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M/s. Ashok Leyland Limited rep. by its Authorised Signatory v/s State Express Transport Corporation, rep. by its Managing Director, Pallavan salai

    O.P.No. 25 of 2017

    Decided On, 23 August 2017

    At, High Court of Judicature at Madras


    For the Petitioner: Jayesh B. Dolia, K.R. Ashwin Kumar for M/s. Aiyar & Dolia, Advocates. For the Respondents: P. Paramasiva Doss, Advocate.

Judgment Text

(Prayer: Petition filed under section 11(6) of the Arbitration and Conciliation Act, 1996 read with Clause 5 of the appointment of Arbitrator's Scheme by the Chief Justice of Madras High Court's Scheme, 1996.)

1. This Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 seeks appointment of an Arbitrator in terms of Article 33 of the agreement dated 12.04.2012 to enter upon reference and decide disputes arising between the petitioner and the respondent.

2. Mr.Jayesh B.Dolia, learned counsel appearing on behalf of the petitioner would draw the attention of the Court to the tender documents for the supply of [BSIII and BSIV] Passenger Bus Chassis in Tender No.15/Chassis/CP/IRT2011. The aforesaid document, at clause CC-33, refers to arbitrtation of the disputes, differences and claims arising out of the contract. Pursuant thereto, the Institute of Road Transport (in short, 'IRT') has issued a letter No.15/CP/IRT/2011 dated 21.11.2011 to the petitioner for the supply of chassis. The aforesaid letter contains reference to the terms and conditions laid down in the tender bearing No.15/Chassis/CP/IRT/2011. Thus, according to Mr.Dolia, the arbitration clause stood incorporated vis-a-vis the present transaction between the petitioner and the respondent.

3. Mr.Dolia would also draw my attention to the purchase order issued by the respondent to the petitioner for the supply of Passenger Chassis dated 21.11.2011 and a contract agreement for supply of Pass Bus Chassis to State Express Transport Corporation Limited, the respondent herein, bearing contract No.H3/0319/H/SETC/11 dated 28.11.2011. Reference is made, in the recitals to the contract, to the following documents that are stated to constitute part and parcel of the contract:

' The following documents shall be deemed to form and be read and construed as part of this Agreement, viz.,

a) The Bid form and Price schedule submitted and subsequent negotiation by the Bidder.

b) The schedule of requirement

c) The Technical specifications

d) The General conditions of contract

e) The Purchaser's Notification of Award (IRT rate contract)'

4. He would thus buttress his submission that the arbitration clause contained in the tender documents was incorporated by reference into the contract between parties and was applicable to the present transaction. In addition, the very same contract is also referred to in the Performance Guarantee issued by the State Bank of India in Guarantee No.0999912BG0000333 dated 12.4.2012 to the respondent.

5. He would summarise stating that a cohesive reading of all the aforesaid documents reveal that the parties have agreed that the clause for arbitration in the tender document would stand incorporated in contract dated 28.11.2011 and is, thus, applicable to the present transaction.

6. Mr.P.Paramasiva Doss, learned counsel appearing for the respondent would seriously object to the argument of Mr.Dolia. He would point out that:

(i) contract dated 28.11.2011 is a unilateral document executed only by the petitioner and not the respondent.

(ii) the performance guarantee is a document executed by the State Bank of India and thus, the reference to contract dated 28.11.2011 therein is of no consequence.

(iii) only two documents, purchase order dated 21.11.2011 issued by the IRT to the petitioner and the consequent purchase order dated 28.11.2011 issued by the respondent to the petitioner stand admitted. All other documents would stand denied.

(iv) of the above, only one document has, admittedly, been executed by the respondent, being the purchase order dated 21.11.2011.

7. Thus, according to him, there is neither agreement for arbitration between the parties nor reference to a clause for arbitration by incorporation or otherwise.

8. Heard learned counsel and perused the materials placed before this Court.

9. The provisions of Section 7(5) of the Arbitration and Conciliation Act, 1996 (in short, 'the Act') dealing with the arbitration agreement contain interalia sub-section (5), reading as follows:

"(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

10. Proceedings for arbitration have thus to be based upon an agreement between parties for arbitration to which both parties have accorded assent. Mr.Dolia relies on letter issued by the IRT in No.15/CP/IRT/2011 dated 21.11.2011, and the specific reference therein to 'tender terms and conditions'. However, this, in my view would not support the stand of the petitioner as the respondent is not a party to the aforesaid document. Moreover, the letter is seen to be a self-contained document with Annexures A to D that contain all details, terms and conditions with reference to the procurement of chassis by the IRT from the petitioner.

11. As rightly pointed out by learned counsel appearing for the State Express Transport Corporation, neither the contract of IRT dated 21.11.2011 nor the contract agreement dated 28.11.2011 bind the respondent herein.

12. Mr.Dolia would refer to the judgments of the Supreme Court in the case of Groupe Chimique Tunisien SA V. Southern Petrochemicals Industries Corpn. Ltd. ((2006) 5 SCC 275) and J.K.Jain and others V. Delhi Development Authority and others ((1995) 6 SCC 571) for the proposition that absent a formal agreement for arbitration, the existence of a clause for arbitration can be implied from documents and surrounding circumstances including the conduct of parties.

13. In the first judgment cited above, the Supreme Court finds that the purchase orders placed by the respondent with the petitioner are contracts between the parties that have been made subject to Fertilizer Association of India Terms and Conditions for Sale and Purchase of Phosporic Acid (in short, "FAI") terms, which contain an arbitration clause.

14. In the present case, I am unable to draw such an inference, since there is no document signed by both parties, not even a letter or any other document, that would lead one to the conclusion that the arbitration clause contained in the tender conditions stand incorporated by reference or otherwise into the agreement between the parties.

15. In J.K.Jain's case (supra), the Supreme Court held that the arbitration clause has to be deemed to be part of the agreement between parties, since the ag

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reement specifically included all the terms and conditions in the tender form. Additionally, each page of the tender form including the page containing the arbitration clause was signed by both parties. It was in the above circumstances that the Court held that there was a valid Arbitration agreement between the parties. This case is distinguishable on facts, as none of the features noticed in J.K.Jain's case (supra) are present here. 16. In the light of the above facts, I do not find any agreement or meeting of minds between the parties on the existence of an agreement for arbitration that would validate the present petition. Accordingly, the petition stands dismissed leaving the parties to bear their own costs.