Further, at paragraph 16 of P.
Dasaratharama Reddy (supra), the distinction
between an expert determination and
arbitration between the parties has been spelt
out as per Russell, on Arbitration (21st Edn.)
in the following words:-
“16……Many cases have been fought
over whether a contract’s chosen
form of dispute resolution is
expert determination or
arbitration. This is a matter of
construction of the contract, which
involves an objective enquiry into
the intentions of the parties.
First, there are the express words
of the disputes clause. If specific
words such as ‘arbitrator’,
‘Arbitral Tribunal’, ‘arbitration’
or the formula ‘as an expert and
not as an arbitrator’ are used to
describe the manner in which the
dispute resolver is to act, they
are likely to be persuasive
although not always conclusive….
Where there is no express wording,
the court will refer to certain
guidelines. Of these, the most
important used to be, whether there
was an ‘issue’ between the parties
such as the value of an asset on
which they had not taken defined
positions, in which case the
procedure was held to be expert
determination; or a ‘formulated
dispute’ between the parties where
defined positions had been taken,
in which case the procedure was
held to be an arbitration. This
imprecise concept is still being
relied on. It is unsatisfactory
because some parties to contract
deliberately choose expert
determination for dispute
resolution. The next guideline is
the judicial function of an
Arbitral Tribunal as opposed to the
expertise of the expert…. An
Arbitral Tribunal arrives at its
decision on the evidence and
submissions of the parties and must
apply the law or if the parties
agree, on other consideration; an
expert, unless it is agreed
otherwise, makes his own enquiries,
applies his own expertise and
decides on his own expert
opinion….”
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11474 OF 2014
(Arising Out of SLP (C) No. 13982 of 2007)
International Amusement Limited
Vs.
India Trade Promotion
Organisation & Anr
Citation:(2015) 12 SCC677
2. These appeals are directed by the appellant
against the common impugned judgment and order
dated 16.07.2007 passed in writ petition (c)
No. 2015 of 2001 and C.M. (M) No.553/2007 by
the High Court of Delhi, urging various facts
and legal grounds and raising two substantial
questions of law which read thus:-
a) Whether the arbitration
proceedings can be continued
between the International
Amusement Limited and the India
Trade Promotion Organisation?
b) Whether the Estate Officer
appointed as Arbitrator is the
correct forum?
Necessary brief facts are stated hereunder
with a view to find out whether the questions
of law framed in these appeals would arise for
our consideration.
3. The appellant herein was running an
amusement park in Pragati Maidan, New Delhi
since the year 1984, which was well known as
“Appu Ghar”. The land for the purpose was
initially allotted to the appellant by India
Trade Promotion Organisation (for short ‘the
ITPO) on licence basis as the lease between the
Central Government and the ITPO was still
pending and as such permanent allotment of the
land could not be made in favour of the
appellant. Only as an administrative measure,
the license agreements were entered into
between the appellant and the ITPO. The
appellant claimed that it was the permanent
allottee of the land for running the amusement
park on the similar lines as were allotted in
favour of the Statutory
Corporations/Instrumentalities of the State and
Central Government. It was only on the
assurance of the Land & Development Office (for
short “the L&DO”), Ministry of Urban
Development and ITPO that the appellant made
huge amount of investment for establishing and
running “Appu Ghar”. The last agreement entered
into between the parties was on 6.11.1995. In
the said agreement, arbitration clauses 27 and
28 were incorporated, which are extracted
hereunder :-
“27. The licensed premises are
public premises as defined in
the Public Premises (Eviction of
Unauthorised Occupants) Act,
1971 and fall within the
jurisdiction of the Estate
Officer, Pragati Maidan.
28. In case of any dispute
arising out of or in connection
with this agreement the disputes
shall be referred to the sole
arbitration of the Chairman,
India Trade Promotion
Organisation or his nominee
whose decision/award shall be
final, conclusive and binding on
the parties. Application for
reference to arbitration shall
be made by either party within
two months of arising of the
dispute.”
4. The case of the appellant is that it being
a permanent allottee of the land at Pragati
Maidan, it had made huge investments for
opening Water Park, in order to provide
additional amusement facilities to the public
at large. The ITPO being aware of the permanent
status of the appellant in respect of the land
as well as the factum of huge investments made
by it upon the same towards establishing the
Water Park, called upon the appellant to vacate
the premises vide letter dated 02.09.1999. The
appellant has raised various disputes, claims
and counter claims against the ITPO.
5. Immediately after the notice was received
by the appellant, it submitted a detailed
representation to ITPO with a request to renew
the lease of the land for further period. Being
unsuccessful, the appellant commenced
proceedings under the Arbitration and
Conciliation Act, 1996 (for short “the
Arbitration Act”) invoking its right under
clause 28 of the agreement referred to supra.
The arbitration notice dated 11.11.1999 was
issued to the ITPO invoking the provisions of
clause 28 of the aforesaid licence agreement
and filed an application under Section 8 of the
Arbitration Act before the Estate Officer for
referring the matter for arbitration. On
18.11.1999 ITPO issued notice of eviction under
Section 4A of the Public Premises (Eviction of
Unauthorized Occupants) Act, 1971 (for short
“the P.P. Act”) to the appellant to evict from
the land of its unauthorised occupation. The
application for arbitration filed by the
appellant was rejected by the Estate Officer
vide his order dated 28.3.2000 on the ground
that the Estate Officer exercises his
jurisdiction as provided under the provisions
of the P.P. Act. It was further stated that it
is an admitted case that the premises in
Pragati Maidan for running Appu Ghar was given
to the appellant on licence basis and on expiry
of the licence period the appellant becomes an
unauthorised occupant as defined under Section
2(g) of the P.P. Act and therefore, it was
required to vacate the premises and hand over
the same to ITPO, hence, the appellant cannot
take up the plea that it was a permanent
allottee of the premises involved in this case
and that there was no dispute at all between
the parties, which could be agitated as raised
by the appellant.
6. Being aggrieved by the order of Estate
Officer, the appellant filed W.P. (C) No.1425
of 2000 before the Delhi High Court questioning
the correctness of the order passed by him.
Thereafter, on 08.05.2000, the appellant filed
an application being A.A. No.111/2000 under
Section 11(6) and petition OMP No.63/2000 under
Section 9 of the Arbitration Act before the
Chief Justice of Delhi High Court. The learned
single Judge, who is the nominee of the learned
Chief Justice, vide his order dated 23.01.2001
allowed the application by appointing an
arbitrator for deciding the disputes between
the parties through the process of arbitration.
7. Aggrieved by the said order, the ITPO filed
Writ Petition (C) No.2015 of 2001 before the
Division Bench of Delhi High Court, challenging
the correctness of the order of appointment of
the arbitrator by the High Court. On
12.04.2001, the High Court stayed the
arbitration proceeding which has been in force
till the disposal of the writ petition.
8. During the pendency of the above matter,
some part of “Appu Ghar” land was required by
Delhi Metro Rail Corporation for construction
of Pragati Maidan Metro Station which was
handed over by the appellant to the ITPO.
Thereafter, the land of Appu Ghar was resumed
by the L&DO and the same was allotted to the
Supreme Court Registry for its expansion plan.
9. The High Court vide its common order dated
16.7.2007 allowed Writ Petition (C)No. 2015 of
2001 filed by the ITPO holding that the matters
enumerated under Section 15 of the P.P. Act
cannot be referred to arbitration for
adjudication for arbitrator. The application
C.M. (M) No. 553 of 2007 filed by the appellant
was also dismissed. Hence, these appeals.
10. It is contended by Mrs. Pratibha M. Singh,
the learned senior counsel for the appellant
that the legal position prevailing with respect
to Section 16 of the Arbitration Act, was that
any directions qua-jurisdiction ought to be
raised before the Arbitrator and the same
cannot be adjudicated under Section 11 of the
Arbitration Act by the Judge who is a designate
of the Chief Justice under Sections 11(6) and
11(7) of the Arbitration Act as per the law
laid down by this Court in its judgments in
Konkan Railway Corporation. Ltd. and Ors. v.
Mehul Construction Co.1 and Konkan Railway
Corpn. Ltd. and Anr. v. Rani Construction Pvt.
Ltd.2
11. Further reliance was placed by the learned
1 (2000) 7 SCC 201
2 (2002) 2 SCC 388
senior counsel upon the Constitution Bench
decision of this Court in SBP & Co. v. Patel
Engineering Limited and Anr.3, wherein this
Court has succinctly held that power under
Section 11(6) of the Arbitration Act is not an
administrative power of either the Chief
Justice of the High Court or his designate but
a judicial power. The said position of law was
re-affirmed and re-emphasized by this Court in
Maharshi Dayanand University and Anr. v. Anand
Coop. L/C Society Ltd. and Anr.4 and again in
the case of S.N. Prasad, Hitek Industries
(Bihar) Ltd. v. Monnet Finance Ltd. and Ors.5
in support of the above said proposition of
law. Further reliance was placed by the learned
senior counsel on behalf of appellant on
another judgment in the case of Andhra Pradesh
Tourism Development Corpn. Ltd. and Anr. v.
Pampa Hotels Ltd.6
12. It is further contended by the learned
senior counsel that under Section 15 of the
3 (2005) 8 SCC 618
4 (2007) 5 SCC 295
5 (2011) 1 SCC 320
6 (2010) 5 SCC 425
P.P. Act, the bar of jurisdiction applies only
to a Court and placed reliance on the judgments
in the cases of Kamal Pushp Enterprises v. D.R.
Construction Company7
, Firm Ashok Traders &
Anr. v. Gurumukh Das Saluja & Ors.8 and Ashoka
Marketing Ltd. & Anr. v. Punjab National Bank &
Ors.9
13. Without prejudice to the above legal
contentions, the learned senior counsel also
contended that though in general, licences may
be governed by the P.P. Act, in the case on
hand, the agreement and the nature of
relationship between the parties was not that
of a licensee and licensor, as it is evident
from the various documents produced on record
by the appellant. There are several documents
spanning from 1980s to 1997 which reflect that
the Government’s intention was always to raise
the appellant as permanent allottee of the
land. However, for various reasons and
subsequent events, the permanent allotment of
7 (2000) 6 SCC 659
8 (2004) 3 SCC 155
9 (1990) 4 SCC 406
land was not made despite the huge investments
made by the appellant and the appellant was
forced to vacate the premises. It was under
these circumstances, the Government was
conscious of the different nature of the
relationship of parties and the arbitration
clause was incorporated in the license
agreement.
14. On the other hand, Mr. Ravi Sikri, the
learned senior counsel appearing on behalf of
the ITPO and Mrs. M. Diwan, learned counsel on
behalf of Union of India rebutted the above
said contentions urged on behalf of the
appellant contending that arbitration clause 28
in the agreement does not deal with the
arbitration under the provisions of the
Arbitration Act. The learned senior counsel
contended that the Division Bench of Delhi High
Court after examining the provisions of Section
5 and in the light of Section 2(3) of the
Arbitration Act, held that Section 2(3)
protects the existing laws, both common law as
well as statutory law, under which some
disputes cannot be made subject matter of
arbitration. Further, it is urged that the
Division Bench of the High Court has rightly
held that Section 15 read with Sections 5 and 7
of the P.P. Act, confers exclusive jurisdiction
on the Estate Officer appointed under Section 3
of the P.P. Act, to deal with the application
that is filed by the ITPO to evict unauthorised
occupants from the public premises and pay the
damages as provided under Sections 5 and 7 of
the P.P. Act respectively. Further, Section 15
of the P.P. Act bars and prohibits any court
from entertaining any suit or proceeding for
eviction from the premises etc. as provided
under clauses (a) to (e) of Section 15 and that
the general power of the Court under Section 9
of the Code of Civil Procedure, 1908 to
entertain suit or proceedings is therefore
ousted if a dispute raised by the appellant
falls in clauses (a) to (e) of Section 15 of
the P.P. Act. It was further contended that the
Division Bench of the High Court rightly held
that the provisions of Sections 5 and 7 of the
P.P. Act empower the Estate Officer appointed
under Section 3 of the P.P. Act to deal with
applications that will be filed by the
respondent-ITPO for eviction of unauthorised
occupation and for payment of rent and damages
in respect of the public premises against the
unauthorised occupants. Sections 5 and 7 of the
P.P. Act conferred exclusive jurisdiction upon
the Estate Officer and makes it very clear that
he alone has sole and exclusive jurisdiction to
decide such applications of the ITPO in respect
of the dispute regarding public premises. The
said jurisdiction conferred upon the Estate
Officer by the statute cannot be taken away by
a contract between the parties by incorporating
arbitration clause in the agreement or made
subject matter of any dispute in relation to
the public premises which will be in occupation
of the licensee for reference before an
arbitrator to arbitrate the same. It cannot be
waiver of statutory provisions of the P.P. Act.
The contract between the parties must be within
the legal framework and parties cannot contract
out of the statute. Further, it was contended
that the Estate Officer having exclusive
jurisdiction is not arbitrable and parties by a
contract cannot agree to refer the matters in
respect of which jurisdiction has been
conferred upon the Estate Officer. Therefore,
the arbitrability of claims of the appellant
covered under Sections 5 and 7 of the P.P. Act,
is excluded. To arrive at the said conclusion,
the Division Bench of the High Court rightly
placed reliance upon the Constitution Bench
judgment of this Court in the case of Ashoka
Marketing Ltd. (supra), wherein the legal
question that arose was as to whether the Rent
Control Act,1995, which is also a Special Act
will override the provisions of the P.P. Act.
After interpreting the relevant provisions of
the Act, the Constitution Bench of this Court
in the above case has held that the P.P. Act,
is a special statute relating to eviction of
unauthorised occupants from public premises and
therefore, the same will prevail over the Rent
Control Act. In the said case it was held that
the 1971 enactment did away with the option of
the parties and conferred exclusive
jurisdiction on the Estate Officer in relation
to the public premises. The power and
jurisdiction of a civil court to adjudicate
matters enumerated under Section 15 of P.P. Act
was withdrawn.
15. Further, reliance was placed by the
learned senior counsel for the respondents upon
the judgment of this Court in Haryana Telecom
Limited v. Sterlite Industries (India)
Limited10
, wherein, this Court has referred to
the provisions of the Companies Act and held
that power to wind up a company is conferred on
the Company Court. The said power cannot be
subject matter of arbitration.
16. In view of the above rival legal
contentions urged on behalf of the parties, to
answer the aforesaid substantial questions of
law, it is necessary for us to examine
arbitration clause 28 of the license agreement
dated 06.11.1995 entered between the parties,
10 (1999) 5 SCC 688Page 16
16
which has been extracted in the earlier portion
of this judgment.
This Court must accept the contention of
the learned senior counsel on behalf of the
ITPO that the said clause in the licence
agreement is not an arbitration agreement
between the parties for the reasons discussed
below.
17. The three Judge Bench decision of this
Court (of which two of us were members) in P.
Dasaratharama Reddy Complex v. Government of
Karnataka & Anr.11
, while examining a similar
clause of an arbitration agreement, after
careful consideration and interpretation of
the clause, has held that in all the matters of
dispute arising out of the agreement regarding
quality of materials and work, etc., the
decision of the Board of Directors of the
Nagarika Yogbakashema Mathu Gruha Nirmana
Sahakara Sangha, shall be final and binding on
the part of the Contractor. Further, the case
of Mysore Construction Company v. Karnataka
11 (2014) 2 SCC 201
Power Corporation Ltd. & Ors.12 was discussed in
P. Dasaratharama Reddy (supra) by this Court,
at para 14, wherein, the Designated Judge has
referred to the passage from Russell, on
Arbitration (19th Edition, page 59) and the
other judgments of this Court in K.K. Modi v.
K.N. Modi and Ors., Chief Conservator of
Forests, Rewa v. Ratan Singh Hans13, Rukmanibai
Gupta v. The Collector, Jabalpur14, State of
Uttar Pradesh v. Tipper Chand15, State of
Orissa v. Damodar Das16, Bharat Bhushan Bansal
v. Uttar Pradesh Small Industries Corporation
Ltd., Kanpur17 and observed that the decisions
in the abovementioned cases make it clear by
laying down the conditions, when an agreement
or a clause in the agreement can be construed
as an arbitration agreement between the
parties.
18. Further, at paragraph 16 of P.
Dasaratharama Reddy (supra), the distinction
12 ILR 2000 KAR 4953
13 AIR 1967 SC 166
14 (1980) 4 SCC 556
15 (1980) 2 SCC 341
16 (1996) 2 SCC 216
17 (1992) 2 SCC 166
between an expert determination and
arbitration between the parties has been spelt
out as per Russell, on Arbitration (21st Edn.)
in the following words:-
“16……Many cases have been fought
over whether a contract’s chosen
form of dispute resolution is
expert determination or
arbitration. This is a matter of
construction of the contract, which
involves an objective enquiry into
the intentions of the parties.
First, there are the express words
of the disputes clause. If specific
words such as ‘arbitrator’,
‘Arbitral Tribunal’, ‘arbitration’
or the formula ‘as an expert and
not as an arbitrator’ are used to
describe the manner in which the
dispute resolver is to act, they
are likely to be persuasive
although not always conclusive….
Where there is no express wording,
the court will refer to certain
guidelines. Of these, the most
important used to be, whether there
was an ‘issue’ between the parties
such as the value of an asset on
which they had not taken defined
positions, in which case the
procedure was held to be expert
determination; or a ‘formulated
dispute’ between the parties where
defined positions had been taken,
in which case the procedure was
held to be an arbitration. This
imprecise concept is still being
relied on. It is unsatisfactory
because some parties to contract
deliberately choose expert
determination for dispute
resolution. The next guideline is
the judicial function of an
Arbitral Tribunal as opposed to the
expertise of the expert…. An
Arbitral Tribunal arrives at its
decision on the evidence and
submissions of the parties and must
apply the law or if the parties
agree, on other consideration; an
expert, unless it is agreed
otherwise, makes his own enquiries,
applies his own expertise and
decides on his own expert
opinion….”
19. It was further held that a clause
substantially similar to the clauses referred
to in P. Dasaratharama Reddy (supra) was
interpreted by the three Judge Bench of this
Court in the State of Uttar Pradesh v. Tipper
Chand (supra) wherein paras 2 and 3 of the
said judgment contain the reasons for holding
that the clause in the agreement cannot be
construed as an arbitration clause.
20. At para 18 in P. Dasaratharama Reddy
(supra), the case of State of Maharashtra v.
Ranjeet Construction18 has been discussed
wherein a two Judge Bench of this Court
interpreted clause 30 of the agreement entered
18 AIR 1986 Bom 76
into between the parties, which is almost
identical to the clauses under consideration,
relying upon the judgment in the Tipper Chand
(supra), and held that clause 30 cannot be
relied upon by the parties for seeking
reference of any dispute to an Arbitrator
arising out of the contract.
21. At para 17 in the P. Dasaratharama Reddy
Complex case (supra), the case of State of
Orissa v. Damodar Das (supra) has also been
examined, wherein the three Judge Bench of
this Court interpreted clause 21 of the
contract entered into between the parties. In
the said case, this Court referred to clause
25 of the agreement, relied upon the judgment
in State of U.P. v. Tipper Chand (supra) and
held that the said clause cannot be
interpreted for resolution of the dispute by
an Arbitrator, the case fell for consideration
of this Court in the case of State of Uttar
Pradesh v. Tipper Chand (supra) which was
relied upon in the said case is extracted at
para 20 of the P. Dasaratharama Reddy case
(supra) as under:-
“20……(10)…… A reading of the
above clause in the contract as a
conjoint whole, would give us an
indication that during the
progress of the work or after the
completion or the sooner
determination thereof of the
contract, the Public Health
Engineer has been empowered to
decide all questions relating to
the meaning of the
specifications, drawings,
instructions hereinbefore
mentioned and as to the quality
of workmanship or material 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, estimates,
instructions, orders or those
conditions or otherwise
concerning the works or the
execution or failure to execute
the same has been entrusted to
the Public Health Engineer and
his decision shall be final. In
other words, he is nominated only
to decide the questions arising
in the quality of the work or any
other matters enumerated
hereinbefore and his decision
shall be final and bind the
contractor. A clause in the
contract cannot be split into two
parts so as to consider one part
to give rise to difference or
dispute and another part relating
to execution of work, its
workmanship, etc. It is settled
now that a clause in the contract
must be read as a whole. If the
construction suggested by the
respondent is given effect then
the decision of the Public Health
Engineer would become final and
it is not even necessary to have
it made rule of the court under
the Arbitration Act. It would be
hazardous to the claim of a
contractor to give such
instruction and give power to the
Public Health Engineer to make
any dispute final and binding on
the contractor. A careful reading
of the clause in the contract
would give us an indication that
the Public Health Engineer is
empowered to decide all the
questions enumerated therein
other than any disputes or
differences that have arisen
between the contractor and the
Government. But for Clause 25,
there is no other contract to
refer any dispute or difference
to an arbitrator named or
otherwise.”
22. Further, at paragraph 21 of the case of P.
Dasaratharama Reddy (supra) the case of K.K.
Modi v. K.N. Modi (supra) fell for
consideration, wherein this Court interpreted
clause 9 of the Memorandum of Understanding
that was signed by the two groups of Modi
family. The relevant portion from the said
judgment with regard to interpretation of
Clause 9 of the Memorandum of Understanding
between the parties is extracted below:-
“9. Implementation will be done
in consultation with the
financial institutions. For all
disputes, clarifications, 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 groups.”
23. Further, in the decision of P. Dasaratharama
Reddy at para 30 referred to the case of
Mallikarjun v. Gulbarga University19 wherein it
was held that the decision of the Superintending
Engineer of Gulbarga Circle was final, conclusive
and binding on all parties to the contract upon
all questions relating to the meaning of the
specifications, designs etc. whether arising
during the progress of the work or after the
completion or abandonment thereof in case of
dispute arising between the contractor and the
Gulbarga University. The case of Punjab State v.
Dina Nath20 was also referred supporting the same
view in the case of P. Dasaratharama Reddy
19 (2004) 1 SCC 372
20 (2007) 5 SCC 28
(supra).
24. In view of the aforesaid decisions and the
law laid down by this Court in catena of cases
referred to supra which are reiterated in the
case of P. Dasaratharama Reddy (supra) we are of
the view that the clause 28 in the agreement
which is referred to in the case on hand is not
an arbitration clause. Therefore, the appointment
of an Arbitrator by the nominee of the Chief
Justice has been rightly set aside in the
impugned judgment by the Division Bench of the
Delhi High Court. The law laid down by this Court
in the above referred judgments, after
interpretation of relevant arbitration clauses in
the agreement in those cases, are aptly
applicable to the fact situation on hand and we
answer the questions of law framed by this Court
against the appellant and in favour of the ITPO
and Union of India.
The other proceedings involved in this
case, if any, pending under the provisions of the
P.P. Act before the Estate Officer, the same
shall be continued by him.
Accordingly, the civil appeals are
dismissed as there is no merit for consideration
to interfere with the impugned judgment and
order. No costs.
……………………………………………………………J.
[V. GOPALA GOWDA]
……………………………………………………………J.
[C. NAGAPPAN]
New Delhi,
December 17, 2014
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