1980 (2) TMI 254 - SC - Indian Laws

Summary

Issues:
The judgment involves the interpretation of a contractual clause to determine if it constitutes an arbitration agreement under Section 34 of the Arbitration Act.

Interpretation of Clause 22:
The defendant contended that Clause 22 of the contract constituted an arbitration agreement, allowing the Superintending Engineer to make final decisions. The trial and appellate courts agreed, but the High Court rejected this view. The High Court emphasized that the clause did not authorize arbitration between the parties, rather it vested the Engineer with supervisory and administrative control over the work.

Comparison with Previous Cases:
The appellant cited precedents such as Governor-General v. Simla Banking and Industrial Company Ltd., Dewan Chand v. State of Jammu and Kashmir, and Ram Lal v. Punjab State to support their argument. However, the court distinguished these cases, noting that the clauses in those cases explicitly mentioned disputes and references to the Engineer, unlike the clause in the present case.

Decision:
After analyzing the clause and considering the arguments, the Supreme Court concurred with the High Court's decision that Clause 22 did not amount to an arbitration agreement. Therefore, the appeal was dismissed with costs.

This judgment clarifies the distinction between clauses conferring decision-making authority on an Engineer and those constituting arbitration agreements, emphasizing the need for explicit reference to disputes and arbitration in the contract language.