LI Network
Published on: January 31, 2024 at 16:00 IST
The Bombay High Court recently dismissed the claim of a construction company asserting that the dispute resolution clause in the General Conditions of Contract (GCC) with the Mumbai Municipal Corporation constituted a valid arbitration agreement.
Justice Firdosh P. Pooniwalla highlighted that the clause’s title, “Finality of Decision and Non-Arbitrability,” clearly indicated the parties’ lack of intention for it to serve as an arbitration agreement.
The Court reasoned that the absence of any mention of arbitration or an arbitrator in the clause rendered it incapable of constituting a valid arbitration agreement.
The case arose from a construction project undertaken by Kalpataru Projects International Ltd. for the Ghatkopar-Mankhurd Link Road Flyover.
Disputes emerged between Kalpataru and the Municipal Corporation, leading to the former seeking arbitration under Clause 96 of the GCC. However, the court determined that the clause did not exhibit mutual intention for arbitration and, therefore, did not constitute a valid arbitration agreement.
The Court’s decision clarified the crucial distinction between persona designata and court appointments, emphasizing that when appointed by designation alone, a judge acts as a court.
The case underscored the significance of clear intention in the arbitration agreement and emphasized that the mere declaration of a decision as “final and binding” did not inherently imply an intention to arbitrate.
In conclusion, the court rejected the construction company’s claim, holding that the dispute resolution clause in the GCC did not constitute a valid arbitration agreement.
The case is titled “Kalpataru Projects International Ltd. v. Municipal Corporation of Greater Mumbai and Anr.,” and the court’s decision was rendered in Commercial Arbitration Application No. 166 Of 2022.
Advocate Naresh Thacker represented the petitioner, Kalpataru Projects International Ltd., while Mr. P. G. Lad represented the respondent, Municipal Corporation of Greater Mumbai.