Case: GIRIRAJ GARG Vs. COAL INDIA LTD

2. The factual matrix of the present case, briefly stated, is as under:  2.1. Respondent No. 1 issued the 2007 Scheme, whereby coal distribution would be conducted through e-Auction, with a view to provide access to coal for buyers, who were not able to source coal through the available institutional mechanism. This system would provide an equal opportunity to purchase coal through a single-window service to all intending buyers, and facilitate country wide access to booking coal online for all sections of coal buyers, through a simple, transparent system.  Clause 11.12 of the 2007 Scheme contains an arbitration clause which reads as underFrom 2012 to 2015, the Appellant, being a registered buyer as per the Terms and Conditions of the 2007 Scheme, participated in the e¬Auction for purchase of coal for several sale orders issued under the 2007 Scheme.  2.3. The Appellant was declared successful with respect to various coal orders. Sale orders were issued in favour of the Appellant, pursuant to which he deposited the Earnest Money Deposit (hereinafter referred to as ?EDM?) and the coal value as per Clause 2.5 and 5.2 of the 2007 Scheme respectively.  2.4. As per Clause 7.2 of the 2007 Scheme, a period of 45 days was allowed to the Appellant from the date of issue of the delivery order, to lift the coal. The Appellant for certain reasons was unable to lift the booked quantity of coal.  2.5. Respondent No. 1 considered this to be a breach of the Terms and Conditions of the 2007 Scheme, and forfeited the EMD deposited by the Appellant under Clause 9.2 of the 2007 Scheme.  2.6. As a consequence, disputes arose between the parties. The Appellant served a Notice dated 21.03.2016 invoking the arbitration Clause 11.12 under the 2007 Scheme. The Respondents failed to appoint an arbitrator as per Clause 11.12 of the 2007 Scheme.  2.7. The Appellant was therefore constrained to file an Application u/S. 11 before the Jharkhand High Court at Ranchi, for appointment of an independent arbitrator.  2.8. The learned Single Judge vide impugned Order dated 21/18.05.2018 rejected the Application on the ground that the disputes relate to different transactions entered into between the parties, under the 2007 Scheme. The sale orders did not contain an arbitration clause. It was held that even though the 2007 Scheme contains an arbitration clause, none of the individual sale orders make reference to the applicability of terms and conditions of the 2007 Scheme to the sale orders. Hence, the arbitration clause could not be incorporated by reference.  3. Aggrieved by the aforesaid Order, the Appellant has filed the present Appeal.

Court's reasoning:
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.