Case Note & Summary
The petitioner, M/s F.A. Enterprise, a registered partnership firm, filed an arbitration petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to resolve disputes arising from a work contract dated 17 August 2009 with the Vidarbha Irrigation Development Corporation (respondent). The contract was for construction of a canal and had a tender cost of Rs. 699,76,22,994. The petitioner relied on Clauses 30.1, 30.2, and 30.3 of the General Conditions of the Contract, which provided for the decision of the Superintending Engineer to be final and binding on all questions relating to the contract. The respondents opposed the petition, arguing that Clause 30.1 did not constitute an arbitration agreement and that the disputes were excepted matters under the contract. The court examined the language of Clause 30.1 and held that it amounted to an arbitration agreement as it provided for a binding decision by a third party on disputes arising out of the contract. The court also rejected the respondents' contention that the disputes were excepted matters, noting that the termination of the contract and claims for payment were not specifically excluded from arbitration. Consequently, the court allowed the petition and appointed a sole arbitrator to adjudicate the disputes, directing the parties to bear the arbitrator's fees equally.
Headnote
A) Arbitration Law - Existence of Arbitration Agreement - Section 11 of the Arbitration and Conciliation Act, 1996 - Clause 30.1 of General Conditions - The court examined whether Clause 30.1, which makes the decision of the Superintending Engineer final and binding, constitutes an arbitration agreement. The court held that the clause provides for a dispute resolution mechanism by a named authority and thus amounts to an arbitration agreement, relying on the principle that a clause need not use the word 'arbitration' if it contemplates a binding decision by a third party. (Paras 1-10) B) Arbitration Law - Excepted Matters - Section 11 of the Arbitration and Conciliation Act, 1996 - The respondents argued that certain disputes were excepted from arbitration under the contract. The court held that the dispute raised by the petitioner regarding termination of the contract and claims for payment were not excepted matters and were arbitrable. (Paras 11-15) C) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - The court allowed the petition and appointed a sole arbitrator to adjudicate the disputes between the parties, noting that the arbitration clause was valid and the disputes fell within its scope. (Paras 16-20)
Issue of Consideration
Whether Clause 30.1 of the General Conditions of the Contract constitutes an arbitration agreement and whether the disputes fall within the excepted matters under the contract.
Final Decision
The court allowed the arbitration petition and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration agreement
- existence of
- Section 11 of the Arbitration and Conciliation Act
- 1996
- excepted matters
- finality clause
- appointment of arbitrator
