Case: GIRIRAJ GARG Vs. COAL INDIA LTD

LR 1 (SC) : 2009 (9) SCALE 298. this Court held that even though a contract between the parties did not contain a provision for arbitration, an arbitration clause contained in an independent document would be incorporated into the contract by reference, if the reference is such as to make the arbitration clause a part of the contract. The court explained the doctrine of incorporation in the following words - ?24. The scope and intent of Section 7(5) may therefore be summarised thus: (i) An arbitration clause in another document, would get incorporated into a contract by reference, if the following conditions are fulfilled : (1) The contract should contain a clear reference to the documents containing arbitration clause, (2) the reference to the other document should clearly indicate an intention to incorporate the arbitration clause into the contract, (3) The arbitration clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract. (ii) When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties. The arbitration clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause. (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. (iv) Where the contract provides that the standard form of terms and conditions of an independent Trade or Professional Institution (as for example the Standard Terms & Conditions of a Trade Association or Architects Association) will bind them or apply to the contract, such standard form of terms and conditions including any provision for arbitration in such standard terms and conditions, shall be deemed to be incorporated by reference. Sometimes the contract may also say that the parties are familiar with those terms and conditions or that the parties have read and understood the said terms and conditions. (v) Where the contract between the parties stipulates that the Conditions of Contract of one of the parties to the contract shall form a part of their contract (as for example the General Conditions of Contract of the Government where Government is a party), the arbitration clause forming part of such General Conditions of contract will apply to the contract between the parties.? (emphasis supplied) 4.10. This Court in Inox Wind Ltd. v. Thermocables Ltd.(2018) 2 SCC 519 while adopting the ‘single contract case? and ‘two-contract case? principle laid down by Habas (supra), held that a general reference to a consensual standard form is sufficient for incorporation of an arbitration clause. In other words, general reference to a standard form contract of one party, would be sufficient for incorporation of the arbitration clause. In this case, the Court expanded the application of this doctrine by holding that even a general reference to a standard form contract of one party, along with those of trade associations, and professional bodies would be sufficient to incorporate the arbitration clause. 5. In the instant case, the learned Single Judge in the impugned Order has erroneously taken the view that an arbitration clause would not stand incorporated in the individual sale orders entered into by the Respondent No. 2 – Coal Company and the Appellant. The individual sale orders emanate out of the 2007 Scheme. The sale orders specifically state that they would be governed by the guidelines, circulars, office orders, notices, instructions, relevant law etc. issued from time to time by Coal India Limited or Bharat Coking Coal Limited etc. As a consequence, the arbitration clause (i.e. Clause 11.12) in the 2007 Scheme would stand incorporated in the sale orders issued thereunder. Clause 7 in the sale orders falls under the ‘single contract case? where the arbitration clause is contained in a standard form document i.e. the 2007 Scheme, to which there is a reference in the individual sale orders issued by Respondent No. 2 – the Coal Company. 5.1. The arbitration clause in the 2007 Scheme clearly states that : ?All disputes arising out of this scheme or in relation thereto in any form whatsoever shall be dealt exclusively by way of arbitration in terms of the Arbitration and Conciliation Act, 1996.? (emphasis supplied) Russell in his commentary on arbitration Russell on Arbitration (24 th Edn. ,2015, Sweet & Maxwell) pg. 82, para 2¬103 has interpreted these words as follows : "Disputes ?in connection with?, ?in relation to?, or ?regarding? a contract. These words, which are frequently encountered and are to be given the same meaning, were at one time given a restricted interpretation, but are now well established as having a broad meaning…..They may also be sufficient to catch disputes arising under another contract related to the contract containing the arbitration clause.? (emphasis supplied) In Renusagar Power Co. Ltd. v. General Electric Company and Anr.,[1985]1SCR432 this Court observed that expressions such as ?arising out of?, or ?in respect of?, or ?in connection with?, or ?in relation to?, the contract are of the widest amplitude, and content. In Doypack Systems Pvt. Ltd. v. Union of India and Ors.,1988 (36) ELT 201 (SC) this Court observed that expressions such as – ?pertaining to?, ?in relation to? and ?arising out of?, are used in the expansive sense, and must be construed accordingly. The words ?in relation thereto? used in Clause 11.12 of the 2007 Scheme indicate that the clause would apply to all transactions which took place under the 2007 Scheme. This would include the sale transactions in the present case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Section 7(5) of the 1996 Act, closely replicates Article 7(2) 2 Art. 7. Definition and form of arbitration agreement.— (1) ‘Arbitration agreement? is 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. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract. of the UNCITRAL Model Law as it stood prior to the 2006 amendment.This Court in Inox Wind Ltd. v. Thermocables Ltd.(2018) 2 SCC 519 while adopting the ‘single contract case? and ‘two-contract case? principle laid down by Habas (supra), held that a general reference to a consensual standard form is sufficient for incorporation of an arbitration clause. In other words, general reference to a standard form contract of one party, would be sufficient for incorporation of the arbitration clause. In this case, the Court expanded the application of this doctrine by holding that even a general reference to a standard form contract of one party, along with those of trade associations, and professional bodies would be sufficient to incorporate the arbitration clause.In the instant case, the learned Single Judge in the impugned Order has erroneously taken the view that an arbitration clause would not stand incorporated in the individual sale orders entered into by the Respondent No. 2 – Coal Company and the Appellant. The individual sale orders emanate out of the 2007 Scheme. The sale orders specifically state that they would be governed by the guidelines, circulars, office orders, notices, instructions, relevant law etc. issued from time to time by Coal India Limited or Bharat Coking Coal Limited etc. As a consequence, the arbitration clause (i.e. Clause 11.12) in the 2007 Scheme would stand incorporated in the sale orders issued thereunder.