GIRIRAJ GARG versus COAL INDIA LTD. & ORS.

Citation: [2019] 2 S.C.R. 239 · Decided: 15-02-2019 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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239
GIRIRAJ GARG
v.
COAL INDIA LTD. & ORS.
(Civil Appeal No. 1695 of 2019)
FEBRUARY 15, 2019
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996:
s. 7(5) – Arbitration clause – Incorporation by reference –
Failure of respondent to appoint an arbitrator as per clause 11.12
of the 2007 Scheme, pursuant to dispute between the parties
pertaining to sale orders – Application for appointment of
independent arbitrator by the appellant – Rejection by the Single
Judge of the High Court stating that the arbitration clause contained
in the 2007 Scheme, could not be incorporated by reference in each
of the sale orders entered into between the parties – On appeal,
held: Arbitration agreement need not be in the form of a clause in
the substantive contract itself – It could be an independent
agreement; or it could be incorporated by reference either from a
parent agreement, or by reference to a standard form contract – On
facts, arbitration clause 11.12 in 2007 Scheme stands incorporated
in the sale orders issued thereunder – Words “in relation thereto”
used in Clause 11.12 indicate that the clause would apply to all
transactions which took place under the 2007 Scheme, including
the sale transactions – Thus, the view taken by the Single Judge is
erroneous, and is set-aside.
Allowing the appeal, the Court
HELD:  1.1 The principle of incorporation by reference of
an arbitration clause, from another document or contract is a well-
established principle in arbitration jurisprudence and has been
given statutory recognition in sub-section (5) of Section 7 of the
Arbitration and Conciliation Act, 1996 Act. Section 7(5) states
that the reference in a contract to a document containing an
arbitration clause, constitutes a valid arbitration agreement, if
the contract is in writing, and the reference is specifically made
to incorporate the arbitration clause as a part of the contract.
[2019] 2 S.C.R. 239
239
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240                    SUPREME COURT REPORTS            [2019] 2 S.C.R.
The arbitration agreement need not necessarily be in the form of
a clause in the substantive contract itself. It could be an
independent agreement; or it could be incorporated by reference
either from a parent agreement, or by reference to a standard
form contract. [Paras 4.1-4.3][244-G-H, 245-A-C]
1.2 In the instant case, the Single Judge in the impugned
order erroneously took the view that an arbitration clause would
not stand incorporated in the individual sale orders entered into
by the Respondent No. 2-Coal Company and the appellant. The
individual sale orders emanate out of the 2007 Scheme. The sale
orders specifically state that they would be governed by the
guidelines, circulars, office orders, notices, instructions, relevant
law etc. issued from time to time by Coal Company. As a
consequence, the arbitration clause (i.e. Clause 11.12) in the 2007
Scheme would stand incorporated in the sale orders issued
thereunder. Clause 7 in the sale orders falls under the ‘single
contract case’ where the arbitration clause is contained in a
standard form document i.e. the 2007 Scheme, to which there is
a reference in the individual sale orders issued by Respondent
No. 2.[Para 5][252-C-E]
1.3 The words “in relation thereto” used in Clause 11.12
of the 2007 Scheme indicate that the clause would apply to all
transactions which took place under the 2007 Scheme. This
would include the sale transactions in the instant case. The
view taken by the Single Judge is erroneous, and is set-aside.
[Paras 5.1, 5.2][253-D]
1.4 The parties consensually agreed to appoint a Retired
Judge of the Calcutta High Court as Sole Arbitrator to adjudicate
the disputes which have arisen between the Appellant and
Respondent No. 2, under the 2007 Scheme. His appointment of
would be subject to the disclosure and declaration made, as per
the Sixth Schedule to the Arbitration and Conciliation Act, 1996
(as amended by the 2015 Amendment Act). [Para 6][253-E-F]
Alimenta SA v. National Agriculture Co-op Marketing
Federation of India Ltd.(1987) 1 SCC 615 : [1987] 1
SCR 957; M.R. Engineers & Contractors Pvt. Ltd. v.
Som Datt Builders Ltd. (2009) 7 SCC 696 : [2009] 10
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241
SCR 373; Inox Wind Ltd. v. Thermocables Ltd. (2018)
2 SCC 519 : [2018] 1 SCR 86; Renusagar Power Co.
Ltd. v. General Electric Company and Anr [1985]1 SCR
432; Doypack Systems Pvt. Ltd. v. Union of India and
Ors. 1988 (36) ELT 201 (SC) – referred to.
Clements v. Devon Co

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