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Karnataka Power Transmission Corporation v. Deepak Cables

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 4424 of 2014)Decided 7 Apr 2014
Civil Appeal No. 4424 of 2014
Justice Anil R. Dave · Justice Dipak Misra

Background

A contractor referred payment and performance disputes to the contract engineer, then sought a court-appointed arbitrator when the engineer did not respond within thirty days. The High Court treated the contract's dispute clause as an arbitration agreement and appointed an arbitrator. The transmission corporation argued that the clause kept work progressing while reserving disputes for the civil courts.

Decision Breakdown

The Supreme Court allowed the appeals and set aside the High Court's orders appointing arbitrators. The engineer's decision was binding only until completion of the works, and the clause did not require an impartial adjudication after hearing both parties. Read with the provision expressly assigning disputes to a competent court in Bangalore, the contract did not show an agreement to submit disputes to binding arbitration. The clause's purpose was to avoid stoppage of work, and the Court made no order for costs.

Lesson Learnt

A contractual step referring difficulties to an engineer is not automatically an arbitration agreement. The wording must show a commitment to binding adjudication through arbitration, assessed together with the rest of the contract.

Official source (sci.gov.in)View Judgment (PDF)

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