BGM and M-RPL-JMCT (JV) vs Eastern Coalfields Limited

2. In the instant case, the appellant is relying on just one clause in the contract which, according to the appellant, constitutes an arbitration agreement whereas according to the respondent, though the clause is not disputed, the same does not constitute an arbitration agreement – In such circumstances, the Court while exercising power u/s.11 would not have to hold a mini-trial or an enquiry into its existence rather a plain reading of the clause would indicate whether it is, or it is not, an arbitration agreement, prima facie, satisfying the necessary ingredients of it, as required by s.7 of the 1996 Act – In view of this Court, such a limited exercise would not transgress the limit set out by sub-section (6-A) of s.11 of the 1996 Act as introduced by 2015 Amendment because the object of such an exercise (i.e., of examination) is to weed out frivolous claims for appointment of an arbitrator/ reference to an arbitral tribunal. [Paras 18, 19] Arbitration and Conciliation Act, 1996 – s.11 – The appellant and the respondent entered into a contract – Dispute arose between the parties – Appellant sought to invoke arbitration through clause 13 of the General Terms and Conditions of the contract – High Court held that clause 13 does not constitute an arbitration agreement – Whether clause 13 of the General Terms and Conditions of the contract and relied upon by the appellant would constitute an arbitration agreement between the parties as contemplated u/s.7 of the Arbitration and Conciliation Act, 1996:

Held: 1. Any agreement, or clause in an agreement, requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement. [Para 26]

2. In the instant case, clause 13 does not bind parties to use arbitration for settlement of the disputes – Use of the words “may be sought”, imply that there is no subsisting agreement between parties that they, or any one of them, would have to seek settlement of dispute(s) through arbitration – It is just an enabling clause whereunder, if parties agree, they could resolve their dispute(s) through arbitration – In view of this Court, the phraseology of clause

13 is not indicative of a binding agreement that any of the parties on its own could seek redressal of inter se dispute(s) through arbitration – Therefore, the High Court was justified in holding that clause 13 does not constitute an arbitration agreement. [Para 31] Arbitration and Conciliation Act, 1996 – Whether clause 32 of Instructions to Bidders negates the existence of an arbitration agreement:

Held: In the instant case, clause 32 does not exclude resolution of disputes through arbitration agreement – It only fixes jurisdiction and in the event of there being an arbitration agreement could determine the juridical seat – However, since this Court has held that there is no arbitration agreement between the parties, decision of this issue is of no consequence. [Para 33]