MAHANADI COALFIELDS LTD & ANR versus M/S IVRCL AMR JOINT VENTURE

Citation: [2022] 7 S.C.R. 522 · Decided: 25-07-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 7 S.C.R.
MAHANADI COALFIELDS LTD & ANR
v.
M/s IVRCL AMR JOINT VENTURE
(Civil Appeal No. 4914 of 2022)
JULY 25, 2022
[DR. DHANANJAYA Y CHANDRACHUD AND
A S BOPANNA, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 2(b), 7 and 11(6)
– Arbitration agreement – Attributes – Contract Agreement entered
between appellant (a subsidiary of CIL) and respondent on 30
January 2012 – Dispute between the parties – Invocation of
jurisdiction u/s.11(6) by respondent before the High Court for
appointment of arbitrator – Challenged, on ground that there was
no arbitration agreement between the parties within meaning of
ss.2(b) and 7 – Held: It was wrong on the part of the High Court to
construe Clause 15 of the Contract Agreement dated 30 January
2012 as an arbitration agreement – Clause 15 of the Contract
Agreement was titled “Settlement of Disputes/Arbitration”, however,
substantive part of the provision makes it abundantly clear that
there was no arbitration agreement between the parties agreeing to
refer either present or future disputes to arbitration – Clause 15 of
the Contract Agreement was a dispute resolution mechanism at the
company level, rather than an arbitration agreement and did not
comport with the essential attributes of an arbitration agreement in
terms of s.7 as well as the principles laid down under Jagdish Chander
case – Policy document / communication dated 7 April 2017 issued
by CIL also cannot be construed as an arbitration agreement
between appellants and respondent in terms of s.7 of the Act so as
to compel the appellants to appoint an arbitrator, since it merely
indicates a desire on behalf of CIL to have disputes related to work
contracts settled by arbitration and requires both the parties to
arrive at a further agreement to proceed to arbitration when the
dispute arises – Invocation of jurisdiction of the High Court u/
s.11(6) of the Act was accordingly not valid and there being no
arbitration agreement between the appellants and the respondent,
no reference to arbitration could have been made – Respondent,
[2022] 7 S.C.R. 522
522
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however, at liberty to seek recourse to remedy available in law to
pursue redressal of its grievances.
Allowing the appeal, the Court
HELD:1. Section 2(b) of the Arbitration and Conciliation
Act, 1996 defines an arbitration agreement to mean an agreement
as referred to in Section 7. In terms of Section 7, an arbitration
agreement is 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. Sub-section (2) of Section 7 stipulates that an
arbitration agreement may be in the form of an arbitration clause
in a contract or in the form of a separate agreement. In terms of
sub-section (3) of Section 7, the arbitration agreement has to be
in writing. [Para 8][527-G-H; 528-A]
2. In the present case, clause 15 of the Contract Agreement
is titled “Settlement of Disputes/Arbitration”. However, the
substantive part of the provision makes it abundantly clear that
there is no arbitration agreement between the parties agreeing
to refer either present or future disputes to arbitration. Clause
15 of the Contract Agreement is a dispute resolution mechanism
at the company level, rather than an arbitration agreement.
Consequently, in case of a dispute, the respondent was supposed
to write to the Engineer-in-charge for resolving the dispute.
Clause 15 does not comport with the essential attributes of an
arbitration agreement in terms of section 7 of the 1996 Act as
well as the principles laid down under Jagdish Chander case. A
plain reading of the clause leaves no manner of doubt about its
import. There is no written agreement to refer either present or
future disputes to arbitration. Neither does the substantive part
of the clause refer to arbitration as the mode of settlement, nor
does it provide for a reference of disputes between the parties to
arbitration. It does not disclose any intention of either party to
make the Engineer-in-Charge, or any other person for that matter,
an arbitrator in respect of disputes that may arise between the
parties. Further, the said clause does not make the decision of
the Engineer-in-Charge, or any other arbitrator, final or binding
on the parties. Therefore, it was wrong on the part of the High
MAHANADI COALFIELDS LTD & ANR v. M/s IVRCL AMR
JOINT VENTURE
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