JUDGMENT
P.K. Balasubramanyan, C.J.
1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996. As per the Scheme framed by the Orissa High Court, the petitioner was expected to produce the Arbitration Agreement along with the application. Of course, in Konkan Railways Corporation Ltd. v. Rani Construction (P) Ltd., 2002 (I) SCALE 465, the Supreme Court has held that the scheme is not mandatory. But alt the same, since it was necessary to know the content of the alleged arbitration clause, I directed the petitioner to produce the Arbitration Agreement. The order in that behalf was passed on 29.1.2002. The matter underwent a number of adjournments and it is seen that till today, the arbitration agreement has not been produced. Though counsel asserted that the agreement had been produced, from a verification of the records, it is seen that no such agreement has been produced.
2. At the time of hearing, learned counsel made available a copy of what he called the arbitration agreement. It is seen to be part of the Section relating to technical information. It contains the following which according to counsel is the arbitration clause :
“The Engineer-in-charge or his authorised representative shall have the right to inspect and test the materials collected by the Contractor for use in the work. The material not conforming to the relevant specification shall be rejected and the contractor shall have to replace the defective materials immediately.
The Engineer-in-charge shall have the authority to reject or accept any or all the work and materials and to direct the contractor to stop the work if the work is not up to specification. The Engineer-in-charge shall also have the authority to suspend a part or whole of the work at any time due to reasons arising out of the above and no claim whatsoever on this account made by the contractor, shall be entertained.
In the case of dispute the decision of the Member Secretary of the Board shall be final and binding.”
It appears to me on a reading of this clause, in the context in which it occurs, that this cannot be construed to be an arbitration clause or an arbitration agreement as defined by Section 7 of the Act. This clause in my view relates to materials to be used in the work and the right of the Engineer-in-charge to reject or accept the work or the work materials and direct the contractor to stop the work if the work is not up to specification. It also confers the authority on the Engineer -in-charge to suspend a part or whole of the work at any time due to reasons arising out of the quality of materials and the work and no claim on account of such action by the Engineer -in-charge by the contractor would be entertained. Then it is stated that in case of any dispute, the decision of the Member Secretary of the Board shall be final and binding. Thus, it appears to me to be a clause confined to the quality of the materials supplied and the quality of the work done. It cannot be understood as an arbitration clause embracing the whole contract. The provision, in case of any dispute the decision of the Member Secretary shall be final and binding, cannot be read in isolation and cannot be interpreted as an Arbitration Agreement within the meaning of Section 7 of the Act. It can be seen that there is no reference of any dispute to the Member Secretary is contemplated to enable the Court to construe it as an arbitration clause. The decision of the Karnataka High Court in Lachmanna B. Horamani v. State of Karnataka and Ors., AIR 1998 Karnataka 405, on which reliance was a placed is of no assistance to the petitioner. In that case, there was a clause for reference of the dispute and the same was understood as an arbitration clause. In the nature of the clause contained herein, it appears to me that this is a case to which the ratio of the decision of the Supreme Court in State of U.P. v. Tipper Chand (AIR 1980 SC 1522) is attracted. Similarly, the decision in Smt. Elizabeth Mathew v. Prof. S.K. Narayana and Anr. (AIR 1999 Karnataka 291) is also not of
any assistance to the petitioner on the facts and in the circumstances of the case. I hold on a construction of this clause that there is no arbitration agreement as such between the parties.
3. Learned counsel for the petitioner relied on the decision in SPM Engineers Ltd. v. Guwahati Municipal Corporation (AIR 2002 Gauhati 114) in support of a submission that the absence of an arbitration clause does not stand in the way of the above clause being construed as an arbitration clause, and in appointing an arbitrator or under Section 11(6) of the Act. In that case, a Commissioner who was to look into the claim did not do so and in that context the Court held that it had the power to appoint an arbitrator. For the purpose of this case, I need not go into the question whether I should accept the ratio of that decision, for the reason that in this case, when the Member Secretary was approached by the petitioner in terms of the concerned contract, the Member Secretary considered each one of those claims and took a decision thereon and directed some of the claims of the petitioner to be looked into, in detail. There is therefore, no failure on the part of the Member Secretary to perform his duty under the clause in question and in that situation, it appears to me that by no stretch of imagination can this Court proceed on the basis that the Member Secretary had failed to perform his duty and construe the clause in question.as arbitration agreement and making the appointment of an arbitrator. The decision of the Gauhati High Court in my view is clearly distinguishable. With respect, I also find it difficult to agree with the proposition enunciated therein. With respect, Smt. Rukmanibai Gupta v. The Collector, Jabalpur (AIR 1981 SC 479) relied on by the Gauhati High Court cannot be taken as an authority to support the conclusion of the High Court in that decision. On the facts of this case, in view of my understanding of the clause in question, this aspect need not be further considered.
4. Counsel then sought to contend that in view of the issuance of Annexure-1 notice and Annexure-2 claim raised by the petitioner before the Member Secretary of the Orissa Water Supply and Sewerage Board, Bhubaneswar and the reply Annexure-3 of the Member Secretary, Orissa Water Supply and Sewerage Board, it must be held that an arbitration agreement has come into existence, within the meaning of Section 7(4)(c) of the Act. Section 7(4) in so far as it is relevant reads :
“7(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 of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one part and not denied by the other.”
Here, no doubt Annexure-1 notice issued on behalf of the petitioner calls upon the Member Secretary to appoint an arbitrator. There is no such power conferred on the Member Secretary by the alleged arbitration clause in the agreement between the parties. This notice was followed by a detailed claim by the petitioner by way of Annexure-2. The Member Secretary, clearly took the stand in Annexure-3 that there was no arbitration agreement between the parties and denying that there was an arbitration agreement as claimed by the petitioner proceeded to decide those claims as he was expected to do by the relevant clause clarifying that he was not acting as an arbitrator. After considering the claims of the petitioner, he recommended that some of the claims may be examined in detail. Annexure-4 letter subsequently written by the petitioner reiterated the demand for appointment of an arbitrator. In the context of Section 7(4){c) of the Act, I am not satisfied that any arbitration agreement can be postulated from the exchange of statements and claims and defence in which the existence of the agreement is alleged by one party and not denied by the other in terms of Section 7(4)(c) of the Act. It may be also noted that the petitioner has not produced the defence if any put forward by the opposite party to the statement of claim so as to enable this Court to consider whether any arbitration agreement can be postulated in terms of Section 7(4)(c) of the Act.
5. The power under Section 11 of the Act can be exercised by the Chief Justice, thereunder or the duty can be performed by the Chief Justice, only if there exists an arbitration agreement in terms of Section 7 of the Act. Since I have come to the conclusion that there exists no arbitration agreement in this case either in terms of Section 7(1) to (3) of the Act or in terms of Section 7(4) of the Act, I have necessarily to decline the request of the petitioner for the appointment of an Arbitrator. I, therefore dismiss this application.