suit on the subject matter of the arbitration proceedings the question to be considered is whether he could have filed the suit in this Court. Answer to that question would be in affirmative because in the suit that could have been filed by the respondent/claimant, the present petitioner would have been the defendant and the defendant/the petitioner carries on business within the jurisdiction of this Court and therefore, in terms of Clause 12 of the Letters Patent the suit filed by the claimant on the subject matter of the arbitration in this Court against the petitioner was maintainable in this Court. It was submitted on behalf of the respondent that the question that this Court will have to consider is had the petitioner filed a civil suit whether that suit would have been maintainable before this Court or not According to the respondent because no part of cause of action arises within the jurisdiction of this Court and the respondent also does not carry on business within the jurisdiction of this Court, this Court will not have jurisdiction to entertain the suit. In my opinion, the submission is not well founded. The proper approach, would be to make an inquiry, if the party which has invoked the arbitration clause and is a claimant, had filed a Civil Suit on the subject matter of arbitration, which Court or Courts will have the jurisdiction to entertain the suit in accordance with the Law If suit filed by the claimant could have been entertained by the Court then that court will be the Court within the meaning of Section 2(e) of the Act. In the present case had the respondent decided to file civil suit instead of invoking the arbitration clause, its suit could have been entertained by this Court, if filed here, because the petitioner who would have been defendant in that suit carry on business within the jurisdiction of this Court. Therefore, in my opinion, the respondent is not right in contending that this Court will not have jurisdiction to entertain the petition because no part of cause of action has arisen within the jurisdiction of this Court and because the respondent also does not carry on business within the jurisdiction of this Court. The objections raised to the maintainability of the petition are thus rejected. I hold that this Court has jurisdiction to entertain the petition.
20. The learned senior counsel then placed reliance upon an unreported judgment of this Court delivered on 8th April 2011 in case of Infrastructure Leasing and Financial Services Ltd. Vs. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. And Anr. in Arbitration Application No. 99 of 2010 in support of his plea that if applicant was required to file a suit on the subject matter of dispute in relation to which arbitration clause was invoked, Court, which could have entertained such, would have jurisdiction to entertain such arbitration application also. The relevant part of paragraph 2 of the said Judgment reads thus:
2. Now first taking up the objection raised by the respondents as to the maintainability of the petition in this Court for consideration, in my opinion, that objection has no substance. According to the provisions of section 11(12)(b) of the Act, when an application is to be made under sub-sections (4), (5), (6), (7), (8) and (10) of section 11, reference to the Chief Justice is to be construed as reference to the Chief Justice of the High Court within whose local limits the principal civil court referred to in clause (e) of sub-section (1) of section 2 of the Act is situated. Section 2(1) (e) of the Act reads as under:-
2(1)(e) Court means the principal civil Court or original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes;
21. Mr. Kamdar, the learned senior counsel then placed reliance upon the Judgment of this Court (Coram: R.D. Dhanuka, J.) delivered on 8th January 2013 in Chamber Summons No. 545 of 2012 (Shri Upendra Knatilal Thanawals And Ors Vs. Shree Ram Builders) in support of the plea that the claims proposed to be made by the applicant, would not be a suit for land. It is submitted that applicant is in possession of the suit property and no relief in respect of possession of property would be sought before the arbitral tribunal. Paragraphs 12, 16 and 17 of the said Judgment read thus:
12. On this issue reference to the judgment of this court in the case of ION Exchange (I) Ltd. (supra) relied upon by Mr. Dhakephalkar, learned senior counsel appearing on behalf of the respondent in the present petition and applicant to the Chamber summons, would be relevant. This court has taken a view that before the arbitrator, if the claimant, instead of taking up arbitration proceeding had filed civil suit on the subject matter of the arbitration proceedings, the question to be considered is whether he could have filed a suit in this court. This court considered that in such a situation, the petitioner in the suit proceeding would have been defendant who was carrying on business within the jurisdiction of this court and therefore, in terms of clause 12 of the Letters Patent, the suit filed by the claimant on the subject matter of the arbitration, in this court against the petitioner was maintainable in this court. Admittedly in that case, the petitioner who had filed petition u/s 34, was original respondent in the arbitration proceedings and was carrying on business within the territorial jurisdiction of this court. Considering these facts, this court took a view that if the respondent to the said petition who were original claimants, would have filed a suit if there was no arbitration clause in respect of the same subject matter, the respondents could have filed a suit within the jurisdiction of this court, within the meaning of section 2(1)(e) of the Act and thus the petition filed by the petitioner in that case u/s 34 of the Act impugning the award would be maintainable in this court. Applying the ratio in the case of ION Exchange Limited to this case, it is clear that while deciding the issue of jurisdiction u/s 34 of this court read with section 2(1)(e) of the Act, the court has to see whether in the arbitration proceeding, original claimants could have filed a suit in respect of the subject matter within the jurisdiction of this court, if there was no arbitration clause and if the answer is in affirmative, petition u/s 34 would be maintainable in such court in which such suit could have been filed. If the suit itself could not have been filed in this court by the original claimant, petition u/s 34 cannot be filed in this court even if some of the respondents are residing and carrying on business at Mumbai.
16. From the perusal of the prayers in the statement of claim, it is clear that the respondent had prayed for specific performance of the agreement to sell. The learned arbitrator has granted such reliefs in favour of the respondents. It is not in dispute that the agreement was entered into at Thane. It is also not in dispute that the agreement had been registered with the office of the Sub Registrar, Thane. It is also not in dispute that the registered office of the first respondent is situated at Thane. In the case of Navin Makhija and Ors. Vs. Tulsi Bhimjiyani and anr. This court (R.D. Dhanuka, J.) by order and judgment dated 16 th October, 2012 in Arbitration Petition No. 560 of 2012 after considering the Supreme Court judgment in the case of
17. The next question that arises for consideration of this court is whether any part of cause of action had arisen either wholly or in part in respect of the subject matter of the dispute within the jurisdiction of this Court. In my view, it is admitted fact that the agreement was entered into at Thane, the suit property is situated at Thane, the suit agreement was registered at Thane. The entire cause of action had thus arisen at Thane. In my view, no cause of action has arisen within the jurisdiction of this court. If no cause of action has arisen within the jurisdiction of this court and if the respondent would have applied for leave under clause 12 of the Letters Patent for filing the suit in this court, no such leave could have been granted by this court in favour of the respondents to confer jurisdiction on this court. In my view, even second part of clause 12 of the Letters Patent in such situation thus would not be attracted.
22. The learned senior counsel placed reliance upon an unreported Judgment of this Court (Coram: R.D. Dhanuka, J.) delivered on 16th October 2012 in ARBP 560 of 2012 (Navin Mahija & Ors. Vs. Tulsi Bhimjiyani & Anr.). Paragraph 13 of the said Judgment reads thus:
13. In my view, whether suit is a suit for land or not has to be determined on the basis of the averments in the statement of claim filed before the arbitral tribunal. The Learned Senior Counsel Mr. S.U. Kamdar invited my attention to paragraphs 2.7 to 2.16 and paragraphs (3) to (10), paragraphs (34) to (45) and prayers (a), (b), (c), (d), (e), (f), (h) and (i) of the statement of claim. From the perusal of the averments and the prayers in the statement of claim filed before the arbitral tribunal, it is clear that the petitioners seek specific performance of the agreement entered into between the parties and the suit is not for land. In view of the fact that the suit agreement is entered into at Mumbai and the dispute has arisen in respect of the such agreement for which specific performance is sought before the arbitral tribunal, in my view, this court has jurisdiction to entertain, try and dispose of the present petition. This court has already granted leave under Clause 12 of the Letters Patent to the petitioners in view of the fact that the property is situated outside Mumbai.
23. Mr. Samdani, the learned senior counsel appearing on behalf of the respondent on the other hand submits that there is no arbitration agreement between the parties. The main development agreement did not provide for the amount of consideration and its payment. Supplemental agreements were executed providing for consideration amount which were executed in Baroda. It is submitted that respondent was put in possession of the property and the possession received was also executed in Baroda. The respondent has already filed a suit in Civil Court (S.D.) praying for specific performance of Development agreement and for possession of land. The subject matter of the dispute therein pertains to letters at Baroda. The Baroda suit is a suit for land which is pending in Baroda Court. It is submitted that application u/s 11 filed by the applicant would lie only in Baroda Court and this Court has no jurisdiction to entertain this application since the land is situated in Baroda. It is submitted that applicant has already filed an application u/s 8 of the Act in the said suit filed by the respondent in Baroda and till that application is disposes of, there can be no question of proceeding with this application or any other application in this Court in view of Section 42 of the Act. It is submitted that an application u/s 8 is an application under Part-I of the Act and by virtue of Section 42 of the Act, this Court has no jurisdiction to try and entertain the application filed u/s 11.
24. The learned senior counsel submits that clause 15 of the development agreement would come in operation only after decision of the suit with regard to dispute in difference of opinion, dispute or misunderstanding between the parties in respect of the agreement. As the agreement has been already terminated by the applicant on the alleged default in payment, there was no difference of opinion or dispute or misunderstanding between the parties in respect of the agreement which was purported to be terminated. It is submitted that under clause 15 of the development agreement, jurisdiction of any Court including Court of Civil Judge, (S.D.) in Baroda and is not excluded. It is submitted that clause 15 is not an ouster clause. As the entire cause of action has arisen in Baroda and no part of cause of action has arisen in Mumbai, the suit land is situated in Baroda, respondent carrying on business in Baroda, partners of respondent residing in Baroda, only Court of Baroda has jurisdiction to entertain the application/suit. It is submitted that accordingly, this Court has no jurisdiction to entertain this application.
In affidavit in reply, respondent did not dispute the present application is maintainable and no bar under provisions of law of limitation.
25. The learned senior counsel then submits that unless both the parties agree, matter cannot be referred to arbitration. It is submitted that applicant has invoked arbitration clause not for making another claim, but for stalling the suit proceedings filed by the respondent in Boroda. It is submitted that applicant has not pleaded in the application that arbitration agreement is derived from the correspondence u/s 7 of the Act. It is submitted that suit is concerning the land and is thus suit for land. The learned senior counsel then submits that the claim of the applicant itself would be barred by law of limitation. It is submitted that agreement has been admittedly terminated on 11th August 1995. If the applicant files a claim for declaration, termination is valid and subsisting and applies for damages under Article 55 of the schedule to the Limitation Act, alleged arbitration clause ought to have been invoked in three years of breach resulting in termination of agreement. The applicant admittedly invoked arbitration clause only on 14th January 1999 which is beyond the period of three years from the date of termination of agreement. It is submitted that application u/s 11 is thus, time barred and invocation is in respect of dead claims.
26. The learned senior counsel placed reliance upon the Judgment of Supreme Court in case of
8. This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in
(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 an 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 excludes 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.
27. Mr. Samdani, the learned senior counsel then submits that whether the claim made by the applicant was dead one or stale which was allegedly sought to be resurrected, has to be decided by the Chief Justice or his designate u/s 11 of the Act. It is submitted that the contract was already terminated as far back as 11th August, 1985. The respondent had disputed termination vide letter dated 25th August, 1985. On 14th January, 1991 the applicant issued notice for appointment of arbitrator. It is submitted that the termination on account of breach which results in claim for damages had accrued on 11th August, 1985. The applicants have invoked alleged arbitration clause in respect of the dead or stale claim. It is submitted that even according to Article 58 of the Schedule to the Limitation Act, in case of any declaration sought, right to sue would accrue on 11th August, 1985 or in any event on 25th August, 1985 when the respondent had disputed the termination. The learned counsel placed reliance on two judgments of the Supreme Court on this issue i.e.
19. In
It is necessary to define what exactly the Chief Justice, approached with an application u/s 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense, whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the question whether the claim was a dead one; or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the arbitral tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator u/s 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral tribunal.
47. (iv) The Chief Justice or the designated judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators.
(emphasis supplied)
22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal u/s 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application u/s 11 of the Act into three categories, that is (i) issues which the Chief Justice or his Designate is bound to decide; (ii) issues which he can also decide, that is issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.
28. In so far as the judgment in Indian Oil Corporation (supra), the learned counsel has placed reliance on Paragraphs 12, 14 and 15 which read thus:
12. The said order is challenged in this appeal by special leave. On the contentions urged the questions that arise for consideration are as follows:
(i) Whether the Chief Justice or his designate can examine the tenability of a claim, in particular whether a claim is barred by res judicata, while considering an application u/s 11 of the Act?
(ii) Whether the Designate was justified in holding that the claim was barred by res judicata and that application u/s 11 of the Act was misconceived and mala fide?
14. To find out whether a claim is barred by res judicata, or whether a claim is "mala fide", it will be necessary to examine the facts and relevant documents. What is to be decided in an application u/s 11 of the Act is whether there is an arbitration agreement between parties. The Chief Justice or his designate is not expected to go into the merits of the claim or examine the tenability of the claim, in an application u/s 11 of the Act. The Chief Justice or his Designate may however choose to decide whether the claim is a dead (long-barred) claim or whether the parties have, by recording satisfaction, exhausted all rights, obligations and remedies under the contract, so that neither the contract nor the arbitration agreement survived. When it is said that the Chief Justice or his Designate may choose to decide whether the claim is a dead claim, it is implied that he will do so only when the claim is evidently and patently a long time barred claim and there is no need for any detailed consideration of evidence. We may elucidate by an illustration: If the contractor makes a claim a decade or so after completion of the work without referring to any acknowledgement of a liability or other factors that kept the claim alive in law, and the claim is patently long time barred, the Chief Justice or his Designate will examine whether the claim is a dead claim (that is, a long time barred claim). On the other hand, if the contractor makes a claim for payment, beyond three years of completing of the work but say within five years of completion of work, and alleges that the final bill was drawn up and payments were made within three years before the claim, the court will not enter into a disputed question whether the claim was barred by limitation or not. The court will leave the matter to the decision of the Tribunal. If the distinction between apparent and obvious dead claims, and claims involving disputed issues of limitation is not kept in view, the Chief Justice or his designate will end up deciding the question of limitation in all applications u/s 11 of the Act.
An application u/s 11 of the Act is expected to contain pleadings about the existence of a dispute and the existence of an arbitration agreement to decide such dispute. The applicant is not expected to justify the claim or plead exhaustively in regard to limitation or produce documents to demonstrate that the claim is within time in a proceedings u/s 11 of the Act. That issue should normally be left to the Arbitral Tribunal. If the Chief Justice or his designate is of the view that in addition to examining whether there is an arbitration agreement between the parties, he should consider the issue whether the claim is a dead one (long time barred) or whether there has been satisfaction of mutual rights and obligation under the contract, he should record his intention to do so and give an opportunity to the parties to place their materials on such issue. Unless parties are put on notice that such an issue will be examined, they will be under the impression that only questions of jurisdiction and existence of arbitration agreement between the parties will be considered in such proceedings.
29. Mr. Samdani, the learned senior counsel then submits that unless both the parties would agree that the matter would be referred to arbitration, such clause lacking such mandatory requirement would not be recognized in law as arbitration agreement. The learned counsel placed reliance upon the judgment of the Supreme Court in the case of
2. The appellant and first respondent entered into a Partnership as per deed dated 9.1.1964 to carry on the business under the name and style of ''Empire Art Industries''. Clause 16 of the said Deed relates to settlement of disputes. The said clause is extracted below:
16) If during the continuance of the partnership or at any time afterwards any dispute touching the partnership arises between the partners, the same shall be mutually decided by the partners or shall be referred for arbitration if the parties so determine.
(Emphasis supplied)
8. This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in
(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 an 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 excludes 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.
9. Para 16 of the Partnership deed provides that if there is any dispute touching the partnership arising between the partners, the same shall be mutually decided by the parties or shall be referred to arbitration if the parties so determine. If the clause had merely said that in the event of disputes arising between the parties, they "shall be referred to arbitration", it would have been an arbitration agreement. But the use of the words "shall be referred for arbitration if the parties so determine" completely changes the complexion of the provision. The expression "determine" indicates that the parties are required to reach a decision by application of mind. Therefore, when Clause 16 uses the words "the dispute shall be referred for arbitration if the parties so determine", it means that it is not an arbitration agreement but a provision which enables arbitration only if the parties mutually decide after due consideration as to whether the disputes should be referred to arbitration or not. In effect, the clause requires the consent of parties before the disputes can be referred to arbitration. The main attribute of an arbitration agreement, namely, consensus ad idem to refer the disputes to arbitration is missing in Clause 16 relating to settlement of disputes. Therefore it is not an arbitration agreement, as defined u/s 7 of the Act. In the absence of an arbitration agreement, the question of exercising power u/s 11 of the Act to appoint an Arbitrator does not arise.
30. Mr. Samdani, then relies on the judgment of the Supreme Court in the case of
9. Before referring the said section, I shall refer to the relevant Clauses 4 and 5 in the two agreements dated 15.8.95. They read as follows:
Clause 4: It is hereby agreed that, if any dispute arises in connection with these presents, only courts in Bombay would have Jurisdiction to try and determine the suit and the parties hereto submit themselves to the exclusive jurisdiction of the courts in Bombay.
Clause 5: It is also agreed by and between the parties that any dispute or differences arising in connection with these presents may be referred to arbitration in pursuance of the Arbitration Act, 1947, by each party appointing one arbitrator and the arbitrators so appointed selecting an umpire. The venue of arbitration shall be at Bombay.
22. It is contended for the petitioner that the word ''may'' in Clause 5 has to be construed as ''shall''. According to the petitioner''s counsel, that is the true intention of the parties. The question then is as to what is the intention of the parties? The parties, in my view, used the words ''may'' not without reason. If one looks at the fact that Clause 4 precedes Clause 5, one can see that under Clause 4 parties desired that in case of disputes, the Civil Courts at Bombay are to be approached by way of a suit. Then follows Clause 5 with the words'' it is also agreed'' that the dispute ''may'' be referred to arbitration implying that parties need not necessarily go to the Civil Court by way of suit but can also go before an arbitrator. Thus, Clause 5 is merely an enabling provision as contended by the respondents. I may also state that in cases where there is a sole arbitration clause couched in mandatory language, it is not preceded by a clause like Clause 4 which discloses a general intention of the parties to go before a Civil Court by way of suit. Thus, reading Clause 4 and Clause 5 together, I am of the view that it is not the intention of the parties that arbitration is to be the sole remedy. It appears that the parties agreed that they can "also " go to arbitration also in case the aggrieved party does not wish to go to a Civil Court by way of a suit. But in that event, obviously, fresh consent to go to arbitration is necessary. Further, in the present case, the same Clause 5, so far as the Venue of arbitration is concerned, uses word ''shall''. The parties, in my view, must be deemed to have used the words ''may'' and ''shall'' at different places, after due deliberation.
31. The learned counsel then relied on the judgment of this court in the case of
6. Section 7 of the Act explains the meaning of arbitration agreement. It is an agreement by the parties to submit to arbitration in a dispute arising from a given contract. It could be inserted into an agreement by way of an arbitration clause and shall be in writing contained in a document. It would be sufficient compliance to these provisions even if such clauses are exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. The legislative purpose appears to be that the parties consciously and by mutually agree to refer the disputes between them for adjudication to an arbitration tribunal in terms of the contract or constituted as per the arbitration agreement and under the provisions of the Act. Unilateral expression of reference to arbitration would not satisfy the ingredients of this provision. There has to be a clear unambiguous intent on the part of the parties recorded in writing in a contract or by various modes as indicated in Section 7 before a reference can be made. The intent could be gathered from the documents but it has to be a definite expression.
7. There is no dispute before us that the claims raised in the present petition are relating to the second contract and are stated to be covered under Clause 1 of the minutes recorded between the parties on 3rd September, 2003. We have already referred the minutes recorded between the parties which clearly show that there was no definite agreement between the parties to refer their dispute to arbitration. The expression "then he may adopt the alternative of arbitration" is an uncertain clause and is an option. Firstly, this clause has no application to the claims of the petitioner raised in the present petition inasmuch as it relates to the construction of ROB at Nepty, Dhere, Daund and Murtizapur and not to the disputes of collection of toll at Daund ROB. It does not bind the parties essentially to go to arbitration. Firstly, they have to reconcile whether the recommendation of the committee the contractor is satisfied or not and it is only thereafter that the contractor may go to arbitration. No mode of arbitration is indicated. Thus, the clause is somewhat uncertain and in any case, is hardly of any relevance in dealing with the dispute raised in the present petition. Even in the case of Wellington Associates (supra), the Supreme Court had taken a view that use of expression "may" unless supported by other attending circumstances giving a definite intention of the parties to refer the matter to the arbitration may not constitute an arbitration agreement per se. However, this discussion is not really very relevant for the matters in controversy in view of the facts of the present case. Even if the above clause is treated as arbitration agreement, it will relate only to Clause 2 of the minutes dated 3rd September, 2003 and not to Clause 1. Clause 1 claim relates to collection of toll at Daund ROB. The decision between the parties was that the Joint M.D. asked that the issues be placed before the Claims Settlement Committee and there was no intention of the parties to refer the matter to arbitration in relation to Clause 1. It is nobody''s case that contract/agreement executed between the parties dated 31-5-2002 contained an arbitration clause. The arbitration clause is sought to be enforced entirely on the strength of the agreement arrived at between the parties in the joint meeting of 3rd September, 2003. As already noticed, there is no arbitration clause, referred in relation to contract in respect of Clause 1 and it is not possible to infer with in extent of definiteness in existence of arbitration agreement between the parties in relation to that contract. Reference can also be made to the judgment of this Court in N.C. Sanghani and Ors. v. Rakesh V. Zangda and Ors. Arbitration Application No. 264 of 2005 where this Court held as under:
The arbitration clause has to be gathered from the documents executed between the parties in the form of a contract or otherwise, but the intent to refer to arbitration has to be express or implied. It cannot be uncertain or unmeaningful. The essential elements of an arbitration clause have been repeatedly stated in various pronouncements of the Supreme Court and the parties are to be ad idem to make a reference of their dispute to the arbitration and such an intent must be clear from the material on record, particularly the contract relied upon between the parties. The law was in fact liberalised to the extent that where the party might have taken a stand on a mistaken or wrong understanding of the law, it is not precluded; from changing its stand, even in accordance with such clause. This principles have clearly been stated by the Supreme Court in the cases of
8. Keeping in view the above principle of law, it is clear that there is no proper and valid arbitration agreement between the parties as contemplated under the provisions of the Arbitration and Conciliation Act, 1996. Another factor which is relevant and needs to be noticed is that even in relation to the present dispute, of course, on a different aspect, the applicant himself had filed the suit in this Court being Suit No. 2702 of 2003. Filing of a suit by the petitioner itself indicates the conduct and intent of the petitioner that the claim in relation to that contract never understood to be covered by the arbitration clause between the parties. How the parties understood the minutes of the meeting is to be seen from their conduct subsequent thereto. The minutes were recorded in the year 2003. The petitioner has filed the suit in 2003 and having failed to get any effective relief, they have filed the present arbitration application on 26th July, 2007.
32. Relying upon the aforesaid three judgments, the learned senior counsel would submit that the unless the agreement to refer the disputes or differences to arbitration is expressly or impliedly spelt out from arbitration clause itself, the matter cannot be referred to arbitration. It is submitted that in these cases, the intention of the parties is clear that only if both the parties agree to the award being binding in future, it could be construed as arbitration clause. As both the parties did not agree that the arbitration award would be binding on both the parties, such clause cannot be construed as arbitration clause. The parties had not disputed or intended at any point of time to have the dispute settled by the arbitration.
33. Mr. Samdani, the learned senior counsel then submits that the applicants have not obtained leave under clause 12 of the Letters Patent Act before filing this application though the property is situated at Baroda, supplementary agreement was arrived at Baroda and the respondents resided at Baroda.
34. In rejoinder, Mr. Kamdar, the learned senior counsel submits that the application filed u/s 11 is not a suit and is not before the court and thus leave under clause 12 of the Letters Patent is not required.
35. Mr. Kamdar, the learned senior counsel submits that from the perusal of the arbitration clause, even as per official translation relied upon by the respondents would indicate that both the parties had agreed that whatever decision would be rendered by the arbitrator would also be accepted. It is submitted that clause does not indicate that the parties would agree to arbitration in future, if they agree to be bound by the award of the arbitral tribunal. It is submitted that the translation relied upon by both the parties shows that the arbitration agreement had already been accepted by both the parties. Both the parties had agreed that the decision of the arbitrator would be binding. It is submitted that the intension of the parties was clear. The form of arbitration agreement is not relevant. It is submitted that even in the letter of the respondent dated 30th November, 2000 addressed to the translator of this court while pointing out the alleged errors in the translation obtained by the applicants, alleged errors pointed out by the respondents were not mentioned as errors in the translation obtained by the applicant. The learned counsel invited my attention to the said letter dated 30th November, 2000 in support of this submission.
36. On the issue of limitation, the learned senior counsel submits that the issue of limitation is a mixed question of fact and law. The Limitation Act does not apply to the application filed u/s 11 of the Arbitration & Conciliation Act and the said application is not before the court. It is submitted that the respondents have not raised any plea of limitation in respect of the claims in the affidavit in reply and unless such plea is raised, the same cannot be allowed to be raised across the bar. It is submitted that section 3 of the Limitation Act would not apply to the application filed u/s 11. In view of no plea of limitation regarding claims in the reply, the applicant did not be produce any material on record to demonstrate that the claims made by the applicants is within time and not dead or stale claim. The learned counsel submits that as per the consideration clause provided in the supplementary agreement, the respondents were under obligation to make payment in eight installments to the applicant within the period of two years from 1995. It is submitted that the default in payment of each installment would amount to separate and continuing breach and thus the last of it occurred in the year 1997 whereas the applicants have invoked arbitration clause in the year 1999. It is submitted that even under Article 58, right to sue for the declaration would arise when the last installment was due. The learned senior counsel submits that in any event, it is for the arbitrator to decide whether the claims are barred by law of limitation or not and in view of such contentious issues raised by both the parties, the said issue can not be decided u/s 11.
37. Mr. Kamdar, the learned senior counsel distinguished the judgments relied upon by Mr. Samdani and submits that the facts for consideration of the Supreme Court and this court in the said judgments are totally different and those judgments are distinguishable in the facts of this case.
38. Mr. Kamdar, the learned senior counsel submits that the applicants have not sought transfer of the suit filed by the respondents before the Civil Court at Baroda by this application filed u/s 11. It is submitted that under rules and the scheme framed by this court in any application u/s 11 of the Arbitration and Conciliation Act, the applicant is required to mention the dispute and not the reliefs which he would be seeking before the arbitral tribunal. It is submitted that the applicant has only mentioned details of the pendency of the suit filed by the respondents in the Civil Court at Baroda and the application filed u/s 8 by the applicants in the said suit. Merely, because the proceedings are referred in application u/s 11, it would not mean that the applicants are seeking transfer and or stay of the said proceedings or praying for decision on the issue of transfer of such suit pending before the court at Baroda. It is submitted that the application u/s 11, the Chief Justice or his designate can only appoint arbitrator and can not decide the merits of the suit claim. It is submitted that the respondent has filed the suit instead of invoking arbitration clause. The applicants have invoked arbitration agreement and have made claims. The respondents were fully aware that the applicants would be claimants before the arbitral tribunal.
39. On the issue of limitation, Mr. Samdani, in his sur-rejoinder argument submits that even according to the applicants in their letter dated 11th August, 1985 the entire transaction was terminated. The applicants have raised similar issues in its pleadings filed u/s 11 to the effect that all transactions were terminated and the agreement had come to an end. It is submitted that thus, there is no substance in the plea of the applicant that the alleged breaches committed by the respondents were continuing breaches which would postpone the cause of action till such breaches cease.
40. I shall first decide whether the arbitration agreement between the parties had been arrived at and if arrived at, whether the Chief Justice or his designate has territorial jurisdiction to entertain, try and dispose of the present application.
41. While deciding the issue as to whether the agreement to refer the dispute or differences existed or not, the Chief Justice or his designate has to decide whether the clause in the contract can be construed as an arbitration agreement, which is expressly or impliedly spelt out from the arbitration clause. The intention of the parties to enter into arbitration agreement has to be gathered from the terms of the agreement. If the terms of the agreement indicates intention on the part of all the parties to the agreement to refer the disputes to arbitral tribunal for adjudication and their willingness to be bound by the decision of such tribunal on such disputes, such agreement would amount to arbitration agreement. It has to be seen whether the agreement is in writing or not. Whether the parties have agreed to refer any disputes between them to the decision of the arbitral tribunal or not. It has to be ascertained as to whether the parties had agreed that the decision of the arbitral tribunal in respect of their disputes will be binding on them. Both the parties must be ad idem on the intention to refer the disputes to arbitration and such intention shall be expressly or impliedly spelt out from the arbitration clauses. Even if the arbitration clause is referred in letters, telex, telegrams or other means of communication exchanged between the parties, which provide record of such agreement and not controverted, it would be in sufficient compliance of section 7 of the Arbitration and Conciliation Act, 1996. Considering these principles laid down by the Supreme Court and this court in catena of decisions, I shall now deal with clause 15 of the agreement relied upon by both the parties to ascertain whether arbitration agreement exists in clause 15 of the development agreement between the parties and whether both the parties had agreed to refer their disputes to arbitration for adjudication.
42. Perusal of the translation of clause 15 relied upon by the applicant and also by the respondents indicates that both the parties had intended and agreed to appoint one arbitrator from each side and had agreed to abide by the decision taken by the arbitrators. Clause also indicates that both the parties had agreed that their disputes, difference of opinions, misunderstanding etc. between the parties shall be referred to arbitration to be appointed by both the parties by appointing one arbitrator, by each party. The parties have also agreed that such arbitration would be given effect to as per the provisions of the Arbitration Act. Even translation of clause 15 relied upon by the respondents indicate that intension of both the parties to refer the disputes to arbitration was clear. In my view, arbitration agreement is already concluded in clause 15 and is not subject to any contingency or subject to any further agreement as canvassed by the respondents. In the letter addressed by the respondent through their solicitors to the Chief Translator on 30th November, 2000, it was alleged that most of the negotiations had been made at Bombay according to clause 15, whereas in the translation it was stated that the negotiations have been made at Bombay only. The respondents also alleged that according to correct translation of clause 15, the word "alone" in the original in Gujarati did not exist and inspite thereof, in the translation relied upon by the applicant, word "alone" has been inserted. The respondents alleged that in clause 15 of Gujarati version, word "This agreement" did not exist whereas in the translation produced by the applicant word "This agreement" is placed. These three alleged errors were pointed out by the respondents in the translation produced by the applicant. There was no objection raised about the existence of arbitration clause for the other reasons sought to be introduced in the affidavit in reply and across the bar by the respondents. In my view, intension of both the parties is clear which is expressly and/or impliedly reflected in the arbitration clause. In my view thus the arbitration agreement exists between the parties and in view of the refusal of the respondents to appoint their nominee arbitrator, the applicant is entitled to file the present proceedings u/s 11(6) of the Arbitration & Conciliation Act, 1996 for appointment of the nominee arbitrator on behalf of the respondents.
43. The next question that arises for consideration is whether this application is maintainable before the Chief Justice of Bombay High Court.
44. I have perused the arbitration clause which indicates that the negotiations had taken place at Bombay. The development agreements were executed at Bombay. The applicant who had invoked arbitration clause had made certain claims in the notice invoking arbitration. It is the case of the applicant that it would be filing claim for the damages for breach of agreements committed by the respondents. Section 11(12) (b) of the Arbitration & Conciliation Act, 1996 reads thus:
Where the mattes referred to in sub sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub sections shall be construed as a reference to the chief Justice of 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 the chief Justice of that High Court.
45. The issue therefore, arises for consideration is that if there was no arbitration clause and if the applicant was required to file a suit, in which court he could have filed such suit having territorial jurisdiction. The Supreme Court as well as this court in catena of decisions has taken a view that if the parties are required to file civil suit in absence of arbitration clause, a court which would have jurisdiction to entertain such suit, such court would have jurisdiction to entertain arbitration petition or application for the same subject matter. In the facts of this case, it is clear that the disputes in relation to which arbitration clause is invoked by the applicant, negotiations between the parties having taken place at Bombay, the agreements were entered into at Bombay, the applicant could have filed a suit before the Bombay High Court for the reliefs which she proposes to claim in the arbitration proceedings and thus Chief Justice of this court or his designate has jurisdiction to entertain the application u/s 11 filed by the applicant in view of section 11(12)(b) of the Arbitration & Conciliation Act, 1996.
46. I am not inclined to accept the submission of the respondents that the applicant is directly or indirectly seeking transfer of the pending suit before the Civil Court Baroda filed by the respondents by this application u/s 11 of the Arbitration & Conciliation Act, 1996. This application is only for appointment of arbitrator and not for referring the dispute between the parties including disputes pending before the Civil Court at Baroda. The applicant has already filed separate application u/s 8 of the Act in the pending suit and the same is pending. Merely because there is reference to the pending suit and application filed by the applicant in the court at Baroda, would not mean that the present application seeks transfer of the said disputes to arbitration by this application.
47. Chief Justice or his designate has no power to transfer such suit u/s 11 of the Act. I am also not inclined to accept the submission of Mr. Samdani, the learned senior counsel that in view of the pendency of the suit as well as application u/s 8 before the Civil Court, Baroda, this court can not appoint an arbitrator. In view of section 8(3) of the Arbitration & Conciliation Act, 1996 even if the suit is pending before the Civil Court Baroda, there is no bar in entertaining this application u/s 11 for appointment of an arbitrator.
48. As far as the judgments relied upon by Mr. Samdani, the learned senior counsel for the respondents in the case of Jagdish Chander (supra) is concerned, the arbitration clause in that case gave option to the parties to mutually decide the dispute or to refer the dispute to arbitration if the parties so determine. Considering clause 16, it was held that it was not arbitration agreement but the provision which would enable the arbitration only if the parties mutually decide after due consideration as to whether the disputes will be referred to arbitration or not. The Supreme court held that such clause which requires consent of parties before the disputes can be referred to arbitration would not be considered as arbitration agreement as the main attribute of an arbitration agreement namely, consensus ad idem to refer the disputes to arbitration is missing in clause 16 relating to settlement of disputes. In my view, the facts in the case of Jagdish Chander are clearly distinguishable with the facts of this case.
49. As far as the judgment of the Supreme Court relied upon by Mr. Samdani in the case of Wellington Associates (supra) is concerned, in that case clause 5 provided discretion to the parties to refer the dispute to arbitration but it was not compulsory. Both the parties had agreed that in case of any dispute or differences, the parties may refer the dispute to arbitration. Considering the word "may", the Supreme Court in the facts of that case and on interpretation of such clause held that it was implied that the parties need not necessarily go to Civil Court by way of suit but also can go before the arbitrator. It is held that it was not intention of the parties that the arbitration would be the sole remedy. In this case, there are no such options made available to the parties. Similarly in the judgment of this court in the case of Ashoka Buildcon (supra), word "may" was interpreted by this court and it was held that such clause would not amount to arbitration agreement. In my view, the facts of that case are clearly distinguishable with the facts of this case and reliance placed by the respondents on the aforesaid judgments thus is of no assistance to the respondents.
50. As far as submission of Mr. Samdani, the learned senior counsel for the respondent that the application filed u/s 11 by the applicant is barred by law of limitation is concerned, as the application filed u/s 11 in my view is not before the court, the provisions of Limitation Act, 1963 would not be applicable to such application. I am therefore, not inclined to accept the submission of the respondents that the application is barred by law of limitation.
51. As far as issue of limitation in making the claim raised by the respondent is concerned, it is not in dispute that no such plea is raised in the affidavit in reply filed by the respondents. Mr. Samdani took pains to point out from the documents on record in support of his submission that if the applicant ultimately files the claim for damages, as cause of action had arisen much prior to three years before the date of invocation of alleged arbitration agreement by the applicant and as the claims of the applicant are dead claims or are stale, arbitrator can not be appointed. The learned senior counsel in support of this plea placed reliance upon the judgment of the Supreme Court in the case of Indian Oil Ltd. (supra) and submits that the Chief Justice or his designate may choose to decide whether the claim is dead (long barred) claims or his stale. It is submitted that the claim which the applicant proposed to make is patently long time barred claim and it does not require any detail consideration of evidence and therefore, parties should not be asked to proceed with the arbitration for adjudication of such dead or stale claim.
52. Mr. Kamdar, the learned senior counsel for the applicant on the other hand submitted that no such plea is raised by the respondents in the affidavit in reply. The applicant therefore, did not produce any material on record to deal with such plea which has been raised across the bar. It is submitted that the applicant can satisfy in the present proceedings that the applicant''s proposed claim would not be barred by law of limitation. In the alternate, the learned counsel submits that the issue can be left open to be adjudicated by the arbitral tribunal.
53. In the case of National Insurance Company Limited (supra), the Supreme Court categorized the issues in three categories to be considered while deciding the application u/s 11 of the Act by the Chief Justice or his designate. It has been held that the first category of issues would be the issues which the Chief Justice or his designate is bound to decide. The second category of issues would be which the chief Justice or his designate can also decide and he may choose to decide and the third category of issues would be which has to be left to the arbitral tribunal to decide. The Supreme Court in the case of Indian Oil Ltd. (supra) held that the Chief Justice or his designate is not expected to go into the merits of the claim for examining the tenability of the claim. It is held that he may however, choose to decide whether the claim is dead (long barred) claim and he will do so only when the claim is patently long time barred claim and there is no need for consideration of any detail evidence. The Supreme Court has also held that the applicant is not expected to justify the claim or plead extensively in regard to limitation or produce documents to demonstrate that the claim is within time in the proceedings u/s 11 of the Act. It has been held that if the Chief Justice or his designate records his intension to decide the issue of limitation, he shall give an opportunity to the parties to place their material on such issue.
54. In my view as the issue of limitation is a mixed question of fact and law, the respondent was bound to raise that issue if they propose to raise, in the affidavit in reply filed opposing the application u/s 11 of the Act. As no such plea is raised, admittedly by the respondents, in my view, no such plea can be allowed to be raised for the first time across the bar. Section 3 of the Limitation Act would not apply to the application u/s 11 of the Arbitration and Conciliation Act, 1996 as the same is not before the Court. Both the parties have relied upon during the course of arguments on various documents and pleadings in support of the plea of limitation and in view of the fact that the issue of limitation is contentious issue which may require even oral evidence, I do not propose to decide that issue in this application u/s 11 and leave it open to be decided by the arbitral tribunal. In the absence of such plea raised in the reply, the applicants were not put to notice that the respondents would raise this issue, otherwise, the applicants could have dealt with the same by producing material evidence on record to controvert the same. In view thereof, it is made clear that the issue of limitation raised by the respondents across the bar is kept open and to be decided by the arbitral tribunal if such issue is raised in the written statement, if filed before the arbitral tribunal by the respondents.
55. In my view, there is no merit in the submissions made by Mr. Samdani, the learned counsel appearing on behalf of the respondents. I, therefore, pass the following order:
Mr. Justice V.C. Daga. Former Judge of this Court is appointed as arbitrator on behalf of the respondents. The learned arbitrator appointed by the applicant and the learned arbitrator appointed by this order shall appoint the presiding arbitrator in accordance with the provisions of Arbitration & Conciliation Act, 1996. Arbitration Application is disposed of in the aforesaid terms. There shall be no order as to costs.
In view of the above, Chamber summons No. 1312 of 2013 also stands disposed.
The learned counsel for the respondents seeks stay of this order for the period of four weeks from today, which is vehemently opposed by the learned counsel appearing for the Applicant. Operation of this order is stayed for the period of four weeks from today.
Latter on Mr. Kamdar, the learned senior counsel appearing on behalf of the applicant submits that the applicants have nominated Mr. Justice V.S. Sirpurkar (Retired), as her Nominee Arbitrator. However, the learned arbitrator nominated by the applicant would be unable to act as arbitrator in view of his appointment as Chairman, Competition Appellate Tribunal and suggests that in place of Justice V.S. Sirpurkar (Retired), Mr. Justice B.N. Srikrishna, Former Judge of Supreme Court is nominated on behalf of the applicant. Statement is accepted. Justice B.N. Srikrishna, Former Judge of the Supreme Court and the arbitrator nominated by this order shall appoint Presiding Arbitrator in accordance with the provisions of Arbitration & Conciliation Act, 1996. The learned counsel for the respondent submits that he does not accept the applicant exercising any right of appointment of either Justice V.S. Sirpurkar or Justice B.N. Srikrishna.
