COMMERCIAL ARBITRATION APPLICATION NO.121 OF 2018

25th October 2018

Petitioner Counsel: Mr.Aditya Thakkar Ms.Rishika Harish Mr.Deepak Shukla Ms.Swapna Samant Vinod Mistry Co.
Respondent Counsel: Mr.Atul Rajadhyaksha Mr.Nishant Tripathi Mr.Somnath Iyer M. Tripathi & Co.

Cases Cited :
Paras 6, 32: Tatva Global Environment (Deonar) Ltd. Vs. The Municipal Corporation of Gr. Mumbai, Arbitration Application No.15 of 2014
Para 6: Bihar State Mineral Development Corporation & Anr. Vs. Encon Builders (I) (P) Ltd., (2003) 7 SCC 418
Paras 6, 13, 20, 40: Jagdish Chander Vs. Ramesh Chander & Ors., (2007) 5 SCC 719
Para 6: Datar Switchgears Ltd. Vs. Tata Finance Ltd., (2000) 8 SCC 151
Para 6: Deep Trading Company Vs. Indian Oil Corporation, (2013) 4 SCC 35
Paras 7, 17, 18, 24, 33, 34, 35, 41: Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. Vs. Jada Elevator Components, 2018 SCC OnLine SC 1503
Paras 11, 36, 38: National Agricultural Coop. Marketing Federation India Ltd. Vs.Gains Trading Ltd., (2007) 5 SCC 692
Paras 12, 39: Dr.Arun Subrao Prabhu Vs. M/s.Rizvi Builders & Ors., Suit No.1336 of 1988
Paras 14, 21: Karnataka Power Transmission Corporation Limited & Anr. Vs. Deepak Cables (India) Limited, (2014) 11 SCC 148
Paras 15, 22: Voltas Limited Vs. M.P. Entertainment & Developers Pvt. Ltd., 2016 SCC OnLine Bom 7664
Paras 16, 23: Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Anr., (2018) 4 SCC 793
Paras 17, 41: Haryana Financial Corporation and Ors. Vs. Jagdamba Oil Mills & Ors., AIR 2002 SC 834
Paras 18, 41: Bank of India & Anr. Vs. K.Mohandas & Ors., (2009) 5 SCC 313
Paras 25, 33: Indtel Technical Services Private Limited Vs. W.S. Atkins Rail Limited, (2008) 10 SCC 308
Para 37: Enercon (India) Limited & Ors. Vs. Enercon GMBH & Anr., (2014) 5 SCC 1

JUDGEMENT

1.By this application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, the applicant seeks appointment of a sole arbitrator to adjudicate upon the disputes and differences between the parties under the Work Order dated 18th June 2013 by invoking Clause 32 of the said work order annexed at Exhibit-A to the arbitration application. Some of the relevant facts for the purpose of deciding this application are as under : -

2. The respondent issue a Work Order dated 18th June 2013 thereby appointing the applicant as a Contractor for certain works in respect of the development of a building at Kasar Wadavali, Ghodbunder Road, Thane. Clause 32 of the said work order is extracted as under : - “Incase of any dispute, our Managing Director's decision will be final and binding on both the parties any dispute shall be referred to arbitration or any court.”

3. The dispute arose between the parties. The applicant vide its advocate's letter dated 15th September 2017 called upon the respondent to pay a sum of Rs.5,13,29,560.49 and with interest @ 18% p.a. In paragraph 28 of the said letter, the applicant pointed out clause 32 of the said work order stating that the said clause was an arbitration clause and the applicant reserved their rights to invoke the said clause. There was no response to the said letter addressed by the applicant through its advocate.

4. On 16th October 2017, the applicant through its advocate invoked clause 32 of the said work order and nominated a counsel of this Court to be the sole arbitrator and called upon the respondent to confirm the same within a period of 30 days from the date of the receipt of the said letter. In response to the said letter invoking clause 32, the respondent through its advocate's letter denied that clause 32 of the work order was an arbitration agreement. It was contended that first part of the said clause contemplates a reconciliation process whereby the decision of the Managing Director was given a finality. In the event of the dispute still persisting, the parties had option either to agree for arbitration or seek remedies through he judicial process. Clause 32 does not reveal any concluded arbitration agreement. Since the respondent refused to appoint an arbitrator, the applicant filed this application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short “the said Act”) inter alia praying for appointment of a sole arbitrator.

5. Mr.Thakkar, learned counsel for the applicant invited my attention to clause 32 of the work order dated 18th June 2013 and the correspondence exchanged between the parties including the notice invoking clause 32 by the applicant, response of the respondent thereto and would submit that the said clause 32 clearly contemplated an arbitration agreement between the parties. He submits that first part of the said clause refers to dispute, decision of the managing director upon the such dispute being final and binding on both the parties and the second part of the said clause refers to arbitration or any Court. He submits that the intention of the parties is thus absolutely clear that in case of any dispute between the parties, such dispute was required to be referred to the arbitration of the Managing Director of the respondent. He submits that however, in view of Section 12(5) read with Seventh Schedule of the Arbitration and Conciliation Act, 1996, the managing director of the respondent who was the named arbitrator would be ineligible to act an arbitrator. The applicant has thus suggested the name of a counsel of this Court to be appointed as a sole arbitrator and the said appointment shall be confirmed within a period of 30 days from the receipt of the said notice failing which the applicant would adopt appropriate remedy for seeking such appointment. He submits that the managing director of the respondent thus could not have been appointed as an arbitrator in view of the said provision under Section 12(5) read with Seventh Schedule of the said Act.

6. Learned counsel placed reliance on an unreported judgment of this Court delivered on 19th March 2015 in the case of Tatva Global Environment (Deonar) Ltd. Vs. The Municipal Corporation of Gr. Mumbai in Arbitration Application No.15 of 2014 and would submit that this Court after considering a similar arbitration clause and after adverting to the judgment of the Hon'ble Supreme Court in the case of Bihar State Mineral Development Corporation & Anr. Vs. Encon Builders (I) (P) Ltd., (2003) 7 SCC 418 and another judgment of the Hon'ble Supreme Court in the case of Jagdish Chander Vs. Ramesh Chander & Ors., (2007) 5 SCC 719 and in case of Datar Switchgears Ltd. Vs. Tata Finance Ltd., (2000) 8 SCC 151 and in the case of Deep Trading Company Vs. Indian Oil Corporation, (2013) 4 SCC 35 has held that there existed a valid and subsisting arbitration agreement between the parties. He submits that the respondent did not agree to the name suggested by the applicant within a period of 30 days and did not even suggest any other name to the applicant for appointment of a sole arbitrator by consensus of the parties within the time prescribed, this Court has an ample power to appoint an independent arbitrator.

7. Learned counsel for the applicant placed reliance on the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. Vs. Jada Elevator Components, 2018 SCC OnLine SC 1503 and in particular paragraphs 4, 10 and 11 thereof and would submit that the Hon'ble Supreme Court has considered the identical arbitration clause and has held that the intention of the parties to have their disputes resolved by arbitration was clear and thus the Hon'ble Supreme Court has appointed an arbitrator on interpretation of the said clause.

8. Mr.Rajadhyaksha, learned senior counsel for the respondent, on the other hand, invited my attention to the averments made in paragraphs 4, 5, 27 and 29 of the arbitration application and also affidavit in rejoinder filed by the applicant and would submit that it is the case of the applicant that the dispute between the parties was required to be referred to the arbitration of the named arbitrator who was the managing director of the respondent.

9. It is submitted that the said clause 32 cannot be construed as an arbitration agreement. The managing director was not required to act judicially or to exercise any power to resolve the dispute between the parties. The said clause 32 does not indicate any adjudication of dispute by complying with the provisions of law and principles of natural justice. The said clause 32 does not postulate a binding agreement between the parties contemplating appointment of an arbitrator. The said clause has to be read in totality. The said clause when read in its totality does not constitute a binding obligation to refer the dispute to arbitration, but merely contemplates a possibility of going to arbitration subject to a further agreement between the parties in that regard. The said procedure contemplated under clause 32 was for primary and secondary approaches to the dispute resolution. When the dispute was not resolved at the execution level, it becomes inevitable that the administrative head intervened to amicably resole the same.

10. It is submitted that the first part of the said clause 32 has to be read in context which was engrafted merely to avoid delay and stoppage of work and for the purpose of smooth carrying on of the works. He submits that if the managing director fails to resolve the dispute, the parties have option either to refer the dispute to arbitration or seeks remedies through the judicial process. At the most, the second part of the said clause 32 shows that it was not the intention of the parties that the arbitration be the sole dispute resolution mechanism. He submits that the parties have not arrived at an agreement to refer the dispute to arbitration and thus the dispute cannot be referred to arbitration.

11. Learned senior counsel for the respondent placed reliance on the judgment of the Hon'ble Supreme Court in the case of National Agricultural Coop. Marketing Federation India Ltd. Vs.Gains Trading Ltd., (2007) 5 SCC 692 in support to the submission that the said clause 32 refers to “arbitration or court” and thus the rules of interpretation required the clause to be read in the ordinary and natural sense, except where that would lead to an absurdity. No part of a term or clause should be considered as a meaningless, surplusage, when it is in consonance with the other parts of the clause and expresses the specific intention of the parties.

12. Learned senior counsel placed reliance on an unreported judgment delivered on 10th September 2009 in the case of Dr.Arun Subrao Prabhu Vs. M/s.Rizvi Builders & Ors. in Suit No.1336 of 1988 and in particular paragraphs 6, 11 and 14 thereof in support of the submission that while interpreting the words of a contract, the efforts of the Court must be to read all the provisions harmoniously. A construction which results in any part of the contract being rendered otiose must be avoided.

13. Learned senior counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Jagdish Chander Vs.Ramesh Chander & Ors. (supra) and in particular paragraphs 2 and 8 thereof and would submit that the Hon'ble Supreme Court after adverting to several earlier judgments on interpretation of the arbitration agreement which has specifically included the words “arbitration or court,” has held that such clause cannot be construed as an arbitration agreement in view of there being uncertainty, the said clause gives a chance to both the parties whether to go to the arbitration or court in the event of dispute having arisen between the parties. The applicant thus could not have applied for appointment of an arbitrator in view of there being no further agreement between the parties for referring the dispute to the arbitration.

14. Learned senior counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Karnataka Power Transmission Corporation Limited & Anr. Vs.Deepak Cables (India) Limited, (2014) 11 SCC 148 and more particularly paragraphs 2, 3, 5, 9 to 11, 21, 22, 23 and 26 thereof. He submits that there was no procedure contemplated in clause 32 for following the principles of natural justice. The managing director was not required to act judicially and thus clause 32 empowering the managing director to resolve the dispute could not be construed as an arbitration agreement.

15. Learned senior counsel for the respondent placed reliance on the judgment of this Court in the case of Voltas Limited Vs. M.P. Entertainment & Developers Pvt. Ltd., 2016 SCC OnLine Bom 7664 and in particular paragraphs 13, 17 and 18 in support of the submission that since the said clause 32 also provides the expression “court,” the expression “arbitration” mentioned in the same clause cannot be enforced unless both the parties give consent for the same.

16. Learned senior counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Anr., (2018) 4 SCC 793 and in particular paragraph 14 thereof and would submit that referring the parties to arbitration has serious civil consequences procedurally and substantively and if there is no arbitration agreement between the parties, without a joint memo or a joint application of the parties, this Court cannot refer the parties to the arbitration.

17. In so far as the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) relied upon by the learned counsel for the applicant is concerned, it is submitted by the learned senior counsel for the respondent that the said judgment cannot be considered as a binding precedent in this matter. The view taken by the Hon'ble Supreme Court in that matter is based on the facts of that case. In support of his submission, the learned senior counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Haryana Financial Corporation and Ors. Vs. Jagdamba Oil Mills & Ors., AIR 2002 SC 834 and would submit that the observations made by the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) must be read in context in which those observations appear to the facts of this case. The judgments of Courts are not to be construed as statutes.

18. Learned senior counsel for the respondent placed reliance on the judgment of the Hon'ble Supreme Court in the case of Bank of India & Anr. Vs. K.Mohandas & Ors., (2009) 5 SCC 313 and in particular paragraphs 54 to 61 in support of the submission that the Court has to apply the judgment to the facts of each case. A case is only an authority for what it actually decides. He submits that the judgment in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) is thus clearly distinguishable in the facts of this case and cannot be construed as a precedent.

19. Mr.Thakkar, learned counsel for the applicant in rejoinder submits that the second part of clause 32 of the work order clearly supports the first part. This Court has to read both the parts harmoniously so as to ascertain the true and correct meaning thereof and the intention of both the parties.

20. Learned counsel for the applicant distinguishes the judgment of the Hon'ble Supreme Court in the case of Jagdish Chander Vs.Ramesh Chander & Ors. (supra) and would submit that all the attributes and elements of an arbitration agreement exist in clause 32 of the work order. The arbitration agreement is admittedly in writing. The parties have agreed to refer the disputes to arbitration. The arbitrator is empowered to adjudicate upon the dispute. The parties have also agreed that the decision of the managing director of the respondent would be final and binding. He submits that the said judgment would support the case of the applicant and not the respondent. He submits that in that case, the Hon'ble Supreme Court had set aside the appointment of the arbitrator on rendering a finding that the parties had agreed to enter into an arbitration agreement in future which is not the clause in this matter.

21. Learned counsel for the applicant distinguishes the judgment of the Hon'ble Supreme Court in the case of Karnataka Power Transmission Corporation Limited & Anr. (supra) relied upon by the learned senior counsel for the respondent on the ground that in this case, the arbitration clause recorded in clause 32 of the work order does not contemplate the process of resolution at two stages as was the case before the Hon'ble Supreme Court. He submits that clause under consideration of the Hon'ble Supreme Court was totally different.

22. Learned counsel for the applicant distinguishes the judgment of this Court in the case of Voltas Limited (supra) relied upon by the learned senior counsel for the respondent on the ground that the arbitration clause in that matter was depending upon the contingencies provided therein. It was provided that if the matter was referred to arbitration then, it would be resolved by dual arbitrators, one by client and another by contractor. He relied upon paragraphs 13, 17 and 18 of the said judgment while distinguishing the said judgment.

23. In so far as the judgment of the Hon'ble Supreme Court in the case of Kerala State Electricity Board & Anr. (supra) relied upon by the learned senior counsel for the respondent is concerned, learned counsel for the applicant distinguishes the said judgment on the ground that the Hon'ble Supreme Court had considered the powers of Court under Section 89 of the Code of Civil Procedure, 1908 when there was no arbitration agreement entered into between the parties and in that context had held that referring the parties to arbitration has serious civil consequences procedurally and substantively and if there is no arbitration agreement between the parties, without a joint memo or a joint application of the parties, this Court cannot refer the parties to the arbitration.

24. In so far as the the other judgments relied upon by the learned senior counsel for the respondent in support of the submission that the judgment of the Hon'ble Supreme Court relied upon by the applicant cannot be considered as a precedent is concerned, it is submitted by the learned counsel for the applicant that there is no dispute about the propositions of law laid down by the Hon'ble Supreme Court or by the High Court in those judgments relied upon by the learned senior counsel for the respondent. He however, submits that the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) would squarely apply to the facts of this case in view of the Hon'ble Supreme Court interpreting the identical arbitration clause which had the expression “dispute should be settled by arbitration body for arbitration or court.”

25. It is submitted that in clause 32 of the work order also the expression “arbitration or court,” both are recorded. After interpreting such arbitration clause, the Hon'ble Supreme Court held that the said clause refers to the arbitration or court. Since there was an option and the applicant had invoked the arbitration clause, the Hon'ble Supreme Court has no hesitation to appoint an arbitrator to adjudicate upon the dispute between the parties. The Hon'ble Supreme Court adverted to the earlier judgment in the case of Indtel Technical Services Private Limited Vs. W.S. Atkins Rail Limited, (2008) 10 SCC 308 and held that the parties had intended to resolve their disputes through arbitration and thus the petition for appointment of an arbitrator was accordingly allowed.

REASONS AND CONCLUSIONS :-

26. A short question arises for consideration of this Court is whether clause 32 of the work order dated 18th June 2013 constitutes an arbitration agreement between the parties or not.

27. A perusal of clause 32 of the work order indicates that the said clause refers to the expression “dispute” and also refers to the decision of the Managing Director of the respondent, in case of such dispute, will be final and binding on both the parties. There is no punctuation between the words “both the parties” and “any disputes shall be referred to Arbitration or any Court.” It is not the case of the respondent that the dispute does not exist between the parties. The application for appointment of an arbitrator is opposed mainly on the ground that the said clause 32 did not provide for any procedure, for complying with the principles of natural justice or adjudication of disputes in a judicial manner by the managing director. It is the case of the respondent that the said clause would only indicate that inspite of intervention of the managing director, if the dispute between the parties is not resolved, in that event, the parties have option either to refer the dispute to arbitration or seeks remedies through the judicial process and thus it was not the intention of the parties that the arbitration be the sole dispute resolution mechanism. In paragraph 6.4 of the affidavit-inreply filed by the respondent, it is the contention of the respondent that at the most, the said clause 32 is only a reflection of a possibility of the parties agreeing to arbitration in the future. On the other hand, it is the case of the applicant that the managing director of the respondent was a named arbitrator under the said clause 32 for the purpose of resolution of disputes and differences between the parties.

28. Section 12(1)(a) of the Arbitration and Conciliation Act, 1996 provides that when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality. Explanation (1) is added to the said provision which provides that the grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of the arbitrator.

29. Section 12(5) of the Arbitration and Conciliation Act, 1996 provides that Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator.

30. The first part of clause 32 of the work order dated 18th June 2013 is extracted as under :-
“Incase of any dispute, our Managing Director's decision will be final and binding on both the parties.”
The said provision thus clearly contemplates that in case of any dispute, the same shall be referred to the Manging Director whose decision will be final and binding on both the parties. The managing director referred to in the said clause obviously refers to the managing director of the respondent.

31. The second part of clause 32 of the work order dated 18th June 2013 is extracted as under :-
“any dispute shall be referred to arbitration or any court.”
If the argument of the learned senior counsel for the respondent is accepted that this clause did not amount to an arbitration agreement, the words “any dispute shall be referred to arbitration” would be surplusage or otiose. Even if the argument of the respondent is accepted that the role of the managing director provided in first part of clause 32 was not adjudicatory, the words “any dispute shall be referred to arbitration” would be surplusage or otiose. I am thus inclined to accept the submission of the learned counsel for the applicant that the parties had clearly intended that the dispute, if any, between the parties shall be referred to arbitration of the managing director. In my view, the managing director would thus fall under Serial Nos.1 and 2 of the Seventh Schedule i.e. (1) The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party or (2) The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties. In my view, Serial Nos.1 and 2 of the Seventh Schedule have to be read with Section 12(5) of the said Act. In my view, inspite of this agreement, in this case, which was entered into on 18th June 2013 i.e. prior to the date of insertion of Section 12(5) w.e.f. 23rd October 2015, the managing director would not be eligible to act as an arbitrator. Since the managing director himself is not eligible to act as an arbitrator, he also will not be eligible to appoint any other arbitrator. In that event, the Court has ample powers under Section 11(6) of the said Act to appoint an independent arbitrator to adjudicate upon the dispute between the parties.

32. This Court in the case of Tatva Global Environment (Deonar) Ltd.(supra) has considered a clause which empowered the Additional Municipal Commissioner to constitute a committee comprising of three officers to resolve the disputes, differences or claim arising out of the agreement. The said clause further contemplated an appeal before the committee comprising of three Additional Municipal Commissioners. This Court rejected the plea of the Municipal Corporation that the said clause could not be construed as an arbitration agreement after adverting to several judgments of the Hon'ble Supreme Court. This Court held that the said clause which provides that the decision given by the committee shall be final and binding upon the parties establishes that the said clause has to be construed as an arbitration agreement and not a mere internal procedure.

33. The Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) has considered the clause 15 which is extracted as under :-
“15.Dispute handling :
Common processing contract disputes, the parties should be settled through consultation; consultation fails by treatment of to the arbitration body for arbitration or the court.”
The Hon'ble Supreme Court held that the intention of the parties, as it flows from the clause, is that efforts have to be made to settle the disputes in an amicable manner and, therefore, two options were available, either to go for arbitration or for litigation in a court of law. After adverting to the earlier judgment of the Hon'ble Supreme Court in the case of Indtel Technical Services Private Limited (supra), the Hon'ble Supreme Court held that the intention of the parties to have their disputes resolved by arbitration has to be considered. In the case at hand before the Hon'ble Supreme Court, the Hon'ble Supreme Court held that the said clause 15 refers to the arbitration or court. There is thus an option for the petitioner to invoke the arbitration clause and, therefore, the Court has no hesitation, in the obtaining factual matrix of the case, for appointment of an arbitrator and, accordingly, appointed a retired Judge of the Hon'ble Supreme Court as a sole arbitrator. In my view, in this case also, the expression “arbitration or court” is incorporated in the said clause 32 in addition to the words “dispute” and “decision of the managing director.” In my view, the said judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) would squarely apply to the facts of this case. I am respectfully bound by the said judgment. The entire clause has to be read harmoniously.

34. Learned senior counsel for the respondent though relied upon various judgments in support of his submission that the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) cannot be considered as a precedent and was delivered in the facts of that case, in my view, there is no dispute about the propositions of law laid down by the Hon'ble Supreme Court in those judgments relied upon by the learned senior counsel for the respondent. In this case, clause 32 of the work order is similar to clause 15 of the said clause which fell for consideration of the Hon'ble Supreme Court. After interpreting the said clause, the Hon'ble Supreme Court held that the said clause which refers to the 'arbitration' or 'court', it would amount to an arbitration clause. The judgments thus relied upon by the learned senior counsel for the respondent would not assist the case of the respondent. In my view, the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) is clear authority on the propositions of law interpreting the identical arbitration clause and thus would be a precedent under Article 141 of the Constitution of India and being applicable to the facts of this case would be binding on this matter.

35. A perusal of the reply dated 2nd July 2018 addressed by the respondent through its advocate in response to the letter dated 15th September 2017 and 16th October 2017 addressed by the applicant through its advocate indicates that the respondent had contended that the first part of clause 32 contemplates a reconciliation process whereby the decision of the managing director of the respondent was given a finality and in the event of dispute still persisting, the parties had option either to agree for arbitration or seek remedies through the judicial process. Similar contention is also raised in the affidavit-in-reply filed by the respondent. It is also contended in the affidavit-in-reply that the said clause at the very highest is the clause which reflects a possibility of the parties agreeing to arbitration in the future. This Submission of the learned senior counsel for the respondent is contrary to the principles of law laid down by the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra).

36. In so far as the judgment of the Hon'ble Supreme Court in the case of National Agricultural Coop. Marketing Federation India Ltd. (supra) relied upon by the learned senior counsel for the respondent is concerned, it has been held by the Hon'ble Supreme Court that no part of a term or clause should be considered as a meaningless, surplusage, when it is in consonance with the other parts of the clause and expresses the specific intention of the parties.

37. The Hon'ble Supreme Court in the case of Enercon (India) Limited & Ors. Vs. Enercon GMBH & Anr., (2014) 5 SCC 1 after adverting to several earlier judgments of the Hon'ble Supreme Court has held that the courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitration agreement or arbitration clause. Therefore, when faced with a seemingly unworkable arbitration clause, it would be the duty of the court to make the same workable within the permissible limits of the law, without stretching it beyond the boundaries of recognition. It is held that a common sense approach has to be adopted to give effect to the intention of the parties to arbitrate. It is held that the court ought to adopt the attitude of a reasonable business person, having business common sense as well as being equipped with the knowledge that maybe peculiar to the business venture. The arbitrate clause cannot be construed with a purely legalistic mindset, as if one is construing a provision in a statute. The Hon'ble Supreme Court in the said judgment adverted to the UNCITRAL Model Law and held that the Courts play a supportive role in encouraging the arbitration to proceed rather than letting it come to a grinding halt. In my view, the principles of law laid down by the Hon'ble Supreme Court in case of Enercon (India) Limited & Ors. (supra) would squarely apply to the facts of this case. I am respectfully bound by the said judgment.

38. In my view, the intention of both the parties was clear that the matter shall be referred to the arbitration if the dispute arises between the parties and decision of such arbitrator will be final and binding on the parties. The Court has to adopt a common sense approach to give effect to the intention of the parties to arbitrate. In my view, this Court cannot interpret the said clause 32 as a statute and cannot accept the interpretation as sought to be canvassed by the learned senior counsel for the respondent. The Court has to encourage the parties to refer the dispute to the arbitration and while interpreting an arbitration clause has to adopt a liberal approach. The judgment of the Hon'ble Supreme Court in the case of National Agricultural Coop. Marketing Federation India Ltd. (supra) thus would not assist the case of the respondent.

39. In so far as the unreported judgment of this Court in the case of Dr.Arun Subrao Prabhu Vs. M/s.Rizvi Builders & Ors. (supra) relied upon by the learned senior counsel for the respondent is concerned, this Court had interpreted two clauses in the contract which were ex facie contrary to each other. This Court in the said suit, accordingly, held that while interpreting the words of a contract, the effort of the Court must be to read all the provisions harmoniously. A construction which results in any part of the contract being rendered otiose must be avoided. In my view, the argument of the learned senior counsel for the respondent that the expression “arbitration or court,” both are referred in clause 32 and thus the expression “court” would be otiose if the matter is referred to the arbitration is concerned, is without any merit. The Court has to interpret the said clause which is entered into between two business men having business common sense and has to adopt an attitude of a reasonable business person while interpreting the said provision. The draft man of the said work order was undoubtedly the respondent. The benefit of doubt in case of any ambiguity thus has to be given to other side. The said unreported judgment of this Court in the case of Dr.Arun Subrao Prabhu Vs. M/s.Rizvi Builders & Ors. (supra) thus would not assist the case of the respondent.

40. In so far as the judgment of the Hon'ble Supreme Court in the case of Jagdish Chander Vs.Ramesh Chander & Ors. (supra) relied upon by the learned senior counsel for the respondent is concerned, the said judgment interpreted the clause which is extracted as under :-
“(16) If during the continuance of the partnership or at any time afterwards any dispute touching the partnership arises between the partners, the same shall be mutually decided by the partners or shall be referred for arbitration if the parties so determine.”
After construing the aforesaid clause 16, the Hon'ble Supreme Court came to the conclusion that the said clause had contemplated that it is not an arbitration agreement but a provision which enables arbitration only if the parties mutually decide after due consideration as to whether the disputes should be referred to arbitration or not and thus the said clause required the consent of parties before the disputes could be referred to arbitration and thus could not be construed as an arbitration agreement. In my view, clause 32 of the work order does not contemplate any such mutual consent subsequently after arising of dispute between the parties. The said judgment of the Hon'ble Supreme Court in the case of Jagdish Chander Vs.Ramesh Chander & Ors. (supra) is thus clearly distinguishable in the facts of this case.

41. In so far as the judgments of the Hon'ble Supreme Court in the case of Haryana Financial Corporation and Ors. Vs. Jagdamba Oil Mills & Ors.(supra) and in the case of Bank of India & Anr. Vs. K.Mohandas & Ors.(supra) relied upon by the learned senior counsel for the respondent are concerned, there is dispute about the propositions of law laid down by the Hon'ble Supreme Court in the said judgment. In this case, the judgment of the Hon'ble Supreme Court in the case of Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. (supra) would squarely apply to the facts of this case.

42. For the reasons recorded aforesaid, in my view, the arbitration agreement exists between the parties. Since the respondent had failed to appoint an arbitrator, this application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 is maintainable.

43. I therefore pass the following order :-
(i) I propose to appoint Shri Justice J.P. Devadhar, a former Judge of this Court having address at 311, Churchgate Chambers, 5, New Marine Lines, Next to American Centre, Churchgate, Mumbai- 400 020 as a sole arbitrator.
(ii) Learned prospective arbitrator is requested to file a statement of disclosure in terms of Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996 on or before the next date. (iii) The applicant is permitted to obtain statement of disclosure from the learned prospective arbitrator and to tender the same before this Court on the next date.
(iv) If the learned prospective arbitrator is appointed, fees and expenses of the learned arbitrator shall be borne by both the parties equally at the first instance.

44. Place the arbitration application on supplementary board for 'Directions' on 30th October 2018.