Full Text
HIGH COURT OF DELHI
ARHP. 47/2020, LA. 10320/2021
473/2021 ^
BmLDERS THROUGH SHRI SAURABH GARG GARG BUILDERS
Through: Mr. Rahul Malhotra, Adv Petitioner(s)
Through:
Respondent Mr. Parveen Kumar Mehdiratta, Adv. with Mr. Ram Singh, Advs. for R-1
(Item Nos. 3 & 6)
Mr. Shlok Chandra, SC with Ms. Mansie Jain, Mr. Nimit Saigal &
Mr. Keshav Garg, Advs. for ESIC (Item Nos.3, 4 & 6)
Mr. Dinesh Soni, SSO/Representative for ESIC (Item Nos.3 to 6)
Mr. Ripu Daman Bhardwaj, CGSC with Mr. Kushagra Kumar & Ms. Aakriti Roy, Advs. for NDRF (Item
No.5)
Mr. Varun Nischal, Adv. with Mr. Vaibhav Mishra, Adv. &
Mr. Mukesh Kumar (Legal In-charge) for R-1 (Item Nos.4 & 5)
2022:DHC:6011
10.10.2022
ORDER
1. All these petitions have been filed seeidng appointment of an Arbitrator.
2. There is no dispute that the respondent had carried outthe work on behalfofESIC(item Nos.3,4&6)/NDRF(item No.5). Certain claims have been raised by the petitioner, which have been declined by the respondent/HPL herein.
3. Anobjection hasbeentaken bytherespondenty«PL,inasmuch asthe petitionerhasnotmadeESIC/NDRFforwhomthe work wascarriedoutas a party respondent. On that objection,I had issued notice to ESIC/NDRF and they are being represented through Mr. Shlok Chandra, Standing Counsel and Mr.Ripu Daman Bhardwaj,CGSC,respectively.In fact,Mr. Malhotra, learned counsel for the petitioner had also stated, he has no objection for impleadment ofESIC/NDRF as party respondent before the Arbitral Tribunal,ifso constituted.
4. Today, Mr. Shlok Chandra, Adv. and Mr. Ripu Daman Bhardwaj, CGSCappearsforESIC/NDRF and contestedthepleathathasbeenurged by the respondentmPL stating thatthe petitioner and the HPL inler-se are governed by the Contract, which stipulates an arbitration agreement and ESIC/NDRF cannot be made a party respondents before the Arbitral Tribunal. Learned counsels also state that even otherwise, such a submission needtobemade beforethe ArbitralTribunal,ifsoconstituted.
5. An objection is takep by learned counsel appearing for respondentmPL that the contract contemplates General Conditions of Contract(GCC,forshort)and SpecialConditionsofContract('SCC,for short)and the procedurecontemplated therein hasnotbeenfollowed bythe petitioner before filing the present petitions seeking appointment of an Arbitrator. In thisregard,myattention has been drawn toClause26(item Nos.3,4and[6])and Clause27ofGCC(item No.5),whichIreproduce as under:- Clause26:SettlementofDisputesandArbitration: Any or allDisputes, differences, or questions which may at any time arise between the parties hereto or any person clamingunderthem,touchingorarisingoutoforin respect ofthis agreement or subject matter thereofshallfirst be endeavored to be amicably resolved atthe top management levd of the parties. However, in event ofsuch dispute, dijference or question etc. remaining unsolved, the same shall be referred to the arbitration by Sole Arbitrator to be nominated by The Chairman And Managing Director of Hindustan Prefab Limited,andprovisions ofthe Arbitration and conciliation Act, 1996shall be applicable. Theplace of such arbitration shall be atNew Delhi." "27.SettlementofDisputesandArbitration. Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specification, design, drawings, and instruction here-in above before mentionedas to the quality ofworkmanship of materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution orfailure to execute the same whether arising during the progress ofthe work or after the cancellation, termination, completion or abandonment thereofshall be dealt with as mentioned hereinafter. i)Ifthe contractor considers any workdemandedofhim to be outside the requirements ofthe contract,or disputes any drawings, record or decision given in writing by the ngineer-m Charge or any matter in connection with or arisingoutofthecontractofcarryingoutofthe work,to be DcZ'in mt'^" within 15 days request the u<oM(L), HPL in writing/or written instructions or decisions. Thereupon, the DGM(C), HPL shall give his written instructions or decisions within a period of one monthfrom thereceiptofthecontractor'sletter. IftheDGM(C),HPLfailstogivehisinstructionsordecision in writing within theaforesaidperiodorifthecontractorsis dissatisfiedwith theinstructionsordecisionoftheDGM(C) Dcif'in Zmf'"' °f ^i appealtothe CMD,HPL whoshall ajjord an opportunity to the contractor to be heard, ifthe atter so desires, and to offer evidence in support ofhis appeal The CMD, HPL shall give his decision within 30 days ofreceipt ofcontractor's appeal. Ifthe contractor is dissatisfied with this decision, the contractor shall within a receiptofthe decision,give notice to the CMD,.in the prescribedformat attached with SCC as Annexure-X HP L for appointment of arbitrator failing which thesaiddecisionshallbefinalbindingandconclusive and notreferable to adjudication bythe arbitrator. li)Exceptwherethedecision hasbecomefinal, bindingand conclusive in terms of Sub Para(i) above disputes of difference shall be referred for adjudication through arbitration byasole arbitratorappointed by the CMD,HPL on behalfofNDRF and with the consent ofNDRF.Ifthe arbitrator so appointed is unable or unwilling to act of resigns his appointment or vacates his office due to any reason whatsoever, another sole arbitrator shall be appointed in the manner aforesaid Such person shall be entitled to proceed with the referencefrom the stage at which it was left by hispredecessor. It IS a term of this contract that the party invoking arbitrationshallgivea listofdisputes with amountsclaimed to respect ofeach such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the CMD,HPL oftheappeal."
6. Thatapart,itisalsourgedthatintermsofClause 16oftheSCO,any dispute with regardtosub standard work,afterthe issue has beenadjudged by the CMD ofthe respondent No.l,cannot be referred to the process of arbitration being an excepted matter. In other words, he state that such a claim can be made before a Civil Court. Reference has been made to the judgments ofthe Supreme Court in the cases ofIndian Oil Corporation Limited V. NCC Limited 2022 SCC OnLine SC 896 and DLF Home Developers Limited v. Rajapura Homes Private Limited & Anr., Arb.P.(Civil)No.17/2020decided on September22,2021.
7. These above objectionsofthe learned counselforthe respondentsi.e. ESIC/NDRFand HPLhavebeencontested by Mr.Malhotraby statingthat the initial clause ofthe SCC clearly stipulatesthatitisthe provisions ofthe SCC,which would prevail over the GCC. He also state that between the provisions ofGCC and SCC,the SCC being specified(which shall prevail) the petitioners hasfollowed the same and assuch,the stage ofappointment ofan Arbitratorhasarisen.He also state nowforthepetitionerstofollowthe procedure would relegate back the petitioner by a period of six months really defeating the purpose ofarbitration.
8. I have consideredtherespective pleas made bylearned counselforthe parties.
9. Insofar as the plea raised by learned counsel for HPL that ESIC/NDRF,needtobemadeapartyisconcerned,thepleaIscontested by the counsel for ESIC/NDRF by stating, the imer-se agreement between petitioner and HPL do not contemplate involvement of ESIC/NDRF and even otherwise such a plea need to be considered by the Arbitral Tribunal. Only to be noted in VistratRealEstatesPrivate LitnUed v. Asian Hotels North Ltd.2022SCCOnlineDei1139on which reliance has been placed by Mr.Chandra,theCourtin paragraphs 11 and 14hasheld asunder:- "!I. Hon'ble Supreme Court in the decision reported as (2013) I see 641 ehrolo eontrols India Private Ltd. Vs. Severn Trent Water Purification Inc. and Ors. though dealingwithaninternationalarbitration underSection45of theAct, heldthateven thirdparties who are notsignatories to the arbitration agreement can bejoined in arbitration.It laid down categories where the third parties can be impleaded to the arbitration and held that the expression..claiming through them" should be construed strictly. It was held as under: "70. Normally, arbitration takes place between thepersons who have, from the outset, been parties to both the arbitration agreement as well as the substantive contract underlining (sic underlying) that agreement. But. it does occasionally happen that the claim is made against or by someone who is notoriginally namedas aparty. These may create some difficult situations, but certainly, they are not absolute obstructions to law/the arbitration agreement. Arbitration, thus, could be possible between a signatory to an arbitration agreementanda thirdparty. Ofcourse,heavy onus lies on thatparty to show that, infactand in law. it is claiming "through" or "under" the signatory party as contemplated underSection 45ofthe 1996Act. Just to deal with such situations illustratively, reference can be made to thefollowing examples in Law andPractice ofCommercial Arbitration inEngland(2ndEdn.)bySirMichaelJ Mustill:
1. The claimant was in reality always a party to the contract, although not named in it.
2. The claimant has succeeded by operation oflaw to the rights ofthe namedparty.
3. The claimant has become a party to the contract in substitutionfor the namedparty by virtue ofa statutory or consensual novation.
4. The originalparty has assigned to the claimanteither the underlying contract, together with the agreement to arbitrate which it incorporates, or the benefit ofa claim which hasalreadycome into existence. XXX
73. A non-signatory or third party could be subjected to arbitration without theirprior consent, but this would only be in exceptional cases. The court will examine these exceptionsfrom the touchstone ofdirect relationship to the party signatory to the arbitration agreement, direct commonality of the subject-matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance ofthe mother agreement may not befeasible without aid, execution and performance of the supplementary or ancillary agreements,for achieving the common object and collectively having bearing on the dispute. Besides all this, the court would have to examine whether a composite reference ofsuch parties would serve the ends ofjustice. Once this exercise is completed and the court answers the same in the affirmative, the reference of even non- signatoryparties wouldfall within the exception afore- discussed.
74. In a case like thepresent one, where origin and end of all is with the mother or the principal agreement, thefact that a party was non-signatory to one or other agreement may not be ofmuch significance. T\he performance ofany one ofsuch agreements may be quite irrelevant without the performance andfulfilment ofthe Principal or the mother agreement Besides designing the corporate managementto successfully complete thejoint ventures, where the parties executedifferentagreements butallwith oneprimaryobject in mind, the court would normally hold the parties to the argain ofarbitration and not encourage its avoidance In cases involving execution ofsuch multiple agreements two essentialfeatures exist;firstly, all ancillary agreements are relatable to the mother agreement and secondly, perjormance ofone is so intrinsically interlinked with the other agreements that they ar\ incapable of being beneficiallyperformed withoutperformance ofthe others or severedfrom therest. Theintentionofthepartiestoreferall the disputes between all theparties to the Arbitral Tribunal is oneofthe determinativefactors.
75. We may notice thatthis doctrine\does nothave universal acceptance. Some jurisdictions, fo^, example, Switzerland, have refused to recognise the doci^ine, while others have been equivocal. The doctrine has found favourable consideration in the UnitedStates andFrenchjurisdictions. The USSupreme Courtin Ruhrgas AG v. Marathon Oil Co. [143 L Ed 2d 760: 526 US 574^(1999)] discussed this doctrine at some length and relied on more, traditional principles, such as, the non- signatory being an alter ego, estoppel, agency and third-party, beneficiaries to find jurisdiction overthe non-signatorie^. such pleas with greater lo the language of the
76. The Court will have to examine caution and by definite reference contract and intention of the p^arties. In the case of composite transactions and multiple agreements, it may again bepossible to invoke such principle in accepting the pleas ofnon-signatory partiesfor r^eference to arbitration. Where the agreements are consequential and in the nature ofafollow-up to the principal or\ mother agreement, the agreement and such latter containing the arbitration agreements being so intrinsically intermingled or interdependent that it is their compositeperformance which shall discharge the parties of their respective mutual obligations and performances, this would be a sufficient indicatorofintentofthepartiestorefersignatoryas wellas non-signatory parties to arbitration. The principle of composite performance" would have to be gatheredfrom the conjoint reading of the principal and supplementary agreements on the one hand and the ' parties and the attendantcircumstaw.
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103. Various legal bases may be signatory toan arbitration agreemer: a XXX XXX pplied to bind a nont:
103.1. Thefirsttheory is thatofimpliedconsent,third-party beneficiaries, guarantors, assignment and other transfer mechanisms ofcontractual rights. This theory relies on the discernible intentions ofthe parties and, to a large extent, on goodfaith principle. They apply to private as well as public legalentities. '
103.2. The second theory includes agent-principal relations, apparent veil (also called "the alter ego"), succession and estoppel. They do intention butratheron theforce ofth XXX
107. Ifone analyses the above cases and the authors'views. it becomes ab the legal doctrines of authority, piercing of joint venture relations, not rely on the parties' e applicable law.
XXX XXX undantly clear that signatory parties to an arbitration It maybethe resultofimpliedorspecificconsentorjudicial determination. reference of even nonagreement can be made. Normally, the parties to the arbitration agreement calling for arbitral reference should be the same as those to the action. But this general concept is subject to exceptions which arethatwhen athirdpartyi.e non-signatoryparty,is claimingorissuedas beingdirectlyaffectedthrough aparty to the arbitration agreement and there are principal and subsidiaryagreements,andsuch thir^partyissignatorytoa subsidiary agreement and not to tl;ie mother or principal agreement which contains the arbitration clause, then depending upon thefacts and circumstances ofthe given case,it may bepossible tosay thatevensuch thirdpartycan be referred to arbitration".
14. Therefore, once a valid arbitration agreement exists between the parties, the issue whether the petitioner is entitled to any reliefin the absence ofa thirdparty to the agreementor that thirdparty is required to be impleaded in theproceedings, is covered by the Doctrine ofCompetence- Competence and it will befor the Arbitrator to decide the said issue. Thus, the issue whether in the absence ofa third party, the petitioner can claim ke refundable security depositwould befor the.learnedArbitrator to determine."
10. The real issue which arises for consideration is whetherthe petitioner IS required to follow the process as laid down in the GCC,which I have already reproduced above. The plea ofthe counsel for the petitioner is, as per the stipulation in the SCC, and also tie SCC being specific, it shall prevail whereas,the counsel for HPL would submitthe SCC only stipulate, that special conditions shall supersede/supplement the relevant conditions I given in CPWD (GCC)tender document] It means, the GCC and SCC supplementeachother. TheprocedureinC^CC/SCCformakingareference to Arbitration have to be harmoniously njad/followed. This plea of the counsel for HPL hasto be considered,in conjunction with other plea thatin ilates that the decision of the rding the quantum ofreduction view of clause 16 of the SCC which stip. Chairman and Managing Director HPL,reg£ as wellasjustificationthereofinrespectofratesforsubstantial work willbe finaland would notbeopento Arbitrationand adjudication. Itfollowsthat, beforethepartiesarereferredtoarbitrationijtisnecessarythatthedispute(s) (ifany)tobereferredaredetermined/estabjishedasperthecontract,andis notan "exceptedmatter". j
11. The reliance placed by learned counsel for the respondent No.l on Indian Oil Corporation Limited (supra), the Supreme Court while considering asimilar issue,hasin paragraphs 30,47,49,62,63,64,65 and 66 held as under:are at liberty to provide "30. It is submitted thattheparties ^ within the contracta departmental machineryfor resolution of certain matters, the determination of which will be outside the scope ofarbitration, hat such departmental machinery, being the will ofthe parties as embodied in the contract, mustbe respectedandgivep effectto.In supportof the above submissions, reliance is placed on thefollowing decisions ofthis Court: ' India v. Sreekanth
(i) Food Corporation of
Transport(1999)4SCC491(ParasS,3) (ii)Harsha Constructions v. UnioA ofIndia(2014)9SCC 246(Paras 14, 18, 19) I (in)Mitra Guha Builders (India)\ Company v. Oil and Natural Gas Corporation Ltd.(2020)3SCC222(Paras 23 24,26,30)
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47. It is further submitted that vide theAmendment Act, 2015,section 11(6A) has been inserted by virtue ofwhich. the scope ofintervention atSection 11 stage is very narrow. Reliance is placed upon the decision ofthis Court in the case ofDuro Felguera S.A. v. Gangavaram Port Limited[(2017) 9 SCC 729]. It ^ submitted that after insertion ofSection 11(6A), the scope ofintervention by the Courtatthe stage ofappointmentofArbitrator is narrowed down and the Courts may have to now only examine the existence of a valid arbitration a'^eement. That in the aforesaid decision it is held that the legislative purpose is essentially to minimize the Court's intervention atthestage of appointment of Arbitrator and that the intention as incorporated inSection 11(6A)ought to be respected is the submission.
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49. It is submitted that the conflicting decisions were considered and the issue has now been settled by a Three Judges Bench of this Court in L subsequent decision rendered in the case ofMayavati TradingPrivate Limited v. Pradyuat Deb Burman[(2019) 8 bcc 714]. That after considering in detailthe 246th Law Commission Report;the report of the High Level Committee regarding institutionalization ofarbitration in India and the Statement ofOb]ects and Reasons ofthe 201^5 Amendment Bill, it is held thatpost 2015, the scope ofthe Courts'powers at the stage of appointment of Arbitrator is confined to the examination ofthe existence ofthe arbitration agreement.It is submitted that the decision oftlus Court in the case of Mayavati Trading Private Limited (supra) has been subsequentlyfollowed by this Cowrjin a recentdecision in the case ofVidya Drolia(supra).
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62. It cannot be disputed that both the parties are governed by the GCC. The GCC are the part of the Agreements / Contracts between \the parties. Under the GCC,theparties have agreedto resolve the dispute between them only in terms of the relevant clauses of the GCC referred to hereinabove. The parties have agreed that certain specified disputes alone vf/// be the subject of arbitration.
63. In the case of Narbheram Power & Steel (P) Ltd (supra),itisobservedandheldthatthepartiesare boundby the Clauses enumeratedin thepolic))<andthe Courtdoes not transplantanyequityto thesame byre writingaclause Itis further observed and held that ak arbitration clause is required to be strictly construed. \Any expression in the clause must unequivocally express the intent ofarbitration. It can also lay the postulate in which situations the arbitration clause cannot be given effect to. It isfurther observed that if a clause stipulates that under certain circumstances there can be no arbitration and they are demonstrably clear then the controversy pertaining to appointmentofArbitratorhasto bep^uttorest(Paras1023).
64. In the case of Centrotrade Minerals & Metal Inc. (supra), this Court hadan occasion to consider the concept ofparty autonomy and it is observed and held that party autonomy is virtually the backbone of arbitration. It is further observed and held that pa\ty autonomy being the brooding and guiding spirit in arbitration, the parties are free to agree on the application of three different laws governing their entire contract-(1)properlaw ofcontract; (2)proper law ofarbitration agreementand(3)proper law ofthe conduct ofarbitration. It isfurther observed in the said decision that the parties to an arbitration agreement have the autonomy to decide notonly on theprocedurallaw to befollowed but also the substantive law. The choice of jurisdiction is also leftto the contractingparties.
65. In the case ofDLF Universal Ltd. & Anr. v. Director, Town and Country Planning Department, Haryana & Ors. [(2010)14see 1], it is observedand held that the contract is to be interpretedaccording to itspurpose. Thepurpose of eoXTL'V'^'"T"' policy that the contTM, designed to actualize. It comprises the joint men oftheparties.Itisobservedth^titisnotanintentofa "2'^potty:ItIS thejointintentofboth thepartiesandthe joint intent of the parties is to b\ discoveredfrom the itsfZartL'iZlTi). surrounding
66. In the case ofRajasthan StateIndustrialDevelopment andInvestment Corporation & Anr. v. Diamond and Gem Development Corporation Ltd.&Anr.[(2013)5SCC4701 It IS observed and held thata party cannot claim anything morethan whatis covered by the terms ofthe contract,for the reason that the contract is a transaction between two parties and has been entered into lith open eyes and by understanding the nature ofcontract Itisfurther observed that thus the contract being a crelture ofan agreement between two or more parties has tb be interpreted giving Item meanings unless there is some\ambiguity therein. The contractis to beinterpretedgivingtlieactualmeaningtothe words containedin thecontractanditis notpermissiblefor the Court to make a new contract, however reasonable if the parties have not made it themselves. It is further observedthatthe termsofthecontr^thaveto beconstrued stnctly without altering the nature ofa contract as it may affect^ the interest ofeither ofthe parties adversely (Para Zj). would reveal that wherever the 12..A readingofthe aforesaid paragraphs partieshave agreed to resolvethedispute betweenthem onlyintermsofthe agreement,they are requiredtofollow thesaUe beforethey arerelegated to the process of arbitration, more specificalli,as according to the learned counselfor the respondent No.l/HPL,thelclaims with regard to the sub standard work are outside the realm ofthj arbitration process. In other words,the process contemplated under the contract is required to be gone into,to narrow down the disputes, which ultimately to be referred to the arbrtratron process. In view ofthejudgmlnts referred to above and the stipulationsinthecontractagreement,Iagree withthesubmission madeby learned counselfortherespondentNo.1,
13. ThepleaofMr.Malhotraisbyrelyinguponthefollowingstipulation in the see. "These special conditions shall supercede/ supplement the reliant conditions given in CPWD ^orm 7/8(Edition 2014 doLZnt" ^"'endments) in the tender
14. The said plea looks appealing on a first blush but on a deeper consideration,the said clause does not in unequivocal terms state that the see shall supersede the GCC. It also consisted ofthe words 'supplement therelevantconditionsgiveninCPWDfornj7/8'. Ifthatbeso,stipulations m GCC and SCC have to be read harmoniously. If both are read harmoniously then the submission made by learned counsel for the respondent No.l shall hold good. The intent of reading GCC / SCC harmoniously would mean that it is only those disputes, which have been narrowed down, shall ultimately be referred to.the arbitration process, subjecttotheexclusionascontemplated in Clause 16ofthe SCC.
15. Insofarasthesubmission made bylearned counselfortherespondent No.l by referring to Clause 16, the Supreme Court in Indian Oil Corporation Limited(supra) has, in para^aphs 23,26 and 67 held as under
23. It is submitted that there a?e umpteen number of examples of restricted arbitration clauses. Reliance is placed on the decision ofthis Court in the case ofUnited IndiaInsurance Co.Ltd. v.Hyunda\Engg.& Construction ^kere the art,Ration dame expressly stated that where a claim is madeagainsttheinsurerandtheinsurerdeniesitsliability noreferencetoarbitration cantake'place.Insupportofte (1) Vidya Drolia v. Durga Trading Paras US116) Corpn.[(2021)2SCC 1, (2)Garware Wall Ropes Ltd. Constructions&Engg.[(2019)9SC^ (3)Oriental Insurance Co Ltd. v Steel(P)Ltd.[(2018)6SCC534,Paras10,23] VS. Coastal Marine C209,Paras2829) Narbheram Power & XXX XXX XXX
26. It is submitted thatin the case dfVidya Drolia(supra), this Court had considered various aspects with respect to the resMeted arbitration clause. \But in the case of unresMcted clauses, all issues raispd by the contracting Parties will have to be referred to arbitration, because ojSection 11(6A). However, the insiant case is a case ofa restricted arbitration clause that] specifically excludes certain issues from arbitration, as a result of which no arbitration clause exists for those 'other' or 'excepted' disputes and hence,the question ofreferring those disputes would not arise. That in the case of Vidya Drolia (supra), the Arbitration Agreement itselfsets out what is excluded from arbitration. Therefore, it was deld thatSection 11(6A) wouldnotstandin the wayofmakinga reference.
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67. In the case ofMitra Guha Builders (India) Company (supra), while interpreting the clause by which the parties agreed thai the decision ofthe Superintending Engineer in matter and the determination kail be only bv the cTnlTb^allT-^'"'"" ofhisdecision cannot be calledin question in the arbitrationproceedings W of and r^- i^^' '' '■eferring to and held that once the parties have decided that certain matters are to be decided by the Superintending Engineer and his decision would be final, the same cannot be the subjectmatterofarbitration." j The learned counsel has also referred! to the judgment in the case of OrientalCompanyInsuranceLimited. V. H^/sNarbheramPowerandSteel Pvt Ltd, CivilAppealNo. 2268/2018 decided on May 02, 2018, wherein the Supreme Court considering a similar stipulation in the contract has in paragraphs 7, 8, 12, 20 and 24 held as underii
7. To appreciate the rival submissions, it is necessary to scan and scrutinize the arbitration clause, that is. Clause 13 ojthepolicy. The said Clause reads asfollows.■shall arise as to the policy (liability being shall independently of
13. If any dispute or dijference quantum to be paid under this otherwise admitted) such difference...... all questions be referred to the decision ofa sole arbitrator to be appointed in writing by thepakies to or ifthey cannot agree upon a single arbitrator within 30 days ofany party invoking arbitration, the same shall be referred to apanel of three arbitrator, comprising of two] arbitrators, one to be appointed by each of the parties to the dispute/difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be \onducted under and in accordance with the provisions 6f the Arbitration and Concihatim Act, 1996. It is clearlvlasreed and undprNtnn/l that no difference or dispute shall he\ rpfprgble to arhitrntinv, as heremhefore proviHrrI ifthe cLpnm,hn, hereby expresslystipulatedanddeLredthatitsj"bea potThaTZ'"'r -»'■' «' potiey that he award by such arbitrator/arbitrators ofthe amount ofthe loss ordamage shall l)efirst obtained." (Emphasis supplied) & »%« we carefullyreadthe aforequotedClause, it is quite r^ZtfZfThT V"'"7 ""derorin ZfZ\ ^ r reference to the ThZj' " '^on'tined in the seJpndpart ofthe Clause Ik thmdpart ofthe Clause stipulates that before any right ofaction or suit upon thepolicy is taken recourse to, prior TZ(L ofT "''''d-'dor/arbitrato^^ with regard to the amount of loss or damage is a condition precedent. The gh Court, as the impugned order would show, has laid ""d o\ that basis, opined that he secondpart and thirdpart do not have harmony and, in Jact, sounda discordant note,for the scheme cannot be split into two parts, one to be decided by the arbitration and the Other in the suit.
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12. The aforesaid principles are in the realm of settled position of law. The natural corollary of the said propositions is that the parties are^ bound by the clauses enumerated in the policy and the court does not transplant any equity to the same by rewriting a clause. The Court can interpret such stipulations in the a^-eement. It is because they relate to commercial transactions and the principle of unconscionability ofthe terms and conditions because ofthe lack ofbargainingpower does not arise. The saidprinciple^ comes intoplay in a different sphere.\ XXX XXX XXX
20. We maypresently refer to the\decision ofthe Madras catkttrdff • ChiefJustice wasinterpreting Clause13ofthe policy conditions. Referring to The Vulcan Insurance Co Ltd.(supra), he has heldthus:not referable to covered by the The dispute which is arbitration, being not ^ clausecannotbeoverthesubjectmatterof arbitration, and the remedy ofthe insured in this case is only to instituteasuit." And again "I am of the view that the remedy of arbitration is not available to the petitioner herein in view ofthe arbitration clause specifically excluding the mode of adjudication of disputes by arbitration, where a claim is repudiated in toto. The remedy would thus only be ofa civilsuitin accordance with law." We concur with thesaid view.
XXX XXX XXX.[4] It does not need special emphhsis that an arbitration clauseISrequiredto bestrictlyconstrued.Anyexpression in the clause must unequivocally ^express the intent of arbitration.It can also lay thepostulate in which situations the arbitration clause cannot be given effect to. Ifa clause stipulates that under certain circumstances there can be no arbitration, and they are demonstrably clear then the controversypertaining to the appointment ofarbitrator has to beputto rest." '
16. From the reading ofthe aforesaid paragraphs, it is clear that the SupremeCourthasinunequivocaltermssa|dthatifaclausestipulatesthat undercertaincircumstancestherecan benoarbitrationthenthecontroversy « • I pertaining to the appointment ofan arbitrator has to be put to rest. It is necessa contest the submission made by ry to state that Mr.Malhotra would learned counsel for the respondent No.l by stating thatthe claims ofthl petitioner are also not with regard tothesub standard work. Hence,all the claims which have been raised by the petitioner are necessarily to be referredtoarbitrationprocess.IsaynothingonthissubmissionmadebyMr MalhotraasthisCourtisoftheview,in view ofthe plearaised bylearned counsel for the respondent No.l that the remedy for the petitioner is to invoke the procedure/process as contemplated underthe GCC/SCC(to be read h to be relegated to the said armoniously), the petitioner need procedure/processandifthe petitionerstilljhasanygrievance,toseeksuch remedyasavailableinlaw. |
17. Insofar as Arb.P.518/2021 is concerned,it isthe conceded case that vide letter dated January 25,2021,the pe^tioner had submitted an appeal against the order ofthe DGM / AGM,HpL dated January 19,2021. The said appeal wasrejected bytherespondent|<o.l vide letterdated March09, 2021 on the ground thatthe appeal filed bj- the petitioner was withoutany justification/reasons. According to Mr.j^alhotra,the remedy underthe GCC IS to file a claim before the Dispute Resolution Committee,which he intendsto file within30daysfrom today.
18. Atthisstage,learned counselfortherespondentNo.l statessincethe appeal has been rejected by the CMD-HPL|as nojustification/reason was given by the petitioner,appropriate shall be for the petitioner to file a fresh appeal withallparticularsbeforetheCMDforreconsideration. Ifthatbeso, the petitioner shall file an appeal within the timeline(s) stipulated in the contract. Actions shall be taken on the sane by the CMD as per the timeline(s).
19. It is also made clearthatin all other cases the timelines prescribed in the GCC/SCC shall be strictly adhered to.
20. Petitionsand connected application(s)are disposed of. Nocosts.
21. It is reiterated,ifthe petitioner has any dispute/grievance,itshall seek such remedy as available in law.
22. A copy ofthis orderbekeptin allthe pUitions.: uCiO OCTOBER 10,2022M (Corrected and uploaded on 22""October,2022) V.KAMESWAR'RAt),J