Holding

The arbitration clause in the 2007 Scheme is incorporated by reference into the individual sale orders, making the arbitration agreement valid and enforceable.

Summary

The appellant, a coal buyer, entered into several sale orders under Coal India Ltd.'s 2007 e‑auction scheme, which contained an arbitration clause (Clause 11.12). After the appellant was deemed to have breached the scheme and his earnest money deposit was forfeited, he invoked the arbitration clause, but the respondent failed to appoint an arbitrator. The appellant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an independent arbitrator, which the Single Judge of the Jharkhand High Court rejected on the ground that the individual sale orders did not incorporate the arbitration clause. On appeal, the Supreme Court examined the doctrine of incorporation by reference under Section 7(5) of the Act and held that a reference in the sale orders to the 2007 Scheme, a standard‑form document, sufficed to incorporate the arbitration clause. The Court clarified the distinction between "single contract" and "two‑contract" cases and applied the former, concluding that the arbitration clause was validly part of each sale order. Consequently, the Single Judge's order was set aside and the appeal was allowed, with the parties agreeing to appoint a retired judge as sole arbitrator.

Issues considered

Whether Clause 11.12 of the 2007 Scheme is incorporated by reference into each individual sale order issued under the scheme.
Whether the doctrine of incorporation by reference under Section 7(5) of the Arbitration and Conciliation Act, 1996 applies to the present facts.
Whether the Single Judge erred in holding that the sale orders did not contain an arbitration clause.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 7(5), s. Sixth Schedule
Arbitration and Conciliation (Amendment) Act, 2015

Subjects

ArbitrationIncorporation by referenceArbitration clauseSale order2007 SchemeSingle contract caseTwo‑contract caseSection 7(5) Arbitration ActSection 11(6) Arbitration ActAppointment of arbitrator

Judgment

[2019] 2 S.C.R. 239 239

GIRIRAJ GARG A
v.
COAL INDIA LTD. & ORS.
(Civil Appeal No. 1695 of 2019)
FEBRUARY 15, 2019 B
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996:
s. 7(5) – Arbitration clause – Incorporation by reference –
Failure of respondent to appoint an arbitrator as per clause 11.12 C
of the 2007 Scheme, pursuant to dispute between the parties
pertaining to sale orders – Application for appointment of
independent arbitrator by the appellant – Rejection by the Single
Judge of the High Court stating that the arbitration clause contained
in the 2007 Scheme, could not be incorporated by reference in each D
of the sale orders entered into between the parties – On appeal,
held: Arbitration agreement need not be in the form of a clause in
the substantive contract itself – It could be an independent
agreement; or it could be incorporated by reference either from a
parent agreement, or by reference to a standard form contract – On
facts, arbitration clause 11.12 in 2007 Scheme stands incorporated E
in the sale orders issued thereunder – Words “in relation thereto”
used in Clause 11.12 indicate that the clause would apply to all
transactions which took place under the 2007 Scheme, including
the sale transactions – Thus, the view taken by the Single Judge is
erroneous, and is set-aside.
F
Allowing the appeal, the Court
HELD: 1.1 The principle of incorporation by reference of
an arbitration clause, from another document or contract is a well-
established principle in arbitration jurisprudence and has been
given statutory recognition in sub-section (5) of Section 7 of the G
Arbitration and Conciliation Act, 1996 Act. Section 7(5) states
that the reference in a contract to a document containing an
arbitration clause, constitutes a valid arbitration agreement, if
the contract is in writing, and the reference is specifically made
to incorporate the arbitration clause as a part of the contract.
H
239
240 SUPREME COURT REPORTS [2019] 2 S.C.R.

A The arbitration agreement need not necessarily be in the form of
a clause in the substantive contract itself. It could be an
independent agreement; or it could be incorporated by reference
either from a parent agreement, or by reference to a standard
form contract. [Paras 4.1-4.3][244-G-H, 245-A-C]
B 1.2 In the instant case, the Single Judge in the impugned
order erroneously took the view that an arbitration clause would
not stand incorporated in the individual sale orders entered into
by the Respondent No. 2-Coal Company and the appellant. The
individual sale orders emanate out of the 2007 Scheme. The sale
orders specifically state that they would be governed by the
C
guidelines, circulars, office orders, notices, instructions, relevant
law etc. issued from time to time by Coal Company. As a
consequence, the arbitration clause (i.e. Clause 11.12) in the 2007
Scheme would stand incorporated in the sale orders issued
thereunder. Clause 7 in the sale orders falls under the ‘single
D contract case’ where the arbitration clause is contained in a
standard form document i.e. the 2007 Scheme, to which there is
a reference in the individual sale orders issued by Respondent
No. 2.[Para 5][252-C-E]
1.3 The words “in relation thereto” used in Clause 11.12
E of the 2007 Scheme indicate that the clause would apply to all
transactions which took place under the 2007 Scheme. This
would include the sale transactions in the instant case. The
view taken by the Single Judge is erroneous, and is set-aside.
[Paras 5.1, 5.2][253-D]

F 1.4 The parties consensually agreed to appoint a Retired
Judge of the Calcutta High Court as Sole Arbitrator to adjudicate
the disputes which have arisen between the Appellant and
Respondent No. 2, under the 2007 Scheme. His appointment of
would be subject to the disclosure and declaration made, as per
the Sixth Schedule to the Arbitration and Conciliation Act, 1996
G (as amended by the 2015 Amendment Act). [Para 6][253-E-F]
Alimenta SA v. National Agriculture Co-op Marketing
Federation of India Ltd.(1987) 1 SCC 615 : [1987] 1
SCR 957; M.R. Engineers & Contractors Pvt. Ltd. v.
Som Datt Builders Ltd. (2009) 7 SCC 696 : [2009] 10
H
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 241

SCR 373; Inox Wind Ltd. v. Thermocables Ltd. (2018) A
2 SCC 519 : [2018] 1 SCR 86; Renusagar Power Co.
Ltd. v. General Electric Company and Anr [1985]1 SCR
432; Doypack Systems Pvt. Ltd. v. Union of India and
Ors. 1988 (36) ELT 201 (SC) – referred to.
Clements v. Devon Country Insurance Committee, [1918] B
1 KB 94; Macleod Ross and Co. Ltd. v. Compagnie d’
Assurances Generales L’Helvetia of St Gall, [1952] 1
All ER 331, 334 : [1952] 1 Lloyd’s Rep 12 (CA); Sea
Trade Maritime Corporation v. Hellenic Mutual War
Risks Association (Bermuda) Limited, The Athena
[2006] EWHC 2530 (Comm); Habas Sinai Ve Tibbi C
Gazlar Isthisal Endustri AS v. Sometal SAL [2010]
EWHC 29 (Comm); SEA2011 Inc. v. ICT Ltd. [2018]
EWHC 520 (Comm) – referred to.
International Commercial Arbitration and Conciliation
in UNCITRAL Model Law Jurisdictions by Dr. Peter D
Binder 3rd Edn., 2010, Sweet & Maxwell p 86, para
2-022; Arbitration by Russell 24th Edn. 2015, Sweet &
Maxwell pp. 52-54, para 2-049; p. 82, para 2-103 –
referred to.
Case Law Reference E

[1987] 1 SCR 957 referred to Para 4.8
[2009] 10 SCR 373 referred to Para 4.9
[2018] 1 SCR 86 referred to Para 4.10
F
[1985] 1 SCR 432 referred to Para 5.1
1988 (36) ELT 201 (SC) referred to Para 5.1
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1695
of 2019
From the Judgment and Order dated 21/18.05.2018 of the High G
Court of Jharkhand at Ranchi in Arbitration Application No. 11 of 2016
Dr. Kedar Nath Tripathy, B. B. Pradhan, Susanta Kr. Muduti,
M. A. Aleem Majid, Advs. for the Appellant.
Anupam Lal Das, Anirudh Singh, Krishanu Barua, Advs. for
the Respondents. H
242 SUPREME COURT REPORTS [2019] 2 S.C.R.

A The Judgment of the Court was delivered by
INDU MALHOTRA, J. Leave granted.
1. The present Civil Appeal arises out of an Order dated 21/
18.05.2018 passed by a learned Single Judge of the Jharkhand High
Court at Ranchi, in Arbitration Application No. 11 of 2016. The Appellant
B filed an Application u/S. 11(6) of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as the “1996 Act”) for appointment of an
independent arbitrator to adjudicate the disputes that had arisen between
the Petitioner and Respondent No. 2.
2. The factual matrix of the present case, briefly stated, is as
C under:
2.1. Respondent No. 1 issued the 2007 Scheme, whereby
coal distribution would be conducted through e-Auction, with
a view to provide access to coal for buyers, who were not
able to source coal through the available institutional
D mechanism. This system would provide an equal opportunity
to purchase coal through a single-window service to all
intending buyers, and facilitate country wide access to
booking coal online for all sections of coal buyers, through
a simple, transparent system. Clause 11.12 of the 2007
E Scheme contains an arbitration clause which reads as
under -
“11.12 In the event of any dispute, Bidder
Buyer is necessarily required to represent in
writing to the General Manager (Sales and
F Marketing) of the concerned Coal Company,
who would deal with the same in a period of 1
month from such representation. Thereafter, if
required the matter be determined by the
Director-In Charge of Marketing of the
concerned Coal Company. Any interpretation
G of this Clause will be subject to clarification
by CIL, which will be deemed as firm and final. All
disputes arising out of this scheme or in
relation thereto in any form whatsoever shall

H
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 243
[INDU MALHOTRA, J.]

be dealt exclusively by way of arbitration in A
terms of the Arbitration and Conciliation Act, 1996.
The arbitration shall be conducted at Kolkata at a
place to be notified by CIL. The arbitrator shall be
appointed by the Chairman and Managing Director,
CIL upon written request in this behalf. The award
B
rendered by the arbitrator shall be final and binding
on the parties. (The place of arbitration and
nomination of arbitrator be varied
appropriately in view of the Coal Company
involved).
(emphasis supplied) C
2.2. From 2012 to 2015, the Appellant, being a registered
buyer as per the Terms and Conditions of the 2007 Scheme,
participated in the e-Auction for purchase of coal for several
sale orders issued under the 2007 Scheme.
2.3. The Appellant was declared successful with respect to D
various coal orders. Sale orders were issued in favour of
the Appellant, pursuant to which he deposited the Earnest
Money Deposit (hereinafter referred to as “EDM”) and
the coal value as per Clause 2.5 and 5.2 of the 2007 Scheme
respectively. E
2.4. As per Clause 7.2 of the 2007 Scheme, a period of 45
days was allowed to the Appellant from the date of issue of
the delivery order, to lift the coal. The Appellant for certain
reasons was unable to lift the booked quantity of coal.
2.5. Respondent No. 1 considered this to be a breach of the F
Terms and Conditions of the 2007 Scheme, and forfeited
the EMD deposited by the Appellant under Clause 9.2 of
the 2007 Scheme.
2.6. As a consequence, disputes arose between the parties.
The Appellant served a Notice dated 21.03.2016 invoking
G
the arbitration Clause 11.12 under the 2007 Scheme.
The Respondents failed to appoint an arbitrator as per
Clause 11.12 of the 2007 Scheme.
2.7. The Appellant was therefore constrained to file an
Application u/S. 11 before the Jharkhand High Court at
Ranchi, for appointment of an independent arbitrator. H
244 SUPREME COURT REPORTS [2019] 2 S.C.R.

A 2.8. The learned Single Judge vide impugned Order dated
21/18.05.2018 rejected the Application on the ground that
the disputes relate to different transactions entered into
between the parties, under the 2007 Scheme. The sale
orders did not contain an arbitration clause. It was held that
even though the 2007 Scheme contains an arbitration clause,
B
none of the individual sale orders make reference to the
applicability of terms and conditions of the 2007 Scheme to
the sale orders. Hence, the arbitration clause could not be
incorporated by reference.
3. Aggrieved by the aforesaid Order, the Appellant has filed the
C present Appeal.
We have heard learned Counsels Dr. Kedar Nath Tripathy, Mr.
B. B. Pradhan, Mr. Susanta Kr. Muduti, and Mr. M. A. Aleem Majid for
the Appellants and Mr. Anupam Lal Das, Mr. Anirudh Singh and Mr.
Krishanu Barua for the Respondents and perused the documents on
D record.
3.1. A copy of a Sale Order issued by Respondent No. 2 was
brought to our notice, which contains Standard Terms and
Conditions at the end. Clause 7 of the Terms and Conditions
state that the sale orders would be governed by the
E Guidelines, Circulars, Notices, and Instructions issued by
Coal India Ltd., Bharat Coking Coal Ltd. etc.
Clause 7 is set out hereinbelow for ready reference -
“7. The sale order will be governed by
guidelines – circulars– office orders – notices
– instructions, relevant law etc. issued from
F
time to time by Coal India Ltd., Bharat Coking
Coal Ltd., State Govts., Central Govt. and
other statutory bodies. This is also subject to
any future escalation in prices and or levies
or duties-taxes etc. which may be imposed from
G time to time.”
(emphasis supplied)
4. The short question before this Court is whether the arbitration
clause contained in the 2007 Scheme, would stand incorporated by
reference in each of the sale orders.
H
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 245
[INDU MALHOTRA, J.]

4.1. The principle of incorporation by reference of an A
arbitration clause, from another document or contract is a
well established principle in arbitration jurisprudence.1 This
principle has been followed by the courts in India, and has
been given statutory recognition in sub-section (5) of Section
7 of the 1996 Act.
B
4.2. Section 7(5) states that the reference in a contract to a
document containing an arbitration clause, constitutes a valid
arbitration agreement, if the contract is in writing, and the
reference is specifically made to incorporate the arbitration
clause as a part of the contract.
4.3. The arbitration agreement need not necessarily be in C
the form of a clause in the substantive contract itself. It
could be an independent agreement; or it could be
incorporated by reference either from a parent agreement,
or by reference to a standard form contract.
4.4. Section 7(5) of the 1996 Act, closely replicates Article D
7(2)2 of the UNCITRAL Model Law as it stood prior to the
2006 amendment. Dr Peter Binder in his Commentary titled
“International Commercial Arbitration and Conciliation
in UCITRAL Model Law Jurisdictions”3has interpreted
Article 7(2) to include incorporation by reference in the
following words: E
“(d) Reference to a document containing an
arbitration clause.
1
Clements v. Devon Country Insurance Committee,[1918] 1 KB 94; Macleod Ross and
Co. Ltd. v. Compagnie d’ Assurances Generales L’Helvetia of St Gall,[1952] 1 All ER
331, 334 : [1952] 1 Lloyd’s Rep 12 (CA).
1
F
Art. 7. Definition and form of arbitration agreement.—
(1) ‘Arbitration agreement’ is an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not. An arbitration agreement may be
in the form of an arbitration clause in a contract or in the form of a separate agreement.
(2) The arbitration agreement shall be in writing. An agreement is in writing if it is
contained in a document signed by the parties or in an exchange of letters, telex, G
telegrams or other means of telecommunication which provide a record of the agreement,
or in an exchange of statements of claim and defence in which the existence of an
agreement is alleged by one party and not denied by another. The reference in a contract
to a document con-taining an arbitration clause constitutes an arbitration agreement
provided that the contract is in writing and the reference is such as to make that clause
part of the contract.
3
Dr. Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL H
Model Law Jurisdictions, (3rd Edn., 2010, Sweet & Maxwell) pg. 86, para 2-022
246 SUPREME COURT REPORTS [2019] 2 S.C.R.

A The third sentence of art. 7(2) is concerned with a
contract containing a reference to a document that
contains an arbitration clause. Provided that the
main contract is in “writing” and that the reference
“is such as to make that clause part of the contract”,
the arbitration agreement is valid. The necessity of
B
including this provision arose from problems and
divergent court decisions on this issue in the
context of the New York Convention. The
travaux explain that it is sufficient if the
reference only refers to the document; specific
C mention of the arbitration clause therein is not
necessary.”
(emphasis supplied)
4.5. Section 6(2) of the English Arbitration Act, 1996 is pari
materiato Section 7(5) of the 1996 Act,and reads as under:
“6. Definition of arbitration agreement.
D
(1)…..
(2) The reference in an agreement to a written
form of arbitration Clause or to a document
containing an arbitration Clause constitutes
an arbitration agreement if the reference is
E such as to make that Clause part of the agreement.”
The Queen’s Bench Division, Commercial Court in Sea
Trade Maritime Corporation v. Hellenic Mutual War Risks
Association (Bermuda) Limited, The Athena 4 held that the
general words of incorporation of a standard form contract were
enough to incorporate an arbitration clause.
F
4.6. The question of incorporation of an arbitration Clause
from an earlier contract by general reference into a later
contract, came up for consideration before the Queen’s
Bench Division in Habas Sinai Ve Tibbi Gazlar Isthisal
Endustri AS v. Sometal SAL5. In this case,the Court followed
G the judgment in the case of Sea Trade Maritime
Corporation (supra), and held that a general reference to
a contract containing an arbitration clause is sufficient for
incorporation from a standard form of contract. The Court
recognized the following broad categories in which the
parties attempt to incorporate and arbitration clause:
H 4
[2006] EWHC 2530 (Comm)
5
[2010] EWHC 29 (Comm)
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 247
[INDU MALHOTRA, J.]

“ (1) A and B make a contract in which they A
incorporate standard terms. These may be the
standard terms of one party set out on the back
of an offer letter or an order, or contained in
another document to which reference is made;
or terms embodied in the Rules of an
B
organization of which A or B or both are
members; or they may be terms standard in a
particular trade or industry.
(2) A and B make a contract incorporating
terms previously agreed between A and B in
another contract or contracts to which they C
were both parties
(3) A and B make a contract incorporating
terms agreed between A (or B) and C. Common
examples are a bill of lading incorporating
the terms of a charter to which A is a party;
D
reinsurance contracts incorporating the terms
of an underlying insurance; excess insurance
contracts incorporating the terms of the
primary layer of insurance; and building or
engineering sub contracts incorporating the
terms of a main contract or sub-sub contracts E
incorporating the terms of a sub contract.
(4) A and B make a contract incorporating
terms agreed between C and D. Bills of lading,
reinsurance and insurance contracts and
building contracts may fall into this category.“
F
In Habas (supra) a distinction was made between a ‘single
contract case’ and a ‘two-contract case’. A ‘single contract case’
is one where the arbitration clause is contained in a standard form
contract to which there is a general reference in the contract
between the parties. On the other hand, where the arbitration
clause is contained in an earlier contract/ some other contract, G
and a reference is made to incorporate it in the contract between
the parties, it is a ‘two-contract case’. The Court held that
incorporation by general reference in a single contract case is
valid. However, in a ‘two-contract case’, where reference is made
to an arbitration clause in a separate contract, the reference must
H
248 SUPREME COURT REPORTS [2019] 2 S.C.R.

A be specific to the arbitration clause. The judgment in Habas (supra)
has recently been affirmed by the Queen’s Bench Division in
SEA2011 Inc.v. ICT Ltd.6
4.7.Russell in his commentary on arbitration 7 has
commented on the single and two contract cases, and
B reference to standard form terms, in the following passage,
which is instructive :
“Reference to standard form terms, single and two
contract cases. If the document sought to be
incorporated is a standard form set of terms and
C conditions the courts are more likely to accept that
general words of incorporation will suffice. This is
because the parties can be expected to be more
familiar with those standard terms, including the
arbitration clause. In Sea Trade Maritime
Corporation v. Hellenic Mutual War Risks
D Association (Bermuda) Ltd., (The “Athena”) No. 2
the Court drew a distinction between what is
described as a “two contract case”, that is where
the arbitration Clause is contained in a secondary
document which is a contract to which at least one
E party is different from the parties to the contract in
question, and “a single contract case” where the
arbitration Clause is in standard terms to be found
in another document. Relying on dictum of Bingham
LJ in Federal Bulk Carries Inc v. C. Itoh & Co. Ltd.
(The “Federal Bulker”), Langley J stated that:
F “In principle, English law accepts incorporation of
standard terms by the use of general words and, I
would add, particularly so when the terms are readily
available and the question arises in the context of
dealings between established players in a well
G known market. The principle, as the dictum makes
clear, does not distinguish between a term which is an
arbitration Clause and one which addresses other issues.
In contrast, and for the very reason that it concerns other
parties, a “stricter rule” is applied in charterparty/bills
of lading cases. The reason given is that the other party
H 6
[2018] EWHC 520 (Comm)
7
Russell on Arbitration (24th Edn. ,2015, Sweet & Maxwell) pp. 52 – 54, para 2-049
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 249
[INDU MALHOTRA, J.]

may have no knowledge nor ready means of knowledge A
of the relevant terms. Further, as the authorities illustrate,
the terms of an arbitration Clause may require adjustment
if they are to be made to apply to the parties to a different
contract.”
The Court therefore reinforced the distinction between B
incorporation by reference of standard form terms and
of the terms of a different contract, and concluded that
in a single contract case general words of incorporation
are sufficient, whereas by its nature a two contract case
may require specific reference to the other contract, unless
the secondary document is stated to be based on standard C
form terms containing an arbitration agreement. In that
case, presumably specific reference to the arbitration
Clause would not be needed. As discussed below, this
approach has been endorsed in subsequent cases, albeit
drawing a slightly different but “material” distinction D
between incorporation of the terms of a separate contract
- standard or otherwise - made between the same parties
which are treated as “single contract” cases, even where
there is in fact more than one contract; and those where
the terms to be incorporated are contained in a contract
between one or more different parties which are treated E
as the “two contract” cases.
Extension of the single contract cases. Recently, the
courts appear to have extended the “single contract”
principle applicable to standard form contracts, where
general words of incorporation will suffice, to other types F
of contract where the same rationale can be said to apply.
Thus, if the document sought to be incorporated is a
bespoke contract between the same parties, the courts
have accepted this as a “single contract” case where
general words of incorporation will suffice, even though
the other contract is not on standard terms and constitutes G
an entirely separate agreement. The rationale for this
approach is that the parties have already contracted on
the terms said to be incorporated and are therefore even
more likely to be familiar with the term relied on than a
party resisting incorporation of a standard term. Put H
250 SUPREME COURT REPORTS [2019] 2 S.C.R.

A another way, if general words of incorporation are
sufficient for the latter, they should be even more so for
the former. The courts also appear to have accepted as
a “single contract” case a situation where the contract
referred to is between one of the parties to the original
contract and a third party, where the contracts as a whole
B “were entered into in the context of a single commercial
relationship.”
(emphasis supplied)
4.8. An early case in Indian arbitration on the doctrine of
incorporation by reference under the Arbitration Act, 1940
(hereinafter referred to as the “1940 Act”), wasAlimenta
C SA v. National Agriculture Co-op Marketing Federation
of India Ltd.8Though there was no specific provision on an
arbitration agreement being based on the doctrine of
incorporation by reference in the 1940 Act, this Court
recognized it to be applicable in Indian law. In this case,
thisCourt held that the arbitration clause of an earlier contract
D could be incorporated by reference into a later contract,
provided it is not repugnant to, or inconsistent with the terms
of the contract in which it is incorpo-rated.
4.9. In the 1996 Act, the doctrine of incorporation by reference
is provided in the statue itself under Section 7(5) of the Act.
E In M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt
Builders Ltd.,9 this Court held that even though a contract
between the parties did not contain a provision for arbitration,
an arbitration clause contained in an independent document
would be incorporated into the contract by reference, if the
reference is such as to make the arbitration clause a part of
F the contract. The court explained the doctrine of incorporation
in the following words–
“24. The scope and intent of Section 7(5) may therefore
be summarised thus:
(i) An arbitration clause in another document, would get
incorporated into a contract by reference, if the following
G conditions are fulfilled :
(1) The contract should contain a clear reference to the
documents containing arbitration clause,
(2) the reference to the other document should clearly
indicate an intention to incorporate the arbitration clause
into the contract,
H 8
(1987) 1 SCC 615 : AIR 1987 SC 643 : 84 (2000) DLT 494.
9
(2009) 7 SCC 696 : 2009 (3) Arb LR 1 (SC) : 2009 (9) SCALE 298.
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 251
[INDU MALHOTRA, J.]

(3) The arbitration clause should be appropriate, that is A
capable of application in respect of disputes under the
contract and should not be repugnant to any term of the
contract.
(ii) When the parties enter into a contract, making a general
reference to another contract, such general reference would
not have the effect of incorporating the arbitration clause B
from the referred document into the contract between the
parties. The arbitration clause from another contract can
be incorporated into the contract (where such reference is
made), only by a specific reference to arbitration clause.
(iii) Where a contract between the parties provides that C
the execution or performance of that contract shall be in
terms of another contract (which contains the terms and
conditions relating to performance and a provision for
settlement of disputes by arbitration), then, the terms of
the referred contract in regard to execution/performance
alone will apply, and not the arbitration agreement in the D
referred contract, unless there is special reference to the
arbitration clause also.
(iv) Where the contract provides that the standard form of
terms and conditions of an independent Trade or
Professional Institution (as for example the Standard Terms E
& Conditions of a Trade Association or Architects
Association) will bind them or apply to the contract,
such standard form of terms and conditions including any
provision for arbitration in such standard terms and
conditions, shall be deemed to be incorporated by
reference. Sometimes the contract may also say that the F
parties are familiar with those terms and conditions or that
the parties have read and understood the said terms and
conditions.
(v) Where the contract between the parties stipulates that
the Conditions of Contract of one of the parties to the G
contract shall form a part of their contract (as for example
the General Conditions of Contract of the Government
where Government is a party), the arbitration clause
forming part of such General Conditions of contract will
apply to the contract between the parties.”
(emphasis supplied) H
252 SUPREME COURT REPORTS [2019] 2 S.C.R.

A 4.10. This Court in Inox Wind Ltd. v. Thermocables Ltd.10while
adopting the ‘single contract case’ and ‘two-contract case’
principle laid down by Habas (supra), held that a general
reference to a consensual standard form is sufficient for
incorporation of an arbitration clause. In other words, general
reference to a standard form contract of one party, would
B
be sufficient for incorporation of the arbitration clause. In
this case, the Court expanded the application of this doctrine
by holding that even a general reference to a standard form
contract of one party, along with those of trade associations,
and professional bodies would be sufficient to incorporate
C the arbitration clause.
5. In the instant case, the learned Single Judge in the impugned
Order has erroneously taken the view that an arbitration clause would
not stand incorporated in the individual sale orders entered into by the
Respondent No. 2 – Coal Company and the Appellant. The individual
D sale orders emanate out of the 2007 Scheme. The sale orders specifically
state that they would be governed by the guidelines, circulars, office
orders, notices, instructions, relevant law etc. issued from time to time
by Coal India Limited or Bharat Coking Coal Limited etc. As a
consequence, the arbitration clause (i.e. Clause 11.12) in the 2007 Scheme
would stand incorporated in the sale orders issued thereunder.
E
Clause 7 in the sale orders falls under the ‘single contract case’
where the arbitration clause is contained in a standard form document
i.e. the 2007 Scheme, to which there is a reference in the individual sale
orders issued by Respondent No. 2 – the Coal Company.
5.1. The arbitration clause in the 2007 Scheme clearly states that :
F
“All disputes arising out of this scheme or in relation thereto
in any form whatsoever shall be dealt exclusively by way of
arbitration in terms of the Arbitration and Conciliation Act,
1996.”
(emphasis supplied)
G Russell in his commentary on arbitration11 has interpreted these
words as follows :
“Disputes “in connection with”, “in relation to”, or
“regarding” a contract. These words, which are frequently
encountered and are to be given the same meaning, were at
10
(2018) 2 SCC 519
H 11
Russell on Arbitration (24th Edn. ,2015, Sweet & Maxwell) pg. 82, para 2-103
GIRIRAJ GARG v. COAL INDIA LTD. & ORS. 253
[INDU MALHOTRA, J.]

one time given a restricted interpretation, but are now well A
established as having a broad meaning…..They may also be
sufficient to catch disputes arising under another contract
related to the contract containing the arbitration clause.”
(emphasis supplied)
In Renusagar Power Co. Ltd. v. General Electric Company B
and Anr.,12 this Court observed that expressions such as “arising
out of”, or “in respect of”, or “in connection with”, or “in relation
to”, the contract are of the widest amplitude, and content.
In Doypack Systems Pvt. Ltd. v. Union of India and Ors.,13
this Court observed that expressions such as – “pertaining to”, “in
relation to” and “arising out of”, are used in the expansive sense, C
and must be construed accordingly.
The words “in relation thereto” used in Clause 11.12 of the
2007 Scheme indicate that the clause would apply to all transactions
which took place under the 2007 Scheme. This would include the
sale transactions in the present case. D
5.2. In view of the above discussion, the view taken by the
learned Single Judge is erroneous, and is hereby set-aside. The
appeal is allowed.
6. At the conclusion of the hearing, the parties consensually
agreed to appoint Mr. Justice Pranab Kumar Chattopadhyay (Retired E
Judge of the Calcutta High Court; Address: P-29/3, Jotish Roy Road,
Kolkata – 700053) as Sole Arbitrator to adjudicate the disputes which
have arisen between the Appellant and Respondent No. 2, under the
2007 Scheme.
The appointment of Mr. Justice Chattopadhyay will be subject
to the disclosure and declaration made, as per the Sixth Schedule to the F
Arbitration and Conciliation Act, 1996 (as amended by the 2015
Amendment Act).
The proceedings will be conducted in Kolkata.
Ordered accordingly.
G
Nidhi Jain Appeal allowed.

12
[1985] 1SCR432
13
1988 (36) ELT 201 (SC) H