ORDER
D. Murugesan, J.
1. The petitioner, Crompton Greaves Ltd., formerly known as Punjab Power Generation Machines Limited, engaged in design, manufacture, test at works, supply, supervision of erection, erection testing, commissioning of generating unit and associated accessories for power generations. The respondent / Board decided to put up unit at Parsons Valley at Nilgris District and invited sealed tenders for design, manufacture and other related works for generation of power for Parsons Valley Unit (Kundah PH VI), Kundah Ultimate Stage Hydro Electric Project in Tamil Nadu under the specification No. HE 1972. The petitioner was the successful tenderer. The respondent / Board entered into a contract with the petitioner in this regard under letter of acceptance dated 24.02.1995 and subsequent purchase order POH 219 dated 28.03.1995. The value of the contract is Rs.17,23,16,160/-. During the execution of the contract, the petitioner raised a dispute regarding the payment of foreign exchange rate variations and the same was not accepted by the respondent / Board on the ground that the Board was not liable to pay the said amount.
2. After the dispute arose, the Board and the petitioner referred the following two issues for Arbitration namely,
(1) To resolve the issue of foreign exchange rate variation and
(2) Recovery of interest on unadjusted advance beyond delivery schedule.
To the said disputes, the respondent / Board filed the claim petition and the petitioner has also filed their counter.
3. While the disputes were pending, the petitioner, in their letter dated 07.01.2000 addressed to the Chief Engineer/ Hydro, Tamil Nadu Electricity Board, Chennai expressed their willingness to refer the following issues also to the Arbitration namely,
(1) Interest on due payments delayed by TNEB beyond 15 days of receipt of material at site.
(2) Extension of delivery and commissioning period without levying of liquidated damages.
(3) Increase in cost of Hydro-generating equipment and associated accessories by the Tamil Nadu Electricity Board subsequent to the acceptance of the offer.
The said request was made on the ground that it will be in the interest of justice to decide the disputes arising out the same contract covered by the Purchase order POH 219 dated 28.03.1995 by the same Arbitral Tribunal.
4. A counter claim was made by the Petitioner before the Tribunal for adjudication of the above issues. The said counter claim was resisted by the Board on the ground that those three disputes are not covered under the agreement and consequently, the same cannot be referred to the Arbitrator at the instance of one of the party to the agreement without the consent of the other party. The respondent / Board also filed a petition under Section 16(1)(2) and (3) of “the Act” requesting the arbitral tribunal to decide the maintainability of the counter claim made by the petitioner as a preliminary issue.
5. By a detailed order dated 03.09.2001, the counter claim was rejected by the Arbitral Tribunal on the ground that it had no jurisdiction to entertain the disputes which are beyond the arbitral agreement. Hence, the petitioner has filed this writ petition for issuance of a Writ of Mandamus, directing the respondents to agree to refer all the disputes arising out of the same contract, namely purchase order POH 219 dated 28.03.1995 entered into between the petitioner and the first respondent, to be decided by the Arbitral Tribunal.
6. It is not disputed by both the petitioner and the respondent / board that the three issues, which are sought to be raised through counter claim by the petitioner are not covered under the Arbitral Agreement. The said agreement covers only two issues, which have been referred to the Arbitrator by mutual agreement of the petitioner and the respondent / Board after the meetings held on 29.10.1998 and 30.10.1998.
7. In the circumstances, it is now to be considered as to whether this court can direct the Arbitral Tribunal to take up the three issues, raised by the petitioner in the counter claim, exercising power under Article 226 of the the Constitution of India.
8. For the purpose of deciding the above issues, the following few provisions of the Arbitration and Conciliation Act, 1996 (Act 26 of 1996) (hereinafter referred to as “the Act”) could be extracted.
“2(1)(a) “arbitration” means any arbitration whether or not administered by permanent arbitral institution;
2(1)(b) “arbitration agreement” means an agreement referred to in section 7;
2(1)(c) “arbitral award” includes an interim award;
2(1)(d) “arbitral tribunal” means a sole arbitrator or a penal of arbitrators;
2(1)(h) “party” means a party to an arbitration agreement.
7. ARBITRATION AGREEMENT
(1) In this part “arbitration 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.
(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.
(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 party and 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.”
9. A combined reading of the above said provisions would lead to a definite conclusion that in order to refer the dispute, there must be an agreement by the parties to submit arbitration all or certain disputes which have arisen or which may arise between them in respect of a definite legal relationship whether contractual or not. All or certain disputes could be referred even in the absence of a specific clause in the agreement for such a reference to arbitration could be made by mutual consent of the parties. “Party” referred to under Section 7 of “the Act” shall necessarily be a party to the arbitration agreement, thereby meaning that no reference for an arbitration could be made by a person or persons who is or are not a party to the arbitration agreement. Similarly arbitration agreement also means an arbitration, which has been referred to in Section 7 of “the Act”. The power of the Arbitral Tribunal is therefore to adjudicate upon only such of the dispute which are referred to it by the parties under Section 7 of the Act or by a judicial authority under Section 8 of “the Act”. When there is no such reference at the instance of both the parties and in the event of any direction by a judicial authority for adjudication of any dispute under Section 8 of “the Act”, the Arbitral Tribunal will have no jurisdiction to decide a dispute.
10. The law on the issue came up for consideration before the Supreme Court on more than one occasion. Before “the Act” came into force, the law was governed by The Arbitration Act, 1940. The validity of the reference made by the Trial Court under Section 21 of the Arbitration Act, 1940 and the consequent award came up for consideration before the Apex Court in NACHIAPPA CHETTIAR AND OTHERS VS. SUBRAMANIAM CHETTIAR . That was a case where the Apex Court was considering the power of trial and appellate courts to refer the matter for arbitration by consent before the judgment in the case was pronounced. Section 21 of the Arbitration Act, 1940 reads as under:-
“Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference”.
While considering the power of the Trial Courts under the above Section, the Apex Court has held as follows:-
“Two conditions must be satisfied before an application in writing for reference is made. All the interested parties to the suit must agree to obtain a reference and the subject matter of the reference must be any matter in difference between the parties in the suit.”
11. In UNION OF INDIA VS. G.S. ATWAL AND CO , the Apex Court while considering a similar question has held as follows:-
“To constitute an arbitration agreement, there must be an agreement that is to say the parties must be ad idem. Arbitrability of a claim depends upon the dispute between the parties and the reference to the arbitrator. On appointment, he enters upon that dispute for adjudication.”
In the said judgment, the Apex Court also referred a paragraph from Law of Arbitration by Justice Bachawat (2nd Edn. (1987) at page 90, which reads as follows:-
“..that jurisdiction of the arbitrator is solely derived from the arbitration agreement. The arbitrator has jurisdiction to deal only with matters which on a fair construction of the terms of the contract the parties agreed to refer to him. Whether or not the arbitrator acts within the jurisdiction depends solely upon the clause of reference.”
12. In TAMIL NADU ELECTRICITY BOARD VS. SUMATHI AND OTHERS , the Apex Court while considering the similar question under the new Act, has held,
“This Court in P. ANAND GAJAPATHI RAJU VS. P.V.G.RAJU has held that there is no provision in the new Act for referring the matter to an arbitrator by intervention of the Court. However, if during the pendency of the proceedings in the court parties have entered into an arbitration agreement then they have to proceed in accordance with the provisions of the new Act and when award is made it is a decree and it cannot be filed in the High Court and it has to be filed in the Court as defined in clause (e) of Section 2 of the new Act for its enforcement as a decree under Section 36 of the new Act. If there is challenge to the award recourse has to be under Section 34 of the new Act.”
13. The above law laid down by the Apex Court would indicate that there must be an arbitral agreement by parties to the contract to refer the disputes to arbitration. In the absence of such arbitral agreement, the arbitral tribunal can have no jurisdiction to entertain and decide any dispute made at the instance of one party without the consent of the other. The same principle is also held to be applicable even when a request is made to Court to refer the dispute pending before it. The question, now to be decided is as to whether the said principle is also applicable to the High Court to issue direction to one of the parties to refer the dispute by exercising power under Article 226 of the Constitution of India.
14. Writ of Mandamus is purely a discretionary remedy. Such a writ could be issued for enforcement of a public duty imposed either by a common law or by statute or by any other law, which is in force. Such a writ could be also issued to compel a public official or a body to perform his official duty imposed by the statute. Such a writ shall also lie even against a private person or against Corporation. What is essential for the Court to consider for issuing the writ is that to find out as to the existence of public duties that should be discharged by person or persons.
15. In this case, the dispute arose out of the contract between the petitioner and the respondent / Board. It is well settled in law that in the matter of contract, parties are bound by the terms and conditions of the contract, their rights and liabilities shall also be determined by the Courts or by the Arbitral Tribunal as in this case, only in consonance with the terms and conditions of the contract. It is equally well settled law that in the matter of contract, writ petitions under Article 226 are not entertained as a matter of course. Mr. T.V. Ramanujam, learned Senior Counsel appearing for the petitioner would contend that the respondent / Board is an instrumentality of the State and it has an obligation to get all disputes arise out of the same contract settled instead having some of the disputes resolved by arbitration and approaching the Courts for adjudication of remaining disputes by spending enormous money. He would also submit that by referring all the disputes to the arbitrator, considerable time also would be saved in resolving the disputes. Though the said argument may be persuasive, I am unable to accept the same in view of the law laid down by the Apex Court. When the facts are not in dispute as to the absence of conditions in the contract for a reference to the Arbitral Tribunal and the disputes have been referred by arbitral agreement, the disputes raised in the counter claim of the petitioner, in the absence of the consent from the Board by an arbitral agreement under Section 7 of the Act between both the petitioner and the respondent, can this Court compel the respondent / Board, who is not agreeable, to submit a reference to arbitration. In my considered view, it must be answered in the negative. The respondent / Board may be a Corporate body and is a State unit in the meaning of Article 12 of the Constitution of India. However, in the matters of contract, this Court cannot compel the Board to refer the disputes raised by the petitioner in the counter claim as the issue of reference cannot be said a public duty cast upon the Board. Law is also well settled that Arbitral Tribunal cannot entertain any claim made to it without there being an arbitral agreement for reference by both the parties. In the absence of such power vested in the Tribunal, this Court also cannot direct the Arbitral Tribunal to adjudicate the dispute, to which anyone of the party is not agreeable.
16. Heavy reliance was placed by the learned counsel for the petitioner over the judgment of Kerala High Court reported in KOSHY VARGHESE VS. HINDUSTAN PAPER CORPORATION LTD., AND OTHERS (2001(1) ARB.L.R. 29 (KERALA)) wherein a Division of Bench held as follows:-
“In our opinion, the respondents being instrumentalities of the State owe a duty to the appellant imposed on them under the Constitution and the law and therefore, we have no hesitation to issue a writ of mandamus to refer the dispute to arbitration. The appellant has a legal right in the present case and the respondents have a legal duty to settle the claim of the appellant. Therefore, the appellant can invoke this Court’s jurisdiction under Article 226 to compel the performance of the duty cast on the respondents as the duty in the present case is a statutory one imposed by the Constitution by the statute and by the rule of common law. Even in cases where the discretionary power is conferred on the authority and the statutory provisions are made for such exercise of that duty in the light of the policy of the Public Sector undertakings to resort to arbitration in inter se disputes, we are of the firm opinion that the same should be adopted in the case of appellant Koshy Varghese also.”
17. However, in view of the law laid down by the Apex Court that there cannot be a reference in respect of any issue unless there is an agreement between the parties to refer the matter to Arbitral Tribunal, I am unable to accept the reliance placed over the judgment as I am bound to follow the law laid down by the Apex Court.
18. For the above reasons, the relief sought for in this writ petition cannot be granted. Accordingly, the writ petition is dismissed. No costs.