2002 (11) TMI 673 - HC - Companies Law

Summary

Issues involved:
1. Whether the respondent-company was bound to refer the dispute to arbitration?
2. Whether there is any arbitration agreement between the parties?

Analysis:

Issue 1:
The appellant contended that the respondent-company was obligated to refer the dispute to arbitration based on the provisions in the objects and articles of association. However, the High Court clarified that these provisions were enabling and did not impose a duty on the company to refer every dispute to an arbitrator. The court emphasized that the clauses were meant to facilitate arbitration if deemed necessary, and not mandatory. The court also rejected the argument that Section 36 of the Companies Act mandated arbitration in every agreement executed by the company, stating that it only bound the company and its directors to the articles of association.

Issue 2:
Regarding the existence of an arbitration agreement between the parties, the appellant argued that certain clauses in the tender notice implied arbitration. The court analyzed the clauses in detail and concluded that they did not automatically incorporate an arbitration clause in the agreement. The court highlighted that for arbitration to be mandated, a specific provision must be included in the contract. The appellant's reliance on the Madras Detailed Standard Specifications for arbitration was also dismissed, as the court found that those specifications were for reference purposes only and did not establish an arbitration agreement. Ultimately, the court ruled that there was no written agreement for arbitration between the parties, as required under the Arbitration and Conciliation Act, 1996.

In conclusion, the High Court found no merit in the appeal and dismissed it, with each party bearing their own costs.