1993 (3) TMI 349 - SC - Companies Law

Whether or not the expression arbitration or arbitrator or arbitrators has been used in the agreement? Held that - In the instant case the original agreement signed between the parties does not contain any clause for arbitration. It is not the case of the applicant that the applicant had no occasion to know the terms of the agreement since singed by the parties and there was any clear representation that the copy of agreement was to be followed by the parties and terms contained in the copy were to be treated as the terms of agreement between the parties. Hence it cannot be held that after the signed agreement the parties had clearly intended to include arbitration clause in the standard specifications. In the absence of clear intention of both the parties agreement for arbitration cannot and should not be inferred more so when the specific case of the respondents is that by mistake the clause relating to arbitration crept. in the copy of agreement. In our view the High Court was justified in holding that in the facts of the case only the original agreement and not the copy was binding between the parties. Hence no reference to arbitration could be made. In the aforesaid circumstances no interference is called for in the instant appeal and the appeal therefore fails and is dismissed

Issues Involved:
1. Validity of the arbitration clause in the agreement.
2. Appointment of a sole arbitrator.
3. Binding nature of the original agreement versus the copy provided to the appellant.

Issue-wise Detailed Analysis:

1. Validity of the Arbitration Clause in the Agreement:

The primary issue revolves around whether the original agreement between the parties contained an arbitration clause. The appellant argued that the agreement included an arbitration clause as per Clause 73 of the preliminary specifications of A.P. Standard specifications. However, the respondents contended that the original agreement, signed on December 11, 1986, did not contain any arbitration clause. The City Civil Court initially found that the copy of the agreement provided to the appellant included an arbitration clause and ruled in favor of appointing an arbitrator. However, the High Court overturned this decision, emphasizing that the original signed agreement did not contain an arbitration clause. The Supreme Court upheld the High Court's view, stating that "only the original agreement, and not the copy, was binding between the parties."

2. Appointment of a Sole Arbitrator:

The appellant sought the removal of the named arbitrator and the appointment of a sole arbitrator due to the named arbitrator's failure to enter upon the reference and pass an award within the stipulated time. The City Civil Court appointed a retired District Judge as the sole arbitrator. However, the High Court found this appointment erroneous, as the original agreement did not contain an arbitration clause. The Supreme Court concurred, stating that "no reference to arbitration could be made" since the original agreement did not include an arbitration clause.

3. Binding Nature of the Original Agreement versus the Copy Provided to the Appellant:

The appellant received a copy of the agreement that included an arbitration clause, which was not present in the original signed agreement. The City Civil Court initially ruled that the respondents were bound by the arbitration clause in the copy provided to the appellant. However, the High Court and subsequently the Supreme Court, held that the original signed agreement was binding. The Supreme Court noted that "the intention to refer to arbitration by such incorporation must be clear and specific," and in this case, the original agreement did not reflect such an intention. The Court also highlighted that the respondents had a policy decision to exclude arbitration clauses from agreements, further supporting the absence of an arbitration clause in the original agreement.

Conclusion:

The Supreme Court dismissed the appeal, affirming the High Court's decision that the original agreement, which did not contain an arbitration clause, was binding. Consequently, the appointment of an arbitrator was deemed invalid, and no reference to arbitration could be made. The appeal was dismissed without any order as to costs.

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