M. DAYANAND REDDY versus A.P. INDUSTRIAL INFRASTRUCTURE CORPORATION LTD. AND ORS.

Citation: [1993] 2 S.C.R. 629 · Decided: 24-03-1993 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Dismissed

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

Judgment (excerpt)

M. DAYANAND REDDY 
A 
v. 
A.P. INDUSTRIAL INFRASTRUCTURE CORPORATION LTD. 
AND ORS. 
+ 
MARCH 24, 1993 
B 
• 
(M.N. VENKATACHALIAH, CJ., AND G.N. RAY, J.) 
Indian Arbitration Ac4 1940: Sections 3, 5, I 1 and 12 read with Sections 
8 and 9-Scope of-Removal and Appointment of Arbitrator by Civil 
Court-Power thereto-Original agreement vis-a- vis copy of agreement- c 
r 
Preferability. 
Whether the existence of an arbitration agreement to refer the dispute 
to arbitrator can be ascertained in the focts and circumstances of the case. 
And, whether in the absence of an arbitration clause, it was necessary to find D 
out the terms agreed between the partie:r-Whether un - written arbitration 
agreement can be recognised under the Act. 
Arbitration Agreement and other agreement-Distinct features-Mode 
•). 
of enforcement-Whether the Courts have discretionary power of dispensation 
of a valid arbitration agreement vis-a-vis other agreements-Obligations of the E 
Parties. 
The appellant, entered into an agreement witli the first respondent 
on December 11, 1986 for construction of sewer line. On June 27, 1988 he 
requested the Chairman to refer the dispute to arbitration as per the 
preliminary specification of the A.P. Standard specifications. As the first F 
-·-" 
respondent refused to settle the claims, the appellant sent a claim petition 
dated October 3, 1988 to the named arbitrator. He sent a reminder but the 
named arbitrator did not enter the reference. The appellant gave further 
notice dated January S, 1989 calling upon the first respondent to concur 
for the appointment of an arbitrator to adjudicate the disputes and G 
differences arising between the parties. 
~ 
On January 18, 1989 the first respondent informed the appellant that 
there was no arbitration clause in the agreement between the parties, so 
the question of entertaining the request to appoint an arbitrator did not 
arise. The appellant then filed an application in the Civil Court praying H 
629 
630 
SUPREME COURT REPORTS 
[1993] 2 S.C.R. 
A 
for removal of the named arbitrator in the agreement and appointment of 
the sole a~bitrator in his place. 
The respondent contested the application contending that the appel-
lant completed only a part of the work within the stipulated time though 
the site was handed over to him. But the accounts were settled before the 
B completion of work and the final bill of the appellant was paid, while the 
balance of work was got completed through other agencies. The respondent 
also contended that the original agreement signed between the parties did 
not provide for any arbitration clause and such fact was known to the 
appellant. 
c 
The Civil Court found that the agreement did not contain any 
arbitration clause. However, it held that the agreement was silent about 
the mode of settlement of the disputes, if any, while every agreement of 
civil contract contains an arbitration clause. However, since there was 
clause 3 in the copy of the agreement supplied to the appellant sub-
D sequently under a covering letter with the seal and signature of the second 
respondent, which provided for reference to arbitration in accordance with 
standard specification and since the copy of agreement was not fabricated 
by the appellant, the respondents were bound by the arbitration clause. 
E 
The respondents had neglected to refer the matter to arbitration 
despite the agreement, so the civil court appointed the sole arbitrator. 
The respondents assailed the order of the civil court in Civil 
Revision before the High Court. The High Court also found that the 
original agreement did not contain any arbitration agreement at all. Since 
F 
there was no arbitration clause in the original agreement, it was not 
necessary to consider other material or circumstances. The High Court 
rejected the contention that the existence of such a clause should be 
assu1ned because the government contractors were governed by the stand· 
ard speci!ication. Therefore the High Court set aside the order appointing 
G the arbitrator. 
This Court granted special leave to appeal to the appellant and on 
consideration of respective contentions of the parties, this Court dismiss· 
ing the appeal. 
H 
HELD: Only an arbitration agreement in writing isrecognised under 
M.D. REDDY v. A.P. IND. CORPN. 
631 
~ 
the Arbitration Act, 1940. [635-G) 
A 
Law is well settled that arbitration clause may be incorporated by 
reference to a specific document which is in exist

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