(2009) 9 S.C.R. 690

EASTERN COALFIELDS LTD. v.

SANJAY TRANSPORT AGENCY & ANR.

(Civil Appeal No. 753 of 2007)

MAY 6, 2009

[DR. MUKUNDAKAM SHARMA AND DR. B.S.

CHAUHAN, JJ.]

Arbitration and Conciliation Act, 1996:

s. 11 (6) - Appointment of arbitrator- HELD: The relevant clause :in the agreement between the parties related to disputes between Public Sector Enterprises inter se and Public Sector Enterprises and Government Departments, and has no application in the instant case wherein one party is a private party- Appointment made by the High Court set aside

- Claimant would be at liberty to approach the civil court - Limitation Act, 1963 - s. 14 - Interpretation of Statutes.

Interpretation of Statutes:

Interpretation of provision of a statute - Relevance of. section heading/marginal note - HELD: The rule of interpretation that section heading or marginal note can be relied upon to clear any doubt or ambiguity while interpreting any statutory provision can be applied to understand clauses of arbitration agreement also which is in the realm of commercial contract.

An excavation contract was entered into between the appellant (employer), a Public Sector Undertaking, and the respondent-contractor, a private party. When dispute arose between the parties, the contractor filed an application u/s 11 (6) of the Arbitration and conciliation Act, 1996 before the High Court, which appointed an arbitrator. Aggrieved, the employer filed the appeal.

L , .

.. ..

EASTERN COALFIELDS LTD. v. SANJAY TRANSPORT 691

AGENCY ...

Disposing of the appeal, the Court A

HELD: 1.1. Clause 14 of the agreement relying whereupon the respondents filed the application u/s 11 (6) of the Arbitration and conciliation Actl 1996, relates to disputes of commercial nature between Public Sector B Enterprises inter se and between Public Sector Enterprises and Government Departments. The said ( clause will have no application to an agreement which is entered into between the appellant and the respondent, one of whom is a private party. Since the arbitration c clause of the agreement is not applicable to the case in hand, therefore, the appointment of the arbitrator by the High Court exercising jurisdiction u/s 11 (6) of the Act was improper. [Para 4] [693-G-H; 694-A-B]

1.2. It is well settled rule of interpretation that the D section heading or marginal note can be relied upon to clear any doubt or ambiguity in the interpretation of any provision and to discern the legislative intent. The said interpretation can well be applied to understand and construct the various clauses of an arbitration agreement E also, which is in the realm of commercial contract. While interpreting so, the Court may depend not only on the text but context as well in order to fully comprehend the meaning of the clause of the contract. [Para 5] [694-C-E]

1.3. The order of the High Court is set aside. It would F be open to the respondents, to approach the civil court for adjudication of the disputes and for this purpose they would be entitled to the benefit of s. 14 of the limitation Act, 1963. [Para 6] [694-F-G] )

CIVIL APPELLATE JURISDICATION : Civil Appeal No. 753 of 2007.

From the Judgment & Order dated 19.01.2006 of the High Court of Calcutta in A.P. No. 8 of 2003.

EASTERN COALFIELDS LTD. v. SANJAY TRANSPORT 693 ._,

AGENCY [DR. MUKUNDAKAM SHARMA, J.] t

regard to the commercial disputes between the Public Sector A Enterprises inter se and Public Sector Enterprises and Government Departments." It reads as follows:

"ARBITRATION WITH REGARD TO THE COMMERCIAL

DISPUTES BETWEEN THE PUBLIC SECTOR

ENTERPRISES INTER SE AND BETWEEN THE PUBLIC B

SECTOR

ENTERPRISES AND

GOVERNMENT

DEPARTMENTS."

"In the event of any dispute of difference relating to the interpretation and application of the provisions of the C commercial terms of the contract such dispute or difference shall be referred by either party to the arbitration, to one of the arbitrators in the Department of Public Enterprises, to be nominated by the Secretary to the Government of India incharge of the BUREAU OF PUBLIC ENTERPRISES.

The Arbitration Act, 1940 shall not be applicable to the D arbitration under this clause. The award of the arbitrator shall be binding upon the parties to the dispute, provided however, any party aggrieved by such award, may make further reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry E of Law & Justice, Government of India. Upon such reference, the dispute shall be decided by the Law Secretary or the Special Secretary/Additional Secretary when so authorised by the Law Secretary, whose decision shall bind the parties finally and conclusively. The parties F to the dispute will share equally the cost of arbitration, as intimated by the arbitrator. n

4. The aforesaid clause No. 14 relates to disputes of commercial nature arising between the Public Sector Enterprises inter se and between the Public Sector Enterprises G and Government Departments. The text that follows also makes the said position clear which provides that after the award is given by the arbitrator in the department of public sector enterprises, reference for setting aside or revision of the award H

SUPREME COURT REPORTS

[2009] 9 S.C.R.

\ /

A is to be made to the Law Secretary, Department of Legal ~

Affairs, Ministry of Law & Justice, Government of India. The said

clause, therefore, concerns the commercial disputes arising between the Public Sector Enterprises inter se and between such enterprises and Government Departments. The said e clause will have no application to an agreement which is entered into between the appellant and the respondents, one of whom is a private party. Since that arbitration clause is not

::' applicable to the case in hand, therefore, the appointment of the arbitrator by the Calcutta High Court exercising jurisdiction c under Section 11(6) of the Act was improper.

5. It is well settled rule of interpretation that the section heading or marginal note can be relied upon to clear any doubt -

' or ambiguity in the interpretation of any provision and to discern the legislative intent. The section heading constitutes an D important part of the Act itself, and may be read not only as explaining the provisions of the. section, but it also affords a ,, -f better key to the constructions of the provisions of the section which follows than might be afforded by a mere preamble. The said interpretation can well be applied to understand and E construct the various clauses of an arbitration agreement also, which is in the realm of commercial contract. While interpreting so, the Court may not depend only on the text but context as well in order to fully comprehend the context and the meaning j of the clause. ....

6. We, accordingly, set aside the said order and give liberty to the respondents to approach the Civil Court for adjudication and resolving the disputes and lis between the parties arising out of the said contract. Needless to say that the respondents herein will be entitled to get the benefit of Section 14 of the G Limitation Act. t ...,

7. Accordingly, the appeal stands disposed of the aforesaid extent.

R.P.

Appeal disposed of.