The three Judge Bench decision of this
Court (of which two of us were members) in P.
Dasaratharama Reddy Complex v. Government of
Karnataka & Anr.(2014) 2 SCC 201
, while examining a similar
clause of an arbitration agreement, after
careful consideration and interpretation of
the clause, has held that in all the matters of
dispute arising out of the agreement regarding
quality of materials and work, etc., the
decision of the Board of Directors of the
Nagarika Yogbakashema Mathu Gruha Nirmana
Sahakara Sangha, shall be final and binding on
the part of the Contractor. Further, the case
of Mysore Construction Company v. Karnataka
Power Corporation Ltd. & Ors.12 was discussed in
P. Dasaratharama Reddy (supra) by this Court,
at para 14, wherein, the Designated Judge has
referred to the passage from Russell, on
Arbitration (19th Edition, page 59) and the
other judgments of this Court in K.K. Modi v.
K.N. Modi and Ors., Chief Conservator of
Forests, Rewa v. Ratan Singh Hans13, Rukmanibai
Gupta v. The Collector, Jabalpur14, State of
Uttar Pradesh v. Tipper Chand15, State of
Orissa v. Damodar Das16, Bharat Bhushan Bansal
v. Uttar Pradesh Small Industries Corporation
Ltd., Kanpur17 and observed that the decisions
in the abovementioned cases make it clear by
laying down the conditions, when an agreement
or a clause in the agreement can be construed
as an arbitration agreement between the
parties.
18. Further, at paragraph 16 of P.
Dasaratharama Reddy (supra), the distinction
between an expert determination and
arbitration between the parties has been spelt
out as per Russell, on Arbitration (21st Edn.)
in the following words:-
“16……Many cases have been fought
over whether a contract’s chosen
form of dispute resolution is
expert determination or
arbitration. This is a matter of
construction of the contract, which
involves an objective enquiry into
the intentions of the parties.
First, there are the express words
of the disputes clause. If specific
words such as ‘arbitrator’,
‘Arbitral Tribunal’, ‘arbitration’
or the formula ‘as an expert and
not as an arbitrator’ are used to
describe the manner in which the
dispute resolver is to act, they
are likely to be persuasive
although not always conclusive….
Where there is no express wording,
the court will refer to certain
guidelines. Of these, the most
important used to be, whether there
was an ‘issue’ between the parties
such as the value of an asset on
which they had not taken defined
positions, in which case the
procedure was held to be expert
determination; or a ‘formulated
dispute’ between the parties where
defined positions had been taken,
in which case the procedure was
held to be an arbitration. This
imprecise concept is still being
relied on. It is unsatisfactory
because some parties to contract
deliberately choose expert
determination for dispute
resolution. The next guideline is
the judicial function of an
Arbitral Tribunal as opposed to the
expertise of the expert…. An
Arbitral Tribunal arrives at its
decision on the evidence and
submissions of the parties and must
apply the law or if the parties
agree, on other consideration; an
expert, unless it is agreed
otherwise, makes his own enquiries,
applies his own expertise and
decides on his own expert
opinion….”
19. It was further held that a clause
substantially similar to the clauses referred
to in P. Dasaratharama Reddy (supra) was
interpreted by the three Judge Bench of this
Court in the State of Uttar Pradesh v. Tipper
Chand (supra) wherein paras 2 and 3 of the
said judgment contain the reasons for holding
that the clause in the agreement cannot be
construed as an arbitration clause.REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11474 OF 2014
(Arising Out of SLP (C) No. 13982 of 2007)
International Amusement Limited
Vs.
India Trade Promotion
Organisation & Anr
Citation:(2015) 12 SCC677
