SOUTH DELHI MUNICIPAL CORPORATION versus SMS AAMW TOLLWAYS PRIVATE LTD.

Citation: [2018] 13 S.C.R. 1120 · Decided: 22-11-2018 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Leave Granted & Allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 13  S.C.R.
SOUTH DELHI MUNICIPAL CORPORATION
v.
SMS AAMW TOLLWAYS PRIVATE LTD.
(Civil Appeal No. 11249 of 2018)
NOVEMBER 22, 2018
[S. A. BOBDE AND L. NAGESWARA RAO, JJ.]
Arbitration:
Appointment of Arbitrator – By High Court – Relying on clause
16.3 of the Agreement in question – Propriety of – Held: Clause
16.3 of the Agreement in question was not an arbitration clause – It
provided for departmental appeal – Purpose of the clause was to
vest the Competent Officer and Commissioner with supervisory
control – The intention was not to provide for a forum for resolving
disputes – Right of appeal is  a creature of statute and can only be
exercised in the manner provided by the statute – Court should not
adopt a different approach while construing a clause in a contract
executed by a statutory body, providing for an appeal, therefore, it
was not proper for the High Court to appoint arbitrator u/s. 11(6)
of Arbitration and Conciliation Act, 1996 – Interpretation of Statutes
– Rules of Interpretation.
Nature of arbitration – Held: Arbitration should be an enquiry
in the nature of a judicial enquiry.
Allowing the appeal, the Court
HELD: 1. The Agreement dated 14.05.2011 between the
appellant and the respondent provides for various mutual rights,
liabilities and obligations of the two parties for the collection of
toll tax from specified commercial vehicles at all border entry
points within the NCT of Delhi.  Clause 16 of the agreement
provides for the resolution of disputes at two stages. First, by
the Competent Officer of the SDMC vide Clause 16.2 followed
by the Commissioner of the Municipal Corporation vide Clause
16.3. [Paras 12 and 14][1125-F; 1126-G-H]
2. Clause 16.3 of the agreement under which an application
to appoint an Arbitrator under Section 11(6) of the Arbitration
and Conciliation Act, 1996 was made, is described as an appeal
[2018] 13  S.C.R. 1120
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in the said Clause.  It is a settled principle of interpretation that
unless the word raises an ambiguity it is not necessary to consider
another meaning. Indeed, it is an appeal since the Contractor is
entitled to take recourse to appeal, if the Contractor is dissatisfied
with the decision of the Competent Officer including a possible
failure to decide within the prescribed period i.e. within 30 days.
The appellate provision can be invoked only by the Contractor
dissatisfied by the decision of the Competent Officer. The other
side, i.e. a Competent Officer who has raised a demand which
the Contractor has not complied with cannot file such an appeal.
The right of appeal is restricted to a dissatisfied Contractor only.
And that too upon a failure to obtain redressal under Clause 16.2.
This mechanism is clearly an appeal in the nature of a
departmental appeal commonly provided in several department
rules including service rules. Such departmental appeals are
invariably decided by a designated officer and can only be invoked
by a dissatisfied party such as a contractor or an employee. Such
appellate powers obviously cannot be invoked by parties unless
the language of the provision setting up the appeal provides for
it, expressly or by necessary implication. A right of appeal is a
creature of statute and can only be exercised in the manner
provided by the statute. [Paras 17 and 18][1128-A-F]
Corporation of the City of Nagpur v. Employees AIR
1960 SC 675 : [1960]  SCR  942; Nelson Motis v. Union
of India (1992) 4 SCC 711 : [1992]  1  Suppl. SCR 
325; Nathi Devi v. Radha Devi Gupta (2005) 2 SCC
271 : [2004] 6 Suppl. SCR 1141 ; Ganga Bai v. Vijay
Kumar (1974) 2 SCC 393 : [1974] 3 SCR 882; State of
Haryana v. Maruti Udyog Ltd. (2000) 7 SCC 348 :
[2000] 3 Suppl. SCR 185; Raj Kumar Shivhare v.
Directorate of Enforcement (2010) 4 SCC 772 : [2010]
4 SCR 608 – relied on.
3. The Court should not adopt a different approach while
construing a clause in a contract executed by a statutory body
and providing for an appeal. The language of Clause 16.3 does
not lend itself to any other construction other than that it provides
for an appeal against the decision of a Competent Officer rendered
under Clause 16.2. [Para 19][1128-F-G]
SOUTH DELHI MUNICIPAL CORPORATION v. SMS AAMW
TOLLWAYS PRIVATE LTD.
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SUPREME COURT REPORTS
[2018] 13  S.C.R.
4. An arbitration should be an enquiry in the nature of a
judicial enquiry i.e. an enquiry which involves hearing both the
parties. The appeal involved in the 

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