The High Court of Calcutta, while disposing of a review application filed by the Applicant seeking review of an order dated 1 December 2022 passed under section 11(6) of the Arbitration and Conciliation Act, 1996, held that an arbitration clause cannot be deemed to have been incorporated by way of a subsequent Circular unless it is specifically referred to and included in the original agreement between the parties.
Brief Facts:
The respondent published an e-tender inter-alia for the hiring of heavy earth-moving machinery and for the removal of coal. Pursuant to the above, online bids were submitted by various entities where the applicant emerged as the successful bidder and was ultimately accepted. It is alleged that despite repeated opportunities, the applicant failed to fulfill the conditions under the NIT. In such circumstances, the respondent was constrained to foreclose the work under the NIT which had been awarded to the applicant. The applicant filed an application for appointment of an Arbitrator. The application was dismissed on the ground that there was no valid arbitration clause between the parties. Hence, this review application.
Contentions of the Applicant:
The learned counsel appearing on behalf of the Applicant submitted that there is an error apparent on the face of the record in passing the order dated 1 December 2022 inasmuch as the Court had relied on clause 5 of the Circular, instead of clause 2 which is the relevant and applicable clause. She contended that the arbitration clause stood incorporated by reference and the requirements of section 7 of the Arbitration and Conciliation Act, 1996 have been complied with.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent submitted that there are no grounds to seek review under Order 47 Rule I of the Code of Civil Procedure 1908. An error apparent on the face of the record is one which is apparent and not an error which requires to be searched. A review is not an appeal in disguise whereby an erroneous decision is reheard or re-corrected but only lies in case of an apparent error. Accordingly, there are no grounds to entertain this application.
Observations of the court:
The court noted that the only ground for review is one of mistake or error apparent on the face of the record. The Court said that there is an apparent error in the order dated 1 December 2022 which ex facie proceeds on the basis that, clause 5 of the Circular was the applicable clause.
The court observed that a reference to the document containing an arbitration clause that needs to be incorporated into another document must clearly indicate an intention to incorporate the arbitration clause from one document to another. Section 7(5) of the Act requires a conscious acceptance of the arbitration clause from another document by the parties as a part of their contract before such arbitration clause could be read into the contract. Mere communication of a decision to go to arbitration cannot be construed as an arbitration agreement between parties under section 7 of the Act. The Court said that an arbitration clause cannot be deemed to have been incorporated by way of a subsequent Circular unless it is specifically referred to and included in the original agreement between the parties.
The decision of the Court:
The Calcutta High Court, disposing of the application, held that the arbitration clause was not incorporated in the contract.
Case Title: Dhansar Engineering Company Private Ltd. vs. Eastern Coalfields Ltd.
Coram: Hon’ble Justice Ravi Krishan Kapur
Case No.: RVWO/38/2023
Advocate for the Applicant: Mrs. Amrita Panda
Advocate for the Respondent: Mr. Mainak Das
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