STATE OF KERALA Vs. JOSEPH

JUDGEMENT

(1.) THIS is an appeal by the State of Kerala and the superintending Engineer, National High Way, South Circle, Vytila, Cochin under s. 39 (1) (iv) of the Arbitration Act against the judgment and decree dated 17-9-1981 in O. S. No. 226 of 1980 of the Subordinate Judge's Court, Ernakulam. The appellants are defendants in the suit. The respondent herein as the plaintiff filed the suit under S. 20 of the Arbitration Act for directing the defendants to file the agreement No. 6/79/80 dated 11-9-1979 executed between the plaintiff and the 1st defendant in Court and also to appoint an Arbitrator for deciding the dispute between the parties. It is alleged that the plaintiff in this case was the lowest tenderer for the work entitled. "widening and strengthening single line section to 2 lines from Km 438/0 to 444/0 (N. H. 47)-road formation and C. D. works. " His tender was accepted The plaintiff did some work and executed certain documents even before the agreement was executed between the parties on 11-9-1979. Certain disputes having arisen between the parties, the plaintiff filed a suit seeking directions of court to appoint an Arbitrator for deciding the dispute between the parties. The sole question raised in this case is as to whether the suit filed by the plaintiff under S. 20 of the Arbitration Act directing the defendants to file the agreement dated 11-9-1979 in Court and for referring the dispute for arbitration is maintainable. It was the plaintiff's case that Ext. BI agreement dated 11-9-1979 contains necessary provisions enabling him to resort to arbitration. According to the defendant, since the work to be done involved more than Rs. 2 lakhs, as per Government Order No. MS. No. 53/ 78/ PH&e dated 8-5-1978 the arbitration clause in the agreement was deliberately scored off. Since the parties are at issue regarding the scope of the agreement let us extract the relevant clauses thereof: "and WHEREAS the contractor has also signed the copy of the Madras Detailed Standard Specifications and addenda volume thereto maintained in the National High Way Division Office in acknowledgement of being bound by all the conditions of the clauses of the Standard Preliminary specification and all the Standard Specifications for items of works described by a Standard Specification number in schedule A; AND WHEREAS the contractor has agreed to execute upon and subject to the conditions set forth in the preliminary Specification of the madras Detailed Standard Specifications and such other conditions as are contained in all the specifications forming part of this contract (hereinafter referred to as "the said conditions") the works shown upon the drawings and described in the said specifications and set forth in schedule A as the "probable quantities" and comply with the rate of progress noted at the end of this Articles of agreement for a sum of rupees 37, 95, 562/ -. . . (3) The arbitrator for fulfilling the duties set forth in the arbitration clause of the (Scored of) Standard Preliminary Specification shall be Superintending Engineer of Circles. " Condition No. 73 of the M. D. S. S. is as follows: "in case of any dispute or difference between the parties to the contract either during the progress of after the completion of the works or after the determination, abandonment or breach of the contract as to the interpretation of the contractor as to any matter arising thereunder except as to the matters left to the sole discretion of the Executive Engineer under Clause. 20. 22, 27 (c),29, 36, 37 and 40 of the preliminary specification or as to the withholding by the Executive Engineer on payment of any bill Co which the contractor may claim to be entitled, then either party shall forthwith give to the other notice of such dispute or difference and such dispute or difference shall be and is hereby referred to the arbitration of the superintending Engineer of the nominated circle mentioned in the articles of the agreement (hereinafter called the Arbitrator) and the award of such arbitrator shall be final and binding on the parties"

(2.) THE defendants contended in the court below that there is no valid and effective arbitration clause and so the suit will not lie. THE learned Subordinate Judge held that there is an arbitration clause in the agreement executed between the parties and that the plaintiff is entitled to get the dispute arising out of the contract settled by an arbitrator who will be a qualified Civil Engineer. Aggrieved by the said decision, the defendants have filed this appeal. Mr. John Mathew, Government pleader, appearing on behalf of the defendants-appellants contended that since Article (3) of the agreement to the following effect "the arbitrator to fulfil the duties set forth in the arbitration clause of the Standard Preliminary Specification shall be Superintending Engineer of Circle" has been scored off, there is no valid and effective clause by which the disputes between the parties could be referred to arbitration. According to counsel, the parties were not ad idem regarding the personnel of the arbitrator. So the arbitration clause is vague, becomes ineffective and meaningless. This is so, notwithstanding that condition no. 73 of the preliminary specifications of M. D. S. S. extracted above, envisages that dispute or difference between the parties to the contract "shall be and is hereby referred to the arbitration of the Superintending engineer" of the nominated circle. Article (3) dealing with this matter has been scored off. So there is no valid provision for arbitration. It was the contention of counsel that the provision regarding arbitration is not available in such circumstances and so unenforceable.

(3.) WE heard counsel at great length. WE are satisfied that the plea of the respondent's counsel, that there is a proper and enforceable clause regarding reference to arbitration is justified. In this case, the agreement dated 11-9-1979 (Ext BI), adopts or incorporates, the conditions in M. D. S. S. and addenda volume thereto maintained in the National high Way, Divisional Office as part of the contract entered into between the parties. As stated by Russell on Arbitration, 19th Edn. , at page 50: "the agreement may arise by the incorporation of one document containing an arbitration clause in another under which the dispute arises. "where parties by an agreement import the terms of some other document as part of their agreement those terms must be imported In their entirety but subject to this: that if any of the imported terms in any way conflicts with the expressly agreed terms, the latter must prevail over what would otherwise be imported. " In this case in the opening portion of the agreement the parties have agreed that the terms and conditions specified in M. D. S. S. will be part of the contract. If so, condition No. 73 of M. D. S. S. clearly envisages that disputes and differences between the parties "shall be and is hereby referred to arbitration" etc. In our opinion since condition No. 73 of M. D. S. S. is part of Ext. B1 agreement executed between the parties, there is a valid and enforceable clause enabling the plaintiff to resort to arbitration in case of disputes or differences arising between them. It may be mentioned here, that Ext. Al marked in the case, is Clause. 73 (condition No. 73) of Preliminary Specification to M. D. S. S. It is true that Article (3) of the usual form of agreement which provided that the Superintending Engineer of the nominated Circle shall be the arbitrator has been scored off and so it is non est. The fact that there is a valid arbitration clause cannot be disputed in the circumstances. The mere fact that the mention of the particular person who should officiate as arbitrator is vague in the arbitration clause or has not been named or parties did not provide for it, will not in any way render the provision for arbitration itself, vague or ambiguous. The decision reported in Asoka Construction Co. v. Union of India (AIR. 1969 Tripura 19) is relevant in this connection to conclude that the provision for arbitration in this case is valid. WE agree with the ratio laid down in the said decision.