Ltd. Vs. Continental Resources (USA) Ltd.  INSC 2069 (2 December 2008)
REPORTABLE IN THE
SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION ARBITRATION PETITION NO. 16
OF 2007 VISA International Ltd. ...Applicant Versus Continental Resources (USA)
application under sub-section (5) and (9) of Section 11 of the Arbitration and
Conciliation Act, 1996 (for short "the Act") has been filed with a
prayer to appoint an Arbitrator in terms of Clause VI of the agreement dated
15.2.2005 entered into by and between the applicant and the respondent.
facts leading to filing of this application may briefly be noticed:
applicant is, inter alia, engaged in the business of providing services in
international trading of Minerals, Metals and Ship Chartering. The respondent
with an intention to make substantial investments to set up an integrated
aluminium complex in Orissa with an Alumina refinery to be catered by the
bauxite deposits of Gandhamardan Mines entered into a Memorandum of
Understanding (for short "MOU") with Orissa Mining Corporation Ltd.
(for short "OMC") for mining of bauxite deposits from the
Gandhamardan Mines situated in the State of Orissa. In order to help set up
integrated aluminium complex in Orissa, OMC had decided and agreed to enter
into a Joint Venture Agreement with the respondent on certain terms and
terms of the proposed joint venture agreement, the respondent was required to
set up an integrated alumina complex in the vicinity of the Gandhamardan area
and was further obliged to utilize the bauxite lifted from the said mines as
raw material in the proposed aluminum complex. The respondent proposed to the
applicant to set up the said integrated aluminum complex in joint venture with
the applicant by duly incorporating a Special Purpose Vehicle (SPV) for the
applicant relying upon representations and assurances had accepted the proposal
for setting up of the said aluminum complex in joint venture with the
respondent. The parties mutually agreed to execute a MOU and an agreement to
clearly define their respective rights and obligations thereto. Accordingly, a
MOU dated 14.2.2005 was executed by and between the applicant and the respondent
whereby and whereunder it was agreed that the applicant and the respondent
would incorporate a company in the name and the style of "VISA Aluminum
Ltd" for the purpose of setting up an integrated Aluminum Complex. The
said MOU was followed by an agreement dated 15.2.2005 executed between the
parties. In terms of the said agreement it was agreed that the respondent would
enter into the joint venture agreement with OMC while the applicant and the
respondent would incorporate a company in the name and style of "VISA
Aluminum Limited" for setting up an integrated Aluminum Complex. In terms
of the said agreement 26% of the issued and paid up equity shares of the
proposed company to be retained by the respondent and the remaining 74% of the
shareholding to be held by the applicant. The applicant agreed to bear a sum of
US$ 7,40,000 being 74% of US$ 10,00,000 to have been incurred by the respondent
on the pre-project activities. Day to day control was agreed to be that of the
applicant exclusively. The applicant also undertook to pay a sum 4 of US$
22,50,000 to the respondent for the future overseas costs in terms of the said
agreement. Article IV of the said agreement stipulated that the agreement to be
effective upon signing by both the parties with immediate effect. The whole
controversy centers around the interpretation of Article VI in the said
agreement which according to the applicant contains the Arbitration Clause.
may not be necessary for the purpose of disposal of this application to note
further details as to what transpired between the applicant and the respondent
after entering into the agreement till 31st August, 2006. Suffice it to note
that on 31st August, 2006 the respondent addressed a letter to the applicant,
inter alia, alleging the agreement entered into between them is not
`appropriate and is obsolete' as it does not address the changes in the OMC
draft agreement itself. The respondent proposed a new agreement to be prepared
on the lines suggested therein. This is the starting point leading to unending
and acrimonious correspondence between the applicant and the respondent
accusing each other of overreach. The applicant asserted that the agreement
dated 15.2.2005 entered into by and between the parties continued to be valid
and subsisting and whereas the respondent contended that the agreement became
unworkable. On 25.9.2006 the respondent informed the applicant that 5 MOU
dated 14.2.2005 and agreement dated 15.2.2005 "stand discharged and CRL
stands discharge" of its obligations under the said agreement. MOU dated
14.2.2005 and agreement dated 15.2.2005 was treated as cancelled. The applicant
vide letter dated 6.3.2007 informed the respondent that its action of
unilaterally terminating the said MOU and also the agreement was not acceptable
to it. The applicant accordingly invoked the arbitration clause duly informing
the respondent that disputes thus have arisen out of the said MOU and the
agreement which are required to be resolved by the Arbitrator. The respondent
in its turn vide letter dated 3.4.2007 rejected the names suggested by the
applicant to be appointed as Arbitrator for the reasons that (a) the
arbitration will not be cost effective; and (b) the arbitration is pre-mature.
it noted that the respondent never disputed the existence of the arbitration
clause. Nor was the case of the respondent that dispute if any between the
parties may have to be resolved by way of conciliation and not by arbitration.
It is under those circumstances the present application has been filed by the applicant
under Section 11(5) & (9) of the Arbitration and Conciliation Act, 1996.
respondent admits the execution of the said MOU as well as the agreement dated
15.2.2005 but contends that the agreement is an inchoate document, a contingent
matter, not capable of being enforced as an arbitration agreement. The exchange
of letters by and between the parties is not in dispute. It is also the case of
the respondent that the applicant failed to identify the dispute that could not
be resolved amicably and as such there is no question of referring the matter
to arbitration by appointing an arbitrator.
regard to the pleadings and contentions the following questions arise for
1. Whether there exists
a valid arbitration agreement between the parties?
2. Whether there exists
a live claim between the parties?
is now well settled that the power exercised by the Chief Justice of India or
the Designated Judge under Section 11 (6) of the Arbitration and Conciliation
Act, 1996 is not an administrative power.
Anr. [ (2005) 8 SCC
618] this Court in its authoritative pronouncement held that while exercising
the power or performing the duty under Section 11 (6) of the Act, the Chief
Justice or the 7 designated Judge has to consider whether the conditions laid
down by the Section for the exercise of that power or the performance of that
duty, exist. The Chief Justice or the designated Judge as the case may be, is
bound to decide whether he has jurisdiction to entertain the request, in the
sense, whether there is a valid arbitration agreement in terms of Section 7 of
the Act and whether the person before him with a request is a party to the
arbitration agreement or whether there was no dispute subsisting which was
capable of being arbitrated upon.
ought to be borne in mind while deciding the application under Section 11 (6)
of the Act.
Whether there exists
a valid arbitration agreement between the parties?
disputed arbitration clause in the present case reads as under:
arising out of this agreement and which cannot be settled amicably shall be
finally settled in accordance with the Arbitration and Conciliation Act,
agreement is defined under Section 7 of the Act. It does not prescribe any
particular form as such. In terms of the said provision arbitration agreement
(1) An agreement by
the parties to submit to arbitration all or certain disputes which have arisen
or which may arise between them in respect of a defined legal relationship,
whether contractual or not.
(2) An arbitration
agreement may be in the form of an arbitration clause in a contract or in the
form of a separate agreement.
(3) An arbitration
agreement shall be in writing.
(4) An arbitration
agreement is in writing if it is contained in - a) a document signed by the
[ (1980) 4 SCC 556]
had an occasion to construe a clause in the lease deed which provided:
any doubt, difference or dispute shall hereafter arise touching construction of
these presents or anything herein contained or any matter or things connected
with the said lands: or the amount or payment of any rent or royalty reserved
or made payable hereunder in the matter in difference shall be decided by the
lessor whose decision shall be final."
that case the lessor was the Governor of the State. This Court took the view
that the said clause read as a whole provided for referring future disputes to
the arbitration of the Governor.
it noted the said clause does not use any expression of "arbitration, a
settlement of dispute by the arbitrator". This Court observed that
arbitration agreement is not required to be in any particular form. It was held
what is required to be ascertained is whether the parties have agreed that if
disputes arise between them in respect of the subject matter of contract such
dispute shall be referred to arbitration, then such an arrangement would spell
out an arbitration agreement.
Ltd. & Ors. [ (1993) (3) SCC 137] the legal position has been further
clarified when this Court in clear and categorical terms held:
clause is not required to be stated in any particular form. If the intention of
the parties to refer the dispute to arbitration can be clearly ascertained from
the terms of the agreement, it is immaterial whether or not the expression
`arbitration' or `arbitrator' or arbitrators' has been used in the
Court is required to decide whether the existence of an agreement to refer the
dispute to arbitration can be clearly ascertained in the facts and
circumstances of the case. This, in turn, may depend upon the intention of the
parties to be gathered from the correspondence exchanged between the parties
and the surrounding 10 circumstances. In the instant case, the respondent while
rejecting the names suggested by the applicant for resolution of the disputes
by the arbitrator never disputed the existence of the arbitration clause. The
applicant vide letter dated 20.9.2006 in response to the respondent's letters
dated 7,8,13 and 15.9.2006 and duly placing reliance upon MOU dated 14.2.2005
and agreement dated 15.2.2005 asserted that agreement entered into between the
parties provided for resolution of all disputes by arbitration. The applicant
accordingly expressed its willingness to refer the matter to arbitration. The
respondent in its reply dated 25.9.2006 stated that referring the matter for
arbitration "is irrelevant and inappropriate" in absence of any valid
agreement, in as much as the MOU dated 14.2.2005 was itself conditional and not
effective. The respondent did not dispute the existence of a valid arbitration
clause in the agreement. The plea was that agreement entered into between the
parties on 15.2.2005 itself was not a valid one.
an arbitration agreement is not required to be in any particular form has been
reiterated in more than one decision. [see: Building (2003) 7 SCC 418]. What is
required is to gather the intention of the parties as to whether they have
agreed for resolution 11 of the disputes through arbitration. What is required
to be decided in an application under Section 11 of the Act is whether there is
any arbitration agreement as defined in the Act? It needs no reiteration that
Section 7 of the Act does not prescribe any particular form and it is immaterial
whether or not expression `arbitration' or `arbitrator' or `arbitrators' has
been used in the agreement.
K.K. Venugopal, learned senior counsel appearing on behalf of the respondent
submitted that MOU dated 14.2.2005 does not contain any arbitration clause and
further the agreement dated 15.2.2005 itself is a contingent agreement
incapable of being enforced.
Singhvi, learned senior counsel for the applicant in response to the said
contention submitted that MOU dated 14.2.2005 culminated in the agreement dated
15.2.2005 which contained a valid arbitration clause and there is no legal
hindrance to appoint an arbitrator for resolving the disputes.
crucial question centers around the interpretation of Clause VI of the
agreement dated 15.2.2005. Shri Venugopal, in response to a pointed query from
the court submitted that the intention of the respondent was to agree for
settlement of the disputes through 12 conciliation in accordance with the
provisions of the Act in case of failure to settle disputes amicably between
the parties. The submission was in a case of arbitration, there is no
settlement; the award of an arbitrator who has to be independent and impartial
from the parties is binding by and between the parties not because both the parties
finally have settled the matter but because of legal sanctity.
There has been no
attempt whatsoever to amicably settle the matter which is a pre-condition to
invoke the latter limb of Article VI and therefore, the application under
Section 11 is liable to be rejected.
The learned counsel
in this regard placed reliance on the decision in [2007) 5 SCC 703]. In the
said case the parties have agreed for resolution of disputes by arbitration in
accordance with the Rules of Arbitration of the Indian Council of Arbitration.
No efforts were made to have the disputes settled by arbitration in accordance
with the Rules of Arbitration of the Indian Council of Arbitration. On the
contrary, one of the parties moved an application under Section 11 of the Act.
It is under those circumstances this Court held:
parties here had agreed on a procedure for appointing an arbitrator for
settling the dispute by arbitration as contemplated by Section 11 (2) and there
is no allegation that any one of the contingencies enumerated in Section 11 (6)
clause (a) or (b) or (c) had occurred, the application moved by the respondent
was clearly not maintainable and the court had no jurisdiction 13 to entertain
such an application and pass any order." (emphasis supplied)
case has no application to the fact situation in hand. It was a case where one
of the parties invoked Section 11(6) of the Act without there being no
allegation that any one of the contingencies enumerated in Section 11(6) Clause
(a) or (b) or (c) had occurred.
the present case the parties did not agree upon any particular procedure for
the appointment of the arbitrator. Clause VI provides that disputes arising out
of the agreement which could not be settled amicably shall be finally settled
in accordance with the provisions of the Act.
The question is
whether the parties have agreed to resolve their disputes by arbitration or
it noted that at no stage the respondent took any plea that the dispute was
required to be settled through conciliation in accordance with the Arbitration
and Conciliation Act, 1996. It is evidently an afterthought. Shri Venugopal
submitted that on a comparison with dispute resolution clause in the MOU
entered into 14 between the OMC and CRL with the settlement clause in the
agreement dated February 15, 2005, it is apparent that there was no specific
intention of the parties to refer the disputes to arbitration. It is true that
the dispute resolution clause in MOU entered into between OMC and CRL is more specific
in its terms but the said clause would not throw any light in construing clause
VI in the agreement dated 15th February, 2005. One cannot take into
consideration terms of other contracts especially when the contract is not
between the same parties.
Venugopal, relied on that clause and submitted that in the absence of a similar
clause in the present agreement the parties have made their intention expressly
clear to resolve their disputes through conciliation in case of failure to
settle the disputes amicably among themselves.
submission is unsustainable for more than one reason. No party can be allowed
to take advantage of inartistic drafting of arbitration clause in any agreement
as long as clear intention of parties to go for arbitration in case of any
future disputes is evident from the agreement and material on record including
is required to be gathered is the intention of the parties from the surrounding
circumstances including the conduct of the parties and the evidence such as
exchange of correspondence between the parties. The respondent in none of its
letters addressed to the applicant suggested that the dispute between the
parties is required to be settled through conciliation and not by arbitration.
In response to the applicant's letter invoking the arbitration clause the
respondent merely objected to the names inter-alia contending the suggested
arbitration would not be cost effective and the demand for arbitration itself
was a premature one.
Is there any material
available on record suggesting that the parties intended to resolve their
disputes through conciliation on failure to settle the disputes amicably among
themselves? 28. Part III of the Act deals with conciliation. Section 61
as otherwise provided by any law and unless have otherwise agreed, Part III
shall apply to conciliation of disputes arising out of legal relationship,
whether contractual or not and to all proceedings relating thereto. Section 62
speaks of commencement of conciliation 16 proceedings. It says the party
initiating conciliation shall send to the other party a written invitation to
conciliate under Part III, briefly identifying the subject of the dispute and
the conciliation proceedings shall commence when the other party accepts in
writing the invitation of conciliation. If the other party rejects the
invitation, there will be no conciliation proceedings. Part III of the Act does
not envisage any agreement for conciliation of future disputes. It only provides
for an agreement to refer the disputes to conciliation after the disputes had
arisen. Whereas Section 7 of the Act which speaks of arbitration agreement
provides for an agreement between the parties to submit to the arbitration all
or certain disputes which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual or not.
VI in the present case obviously provides for resolution of the disputes
between the parties which may arise out of the agreement after its execution.
There was no dispute between the parties even as on the date of the agreement.
That apart the conciliator only assists the parties in an independent and
impartial manner in their attempt to reach an amicable settlement of their disputes.
The conciliator provides guidance as provided for under Section 67 of the Act.
Under Section 73 of the Act the Conciliator 17 formulates the terms of a
possible settlement when it appears to him that there exist elements of a
settlement which is acceptable to the parties. Ultimately it is the parties who
are required to reach an agreement on a settlement of dispute. The conciliator
merely authenticates the settlement agreement. The settlement agreement shall
have the same effect as the arbitral award on agreed terms on the substance of
the dispute rendered by the arbitral tribunal under Section 30.
the present case as is evident from Clause VI of the agreement the parties
intended to settle the disputes amicably among themselves and only in case of failure
the disputes were required to be settled in accordance with the provisions of
the Act. It is clearly evident from the language employed in Clause VI that on
failure to settle the disputes amicably the parties intended to invite a
binding verdict in accordance with the provisions of the Act. The parties never
intended to go through the conciliation proceedings even after their failure to
arrive at an amicable settlement among themselves. It is pertinent to observe
that the respondent never initiated any conciliation by sending any written
invitation to conciliate under Part III of the Act. In the circumstances, it is
impossible to accede to the 18 submission that the parties intended to settle
their future disputes arising out of the agreement through conciliation.
Venugopal submitted that the agreement dated 15th February, 2005 is of inchoate
nature and is a contingent agreement, therefore, even if any dispute had arisen
the same cannot be referred to any Arbitral Tribunal to resolve it.
 Vol.1 Lloyd's
Law Reports 163 and AIG Europe S.A. vs. QBE International Insurance Ltd.
reported in  Vol.2 LLR 268 upon which reliance was placed are not
applicable to the facts of the case and render any assistance to resolve the
issue. In E.J.R. Lovelock Ltd.(supra) the arbitration clause was divided into
two parts. The first part (which was lifted bodily from a standard form and
contract) provided for arbitration before English arbitrators. The second part
provided for arbitration in Russia in accordance with Russian Chamber of
Commerce Arbitration Rules. Lord Denning having interpreted the arbitration
clause contained in the agreement in that case observed that the clause was so
uncertain that the court cannot give effect to it.
clause is divided into two parts which are inconsistent with one another: and
it is impossible to reconcile them. The first part of this 19 arbitration
clause would send "any dispute and/or claim to arbitration in England. The
second part of the clause would send "any other dispute" to
arbitration in Russia. It is beyond the wit of man or at any rate beyond my wit
- to say which dispute comes within which part of the clause.......the whole
clause is meaningless. It must be rejected.
The court cannot give
effect to it. The dispute cannot be sent to arbitration." In AIG Europe
S.A.; Queen's Bench Division while construing a contract of reinsurance which
clauses and conditions as original in all respects including settlements:
The underlying policy
contained among its general conditions the following clauses:
Procedure In case of dispute between the insured and the insurers the parties
will apply to Tribunal de Commerce in Paris who will appoint an arbitrator.....
(M) Law and
Jurisdiction In the event of dispute between the insured and the
insurer.....the.....parties should address themselves to the French Courts
which have sole jurisdiction; foreign companies which have accepted part of the
risk are also subject to the jurisdiction of the French Courts..."
observed that clause
(L) on its face merely provided for a preliminary procedure involving
appointment of persons described as arbitrators; but it was clear that it was
at best a procedure for consideration which 20 might or might not result in a
compromise of a dispute; it was clearly not an arbitration agreement in the
sense in which that expression was normally used, nor did it deprive the courts
of jurisdiction; as between the insured and insurer.
the present case the parties have agreed that the disputes arising out of the
agreement which cannot be settled amicably to be finally settled in accordance
with the provisions of Arbitration and Conciliation Act, 1996. The Act not only
provides for the procedure involving appointment of arbitrator but also
comprehensively provides as to jurisdiction of Arbitral Tribunal and conduct of
arbitral proceedings such as determination of rules of procedure; place of
arbitration etc. and for making arbitral award and termination of proceedings.
The arbitral award shall be final and binding on the parties and persons
claiming under them respectively. The award is enforceable under the Code of
Civil Procedure in the same manner as if it was a decree of the court. The
parties have thus agreed for the resolution of the disputes making all the
provisions of the Arbitration and Conciliation Act, 1996 applicable until the
final termination of their disputes arising out of the agreement. The absence
of word `Reference' may not clinch the issue inasmuch as it is the whole clause
providing for the resolution/settlement of the disputes arising out of 21 the
agreement and not a word or two is required to be interpreted in order to
gather the intention of the parties. In my considered opinion clear intention
to refer the disputes to arbitration in accordance with the provisions of
Arbitration and Conciliation Act, 1996 is clearly evident from Article VI
incorporated in the agreement. It is also required to notice that clause VI
contains expression "shall be finally settled....." which is of some
significance. The award passed by the Arbitral Tribunal is final and binding on
the parties and the persons claiming under them respectively of course subject
to the provisions contained in Chapter III of the Act. A plane reading of the
arbitration clause reveals that parties intended to settle disputes finally in
accordance with the provisions of the Act in case of failure to arrive at
the respondent has placed reliance and referred to the checklist of matters to
be considered/suggested by Russel in his treatise, Russel on Arbitration. The
contention was that the disputed clause does not satisfy the checklist of
matters to be considered.
Russel in his
treatise suggests that while drafting an arbitration agreement care needs to be
taken to ensure whether they need to be addressed in the particular
circumstances of the case. The following is the checklist of the matters which
according to Russel need to be 22 considered when drafting an arbitration
agreement. But it may not be necessary to include any provision for all of
them. But thought should be given as to whether they need to be addressed in
the particular circumstances of the case. A close scrutiny of clause VI of the
agreement which provides for the applicability of the provisions of Arbitration
and Conciliation Act reveals that essential elements stated in the checklist
have been addressed to namely:
1. The parties have
been properly identified;
2. There is a clear
reference to arbitration in accordance with the provisions of Arbitration and
Conciliation Act, 1996;
3. The disputes that
had arisen between the parties which could not be amicably settled are to be
referred to arbitration;
4. The seat of the
arbitration is to be in terms of Section 20 (1) and 20(2). The arbitral
tribunal in the absence of any agreement between the parties is entitled to
determine the place of arbitration;
5. The substance of
the dispute is to be determined in accordance with the provisions of Sections
19,23,24,25,26,27 and other provisions of the Arbitration and Conciliation Act,
arbitration clause states that the disputes arising out of the agreement which
cannot be settled amicably to be finally settled in accordance with the
Arbitration and Conciliation Act, 1996. Therefore, the provisions of the said
Act will govern the appointment of Arbitrator, 23 the reference of disputes
and the entire process and procedure of arbitration from the stage of
appointment of arbitration till the award is made and executed/given effect to.
The provisions of the said Act would meet the requirement of checklist of the
matters enumerated in the treatise. Once the parties agree for resolution of dispute
in accordance with the Arbitration and Conciliation Act, 1996 the said Act will
take care of the entire processes and procedure. Be that as it may when the
specific intention of the parties is clearly evident from the arbitration
clause the same cannot be treated as vague on the ground that it does not
satisfy the suggested checklist of all matters to be considered while drafting
an arbitration agreement.
Whether invocation of
Article VI providing for arbitration is premature?
was contended that the pre-condition for amicable settlement of the dispute
between the parties has not been exhausted and therefore the application
seeking appointment of arbitrator is premature. From the correspondence
exchanged between the parties at pages 54-77 of the Paper-book, it is clear
that there was no scope for amicable settlement, for both the parties have
taken rigid stand making allegations against each other. In this regard a
reference may 24 be made to the letter dated 15th September, 2006 from the
respondent herein in which it is inter-alia stated "......since February,
2005 after the execution of the agreements, various meetings/discussions have
taken place between both the parties for furtherance of the objective and
purpose with which the agreement and MOU was signed between parties. Several
correspondences have been made by CRL to VISA to help and support its endeavour
for achieving the goal for which the above mentioned agreements were
executed." In the same letter it is alleged that in spite of repeated requests
the petitioner has not provided any Funding Schedules for their portion of
equity along with supporting documents to help in convincing OMC of financial
capabilities of the parties and ultimately to obtain financial closure of the
project. The exchange of letters between the parties undoubtedly discloses that
attempts were made for an amicable settlement but without any result leaving no
option but to invoke arbitration clause.
Whether there is any
live issue between the parties ?
next question that falls for consideration is as to whether there is a live
issue between the parties? The application for arbitration can be made only
when a dispute arises between the parties to the arbitration agreement and such
dispute gives rise to a 25 live issue. As to what is the meaning and nature of
dispute has been summed up by Mustill and Boyd in their treatise on Arbitration
law titled Law and Practice of Commercial Arbitration, 1982......
"A dispute means
that there may be a difference of opinion as to the future performance of a
For example, one
party may be denying that any further performance is due, on the ground that
the contract has been discharged by repudiation or frustration; or it may be a
common ground that the contract is subsisting, but the parties may be in a
dispute about whether a particular act would constitute a valid performance, or
whether one party is entitled to give a particular order, or exercise an option
in a particular way. If the parties stand their ground in such a situation, a
time will come when it is too late for the right view to prevail; one party
will irremediably in the wrong; and serious financial loss is likely to ensue.
All this can be prevented if the parties can mount arbitration with sufficient
speed to enable them to know the true position under the contract before the
time for performance has finally expired."
the present case, in this sense there is a dispute and live issue between both
the parties. It is not a stale claim or a claim barred by any limitation.
However, it is required to note that this finding as to the existence of
dispute is confined only for the purpose of finding out whether the arbitral
procedure has to be started for resolving the live issue in between the
SBP & Co. vs. Patel Engineering Ltd. & Anr. [(2005) 8 SCC 618] it is
"39. It is
necessary to define what exactly the Chief Justice, approached with an
application under Section 11 of the Act, is to decide at that stage. Obviously,
he has to decide his own jurisdiction in the sense whether the party making the
motion has approached the right High Court. He has to decide whether there is
an arbitration agreement, as defined in the Act and whether the person who has
made the request before him, is a party to such an agreement. It is necessary
to indicate that he can also decide the question whether the claim was a dead
one; or a long-barred claim that was sought to be resurrected and whether the
parties have concluded the transaction by recording satisfaction of their
mutual rights and obligations or by receiving the final payment without
objection. It may not be possible at that stage, to decide whether a live claim
made, is one which comes within the purview of the arbitration clause. It will
be appropriate to leave that question to be decided by the Arbitral Tribunal on
taking evidence, along with the merits of the claims involved in the
arbitration. The Chief Justice has to decide whether the applicant has
satisfied the conditions for appointing an arbitrator under Section 11(6) of
the Act. For the purpose of taking a decision on these aspects, the Chief
Justice can either proceed on the basis of affidavits and the documents
produced or take such evidence or get such evidence recorded, as may be
necessary. We think that adoption of this procedure in the context of the Act
would best serve the purpose sought to be achieved by the Act of expediting the
process of arbitration, without too many approaches to the court at various
stages of the proceedings before the Arbitral Tribunal."
is amply clear from the facts as pleaded and as well as from the exchange of
correspondence between the parties that there has not been any satisfaction
recorded by the parties with respect to their claims. There has been no mutual
satisfaction arrived at between the parties as regards the dispute in hand. The
claims are obviously not barred by any limitation. It is thus clear that there
is a live issue subsisting between the parties requiring its resolution.
the light of foregoing discussion I am of the clear opinion that a clear case
is made out for appointment of an arbitrator to decide the disputes between the
Shri Justice Dr. A.S. Anand, former Chief Justice of India is appointed as the
sole Arbitrator with a request to him to decide the disputes between the
parties arising out of the agreement referred to in this order. The sole
Arbitrator shall be at liberty to fix his fee in the matter.
application is accordingly allowed.