SYMBIOSIS INTERNATIONAL UNIVERSITY,

SCHOOL OF LAW, HYDERABAD

PROJECT ASSIGNMENT

ON

ALTERNATE DISPUTE RESOLUTION

TOPIC: CASE ANALYSIS

COURSE TEACHER:

Prof. Sanu Rani Paul

SUBMITTED BY:

NAME: Neha Vashist

ROLLNO. - 15010324312

SEMESTER:9th
 M.R ENGINEERS CONSTRUCTIONS PVT.L TD
V/S
SOMDATTA BUILDERS

PROCEDURAL HISTORY
The Supreme Court as of late made a significant proclamation on its translation of Section 7(5) of
the Arbitration and Conciliation Act 1996 and the issue of whether an intervention provision con-
tained in a primary contract can be consolidated by reference into a subcontract, where the sub-
contract gives that it "will be done on the terms and conditions as appropriate to the fundamental
contract". In MR Engineers and Contractors Pvt Ltd v SomDatt Builders Ltd the Supreme Court
talked about the appropriateness of the intervention proviso contained in the fundamental contract
to the debates emerging in connection to the subcontract and set out specific conditions for the
consolidation of the discretion statement.

FACTS
The Appellant was occupied with the matter of assembling of wind turbine generators (WTGs).
The Respondent was a producer of wind power links and different sorts of links. Two buy requests
were set by the Appellant on the Respondent for supply of links for their WTGs dated 13 December
2012 and 2 February 2013. The buy request recorded that the supply must be as per the terms as
referenced in the buy request and the standard terms and conditions (T&C) appended to the buy
request. The T&C contained a condition on question goals giving that debates be settled by a sole
mediator as per the Arbitration and Conciliation Act, 1996 (the Act). On discovering absconds in
the items provided by the Respondent, the Appellant requested a substitution which was denied.
Therefore, the Appellant issued a notice on 30 October 2014 proposing a sole authority as per the
standard T&C. The Respondent did not answer to the notice, along these lines an application under
area 11(6) of the Act was favored by the Appellant under the watchful eye of the High Court. The
High Court rejected the equivalent on the ground that the Appellant couldn't demonstrate the pres-
ence of a discretion understanding. The High Court depended on the decision of the Supreme Court
in M R Engineers and Contractors Private Limited v Som Datt Builders Limited3 (M R Engineers
case) where the Litigant was a sub-temporary worker of the Respondent. The Appellant was
endowed a piece of the work by the Respondent-contractual worker which related to 'development
of undertaking directorate building'. It was referenced in the sub-contract that it will be done ac-
cording to the terms and conditions appropriate to the fundamental contract. A debate emerged
between the gatherings which made the Appellant in that to approach the High Court for arrange-
ment of a judge under Section 11 (6) of the Arbitration and Conciliation Act, 1996.The High Court
of Kerala rejected the application on the ground that the arbitration clause in the main contract was
not incorporated by reference in the contract between the Appellant and Respondent therein Su-
preme Court held that since there is no exceptional reference to the assertion condition in the
standard T&C, the intervention statement can't be said to have been consolidated into the buy
request.

ISSUES
1. Whether an arbitration clause contained in a main contract, would stand incorporated by
reference, in a sub-contract, where the sub-contract provided that it "shall be carried out on
the terms and conditions as applicable to the main contract?
2. Whether the terms “sub-contract” is included in the Defintion clause of Arbitration Agree-
ment?
3. Whether there is a difference in the terms “another document in a contract and incor-
poration of another document in a contract, by reference”?

RULES
1. Section 7(5) of the Arbitration & Conciliation Act, 1996.
“the reference in a contract to a document containing an arbitration clause constitutes
an arbitration agreement if the contract is in writing and the reference is such as to
make that arbitration clause part of the contract”

2. Section 7(1) of the Arbitration &Conciliation Act, 1996.

“(1) In this Part, “arbitration agreement” means 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.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract
or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties
(b) an exchange of letters, telex, telegrams or other means of telecommunication
which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the
agreement is alleged by one party and not denied by the other.
(5)The reference in a contract to a document containing an arbitration clause consti-
tutes an arbitration agreement if the contract is in writing and the reference is such as
to make that arbitration clause part of the contract.”

3. Section 6 of the Arbitration & Conciliation Act 1996.

“Administrative assistance.—In order to facilitate the conduct of the arbitral proceed-
ings, the parties, or the arbitral tribunal with the consent of the parties, may arrange
for administrative assistance by a suitable institution or person”

4. Section 11 of the Arbitration & Conciliation Act, 1996

“11 Appointment of arbitrators. —
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by
the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for ap-
pointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbi-
trators, each party shall appoint one arbitrator, and the two appointed arbitrators shall
appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and—
(a) a party fails to appoint an arbitrator within thirty days from the
receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator
within thirty days from the date of their appointment, the appointment
shall be made, upon request of a party, by the Chief Justice or any
person or institution designated by him.
(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole ar-
bitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a
request by one party from the other party to so agree the appointment shall be made, upon
request of a party, by the Chief Justice or any person or institution designated by him.
(6) Where, under an appointment procedure agreed upon by the parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement
expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted
to him or it under that procedure, a party may request the Chief Justice or any
person or institution designated by him to take the necessary measure, unless
the agreement on the appointment procedure provides other means for secur-
ing the appointment.
(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section
(6) to the Chief Justice or the person or institution designated by him is final.

(8) The Chief Justice or the person or institution designated by him, in appointing an ar-
bitrator, shall have due regard to—
(a) any qualifications required of the arbitrator by the agreement of the parties;
and
(b) other considerations as are likely to secure the appointment of an independent
and impartial arbitrator.
 (9) In the case of appointment of sole or third arbitrator in an international commercial
arbitration, the Chief Justice of India or the person or institution designated by him may
appoint an arbitrator of a nationality other than the nationalities of the parties where the
parties belong to different nationalities.
(10) The Chief Justice may make such scheme 1 as he may deem appropriate for dealing with
matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.
(11) Where more than one request has been made under sub-section (4) or sub-section (5) or
sub-section (6) to the Chief Justices of the High Courts or their designates, the Chief Justice or
his designate to whom the request has been first made under the relevant sub-section shall alone
be competent to decide on the request.
(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an
international commercial arbitration, the reference to ‘‘Chief Justice'' in those sub-sections shall
be construed as a reference to the ‘‘Chief Justice of India''.
(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any
other arbitration, the reference to “Chief Justice” in those sub-sections shall be construed as
a reference to the Chief Justice of the High Court within whose local limits the principal Civil
Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High
Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.”

5. Section 10 of the Indian Contract Act, 1872

“What agreements are contracts.—All agreements are contracts if they are made by the free
consent of parties competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void. —All agreements are contracts if they are
made by the free consent of parties competent to contract, for a lawful consideration and with
a lawful object, and are not hereby expressly declared to be void." Nothing herein contained
shall affect any law in force in India and not hereby expressly repealed, by which any contract
is required to be made in writing 2or in the presence of witnesses, or any law relating to the
registration of documents.”

6. Section 13 of the Indian Contract Act, 1872

“Consent’ defined.—Two or more persons are said to consent when they agree upon the same
thing in the same sense. —Two or more persons are said to consent when they agree upon the
same thing in the same sense."

ANALYSIS
J. Raveendran proposed usage of s. 7(5) of the Arbitration Act, which gives "the reference in a
consent to a file containing a mediation articulation includes a statement which is recorded as a
printed version and the reference seems to be, for instance, to make that watchfulness arrangement
some part of the understanding". The Court interpreted the words, ", for instance, to make that
intercession part of the understanding " surmised that solitary a reference isn't adequate. The Court
held that this request would be answered by the standard principles of report improvement, without
statutory guidelines.
The essential marker of this desire is the language of the merging condition. The Court saw that
understandings a portion of the time combine various contracts totally, tracing the way of "the
significant number of terms and conditions… " or "this understanding will be directed by the
courses of action of… ", etc. In certain scenarios, declaration explanation is moreover joined.
Where, in any case, the combining stipulation insinuates a specific piece of another understanding,
the supposition that will be that it was not wanted to intertwine the intervention explanation. This
exhibited to be basic for the circumstance, in light of the way that the combining condition used
the articulation "this sub-contract will be finished… " The Court mentioned the use of words "did"
demonstrated the desire for the social occasions to confine combination to issues of execution and
execution, and that it could along these lines not stretch out to arrangements outside this hover, for
instance, security stores and intercession explanations

The major significant suggestion for this circumstance is a differentiation that the Court made
between "standard structure contracts" and different contracts. Purposing on ideas in Russell on
Arbitration, it was held that the general reference may do the trick if the contention was to a
standard type of conditions of "exchange affiliations or administrative foundations". The mindset
is that gatherings which acknowledge the terms and states of such surely understood affiliations
and organizations are probably mindful of the presence of the intervention proviso, moreover once
these terms and conditions are quite often distributed.

The turning point of this submission to dismiss the joining contention is the hotspot for another
significant legitimate suggestion – the intervention statement, after fuse, must stay steady with the
agreement into which it is fused. For this situation, the authorities were to be selected by different
“Government Departments”, which possibly may not have any significant bearing to an agreement
to which the Government was not a gathering.
CONCLUSION

The supreme court through this decision has adopted a commercial strategy and further extended
the extent of reference to an assertion provision based on the understanding and expectation of
the gatherings. A takeoff from carefully applying the standards for explicit reference to an assertion
provision in all types of a multi-record contract is a much needed development and a push towards
the elective question goals instrument. The key takeaway from this judgment is that where business
goals provisions is foremost. Also, clear and unequivocal drafting is basic to guarantee the recog-
nizable proof, legitimacy and enforceability of the assertion condition. It would likewise be appro-
priate to express that the choice in MR Engineers case was rendered by a seat of two judges and
consequently to the degree that the present choice contrasts with the MR Engineers case, it ought
to have been alluded to a bigger seat for an authoritative choice on these standards.