1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORIGINAL SIDE ARBITRATION APPLICATION NO.62 OF 2007 Bygging India Limited .... Applicants Vs. M/s. Surindra Engineering Company Limited .... Respondents None for the Applicants. Shri Sanjay Jain i/b L.J. Law for the Respondents. CORAM: J.N. PATEL, ACTING C.J. DATED: FEBRUARY 5, 2010 P.C: 1. None for the applicants. Shri Sanjay Jain present on behalf of the respondents. Heard. This application has been filed seeking appointment of an Arbitrator who shall be an Engineer or any other person having knowledge of Construction Engineering and Law to adjudicate the disputes arising between the parties. 2. The applicants had taken a sub- contract from the respondents to complete the work relating to the contract obtained by the 2 respondents from the Maharashtra Jeevan Pradhikaran. On 14-10-1999 the parties executed a contract and the respondents issued a work order in favour of the applicants. It is the case of the applicants that they raised various bills from time to time and though the respondents received payments from the principal i.e., the Maharashtra Jeevan Pradhikaran, they did not pay a substantial amount to the applicants, which was contrary to the clause in the contract, though the respondents have admitted that the applicants have completed the work. 3. It is the applicants case that when they demanded their money, the respondents called upon them to send all the accounting statements so that finalisation of the account could be carried out by them. In spite of the applicants lodging their claim by preparing a statement of final bill, the respondents failed to pay the same and made various false and incorrect observations therein, thereby reducing the claim of the respondents. Therefore, the applicants sent a letter dated 16-9-2004 and called upon the respondents to pay the balance amount and as the respondents failed to pay the balance legitimate dues of 3 the applicants, the applicants by their letter/notice dated 30-12-2006 invoked the arbitration clause and called upon the respondents to refer the disputes to a Principal Secretary (Technical), Maharashtra Jeevan Pradhikaran, for arbitration. Though the respondents have received the notice on 1-1-2007 and another copy on 5-1-2007 by registered post, they have failed to appoint an Arbitrator and hence this application. 4. The respondents have filed their reply and contended that the applicants cannot invoke arbitration clause in a contract between the respondent and their principal and, therefore, the application deserves to be rejected. Another contention is in respect of the claim being barred by limitation. Attention of this Court is drawn to two Agreements between the parties, particularly the Agreement between the applicants and the respondents. It is the contention of the learned counsel appearing for the respondents that Clause 20 of the Agreement provides that "in case of dispute between the contractor and the filed officers, Member Secretary (Technical), MJP shall be the sole Arbitrator and no external Arbitrators shall be appointed". It is, therefore, contended that 4 Clause 30 of the original Agreement between the MJP and the respondents referred to by the respondents in para 9 of the affidavit is not applicable in this context since Clause 30 refers to the questions relating to the meaning of the specifications, designs, drawings and instructions and as to the quality of workmanship or the materials used on the work or as to any other question, claim, right, matter or things whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or those conditions or otherwise concerning the work or the execution or failure to execute the same whether arising during the progress of work or after the completion or abandonment thereof and, therefore, the applicants are not concerned with any clause relating to arbitration entered into between the respondents and their principal. In support of his contention, the learned counsel appearing for the respondents has referred to a decision of the Supreme Court in the case of M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt Builders Ltd., reported in 2010 (1) Mh.L.J., page 460 wherein similar question arose for consideration before the Hon'ble Supreme Court relating to sub-section 5 (5) of Section 7 of the Arbitration and Conciliation Act, 1996. While explaining the scope and intent of Section 7(5), Their Lordships in Clause (iii) of para 13 have held thus: "(iii) Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/performance alone will apply, and not the arbitration agreement in the referred contract, unless there is special reference to the arbitration clause also." 5. If one examines the Agreement between the applicants and the respondents on which reliance is placed by the applicants while invoking the arbitration clause, it clearly shows that there is no agreement between the parties to refer disputes to an Arbitrator. On the other hand, same contemplates that the applicants, who were appointed as sub- contractor, had expressed to the contractor their capacity, readiness and willingness to execute the work in diligent manner and 6 faithfully discharging all the related contractual obligations of the contract, and had offered to perform the work in accordance with the terms of the contract and had submitted their quotation dated 3-9-1999, duly revised on 9-9-1999, to the contractor in respect of the prices for the works and further in consideration of the payment to be made by the contractor to the sub-contractor, the sub- contractor agreed to the contractor to execute the works in conformity with the provisions of the work order. Thus it can be seen that this is a case where the parties have agreed and entered into an Agreement which provides for the execution of performance of the contract between the respondents and their principal, which does not provide for settlement of disputes by arbitration. Therefore, the application is rejected. ACTING CHIEF JUSTICE