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Arbitration & Commercial LawSupreme Court of India

BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited

Civil Appeal · 2025 INSC 874Decided 18 Jul 2025
Civil Appeal arising out of SLP (C) Diary No. 21451/2024
Justice Manoj Misra

Background

A joint venture company (BGM and M-RPL-JMCT) had a transportation/handling contract with Eastern Coalfields Limited. When disputes arose, the joint venture sought to have an arbitrator appointed under the Arbitration and Conciliation Act, relying on a contract clause stating that "in case of parties other than Govt. Agencies, the redressal of the dispute may be sought through" arbitration. The Calcutta High Court refused to appoint an arbitrator, holding that the word "may" showed the parties had not definitely agreed to arbitration, and the company appealed to the Supreme Court.

Decision Breakdown

The Supreme Court first clarified that when deciding whether to appoint an arbitrator, a court only needs to check, on the face of an undisputed document, whether an arbitration agreement exists; it does not need to hold a full trial on the question, and any view it takes is not binding on the arbitrator later. Applying settled principles from its own precedents, the Court held that using the permissive word "may" (rather than a mandatory "shall") in a dispute clause means the parties had not actually committed themselves to arbitration. It was merely an option they could jointly choose later, not a binding promise. Since the joint venture could not show the parties had agreed to arbitration, the Court agreed with the High Court and dismissed the appeal.

Lesson Learnt

When drafting a contract, the specific wording of a dispute-resolution clause matters enormously: language merely saying disputes "may" go to arbitration, without a firm mutual commitment, will not be treated as a binding arbitration agreement, and a party wanting a guaranteed right to arbitrate should make sure the clause says disputes "shall" be referred to arbitration.

BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Limited – Legal Case Shots | LegalAware