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Powers given to an employee in the nature of a departmental dispute resolution is meant for expeditious sorting out of problems; cannot be construed as an arbitration clause agreement :Bombay High Court

Arbitration is very effective form of dispute resolution between parties for the differences that arise between them in a contract. However it needs to clearly stipulated in the contract, it cannot be loosely translated. This was held in the judgment passed by a single judge comprising Hon’ble JUSTICE S.J. KATHAWALLA, in the matter M/s. F.A.Enterprise. V. Vidarbha Irrigation Development Corporation, dealt with an issue where the petitioner filed a petition seeking enforcement of their alleged arbitration clause between the parties.

The petitioner had petitioned the court seeking appointment of an Arbitrator under the Arbitration and Conciliation Act, 1996  to decide the disputes between the Petitioner and the Respondents arising out of the Work Contract dated 17th August, 2009.

The Petitioner is a registered Partnership Firm, undertaking engineering and irrigation contracts of various organizations.

The counsel for petitioner relying on Clauses 30.1, 30.2 and 30.3 of the General Conditions of the Contract, submitted that there exist an Arbitration Agreement between the Petitioner and the Respondent.

The Counsel for respondents has submitted that there is no arbitration agreement entered into between the parties and thus, the Petition filed under Section 11(6) of the Act, is not maintainable. In support of their submission, the Respondents have relied on the Judgments of the Supreme Court in the case of Vishnu by LRs V/s. State of Maharashtra and Ors.

The counsel for petitioner relied B.T.Patil and Sons (Supra) and submitted that there exists an Arbitration Agreement between the parties, relied on the very same Clauses 30.1, 30.2 and 30.3.

After hearing both the parties, the Hon’ble Bombay High court dismissed the petition and held that there exists no arbitration agreement between the parties. The application filed under Section 11(6) of the Arbitration & Conciliation Act 1996 is thus not maintainable and therefore accordingly dismissed. It also held that the clauses under consideration before the Supreme Court are identical to the clauses considered in this case. In the court’s view, the judgment of Supreme Court in case of M/s P. Dasaratharama Reddy Complex (supra) is squarely applicable to the facts of this case. And the court is respectfully bound by the said judgment.

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