2000 (3) TMI 1117 - HC - Indian Laws

Summary

Issues Involved:
1. Whether Clause 29 (formerly Clause 67) of the Conditions of Contract constitutes an arbitration agreement.
2. Whether the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator is maintainable.

Detailed Analysis:

Issue 1: Whether Clause 29 (formerly Clause 67) of the Conditions of Contract constitutes an arbitration agreement.

The petitioner entered into an agreement with the Karnataka Power Corporation Limited (KPC) for the construction of Kadra Power House. Clause 67 of the original agreement and Clause 29 of the supplementary agreement dealt with the settlement of disputes. The petitioner contended that these clauses constituted an arbitration agreement, while the respondents argued otherwise.

The court examined the definitions and interpretations of an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. It emphasized that an arbitration agreement must reflect the intention of the parties to refer disputes to arbitration and be bound by the arbitrator's decision. The court referred to several precedents, including the Supreme Court's rulings in K.K. Modi v. K.N. Modi and others, Chief Conservator of Forests v. Ratan Singh Hans, and others, to elucidate the attributes of an arbitration agreement.

The court analyzed Clause 29 and found that:
- The clause did not mention "arbitration" or "arbitrator."
- It required disputes to be referred to the Chief Engineer, who had jurisdiction over the work, indicating an internal decision rather than an independent adjudication.
- The Chief Engineer's decision was binding only on the contractor, not on KPC, and the contractor was required to approach the law courts if dissatisfied.
- There was no provision for a fair and judicious enquiry by the Chief Engineer.

The court concluded that Clause 29 did not constitute an arbitration agreement as it lacked the essential attributes of arbitration, such as an independent adjudication process and a binding decision on both parties.

Issue 2: Whether the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator is maintainable.

Given the conclusion that Clause 29 (and the former Clause 67) did not constitute an arbitration agreement, the court held that the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, was not maintainable. The court emphasized that without an arbitration agreement, the question of appointing an arbitrator did not arise.

Conclusion:

The court rejected the petition as not maintainable, holding that Clause 29 (formerly Clause 67) of the Conditions of Contract was not an arbitration agreement. The petitioner failed to demonstrate that the clause provided for an independent adjudication process with a binding decision on both parties.