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REPORTABLE  

IN THE SUPREME COURT OF INDIA    

CIVIL ORIGINAL JURISDICTION    

ARBITRATION PETITION (CIVIL) NO. 22 OF 2018     

M/s. Zhejiang Bonly Elevator Guide     …Petitioner(s)   Rail Manufacture Co. Ltd.      

VERSUS      

M/s. Jade Elevator Components    …Respondent(s)     

  J U D G M E N T  

 Dipak Misra, CJI    

In the instant arbitration petition, preferred under Section 11(5) of  

the Arbitration and Conciliation Act, 1996 (for brevity, „the Act‟), the  

petitioner seeks for constitution of an arbitral tribunal with a sole  

arbitrator to adjudicate the claims of the petitioner under the  

Commission Processing Contract dated 11.09.2014 and to pass such  

further order as may be deemed fit and proper in the facts and  

circumstances of the case.  

2. The petitioner, company incorporated under the laws of People‟s  

Republic of China having its office at Sanquiao Village, Fuchun Street,  

Fuyang, China, is engaged in the business of, inter alia, exporting and

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supplying high quality elevator guiderails, fish-plates, accessories and  

allied goods.  The respondent, a partnership firm based in India having  

its office at Plot No.455, Road No.11, “A” Cross Road, GIDC,  

Kathwada, Ahmedabad – 382430, Gujarat, is engaged in the business  

of supplying elevator components for use in the modernization of  

existing lifts and the new design of the elevator.  

3. The contract, namely, Commission Processing Contract  

(hereinafter referred to as „the Contract‟) was entered into between the  

parties on 11.09.2014 in respect of supply of certain products under  

the Contract.  In the course of performance of the Contract, as certain  

differences had arisen and the parties were unable to amicably settle  

the disputes which fell within the scope of the arbitration clause, the  

petitioner appointed Justice V.S. Agarwal, former Judge, High Court of  

Judicature at New Delhi as the sole arbitrator.  On 30.03,2018, the  

petitioner called upon the respondent to consent to the appointment of  

the sole arbitrator within a period of thirty days from the receipt of the  

notice. The respondent received the said notice on 31.03.2018 and  

the respondent in its reply dated 05.04.2018 refused to concur and  

consent to the appointment of the sole arbitrator.  Because of the  

aforesaid situation, the petitioner has been compelled to move this  

Court for appointment of the sole arbitrator.  When the matter was

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listed before this Court after service of notice, the learned counsel for  

the respondent has placed reliance on the reply dated 05.04.2018  

given by the counsel for the respondent.  In the said reply, the facts  

asserted by the petitioner have been disputed.  That apart, it has been  

stated that the claims put forth are beyond the provisions of the  

Contract.  

4. To appreciate the controversy, it is required to be seen whether  

there is an arbitration clause for resolution of the disputes.  Clause 15  

of the agreement as translated in English reads as follows:-  

“15. Dispute handling:    Common processing contract disputes, the parties  should be settled through consultation; consultation  fails by treatment of to the arbitration body for  arbitration or the court.”    

 5. It is submitted by learned counsel for the petitioner that if the  

clause of „dispute handling‟ is scrutinized appropriately, the disputes  

are to be settled through consultation and, if the consultation fails by  

treatment of to the arbitration body for arbitration or Court and,  

therefore, the matter has to be referred to arbitration.  It is canvassed  

by him that the clause is not categorically specific that it has to be  

adjudicated in a court of law.  It leads to choices and the choice  

expressed by the petitioner is arbitration.

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6. Learned counsel for the respondent, in his turn, would urge that  

when it is stated arbitration or Court, the petitioner should knock at the  

doors of the competent court but not resort to arbitration, for the  

clause cannot be regarded as an arbitration clause which stipulates  

that the disputes shall be referred to arbitration.  

7. To appreciate the clause in question, it is necessary to appositely  

understand the anatomy of the clause.  It stipulates the caption given  

to the clause „dispute handling‟.  It states that the disputes should be  

settled through consultation and if the consultation fails by treatment of  

to the arbitration body for arbitration or the court.  On a query being  

made, learned counsel for the parties very fairly stated that though the  

translation is not happily worded, yet it postulates that the words  

“arbitration or the court” are undisputable as far as the adjudication of  

the disputes is concerned.  There is assertion that disputes have  

arisen between the parties.  The intention of the parties, as it flows  

from the clause, is that efforts have to be made to settle the disputes  

in an amicable manner and, therefore, two options are available, either  

to go for arbitration or for litigation in a court of law.  

8. This Court had the occasion to deal with such a clause in the  

agreement in INDTEL Technical Services Private Limited vs. W.S.

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Atkins Rail Limited1. In the said agreement, clause No.13 dealt with  

the settlement of disputes.  Clauses 13.2 and 13.3 that throw light on  

the present case were couched in the following language:-  

“13.2. Subject to Clause 13.3 all disputes or  differences arising out of, or in connection with, this  agreement which cannot be settled amicably by the  parties shall be referred to adjudication;    13.3.   If any dispute or difference under this  agreement touches or concerns any dispute or  difference under either of the sub-contract  agreements, then the parties agree that such  dispute or difference hereunder will be referred to  the adjudicator or the courts as the case may be  appointed to decide the dispute or difference under  the relevant sub-contract agreement and the parties  hereto agree to abide by such decision as if it were  a decision under this agreement.”    

9. Interpreting the aforesaid clauses, the Judge designated by the  

learned Chief Justice of India held thus:-  

“Furthermore, from the wording of Clause 13.2 and  Clause 13.3, I am convinced, for the purpose of this  application, that the parties to the memorandum  intended to have their disputes resolved by  arbitration and in the facts of this case the petition  has to be allowed.”    

10. The aforesaid passage makes it clear as crystal that emphasis  

has been laid on the intention of the parties to have their disputes  

resolved by arbitration.  

                                                 1 (2008) 10 SCC 308

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11. In the case at hand, as we find, Clause 15 refers to arbitration or  

court.  Thus, there is an option and the petitioner has invoked the  

arbitration clause and, therefore, we have no hesitation, in the  

obtaining factual matrix of the case, for appointment of an arbitrator  

and, accordingly, Justice Prakash Prabhakar Naolekar, formerly a  

Judge of this Court, is appointed as sole Arbitrator to arbitrate upon  

the disputes which have arisen between the parties.  The learned  

Arbitrator shall be guided by the Arbitration & Conciliation  

(Amendment) Act, 2015.  The learned Arbitrator shall make positive  

efforts to complete the arbitration proceedings as per the Act of 2015.    

12. The Registry is directed to send a copy of this order to the sole  

Arbitrator.  Learned counsels for the parties are also at liberty to bring  

it to the notice of the Arbitrator.  

13. The arbitration petition is, accordingly, allowed.  There shall be  

no order as to costs.    

           ..………………………….CJI.           (Dipak Misra)                   

..…………………………….J.              (A. M. Khanwilkar)      

           ..…..……………….………..J.                        (Dr. D.Y. Chandrachud)  New Delhi;     

September 14, 2018