LARSEN AND TOUBRO LTD. versus FERTILIZER AND CHEMICALS TRAVANCORE LTD.

Citation: [2007] 11 S.C.R. 1085 · Decided: 12-11-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

Judgment (excerpt)

LARSEN AND TOUBRO LTD. 
V. 
FERTILIZER AND CHEMICALS TRA V ANCORE LTD. 
NOVEMBER 12, 2007 
[DR. ARIJIT PASAYAT AND LOKESHWAR 
SINGHPANTA,JJ.) 
A 
B 
Arbitration-Contract entered between Appellant and 
Respondent-Contained two different set of conditions viz. 'Standard C 
Conditions 'and 'Special Conditions '--Dispute between Appellant and 
Respondent-Arbitration proceedings sought to be initiated-
Disagreement between parties over the governing provisions-Held: 
Arbitration proceedings to be governed by the 'Standard Conditions' 
and not 'Special Conditions' as contended by Appellant-'Special D 
Conditions' themselves showed that the 'Standard Conditions' 
contained provisions for arbitration. 
Appellant and Respondent had entered into a contract vide a 
purchase order. The purchase order contained two different set of 
terms and conditions viz. 'Standard Conditions' and 'Special E 
Conditions'. 
Disputes having arisen between the parties, Appellant invoked 
the 'Special Conditions' and suggested three names to Respondent 
for appointment of an independent sole arbitrator. Respondent took F 
the stand that in view of Article 26 of the 'Standard Conditions', only 
the Managing Director of Respondent could be appointed as a 
named arbitrator and accordingly declined to appoint a sole 
independent arbitrator. 
In appeals to this Court it was contended by the Appellants that G 
the Managing Director of Respondent cannot be treated as an 
independent arbitrator and arbitration proceedings between the 
parties was to be governed by the 'Special Conditions' and not the 
'Standard Conditions'. 
1085 
H 
1086 
SUPREME COURT REPORTS 
[2007] 11 S.C.R. 
A 
Dismissing the appeals, the Court 
HELD: 1.1. The stand of the Appellant that the special 
conditions of the work order superseded the standard terms and 
conditions, is not correct. The apprehension that named arbitrator 
B may not act fairly is without any foundation. 
[Paras 8 and 11) (1090-E; 1092-CJ 
';-
c 
D 
1.2. The special conditions themselves show that articles 25 and 
26 of the Standard terms and conditions contained provisions for 
arbitration. [Para 12) [1092-F) 
1.3 .. BY Article 16 of the special terms and conditions of 
purchase there. was an amendment to Article 25 of the Standard 
terms and conditions. Similar was the amendment to Article 26 of 
·the Standard terms and Conditions for erection and commissioning 
in Article 16 of the Special Conditions of work attached to the work 
order. The amendments incorporated by the Special conditions only 
provide that the provisions of the relevant Arbitration Act and the 
rules made thereunder and any statutory modifications thereof for 
the time being in force will be applicable and the venue of arbitration 
and language of the proceedings. 
E 
[Paras 11and12) (1092-C, D, E, F, G) 
· Secretary to Government, Transport Deptt., Madras v. 
Munuswanty Mudliar and Anr., [1988) Suppl. SCC 651, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5159 of 
F 2007. 
G 
H 
From the final Judgment and Order dated 18.12.1999 of the High 
Court ofKerala at Emakulam in A.R. No. 29of1999. 
WITH 
C.A. No. 5160 of 2007 
V.A. Mohta, Nilkanta Nayak, Shweta Bharti, Aditi Mohan, Neelam 
and Niranjana Singh for the Appellant. 
C.N. Sree Kumar for the Respondent. 
LARSEN AND TOUBRO LTD. v. FERTILIZER AND 
CHEMICALSTRAVANCORELTD.[PASAYAT,J.] 
The Judgment of the Court was delivered by 
DR. ARIJIT PASAYAT, J. 1. Leave granted. 
1087 
2. Challenge in these appeals is to the order passed by the learned 
Single Judge of the Kerala High Court disposing of arbitration request 
A 
filed before him. 
B 
3. Background facts in a nutshell are as follows:-
Appellant and the respondent entered into a contract vide purchase 
orderno.3020/02-2701/016/1018 dated 7.1.1995. Alleging that in breach 
of the terms and conditions of the purchase order certain amounts were c 
withheld, the appellant invoked the arbitration agreement purportedly in 
terms of new Article 26 of the Special Conditions and suggested thre~ 
names for appointment of an independent sole arbitrator and called upon 
the respondent to name one out of the three names. The respondent took, 
the stand that it is only the Managing Director of the respondent who can D 
be appointed as a named arbitrator as per Article 26 of the Standard 
Conditions and refused to appoint a sole independent arbitrator. The High 
Court of Kerala was moved seeking appointment of an arbitrator by 
Arbitrat

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