JUDGMENT
R.M.S. Khandeparkar, J.
1. This is an application under Section 11(5) of the Arbitration and Conciliation Act, 1996, hereinafter called as “the said Act” for the appointment of Arbitrator.
2. It is the case of the Applicants that the Applicants were awarded the work of screening of lumpy ore at Sanvordem by Work Order dated 3rd October, 1997 in terms of the agreement entered into between the parties. Clause 12 thereof provided that all the disputes, differences, arising out of or in connection with and/or consequences of or relating to the agreement whatsoever shall be referred to arbitration under the said Act. Since disputes and differences have arisen between the parties, the Applicants by letter dated 4th November, 1998 submitted certain claims to the Respondent which were denied and disputed by the Respondent by letter dated 16th November, 1998. The Applicants, therefore, by letter dated 28th January, 1999 called upon the Respondent to agree to concur with the appointment of Shri B.V. Khanolkar, retired Chief Engineer of the Irrigation Department of Government of Goa to be the sole arbitrator to decide the disputes and differences arisen between the parties under the contract. The claim of the Applicants was denied and contested by the Respondent by letter dated 11th February, 1999 stating that the Applicants cannot take recourse under the arbitration clause in the matter as the demands made by the Applicants have no sanctity in law besides being imaginary and cannot be equated with the disputes as contemplated under the arbitration clause in the agreement between the parties. The Applicants, therefore, filed the present application.
3. Shri S.S. Usgaonkar, learned Advocate appearing for the Applicants placing reliance upon the Judgment of the Apex Court in the matter of Renusagar Power Co. Ltd. v. General Electric Co. and Anr. and A.T. Brij Paul Singh and Bros. v. Slate of Gujarat submitted that the Clause 12 of the agreement between the parties clearly provides that all disputes and differences arising out of or in connection with and/or consequences of or relating to the agreement are required to be referred to arbitration under the said Act. Therefore, any claim arising out of the claim of breach of the contract would entitle the party to the agreement to claim damages for the loss of profit which the party could have earned by undertaking the job pursuant to the contract and such a claim would certainly fall within the scope of dispute under the arbitration clause in the said agreement. Shri S.N. Kerkar, learned Advocate appearing for the Respondent placing reliance on the Judgment of the Apex Court in the matter of I.T.C. Ltd. v. G.J. Fernandes and Anr. submitted that considering the fact that the agreement has been rescinded consequent to the fact that it has become non-executable and, therefore, non-enforceable, the dispute alleged to have been arisen between the parties cannot relate to the contract and, therefore, cannot be referred to arbitration by invoking Clause 12 in the agreement between the parties. The said submission is sought to be countered by the learned Advocate appearing for the Applicants by referring to Section 16 of the said Act. It is the contention of the learned Advocate appearing for the Applicants that Section 16 clearly empowers the Tribunal to rule on its own jurisdiction. According to the learned Advocate, the decision of the Apex Court in the matter of J.T.C. Ltd. v. G.J. Fernandes was in relation to the provisions contained in the Arbitration Act, 1940 and, therefore, the same has no application to the case in hand.
4. The fact that certain disputes have arisen between the parties is not denied by the Respondent. The only contention which is sought to be raised on behalf of the Respondent is that the claim sought to be raised being of the nature of compensatory damages, it is outside the scope of the arbitration clause in the agreement. It is the contention of the Applicants that the said claim has been arisen in relation to anticipatory profits towards the employees, interest which the Applicants had to pay towards the amount invested for obtaining Bank Guarantee and various other expenditure incurred on the actual work carried out by the Applicants as well as the interest on the said different claims.
5. The Apex Court in M/s. A.T. Brij Paul Singh’s case has clearly held as regards the anticipated profits that where in a works contract, the party, entrusted the work, commits breach of the contract, then the Contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract and that what would be the measure of the profits and what proof should be tendered to sustain such claim is a different matter but the claim under this head is certainly admissible. It is the case of the Applicants in the case in hand that inspite of issuance of the work Order, the Applicants were prohibited from carrying out the work entrusted to them on account of the lapses on the part of the Respondent. The claim for anticipated profit is based on the allegation by the Applicants regarding the failure on the part of the Respondent to make it possible for the Applicants to carry out the work entrusted to him.
6. While dealing with the scope of arbitration clause in an agreement, the Apex Court in the matter of the Renusagar Power Co. Ltd., has clearly held that:-
Four propositions emerge very clearly from the authorities discussed above:
1. Whether a given dispute inclusive of the Arbitrator’s jurisdiction comes within the scope or purview of an arbitration clause or not primarily depends upon the terms of the clause itself; it is a question of what the parties intend to provide and what language they employ.
2. Expressions such as “arising out of or “in respect of or “in connection with” or “in relation to” or “in consequence of or “concerning” or “relating to” the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement.
3. Ordinarily as a rule an arbitrator cannot clothe himself with power to decide the questions of his own jurisdiction (and it will be for the Court to decide those questions that there is nothing to prevent the parties from investing him with power to decide those questions as for instance, by a collateral or separate agreement which will be effective and operative.
4. If, however, the Arbitration clause, so widely worded as to include within its scope questions of its existence, validity and effect (scope), is contained in the underlying commercial contract then decided cases have made a distinction between questions as to the existence and/or validity of the agreement on the one hand and its effect (scope) on the other and have held that in the case of former those questions cannot be decided by the Arbitrator, as by sheer logic the arbitration clause must fall along with underlying commercial contract which is either non-existent or illegal while in the case of the latter it will ordinarily be for the Arbitrator to decide the effect or scope of the arbitration agreement, i.e. to decide the issue of arbitrability of the claims preferred before him.
7. It is thus clear that the expressions “arising out of, “in connection with”, “relating to” or “in consequence of are of widest amplitude and would include all types of questions under the contract.
8. Applying the test laid down by the Apex Court in the matter of Renusagar Power Co. Ltd. and M/s A.T. Brij Paul Singh’s case, it cannot be said that the dispute sought to be raised are not within the ambit and scope of the arbitration clause No. 12 of the agreement between the parties to the proceeding. The contention of the learned Advocate for the Applicants that the ruling of the Apex Court in the matter of I.T.C. Ltd. v. G.J. Fernandes and Anr. (supra) will have no application to the case in hand in view of Section 16 of the said Act also deserves due consideration. However, even without going to the said controversy referring to the arbitration clause No. 12 in the agreement itself and considering the ruling of the Apex Court in Renusagar Power Co. Ltd. and M/s. A.T. Brij Paul Singh’s case, it is clear that the objection sought to be raised by the Respondent for reference of the dispute to the arbitration is devoid of substance.
9. In the result, therefore, the application deserves to be allowed and is hereby accordingly allowed. The disputes regarding various claims as narrated in the letter dated 4th November, 1998, copy of which is annexed in the application as Exhibit ‘B’ at pages 13 to 20 are hereby referred for arbitration by the Arbitrator in terms of Section 11(5) of the said Act. Shri G.D. Kamat, Chief Justice of Gujarat High Court (Retd.) Panaji, Goa, is hereby appointed as the Arbitrator to decide the disputes between the parties. The application stands disposed of accordingly with no order as to costs.