KARNATAKA POWER TRANSMISSION CORPORATION LIMITED AND ANOTHERversusM/S. DEEPAK CABLES (INDIA) LTD.

                     [2014] 4 S.C.R. 771


 KARNATAKA POWER TRANSMISSION CORPORATION                         A
            LIMITED AND ANOTHER
                               v.
           MIS. DEEPAK CABLES (INDIA) LTD.
             (Civil Appeal No. 4424 of 2014)
                                                                  B
                       APRIL 07, 2014
         [ANIL R. DAVE AND DIPAK MISRA, JJ.]

     Arbitration and Conciliation Act, 1996: s.11 (6) -
Appointment of arbitrator - Dispute between the parties - C
Respondent seeking appointment of arbitrator - Resisted by
appellant on the ground that the agreement did not provide
for arbitration - Held: Clause 48 of the agreement provided
that when disputes or differences of any kind arise between
the parties relating to the performance of the works during D
progress of the works or after its completion or before or after
the termination, abandonment or breach of the contract, it is
to be referred to and settled by the engineer - There is also a
stipulation that his decision in respect of every matter so
referred to shall be final and binding upon the parties until the E
completion of works and is required to be given effect to by
the contractor who shall proceed with the works with due
diligence - This clause did not provide any procedure to even
remotely indicate that the concerned engineer was required
to act judicially as an adjudicator by following the principles
                                                                   F
of natural justice or to consider the submissions of both the
parties - This only depict that the said clause was engrafted
to avoid delay and stoppage of work and facilitate smooth
carrying on of the work - The language employed in the clause
did not spell out the intention of the parties to get the disputes G
adjudicated through arbitration - Apart from that clause 4. 1 of
the agreement stated that it was specifically agreed by and
between the parties that all the differences or disputes arising
?ut of the Agreement or touching the subject matter of the
                             771                                  H
    772      SUPREME COURT REPORTS             [2014) 4 S.C.R.


A Agreement would be decided by a competent Court at
  Bangalore - Thus, clause 48, read in conjunction with clause
  4.1, clearly established that there was no arbitration clause
  in the agreement.

      Appellant No. 1, a State Transmission utility invited
8
  tenders for establishing sub-stations. Respondent-
  company was successful bidder and contract was
  entered with it. Dispute arose and tile respondent filed
  application under Section 11 (5) and (6) of the Arbitration
  and Conciliation Act, 1996 before the High Court for
C appointment of an arbitrator. The application was resisted
  by the appellant on the ground that clause 48 did not
  provide for arbitration and same cannot be co...,strued as
  an arbitration clause. The High Court held that a plain
  reading of clause 48 would indicate that it partak~ the
D character of an arbitration clause and, accordingly,
  appointed a sole arbitrator to adjudicate the matters in
  dispute. Hence these appeals.

          Allowing the appeals, the Court
E
        HELD: 1. Section 7 of the Arbitration and Conciliation
   Act, 1996 states that unless an arbitration agreement
   stipulates that the parties agree to submit all or certain
   disputes which have arisen or which may arise in respect
.F of defined legal relationship, whether contractual or not,
   there cannot be a reference to an arbitrator. It conveys
   that there has to be intention, expressing the consensual
   acceptance to refer the disputes to an arbitrator. In the
   absence of an arbitration clause in an agreement, as
   defined in sub-section (4) of Section 7, the dispute/
 G disputes arising between the parties cannot be referred
   to the arbitral tribunal for adjudication of the dispute.
   [Para 9] [779-F-H; 780-A]

      2. Clause 48 is to the effect that it provides for the
H parties to amicably settle any disputes or differences
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 773
        DEEPAK CABLES (INDIA) LTD.
arising in connection with the contract. This is the first     A
part. The second part is that when disputes or differences
of any kind arise between the parties to the contract
relating to the performance of the works during progress
of the works or after its completion or before or after the
termination, abandonment or breach of the contract, it is      B
to be referred t,o and settled by the engineer, who, on
being requested by either party, shall give notice of his
decision within thirty days to the owner and the
contractor. There is also a stipulation that his decision in
respect of every matter so referred to shall be final and      c
binding upon the parties until the completion of works
and is required to be given effect to by the contractor who
shall proceed with the works with due diligence. To
understand the intention of the parties, this part of the
clause is important. On a studied scrutiny of this
                                                               D
postulate, it is graphically clear that it does not provide
any procedure which would remotely indicate that the
concerned engineer is required to act judicially as an
adjudicator by following the principles of natural justice
or to consider the submissions of both the parties. That
apart, the decision of the engineer is only binding until      E
the completion of the works. It only casts a burden on the
contractor who is required to proceed with the works
with due diligence. Besides that during the settlement of
disputes and the court proceedings, both the parties are
obliged to carry out the necessary obligation under the        F
contract. The said clause has been engrafted to avoid
delay and stoppage of work and for the purpose of
smooth carrying on of the works. The burden is on the
contractor to carry out the works with due diligence after
getting the decision from the engineer until the               G
completion of the works. Thus, the emphasis is on the
performance of the contract. The language employed in
the clause does not spell out the intention of the parties
to get the disputes adjudicated through arbitration. It
does not really provide for resolution of disputes. Apart      H
    774    SUPREME COURT REPORTS               [2014] 4 S.C.R.

A from that clause 4.1 of the agreement stated that it was
  specifically agreed by and between the parties that all the
  differences or disputes arising out of the Agreement or
  touching the subject matter of the Agreement would be
  decided by a competent Court at Bangalore. Clause 48,
B read in conjunction with clause 4.1, clearly establishes
  that there is no arbitration clause in the agreement. The
  High Court has fallen into grave error by considering the
  said clause as providing for arbitration. [Para 22, 23 and
  24) (789-F-H; 790-A-G; 791-E-F]
c       Jagdish Chander v. Ramesh Chander and Ors. (2007)
    5 sec 719: 2007 (5) SCR 720 - relied on.

       Smt. Rukmanibai Gupta v. Collector, Jabalpur and Ors.
  (1980) 4 SCC 556; State of UP. v. Tipper Chand (1980) 2
D SCC 341; Dewan Chand v. State of Jammu and Kashmir AIR
  1961 J & K 58; Ram Lal v. Punjab State AIR 1966.Punj 436
  : 68 Punj LR 522 : ILR (1966) 2 Punj 428; State of Orissa
  and Anr. etc. v. Sri Damodar Das AIR 1996 SC 942: 1995
  (6) Suppl. SCR 800; State of Orissa and Ors. v. Bhagyadhar
E Dash (2011) 7 SCC 406: 2011 (8) SCR 967 - Distinguished.

      M.K. Shah Engineers & Contractors v. State of M.P.
  (1999) 2 SCC 594: 1999 (1) SCR 419; Wellington
  Associates Ltd. v. Kirit Mehta (2000) 4 SCC 272; Punjab State
  and Ors. v. Dina Nath (2007) 5 SCC 28: 2007 (6) SCR 536;
F Chief Conservator of Forest v. Rattan Singh AIR 1967 SC
  166 : 1966 Supp SCR 158; Governor-Genera/ v. Simla
  Banking and Industrial Company Ltd. AIR 1947 Lah 215 :
  226 IC 444; K.K. Modi v. K.N. Modi and Ors. (1998) 3 sec
  573: 1998 (1) SCR 601; M. Dayanand Reddy v. A.P.
G Industrial Infrastructure Corporation Limited And Ors. (1993)
  3 SCC 1.37: 1993 (2) SCR 629; Bharat Bhushan Ba.nsal v.
  UP. Small Industries Corporation Ltd., Kanpur AIR 199~ SC
  899: 1999 (1) SCR 181; Bihar State Mineral Development
  Corporation and Anr. v. Encon Builders (I) (P) Ltd. (2003) 7
H SCC 418: 2003 (2) Suppl. SCR 812; State of Orissa and Ors.
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 775
        DEEPAK CABLES (INDIA) LTD.
v. BhagyadharDash (2011) 7 SCC 406: 2011 (8) SCR 967            A
- referred to.
                     Case Law Reference:
    19.99 (1) SCR 419            Referred to       Para 6
                                                                B
    (2000) 4 sec 212             Referred to       Para 6
    2007 (5) SCR 720             Relied on         Para 6
    (1980) 4 sec 556             Distinguished Para 7
    2007 (6) SCR 536             Referred to       Para 7
                                                                c
    1966 Supp SCR 158            Referred to       Para 11
    (1980) 2 sec 341             Distinguished Para 12
    226 IC 444                   Referred to       Para 13
    AIR 1961 J & K 58            Distinguished Para 13          D
    AIR 1966 Punj 436            Distinguished Para 13
    1995 (6) Suppl. SCR 800      Distingusihed Para 14
    1998 (1) SCR 601             Referred to       Para 15
    1993 (2) SCR 629             Referred to       Para 15      E

    1999 (1) SCR 181             Referred to       Para 16
    2003 (2) Suppl. SCR 812      Referred to       Para 17
    2011 (8) SCR 967             Distinguished Para 20
                                                                F
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4424 of 2014.
     From the Judgment and Order dated 01.03.2013 of the
High Court of Karnataka at Bangalore in C.M.P. No. 7 of 2013.
                             WITH                               G
     C.A. Nos. 4425, 4426, 4427, 4428, 4429, 4430 and 4431
of 2014.
    K.V. Vishwanathan, ASG, S. Sriranga, Balaji Srinivasan,
Mayank Kshirsagar, Vaishali Dixit, Abhishek Kaushik for the
Appellants.                                                     H
    776 .    SUPREME COURT REPORTS                 [2014] 4 S.C.R
      !




A        Dushyant Dave, Shyam Divan, L.M. Chidanandayya, S.
    Udaya Kumar Sagar, Bina Madhavan, Praseen E. Joseph,
    Shivendra Singh, Sinha Shrey Nikhilesh (for Lawyer's Knit &
    Co.) for the Respondent.

          The Judgment of the Court was delivered by
B
          DIPAK MISRA, J. 1. Leave granted in all the special leave
    petitions.

          2. The controversy involved in these appeals, preferred by
c special leave, being similar, they were heard together and are
    disposed· of by a common judgment. For the sake of
    convenience, we shall state the facts from Civil Appeal arising
    out of Special Leave Petition 29011 of 2013.

         3. The appellant No. 1 is a company wholly owned by the
D Government of Karnataka and, being a State transmission
  utility, is a deemed licencee in the State. It invited tenders for
  establishing 2x8 MVA, 66/11 Sub-stations at Tavarekere in
  Channagiri Taluk, · Davanagere District, which included the
  supply materials, erection and civil works on partial turnkey
E basis. The respondent-company participated in the bid and it
  was successful in the tender and, accordingly, a letter of intent
  was sent to it. After taking recourse to certain procedural
  aspects, a contract was entered into between the appellant-
  company and the respondent. During the performance of the
F contract, the respondent raised a claim before the engineer as
  per clause 48 of the general conditions of the contract and
  called upon the engineer to settle certain disputes arising in
  connection with the contract. As the concerned engineer did not
  do anything within the prescribed period of thirty days as
G provided un~er clause 48.2, the respondent filed CMP No. 62
  of 2011 unaer Section 11 (5) and (6) of the Arbitration and
  Conciliation Act, 1996 (for brevity "the Act") before the High .
  Court of Karnataka at Bangalore for appointment of an
  arbitrator.
H
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 777
 DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
     4. The said application was resisted by the present              A
appellants on the singular ground that clause 48 does not
provide for arbitration and the same, under no circumstances,
could be construed as an arbitration clause. To substantiate the
said submission, reliance was placed on clause 4.1 of the
agreement. It was put forth that as there is no arbitration clause,   B
no arbitrator could be appointed. The designated Judge of the
Chief Justice placed reliance on the proceedings in W.P. No.
28710/09 (M/s. Subhash Projects & Marketing Limited v.
Karnataka Power Transmission Corporation Limited) disposed
of on 10.6.2010 wherein the appellant-company, being a State          c
owned Corporation, had not disputed clause 48.2 as an
arbitration clause and, on that foundation, opined that it was
precluded from denying the same in the case under
consideration. The learned designated Judge interpreted
clauses 48 and 4.1 of the agreement and came to hold that a           D
plain reading of clause 48 would indicate that it partakes the
character of an arbitration clause and, accordingly, appointed
a sole arbitrator to adjudicate the matters in dispute.

    5. }Ne have heard Mr. K.V. Vishvanathan, learned senior
counsel appearing for the appellants, and Mr. Dushyant Dave           E
and Mr.. Shyam Divan, learned senior counsel appearing for the
respondents.

      6. Mr. Vishvanathan, learned senior counsel appearing for
the appellants, assailing the impugned order, has submitted that F
clause 48 of the agreement cannot be remotely construed as
an arbitration clause and hence, the designated Judge could
not have invoked the power under Section 11(5) & (6) of the
Act for appointment of an arbitrator. It is urged by him that an
order passed in a writ petition, which was instituted in a G
different context, could not have been placed reliance upon for
construing the said clause as an arbitration clause. It is
submitted by him that in the absence of an express intention
for referring the matter to an arbitrator, it cannot be so inferred .
from such a clause and, more so, when there is a specific· H
     778       SUPREME COURT REPORTS                  [2014] 4 S.C.R.


 A   clause, i.e., clause 4 in the agreement which provides for
     settlement of disputes that stipulates that all the references and
     disputes arising out of the agreement or touching the subject-
     matter of the agreement shall be decided by a competent court
     at Bangalore. To bolster his contentions, he has commended
 B • us to the decisions rendered in M.K. Shah Engineers &
     Contractors v. State of M.P. 1 , Wellington Associates Ltd. v.
     Kirit Mehta 2 and Jagdish Chander v. Ramesh Chander and
     others3 .

         7. Mr. Dushyant Dave and Mr. Shyam Divari, learned
  C senior counsel appearing for the respondents in all the appeals,
    in oppugnation, have submitted that when clause 48 is read as
    a whole, it is clear as crystal that the intention of the parties is
    to get the matter referred to an arbitrator and clause 4.1 ·only
    determines the place of territorial jurisdiction and has nothing
· D to do with any stipulation for arbitration. It has been strenuously
    urged that clause 48 has to be interpreted on the touchstone
    of the language employed in Section 7 of the Act and when it
    is scrutinized on that anvil, there remains no trace of doubt that
    clause 48 has all the attributes and characteristics of an
  E arbitration agreement. Learned senior counsel have placed
    reliance on Smt. Rukmanibai Gupta v. Collector, Jaba/pur and
    others" and Punjab State and others v. Dina Nath 5 •

          8. Before we advert to the rival submissions advanced at
 F   the Bar, we think it appropriate to refer to Section 7 of the Act
     and what it conveys and, thereafter, refer to few authorities to
     understand what constitutes an arbitration clause in an
     agreement entered into between two parties. Section 7 of the
     Act reads as follows:
 G
     1.   (1999} 2 sec 594.
     2.   (2000} 4 sec 212.
     3.   (2007} 5 sec 719.
     4.   (1980} 4 sec 556.
 H   s.   (2007) 4 sec 28.
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 779
 DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
    "7. Arbitration agreement. - (1) In this Part, "arbitration     A
    agreement" means 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.
                                                                    B
    (2) An arbitration agreement may be in the form of an
    arbitration clause in a contract or in the form of a separate
    agreement.

     (3) An arbitration agreement shall be in writing.
                                                                    c
    (4) An arbitration agreement is in writing if it is contained
    in -

    (a) a document signed by the parties;

    (b) an exchange of letters, telex, telegrams or other means . D
    of telecommunication which provide a record of the
    agreement; or

    (c) an exchange of statement of claim and defence in which
    the existence of the agreement is alleged by one party and      E
    not. denied by the other.

    (5) The reference in a contract to a document containing
    an arbitration clause constitutes an arbitration agreement
    if the contract is in writing and the reference is such as to
    make that arbitration clause part of the contract."             F

     9. From the aforesaid provision, it is graphically clear that ·
unless an arbitration agreement stipulates that the parties
agree to submit all or certain disputes which have arisen or
which may arise in respect of defined legal relationship, whether G
contractual or not, there cannot be a reference to an arbitrator.
To elaborate, it conveys that there has to be intention,
expressing the consensual acceptance to refer the disputes to
an arbitrator. In the absence of an arbitration clause in an
agreement; as defined in sub-section (4) of Section 7, the · H
    780       SUPREME COURT REPORTS                  [2014] 4 S.C.R.


A   dispute/disputes arising between the parties cannot be referred
    to the arbitral tribunal for adjudication of the dispute.

          10. In Smt. Rukmanibai Gupta (supra), while considering
    Clause 15 of the agreement therein, a two-Judge Bench opined
    that the clause spelt out an arbitration agreement between the
8
    parties. The said clause was as follows:-

          "Whenever any doubt, difference or dispute shall hereafter
          arise touching the construction of these presents or
          anything herein contained or any matter or things
c         connected with the said lands or the working or non-
          working thereof or the amount or payment of any rent or
          royalty reserved or made payable hereunder in the matter
          in difference shall be decided by the lessor whose
          decision shall be final."
D
         The learned Judges, to appreciate the tenor and purport·
    of the said clause, referred to Section 2(a) of the 1940 Act and
    reproduced a passage from Russell on Arbitration, 19th Edn.,.
    P. 59 which reads as follows: -
E         "If it appears from the terms of the agreement by which a
          matter is submitted to a person's decision that the intention
          of the parties was that he should hold an inquiry in the
          nature of a judicial inquiry and hear the respective cases
          of the parties and decide upon evidence laid before him,
F         then the case is one of an arbitration"

        11. The Court also referred to Chief Conservator of Forest
    v. Rattan Singh 6 and ruled that:

          "In the clause under discussion there is a provision for
G         referring the disputes to the lessor and the decision of the
          lessor is made final. On its true construction it spells out
          an arbitration agreement"


H 6.   AIR 1967 SC 166: 1966 Supp SCR 158.
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 781
 DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
     12. At this juncture, it is apposite to refer to a three-Judge   A
Bench decision in State of U. P. v. Tipper Chand 7 where the
Court was interpreting Clause 22 in the agreement which was
under consideration so as to find out whether the stipulations
therein spelt out an arbitration clause. The clause involved in
the said case read as follows:-                                       B

      "Except where otherwise specified in the contract the
      decision of the Superintending Engineer for the time being
      shall be final, conclusive and binding on all parties to the
      contract upon all questions relating to the meaning of the      C
      specifications, design, drawing and instructions
      hereinbefore mentioned. The decision of such Engineer as
      to the quality of workmanship, or materials used on the
      work, or as to any other question, claim, right, matter or
      things whatsoever, in any way arising out of or relating to
      the contract, designs, drawing specifications, estimates,       D
      instructions, orders, or these conditions. or otherwise
      concerning the works, or the execution or failure to execute
      the same, whether arising during the progress of the work,
      or after the completion or abandonment of the contract by
      the contractor, shall also be final, conclusive and binding     E
      on the contractor."

      Interpreting the said clause, the Court opined thus:-

      "Admittedly the clause does not contain any express
                                                                      F
      arbitration agreement. Nor can such an agreement be
      spelled out from its terms by implication, there being no
      mention in it of any dispute, much less of a reference
      thereof. On the other hand, the purpose of the clause
      clearly appears to be to vest the Superintending Engineer
      with supervision of the execution of the work and               G
      administrative control over if from time to time."

    13. In that context, the three-Judge Bench approved the
decisions of the High Courts in Governor-General v. Simla
1.   (1980) 2 sec 341.                                                H
    782       SUPREME COURT REPORTS                      [2014] 4 S.C.R.


A Banking and Industrial Company Ltd. 8 , Dewan Chand v. State
  of Jammu and Kashmir9 and Ram Lal v. Punjab State 10
  wherein the clauses were different. In that context, it was opined
  that the High Courts had rightly interpreted the clause providing
  for arbitration. We think it apt to reproduce the delineation by
B the learned Judges:-
          "ln the Jammu and Kashmir case the relevant clause was
          couched in these terms:
                  "For any dispute between the contractor and the
c                 Department the decision of the Chief Engineer
                  PWD Jammu and Kashmir, will be final and binding
                  upon the contractor."
          The language of this clause is materially different from the
          clause in the present case and in our opinion was correctly
D         interpreted as amounting to an arbitration agreement. In
          this connection the use of the words "any dispute between
          the contractor and the Department" are significant. The
          same is true of the clause in Ram Lal case which ran thus:
                  "In matter of dispute the case shall be referred to
E                 the Superintending Engineer of the Circle, whose
                  order shall be final."
          We need hardly say that this clause refers not only to a
          dispute between the parties to the contract but also
          specifically mentions a reference to the Superintending
F
          Engineer and must therefore be held to have been rightly
          interpreted as an .arbitration agreement." ·
       14. At this stage, it is useful to refer to a three-Judge Bench
  decision in State of Orissa and another etc. v. Sri Damodar
G Das11 wherein the Court posed the question whether there was
  an agreement for the resolution of disputes as enshrined under
    8.   AIR 1947 Lah 215 : 226.IC 444.
    9.   AIR 1961 J & K 58.
    10. AIR 1966 Punj 436 : 68 Punj LR 522 : ILOR (1966) 2 Punj 428.
H 11. AIR 1996 SC 942.
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 783
 DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
Clause 25 of the agreement. The said clause read as follows:-          A
     "25. Decision of Public Health Engineer to be final. -
     Except where otherwise specified in this contract, the
     decision of the Public Health Engineer for the time being
     shall be final, conclusive and binding on all parties to the
     contract upon all questions relating to the meaning of the        B
     specifications; drawings and instructions hereinbefore
     mentioned and as to the quality of workmanship or
     materials used on the work, or as to any other question,
     claim, right, matter or thing, whatsoever in any way arising
     out of, or relating to, the contract, drawings, specifications,   c
     estimates, instructions, orders or these conditions, or
     otherwise concerning the works or the execution or failure
     to execute the same, whether arising during the progress
     of the work or after the completion or the sooner
     determination thereof of the contract."                           D

    The three-Judge Bench referred to the principles stated in
Tipper Chand (supra) and observed as follows:-

      "We are in respectful agreement with the above ratio. It is
      obvious that for resolution of any dispute or difference         E
      arising between two parties to a contract, the agreement
    · must provide expressly or by necessary implication, a
      reference to an arbitrator named therein or otherwise of
      any dispute or difference and in its absence it is difficult
      to spell out existence of such an agreement for reference        F
      to an arbitration to resolve the dispute or difference
      contracted between the parties. The ratio in Smt.
      Rukmanibai Gupta v. Collector does not assist the
   · respondent."
                                                                       G
     15. In K.K. Modi v. K.N. Modi and others12 , a two-Judge
Bench was interpreting Clause 9 of the agreement which read
as follows:-

12. (1998) 3 sec 573.                                                  H
    784       SUPREME COURT REPORTS                    (2014] 4 S.C.R.


A         "Implementation will be done in consultation with the
          financial institutions. For all disputes, clarification etc. in
          respect of implementation of this agreement, the same
          shall be referred to the Chairman, IFCI or his nominees
          whose decisions will be final and binding on both the
B         groups."

       The court referred to a passage from Russell on Arbitration,
  21st Edn., at p. 37, para 2-014 and the decisions in
  Rukmanibai Gupta (supra) and M. Dayanand Reddy v. A.P.
  Industrial Infrastructure Corporation Limited And Others13 and
C came to hold that the said clause was not an arbitration clause
  and hence, the proceedings before the Chairman, IFCI could
  not have been treated as arbitration proceedings .. It was so held
  on the following ground:-

D         "Undoubtedly, in the course of correspondence exchanged
          by various members of Groups A and B with the Chairman,
          IFCI, some of the members have used the words
          "arbitration" in connection with clause 9. That by itself,
          however, is not conclusive. The intention of the parties was
E         not to have any judicial determination on the basis of
          evidence led before the Chairman, IFCI. Nor was the
          Chairman, IFCI required to base his decision only on the
          material placed before him by the parties and their
          submissions. He was free to make his own inquiries~ He
F         had to apply his own mind and use his own expertise for
          the purpose. He was free to take the help of other experts.
          He was required to decide the question of valuation and
          the division of assets as an expert and not as an arbitrator.
          He has been authorised to nominate another in his place.
          But the contract indicates that he has to nominate an
G
          expert. The fact that submissions were made before the
          Chairman, IFCI, would not turn tile decision-making
          process into an arbitration."

H 13. (1993) sec 137.
   KARNATAKA POWER TRANSMISSION CORP. LTD. 785
  v. DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
        16. In Bharat Bhushan Bansal v. UP. Small Industries             A
  Corporation Ltd., Kanpur 14 , clauses 23 and 24 of the
  agreement were projected to make the foundation of an
· arbitration clause. That read as follows:-
      "Decision of the Executive Engineer of the UPSIC to be
                                                                         B
      final on certain matters.
      23. Except where otherwise specified in the contract, the
      decision of the Executive Engineer shall be final, conclusive
      and binding on both the parties to the contract on all
      questions relating to the meaning, the specification, design,      c
      drawings and instructions hereinbefore mentioned, and as
      to the quality of workmanship or materials used on the
      work or as to any other question whatsoever in any way
      arising out of or relating to the designs, drawings,
      specifications, estimates, instructions, orders or otherwise       D
      concerning the works or the execution or failure to execute
      the same whether arising during the progress of the work,
      or after the completion thereof or abandonment of the
      contract by the contractor shall be final and conclusive and
      binding on the contractor.                                         E
      Decision of t11e MD of the UPSIC on all other matters shall
      be final
     24. Except as provided in clause 23 hereof, the decision
     of the Managing Director of tre UPSIC shall be final,
                                                                         F
     conclusive and binding on both the parties to the contract
     upon all questions relating to any claim, right, mafo.:r 0r thing
     in any way arising out of or relating to the contract or these
     conditions or concerning abandonment of the contract by
     the contractor and in respect of all other matters arising
     out of this contract and not specifically mentioned herein."        G
 Interpreting the said clauses, the Court opined thus:-
      "ln the present case, reading clauses 23 and 24 together',
 14. AIR 1999 SC 899.                                                    H
    786      SUPREME COURT REPORTS                    [2014] 4 S.C.R.

A         it is quite clear that in respect of questions arising from or
          relating to any claim or right, matter or thing in any way
          connected with the contract, while the decision of the
          Executive Engineer is made final and binding in respect
          of certain types cif claims or questions, the decision of the
B         Managing Director is made final and binding in respect of
          the remaining claims. Both the Executive Engineer as well
          as the Managing Director are expected to determine the
          question or claim on the basis of their own investigations
          and material. Neither of the clauses contemplates a full-
C         fledged arbitration covered by the Arbitration Act."

          17. In Bihar State Mineral Development Corporation and
    another v. Encon Builders (/) (P) Ltd. 15, while dealing with the
    arbitration clause of an arbitration agreement under the Act the
    Court stated thus:
D
          "(1) There must be a present or a future difference in
          connection with some contemplated affair.
          (2) There must be the intention of the parties to settle such
          difference by a private tribunal.
E                                             ,
          (3) The parties must agree in v1lriting to be bound by the
          decision of such tribunal.

          (4) The parties must be ad idem".·

F       In the said case, it has also been opined that the Act does
  not prescribe any form of an arbitration agreement. The term
  'arbitration' is not required to be specifically mentioned in the
  agreement but what is required is to gather the intention of the
  parties as to whether they have agreed for resolution of the
G disputes through arbitration.
         18. In Dina Nath (supra), the clause in the agreement read
    as follows: -


H   15. (2003) 1 sec 418.
 KARNATAKA POWER TRANSMISSION CORP. LTD. 787
v. DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
   . "4. Any dispute arising between the department and the           A
     contractor/society shall be referred to the Superintending
     Engineer, Anandpur Sahib, Hydel (Construction) Circle No.
     1, Chandigarh for orders and his decision will be final and
     acceptable/binding on both parties."
      The two-Judge Bench, basically relying on Tipper Chand          B
(supra) which has approved the view of Jammu and Kashmir
High Court in Dewan Chand (supra), treated the aforesaid
clause as providing for arbitration because it categorically
mentioned the word "dispute" which would be referred to the
Superintending Engineer and further that his decision would be        C
final and acceptable to/binding on both the parties.
       19. In Jagdish Chander (supra), the Court, after referring
to the earlier decisions, culled out certain principles with regard
to the term "arbitration agreement". The said principles              D
basically emphasize on certain core aspects, namely, (i) that
though there is no specific form of an arbitration agreement,
yet the intention of the parties which can be gathered from :the
terms of the agreement should disclose a determination and
obligation to go to arbitration; (ii) non-use of the words            E
"arbitration" and "arbitral tribunal" or "arbitrator" would not
detract from a clause being interpreted as an arbitration
agreement if the attributes or elements of arbitration agreement
are established, i.e., (a) The agreement should be in writing.
(b) The parties should have agreed to refer any disputes
(present or future) between them to the decision of a private         F
tribunal. (c) The private tribunal should be empowered to
adjudicate upon the disputes in an impartial manner, giving due
opportunity to the parties to put forth their case before it. (d)
The parties should have agreed that the decision of the private
tribunal in respect of the disputes will be binding on them; and      G
(iii) where there is specific exclusion of any of the attributes of
an arbitration agreement or contains anything that detracts from
an arbitration agreement, it would not be an arbitration
agreement. In this context, the two-Judge Bench has given
some examples and we think it apt to reproduce the same: -            H
    788       SUPREME COURT REPORTS                    [2014] 4 S.C.R.


A         "For example, where an agreement requires or permits an
          authority to decide a claim or dispute without hearing, or
          requires the authority to act in the interests of only one of
          the parties, or provides that the decision of the authority
          will not be final and binding on the parties, or that if either
B         party is not satisfied with the decision of the authority, he
          may file a civil suit seeking relief, it cannot be termed as
          an arbitration agreement."
       20. In State of Orissa and others v. Bhagyadhar Dash 16,
  the Court, while discussing about the non-requirement of a
C particular form for constituting an arbitration agreement and
  ascertainment of the intention for reference to arbitration, as has
  been stated in Rukmanibai Gupta (supra), observed thus: -
          "16. While we respectfully agree with the principle stated
D         above, we have our doubts as to whether the clause
          considered in Rukmanibai Gupta case would be an
          arbitration agreement if the principles mentioned in the
          said decision and the tests mentioned in the subsequent
          decision of a larger Bench in Damodar Das are applied.
          Be that as it may. In fact, the larger Bench in Damodar Das
E
          clearly held that the decision in Rukmanibai Gupta was
          decided on the special wording of the clause considered
          therein: (Damodar Das case, SCC p. 224, para 11)
                 "11 .... The ratio in Rukmanibai Gupta v. Collector
F                does not assist the respondent. From the language
                 therein this Court inferred, by implication, existence
                 of a dispute or difference for arbitration."
       21. Keeping in mind the principles laid down by this Court
  in the aforesaid authorities relating to under what circumstances
G a clause in an agreement can be construed as an arbitration
  agreement, it is presently apposite to refer to clause 48 of the
  agreement. The said clause reads as follows: -            ""
          "48.0 Settlement of disputes:
H   1e. c2011) 1 sec 406.
KARNATAKA POWER TRANSMISSION CORP. LTD. v. 789
 DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
    48.1 Any dispute(s) or difference(s) arising out of or in          A
    connection with the Contract shall, to the extent possible,
    be settled amicable between the parties.
    48.2 If any dispute or difference of any kind whatsoever
    shall arise between the owner and the Contractor, arising
                                                                       B
    out of the Contract for the Performance of the Works
    whether during the progress of the Works or after its
    completion or whether before or after the termination,
    abandonment or breach of the contract, it shall, in the first
    place, be referred to and settled by the Engineer, who,
    within a period of thirty (30) days after being requested by       C
    either party to do so, shall give written notice of his decision
    to the owner and the contractor .

   . 48.3 Save as hereinafter provided, such decision in
     respect of every matter so referred shall be final and            D
     binding upon the parties until the completion of the works
     and shall forthwith be given effect to by the contractor who
     shall proceed with the works with all the due diligence.
    48.4 During settlement of disputes and Court proceedings,
    both parties shall be obliged to carry out their respective        E
    obligations under the contract."

      22. On a careful reading of the said clause, it is
demonstrable that it provides for the parties to amicably settle
any disputes or differences arising in connection with the
                                                                       F
contract. This is the first part. The second part, as is
perceptible, is that when disputes or differences of any kind
arise between the parties to the contract relating to the
performance of the works during progress of the works or after
its completion or before or after the termination, abandonment         G
or breach of the contract, it is to be referred to and settled by
the engineer, who, on being requested by either party, shall give
notice of his decision within thirty days to the owner and the
contractor. There is also a stipulation that his decision in
respect of every matter so referred to shall be final and binding
upon the parties until the completion of works and is required         H
                                                            '
    790      SUPREME COURT REPORTS                  [2014] 4 S.C.R.


A to be given effect to by the contractor who shall proceed with
  the works with due diligence. To understand the intention of the
  parties, this part of the clause is important. On a studied scrutiny
  of this postulate, it is graphically clear that it does not provide
  any procedure which would remotely indicate that the concerned
B engineer is required to act judicially as an adjudicator by
  following the principles of natural justice or to consider the
  submissions of both the parties. That apart, the decision of the
  engineer is only binding until the completion of the works. It only
  casts a burden on the contractor who is required to proceed
c with the works with due diligence. Besides the aforesaid, during
  the settlement of disputes and the court proceedings, both the
  parties are obliged to carry out the necessary obligation under
  the contract. The said clause, as we understand, has been
  engrafted to avoid delay and stoppage of work and for the
  purpose of smooth carrying on of the works. It is interesting to
0
  note that the burden is on the contractor to carry out the works
  with due diligence after getting the c!ecision from the engineer
  until the completion of the works. Thus, the emphasis is on the
  performance of the contract. The language employed in the
  clause does not spell out the intention of the parties to get the
E disputes adjudicated through arbitration. It does not really
  provide for resolution of disputes.
        23. Quite apart from the above, clause 4.1 of the
    agreement is worthy to be noted. It is as follows: -
F         "4.1 It is specifically agreed by and between the parties
          that all the differences or disputes arising out of the
          Agreement or touching the subject matter of the
          Agreement, shall be decided by a competent Court at
          Bangalore."
G
       24. Mr. Vishwanathan, learned senior counsel for the
  appellants, laying immense emphasis on the same, has
  submitted that the said clause not only provides the territorial
  jurisdiction by stating a competent court at Bangalore but, in
H essence and in effect, it stipulates that all the differences or
 KARNATAKA POWER TRANSMISSION CORP. LTD.                       791
v. DEEPAK CABLES (INDIA) LTD. [DIPAK MISRA, J.]
disputes arising out of the agreement touching the subject-            A
matter of the agreement shall be decided by a competent court
at Bangalore. Mr. Dave, learned senior counsel for the
respondents, would submit that it only clothes the competent
court at Bangalore the territorial jurisdiction and cannot be
interpreted beyond the same. The submission of Mr. Dave, if            B
properly appreciated, would convey that in case an award is
passed by the arbitrator, all other proceedings under any of the
provisions of the Act has to be instituted at the competent court
at Bangalore. This construction, in our opinion, cannot be placed
on the said clause. It really means that the disputes and              c
differences are left to be adjudicated by the competent civil
court. Thus, clause 48, as we have analysed, read in
conjunction with clause 4.1, clearly establishes that there is no
arbitration clause in the agreement. The clauses which were
interpreted to be arbitration clauses, as has been held in Ram         D
Lal (supra) and Dewan Chand (supra) which have been
approved in Tipper Chand (supra), are differently couched. As
far as Rukmanibai Gupta (supra) is concerned, as has been
opined in Damodar Das (supra) and also in Bhagyadhar Dash
(supra), it has to rest on its own facts. Clause in Dina Nath          E
(supra) is differently couched, and clause 48, which we are
dealing with, has no similarity with it. In fact, clause 48, even if
it is stretched, cannot be regarded as an arbitration clause. The
elements and attributes to constitute an arbitration clause, as
has been stated in Jagdish Chander (supra), are absent.
Therefore, the irresistible conclusion is that the High Court has      F
fallen into grave error by considering the said clause as
providing for arbitration.
     25. Consequently, the appeals are allowed and the
judgments and orders passed by the High Court are set aside.           G
Howexer, regard being had to the facts and circumstances of
the case, there shall be no order as to costs.
D.G.                                            Appeals allowed.

                                                                       H