Ganesh Benzoplast Ltd., a Company Incorporated Under the Provisions of the Companies Act, 1956 and Mr. Ramesh Pilani Vs. the Board of Trustees of the Murmagao Port Trust, Constituted Under the Provisions of Major Port Trust Act, 1963 - Court Judgment

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arbitration - appointment of - arbitrator - section 11 of the arbitration and conciliation act (act) - parties entered into contract - dispute arose - applicant requested for appointment of sole-arbitrator - respondent denied - hence, present application - applicant submitted that there existed arbitration clause in the tender document - no arbitration agreement entered between parties - held, power of court under section 11 of act could not be invoked in absence of arbitration contract - in absence of arbitration agreement court could not appoint sole arbitrator - application dismissed - section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] admission to professional colleges - technical courses - publication of brochure on basis of which candidates seek admission to various institution keeping in mind their merit and preference of colleges held, for ensuring adherence to proper appreciation of an academic course, it is essential that the method of admission is just, fair and transparent. the first step in this direction would be publication of a brochure on the basis of which the applicants are supposed to aspire for admission to various institution keeping in mind their merit and preference of college. brochure, firstly has to be in conformity with law and the statutory scheme notified by the competent authority. it is a complete and composite document as it deals with the scheme for conducting their entrance examinations, declaration of results, general instructions and method of admission, etc. this brochure is binding on the applicants as well as the authorities. this brochure or admission notification issued by the state or other competent authority cannot be altered at a subsequent stage particularly once the process of admission has begun. there is hardly any exception to this accepted rule of law. section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre,jj] admission to professional colleges - technical courses - approval to additional seats or to start new course - cut off dates held, the settled principle of law is that merit of the applicant is the primary criteria which would determine his rank as well as the college where he would be entitled to admission. this rule should not be frustrated as it will tantamount to entirely upsetting the object of admissions based on merit oriented method and would cast cloud on the fairness and transparency of the method of admission. one of the ways in which merit can be defeated is allowing increase in the intake strength or commencement if new colleges beyond cut-off date and admissions beyond the last date specified in the notification/calendar issued by the concerned authorities. this can be illustrated by giving an example. college a which is running a professional course like engineering or mba etc. has an intake capacity of 60 seats which has duly been notified in the information brochure. however, after the cut-off date, approval is granted by the aicte and thereafter, the process is taken up by the state and the intake capacity of the college is increased by 30 more seats. these seats would obviously, not be notified in the information brochure and the candidate who are meritorious and for whom college a; be the college of reference could not get seats or give preference as the seats were limited. none had the proper knowledge about the increase in intake of seats though at a much subsequent stage and may be even after the last date of admission is over either by themselves or under the order of the court even it is put on the internet or given in the newspaper, the candidates of higher rank or meritorious candidates would not be able to avail of that benefit because they have already submitted the testimonial, have paid their fees and the courses have commenced. in that situation, for variety of reasons, they may not be able to take admission in the institution of their higher preference while the candidates of much lower merit will be admitted to that course. besides defeating the merit, it has been commonly noticed that the late admissions made by the colleges directly effect notified candidates who have questioned it more than often as their admission process is not so just, fair and transparent which has given rise to the litigation. it is also a kind of back door entry method. another serious consequence that result from such admissions is shortening of the academic courses in an undesirable manner. it is expected of other candidate selected to a professional course that he or she would complete the course in its entirety and not by missing more than a month or so in joining the said course. this results in lowering the excellence of education as well as harms the academic standard of professional education. admission to professional colleges: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] technical courses - held, in process of admission to professional colleges relating to technical courses, primarily three institutional bodies are involved. (i) all india technical council for technical education, (ii) state of maharashtra through director of technical education and (iii) university to which such institution is affiliated the role of all these institutions in distinct and different but for a common object. primary of the rule of all india council for technical education (aicte) is now well settled but that certainly does not mean that role of the state government and for that matter the university is without any purpose or of no importance. the council is the authority constituted under the central act with the responsibility of maintaining education standards and judging upon the infra-structure and facilities available for imparting such professional education. its opinion is of utmost importance and shall take precedence over views of the state as well as that of the university. the concerned department of the state and the affiliating university has a role to pay but it is limited in its application. they cannot lay down any guidelines or policies which would be in conflict with the central statute or the students laid down a by the central body. state can frame its policy for admission to such professional courses but such policy again has to be in conformity with the directives issued by the central body. while the state grants its approval and university its affiliation for increased intake of seats or commencement for a new course/college, its directions should not offend and be repugnant to what has been laid down in the condition of approval granted by the central authority or council. what is most important is that all these authorities have to work ad idem as they all have a common object to achieve i.e. of proper imparting of education an ensuring maintenance of proper standards of education, examination and ensuring proper infrastructure for betterment of educational system. only if all these authorities work in a co-ordinated manner and with co-operation they would be able to achieve the very object for which all these entities exist admission to professional courses: [swatanter kumar, c.j.,a.p. deshpande & smt. nishita mhatre, jj] admission schedule - interference by courts held, all the expert bodies viz. aicte as well as directorate of education in consultation with the departments of the state regulating the process of admission and maintenance of standards of education had notified a legal binding document specifying dates and schedule for various matters in relation to admission of students and commencement of courses. there has to be so compelling circumstances and grounds before the court to interfere with the prescribed schedule. it is neither so arbitrary nor so perverse, keeping in view the essential features relating to imparting education to professional courses that it should invite judicial chastisement to the extent of laying down entirely new schedule. merely because there has been some delay on the part of either of these authorities to timely grant of either of these authorities to timely grant or decline approval and permission to commence a course per se would not be sufficient ground for disturbing the notified schedule and timely commencement of courses. - he submitted that it is well settled that existence of a valid arbitration agreement is a prerequisite for this court to exercise its powers under section 11(6) of the arbitration and conciliation act. it very clearly states that the lease area will be allotted to the successful bidder only after the same is approved by the board and central government. in that itself, it is very clearly stated that the successful bidder has to execute a lease agreement with the port trust. in these circumstances the prerequisite for exercising jurisdiction under section 11(6) of the act being not satisfied, this application cannot be entertained.s.c. dharmadhikari, j.1. heard mr. pochkhanawala, learned senior advocate for the applicants and mr. v.b. nadkarni, learned senior advocate for the respondents.2. the prayer in the present application under section 11 of the arbitration and conciliation act is to appoint an arbitrator.3. the application presented on 18.4.2007 states that the respondent advertised by a public notice that it intends to invite bids for establishing a liquid storage and handling terminal. the parties interested were required to send their offers. the applicants approached and requested for supply of a tender form which was forwarded to it.4. the applicants filled up the tender document alongwith an undertaking that it was agreeable to comply with the terms and conditions in the tender document. the applicants rely upon section 4(6) and section 5(17) of the terms and conditions.5. by letter dated 12/01/1999 the respondent approved the tender/bid and allotted the land admeasuring 20,000 sq. mtrs. in the mpt for constructing tanks for storing liquid cargo. the applicants also made payment of advance and one year lease rents towards security deposit. the payment was acknowledged by the respondent.6. thereafter a lease deed dated 14.02.2000 was executed between the applicant no. 1 and the respondent. after execution of the sale, the respondent was handed over possession of the land more particularly described in the lease deed and it is contended that the lease is in force for 30 years.7. it is the case of the applicants that after the work of construction of tanks, they suddenly received a letter dated 13/06/2002, directing them to restrict their activities within an area of 11, 200 sq. mtrs. the applicants were allegedly called upon to remove their structures on the balance land of 8,800 sq. mtrs. the dispute in this behalf is set out at pages 5 to 7 of the petition. thereafter the nature of correspondence between the parties has been set out.8. according to the applicants, since a dispute arose between them and the respondents, and that dispute arises out of the tender and the terms and conditions therein so also the work commenced under the lease deed, initially attempt was made to resolve it amicably but thereafter they could not cope up with certain demands which are termed as illegal and untenable and that is how the applicants invoked the arbitration clause by a letter dated 03/03/2007. the applicants requested that a sole arbitrator be appointed so that the disputes can be adjudicated upon. however, the respondents by their letter dated 10.4.2007 did not comply with their request and requisition contained in the applicants' letter dated 03.03.2007 and that is how the applicants have approached this court under section 11 of the arbitration and conciliation act, 1996.9. mr. pochkhanawala, learned senior counsel appearing for the applicants contended that tender document and lease deed are part and parcel of each other. that apart, the tender document itself is a concluded contract. the respondent is a 'state within the meaning of article 12 of the constitution of india' and therefore it cannot part with its property and/or create any interest therein unless it invites bids by public offer. therefore, the tender document was issued, which is comprehensive document. it can be termed as a contract by itself. he submits that arbitration clause is one of the terms and conditions of the tender. clause 16 of the tender document and clause 21 of the lease agreement taken together would demonstrate that there is an agreement to refer the matters to arbitrator. in any event, clause 17 is an arbitration clause. he invites my attention to the terms 'lessor and lessee' appearing in the lease deed and submits that the lease document cannot be read as a distinct transaction. in any event, clause 38(h) thereof does not exclude arbitration and therefore merely because the lease agreement is silent in that behalf does not mean that the application is not maintainable. for all these reasons, he submits that the application be allowed.10. shri pochkhanawala has relied upon the following decisions in support of above contentions. (1) progressive constructions ltd. v. bharat hydro power corporation ltd. : air1996delhi92 , (2) lal chand v. dev raj air 1951 pep 115, (3) maharshi dayanand university and anr. v. anand co-op l/c society ltd. and anr. : air2007sc2441 and union of india v. rallia ram : [1964]3scr164 ).11. on the other hand, shri nadkarni, learned senior counsel appearing for the respondent has contended that the respondents have pointed out in their affidavit-in-reply as to how there is no arbitration agreement. inviting my attention to the affidavit it is urged by shri nadkarni that by its letter dated 12.1.1999 (exhibit - b), the respondent informed the applicants that the ministry of surface transport, government of india has approved the lease of 20,000 sq. mtrs. of land subject to the conditions appearing in their letter dated 23.12.1998.12. inviting my attention to the letter dated 23.12.1998 and more particularly clause 2 thereof shri nadkarni contended that a lease agreement was to be entered into and the said letter contemplates the execution of such an agreement. the terms and conditions of the lease were to be approved by the legal and finance department of respondent. that is how it was executed on 14.2.2000. there is no arbitration agreement, leave alone arbitration clause in the lease deed. therefore, it is not proper to urge that either there is arbitration clause in the contract and/or there is a separate arbitration agreement. he submitted that it is well settled that existence of a valid arbitration agreement is a prerequisite for this court to exercise its powers under section 11(6) of the arbitration and conciliation act. there is no arbitration agreement and therefore the application should be dismissed. mr. nadkarni has relied upon the following decisions in support of the above contentions. (1) dresser rand s.a. v. bindal agro chemicals ltd. : air2006sc871 (2) j.k. jain v. delhi development authority : air1996sc318 ) (3) bomanji ardeshir wadia and ors. v. secretary of state air 1929 p.c. 34 anil kumar srivastave v. state of u.p. : air2004sc4299 , and (5) wellington associates ltd v. kirit mehta air 2000 scw 1165.13. with the able assistance of the learned senior counsel appearing for the parties, i have perused the application and annexures thereto so also the affidavits filed. i have also perused the relevant statutory provisions and the decisions brought to my notice.14. in my view, there is much substance in the contention of shri nadkarni that neither is there any arbitration clause in the contract nor is there a arbitration agreement between the parties.15. the undisputed facts are that the applicants collected the tender form and thereafter submitted the tender. the tender form is divided into several sections. section 1 is the nature of the offer. section 2 contains general information. section 3 is not material for our purpose. section 4 contains instructions to applicants. these instructions are clear inasmuch as the offerer/bidder has to give an undertaking to the effect that they are agreeable to the terms and conditions as prescribed in the entire tender document. it very clearly states that the lease area will be allotted to the successful bidder only after the same is approved by the board and central government. section 5 contains terms and conditions for the lease of rent. in that itself, it is very clearly stated that the successful bidder has to execute a lease agreement with the port trust. in such circumstances, no assistance can be derived from clause 17 of the terms and conditions of the lease of land.16. in the peculiar facts of this case, it is clear that mere undertaking by the applicants to abide by the terms and conditions of the tender does not mean that stipulation with regard to arbitration (clause 17) would automatically govern the lease between the parties. mr. pochkhanawala does not dispute that the tender was submitted by the applicants and thereafter the applicants received a letter dated 12.1.1999 that the offer is approved subject to the conditions of the letter dated 23.12.1998 and the terms and conditions of the lease have been set out in the said letter. the condition is that the port trust will enter into a lease agreement with the applicants incorporating the conditions mentioned in this letter after the same is vetted by the legal and finance department of the board so also is in accordance with the guidelines dated 11.3.1998. it is not possible for me to uphold the contention of shri pochkhanawala that condition xvi of this letter would include a arbitration clause or contemplates an arbitration agreement. admittedly, in these terms and conditions there is no reference to arbitration or any clause stipulating arbitration. further, the lease agreement executed does not contain any arbitration clause but clause 38(h) thereof is relied upon by shri pochkhanawala to mean that it is an arbitration clause. clause 38(h) reads thus:clause 38(h) in case of any dispute/difference arises between the parties and which may be the subject matter of any action in the court of law, subject to the provisions herein before, shall be referred only to the courts having local jurisdiction over the state of goa.17. a bare perusal of the same would indicate that all that the parties have agreed is to approach a court of law having local jurisdiction over the state of goa, in case of any dispute or difference arising between them. by no stretch of imagination can it be said to be an arbitration clause. this is a clause under which the parties have agreed to submit themselves to the jurisdiction of a court at goa in case there is any dispute or difference arising between them. this clause together with condition xvi of the terms and conditions in the letter dated 23.12.1998 is not an arbitration agreement between the parties.18. it is, therefore, that mr. pochkhanawala contended that the tender document is a concluded contract by itself or that the tender document must be read as part and parcel of the lease agreement. i find no substance in this contention either. the tender has been forwarded with the terms and conditions of the tender may be speaking of a lease, but nonetheless the tender itself contemplates execution of a lease agreement. once the tender contemplates execution of a lease agreement and that the tender was forwarded for acceptance, itself would mean parties proceeded on the basis that there is no concluded contract at that stage. the bid/offer had to be accepted and the acceptance to be conveyed by the respondent in writing. that is how parties proceeded and that is how letter dated 12.1.1999 was addressed. in any event, the acceptance was conveyed subject to the terms and conditions of the letter dated 23.12.1998. that pursuant to the terms and conditions of this letter, the lease agreement was entered into and executed. the lease agreement does not provide for any arbitration and by interpretative process one cannot read into it an arbitration agreement. in the peculiar facts of this case, it will not be possible to uphold the above argument of shri pochkhanawala. that the tender is neither a arbitration agreement nor is the arbitration clause therein a part and parcel of the lease agreement, as contended by him.19. shri nadkarni therefore is right in relying upon the decisions of the supreme court in the case of dresser rand s.a. v. bindal agro. the supreme court was considering somewhat identical controversy. the supreme court held that:parties agreeing upon the terms subject to which a contract will be governed, when made, is not the same as entering into the contract itself. similarly, agreeing upon the terms which will govern a purchase when a purchase order is placed, is not the same as placing a purchase order. a prelude to a contract should not be confused with the contract itself. the purpose of revision 4 dated 10.6.1991 was that if and when a purchase order was placed by bindal, that would be governed by the 'general conditions of purchase' of bindal, as modified by revision 4. but when no purchase order was placed, neither the 'general conditions of purchase' nor the arbitration clause in the 'general conditions of purchase' became effective or enforceable. therefore, initialling of 'revision 4' by dr and bindal on 10.6.1991 containing the modifications to the general conditions of purchase, did not bring into existence any arbitration agreement to settle disputes between the parties.20. it reiterated the principle in j. k. jain v. d.d.a. reported in : air1996sc318 . this is what observed in paras 7 and 12 of this judgment.7. it is true that there must be an arbitration agreement, to confer jurisdiction on the arbitrator to hear and decide the dispute. where there is no such agreement there is an initial want of jurisdiction. that is why it has been impressed by courts that one of the essential ingredients of submission to arbitration is that the parties should agree that the dispute should be determined by an arbitrator. where there is an arbitration clause in a contract, it amounts to two contracts into one, one relating to the execution of the work entrusted in the manner prescribed and the other how to resolve the dispute in event any such dispute arises in respect of the said contract. whenever one party to the dispute asserts that there is an arbitration agreement by which the parties had agreed to refer the dispute to an arbitrator which is disputed and challenged by the other party to the agreement, it has to be examined and determined. to constitute 'an arbitration agreement' it is not necessary that there should be a formal agreement or that the terms should all be contained in one document. all that is necessary is that from documents it must appear that the parties had agreed to submit present or future differences to arbitration.12. as already pointed out above, so far as the present case is concerned, the arbitration clause has not been included in the agreement itself. but it shall be deemed to be part of the agreement because the agreement specifically says that the terms and conditions contained in the tender form shall be binding between the parties which obviously will include clause 14 of the tender form, which admittedly requires any dispute between the parties to be referred to an arbitration. the other special feature of the present case is that each page of the tender form which forms part of the agreement has been signed by the appellant, on behalf of the firm and the executive engineer on behalf of the respondent. a mere denial of the existence of the contract of arbitration by one party does not denude the arbitrator of jurisdiction. the arbitrator gets jurisdiction to decide the disputes on basis of the agreement to refer such disputes and not by its acceptance or denial. the objection on behalf of the appellants, that there was no condition in the main agreement to refer the disputes to arbitration can be accepted only if it is held that the different terms and conditions mentioned in the tender form are not binding on the parties, because the parties never agreed to those terms and conditions, while entering into a contract. but the fact about which there is no dispute, is that both the parties had signed the tender form in token of having accepted the terms and conditions mentioned therein including about reference of disputes, if any, to an arbitrator. they had also agreed in the main agreement, that the terms and conditions contained in the tender form shall be binding between the parties. in this background, it is difficult for us to comprehend as to how it an be held that the appellants had never agreed to refer any dispute arising between the parties to an arbitrator in terms of clause 14 of the tender form.thus, the statement of law in bindal agro (paras 27 & 32) read with the above paras in j.k. jain, would make it abundantly clear that an invitation to tender is neither an agreement nor a contract for the purposes of appointing an arbitrator.21. in the present case the lease is entered consequent upon the terms and conditions mentioned in the letter dated 12.1.1999. the lease is not referring to all the tender terms and conditions, leave alone making them part and parcel thereof. clause 17 of the terms and conditions of the lease of land appearing in section (5) of the tender document, if at all can be construed an arbitration agreement, has not been made part of the lease agreement admittedly. the lease agreement only refers to the forum or court which would be approached by the parties in case of dispute. that is not the same thing as an arbitration clause in an agreement or an arbitration agreement itself. in these circumstances the prerequisite for exercising jurisdiction under section 11(6) of the act being not satisfied, this application cannot be entertained. it is accordingly dismissed. there will be no order as to costs.22. in view that i have taken, it is not necessary to go into any larger issue or whether usage of the word 'may' in clause 17 of the terms and conditions of lease as appearing in the tender document would mean a mandate to refer the matter to the arbitration or not. that aspect can be gone into an appropriate case. application dismissed. rule discharged.