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Reportable  IN THE SUPREME COURT OF INDIA  

 CIVIL APPELLATE JURISDICTION  

 CIVIL APPEAL NO. 4151 OF 2009  

(Arising out of SLP [C] No.11118 of 2006)      M.K. Abraham & Co.      … Appellant    Vs.    State of Kerala & Anr.       ... Respondents    

WITH    

CIVIL APPEAL No. 4155/2009  (Arising out of SLP (C) No11119/2006)  

 Vijay Constructions      … Appellant    Vs.    State of Kerala & Anr.       ... Respondents    

J U D G M E N T  

   R.V. RAVEENDRAN, J.  

    Delay condoned as appellants were pursuing the remedy by way of  

writ petition till 14.12.2005. Leave granted.   

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FACTS (M.K. ABRAHAM & CO.)      2. A section of the work relating to NH-49 was awarded to the appellant  

under letter of acceptance dated 1.12.1999 issued by the second respondent  

[Project Director (SE), National Highway (ADB), Circle Edappally,  

Cochin]. A formal contract agreement was executed by them on the same  

day. By letter dated 9.10.2001, the appellant-contractor called upon the  

Executive Engineer, National Highways (Roads) Division to pay certain  

amounts as compensation for the losses caused on various accounts. The  

Executive Engineer denied the claim by a reply sent in December, 2001  

contending that there was a full and final settlement of the claims by paying  

the amounts due under the final bill. Being dissatisfied with the said  

rejection, the appellant by notice dated 1.4.2002 called upon the Executive  

Engineer to refer the disputes in regard to its claims aggregating to  

Rs.42,26,432/58 to arbitration. As there was no response, the appellant by  

letter dated 26.8.2002 nominated his arbitrator and called upon the second  

respondent to nominate the department’s arbitrator in terms of the contract  

so that the Director-General (Road Development), Ministry of Surface &  

Transport, could nominate the Chairman - Arbitrator. The second respondent  

failed to comply. Therefore, the appellant by letter dated 28.10.2002  

requested the Director-General to appoint the arbitrator on behalf of the

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employer as also the Chairman of the Arbitration Committee. As the  

Director-General also failed to comply, the appellant filed an application  

dated 9.4.2003 under section 11 of the Arbitration & Conciliation Act, 1996  

(for short ‘the Act’). The designate of the Chief Justice dismissed the  

application by order dated 19.12.2003.   

 FACTS (VIJAY CONSTRUCTIONS)    3. A section of the work relating to NH-49 was awarded to the appellant  

under letter of acceptance dated 7.9.2000 issued by the second respondent. A  

formal contract agreement was executed on 26.9.2000 between them. The  

work was completed on 30.4.2001. According to Appellant, the Executive  

Engineer informed him that unless it gave a no claim certificate, even the  

admitted dues would not be released. Under such coercion, it gave such a  

certificate on 23.1.2002, so that it can receive at least the admitted amounts.  

Immediately on receiving the admitted dues, the appellant claims to have  

informed the respondents by letter dated 2.2.2002 that it signed the no claim  

undertaking under coercion and therefore, it had no legal effect. It also  

called upon the respondent to redress its grievances and claims. As there was  

no response, the appellant by notice dated 19.8.2002 called upon the  

Executive Engineer, who was the “Engineer” under the contract to give his  

decision on its claims, in terms of the contract. As the “Engineer” failed to

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do so within 60 days, the appellant wrote to the Director-General (Road  

Development), Ministry of Surface & Transport on 26.10.2002, to appoint a  

sole Arbitrator to adjudicate upon the disputes. The appellant filed a petition  

under section 11 of the Arbitration & Conciliation Act, 1996 (for short ‘the  

Act’) contending that the contract between the parties provides for  

settlement of disputes by arbitration and that in spite of appellant taking  

necessary pre-arbitration steps in terms of the arbitration clause, there was  

no compliance. The designate of the Chief Justice dismissed the application  

by order dated 19.12.2003.   

  COMMON ISSUE    4. In both cases, the appellants contend that there is an arbitration  

agreement in their contracts dated 1.12.1999 and 26.9.2000. They submitted  

that each was entrusted a section of the project “National Highway 49 –  

Mathura Cochin Road” which was executed by the Ministry of Surface  

Transport, Government of India through the respect State Public Works  

Department. The Ministry of Surface Transport, Government of India, by  

communication dated 28.9.1994 informed all the State Public Works  

Departments and all Chief Engineers in all States dealing with National  

Highways, that a standard contract clause prescribing the procedure to be  

followed for appointment of arbitrators was finalized by the Ministry and

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enclosed a copy of the arbitration provision and with instructions to  

incorporate the said clause in the bidding conditions for the National  

Highway works and to ensure that the said arbitration clause was  

compulsorily made a part of the bidding conditions in the respective States.  

The relevant portions of the ‘contract clause for inclusion in the bidding  

conditions for wholly domestic funded NH works’ enclosed to the  

Ministry’s letter dated 28.9.1994 reads thus:   

“2. Arbitration     All disputes or differences in respect of which the decision, if any, of the  Engineer has not become binding as aforesaid and amicable settlement has  not been reached, shall, on the initiative of either party, be referred to the  adjudication. The sole Arbitrator for claims upto Rs.5.00 lakhs shall be  appointed by the State Chief Engineer. Such appointed Arbitrator shall be  a person not below the rank of Executive Engineer and not connected with  the contract. The claims above Rs.5.00 lakhs and upto Rs.25.00 lakhs shall  be settled by a sole arbitrator to be nominated by the Director General  (Road Development), Ministry of Surface Transport, Government of  India, New Delhi. A copy of the order shall be supplied to both the parties.  The claims of more than Rs.25.00 lakhs shall be referred to the  adjudication of a Committee of three arbitrators. The Committee shall be a  composed of one arbitrator to be nominated by the Employer, one to be  nominated by the Contractor and the third, who will also act as the  Chairman of the Committee, to be nominated by the Director General  (Road Development), Ministry of Surface Transport (Roads Wing);  Government of India, New Delhi. If either of the parties abstain or fail to  appoint his arbitrator, within 60 days after receipt of notice for the  appointment of such arbitrator, then the Director-General (Road  Development), Ministry of Surface Transport (Roads Wing), Government  of India, shall also appoint such arbitrator(s). A certified copy of the  appointment made by the Director General (Road Development), Ministry  of Surface Transport (Roads Wing), Government of India, shall be  furnished to both parties. The decision about the appointment of the  arbitrators by the Ministry of Surface Transport shall be final and binding  on both the parties. Any person appointed as Arbitrator shall not be  connected with the work.     Save as otherwise provided in the Contract, the Arbitration shall be  conducted in accordance with the provisions of the Indian Arbitration Act

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1940 or any statutory modifications or enactment thereof and shall be held  at such place and time in India as the arbitrator or the Committee of  Arbitrators may determine. The decision of the Arbitrator(s) shall be final  and binding as may be determined by the Arbitrator(s).”     

 In view of the said communication, a slip signed by both parties was  

attached to the respective contracts of the appellants. The attachment slip  

reads thus:  

“Arbitration Clause as per Ministry of Surface Transport’s  letter No.RW/NH-34041/3/94-DO-III dated 28.9.94 will be  applicable.”  

The contractors contend that the contracts entered by the respondents,  

contain a provision for arbitration.   

 5. The respondents contend that there was no provision for arbitration as  

it was specifically excluded, relying upon clauses 24 and 24(a) of the  

“Notice Inviting Tenders for Works” and clause (3) in the printed standard  

form of Agreement executed between the parties extracted below:   

“Clauses 24 and 24(a) of Notice Inviting Tender for Works    24. Arbitration shall not be a means of settlement of  dispute or claim arising out of the contract relating to the work.  (G.O.Ms.No.10/86/PW & T dated 27.10.1986)    24(a). All disputes and differences arising out of the  contract that may be executed in pursuance of this notification shall be  settled only by the Civil Court in whose jurisdiction the work covered by  the contract is situated or in whose jurisdiction the contract was entered  into in case the works extends to the jurisdiction of more than one Court.  (G.O.Ms.53/88/PW & T dated 30.9.1988)    Clause (3) of standard form of Agreement

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(3) The parties to this contract agreed to undertake the  condition that arbitration shall not be a means of settlement of disputes or  claim or anything on account of this contract.”   

6. The designate of the Chief Justice of the High Court held that having  

regard to the specific bar against arbitration contained in clauses 24 and  

clause 24(a) of the ‘Notice inviting Tenders for Works’ and clause (3) of the  

standard form of Agreement, there cannot be any reference to arbitration.  

The Court also rejected the claim of the contractors that there is a provision  

for arbitration by holding :   

“The notification relied on by the applicant has not been accepted by the  respondents and it had not become part of the contract. The file did not  disclose the acceptance of any such notification.”  

The appellants challenged the orders of the designate of the Chief Justice  

holding that there was no arbitration agreement, in writ petitions which were  

dismissed by a common order dated 14.12.2005 as not maintainable.  

Thereafter, the appellants have challenged the orders of the designate of the  

Chief Justice in these appeals by special leave contending that the High  

Court ignored the relevant attachment to the contract which incorporated the  

arbitration clause by special reference.   

   7. The common question that arises for consideration in these appeals is  

whether there is an arbitration agreement between the parties.  

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  THE CONTRACT DOCUMENT      8. To decide the issue, it is necessary to refer to and understand the  

evolution of the contract document. In Kerala, in regard to the construction  

contracts, the Public Works Department, enters into a short ‘contract  

agreement’ to serve as a preamble to which are annexed a standard printed  

form of Articles of Agreement, the conditions of contract, notice inviting  

tender for works, special conditions, and Madras Detailed Standard  

Specifications (MDSS for short). All these attachments are printed forms  

with added amendments in cyclostyled forms. In addition there will be other  

annexures including tender schedule, plans, additional special conditions etc.  

 8.1. Clause 73 of the MDSS contained a provision for arbitration. The  

State Government took a decision in or about 1986 to delete the provision  

for arbitration clause in PWD contracts. As a consequence, the standard  

form of ‘Notices inviting Tenders for Works’ [clauses 24 and 24(a)] and the  

standard  form  of  Agreement  (clause 3)  contain specific printed conditions   

which bar arbitration. Further the preamble to the standard form of  

Agreement also clearly states “whereas the contractor has also signed the  

copy of the Madras Detailed Standard Specifications excluding clause 73  

and other clauses relating to arbitration contained therein……”

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 9. If the contract was a contract entered into by the Public Works  

Department contract of the State Government, necessarily the said bar  

against arbitration would operate. There is no doubt that if the contract  

contained a provision specifically barring arbitration, there can be no  

reference to arbitration. But the position is different where the standard  

format of the State PWD is used with modifications in regard to construction  

contracts of another department which has taken a policy decision to have a  

provision for arbitration compulsorily in all its contracts, and in view of it,  

the arbitration clause is made a part of the contract by a further addition to  

the standard form of Agreement. In fact Government of Kerala by its G.O.  

(MS). No. 68/88/PWD dated 19.11.1988 clarified, while barring arbitration  

in regard to PWD contracts, that if any work is financed by an agency which  

requires a provision for arbitration, then a provision for arbitration may be  

provided in the agreements relating to such works. In these cases, we are  

concerned, not with regular PWD contracts, but contracts relating to another  

agency, that is the National Highway Project, entered by Project Director  

(S.E.), National Highway (ADB) Project Circle. The said National Highway  

Projects has special provision relating to arbitrations which does not find a  

place in the Kerala PWD contracts. In such a situation, merely because the  

standard forms of PWD were used for entering into contracts, or because the

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contracts were executed through PW Department of the State Government, it  

cannot be contended that special provisions applicable to National Highway  

Projects specifically added to the contract should be ignored.   

 10. If a contract consists of a printed form with cyclostyled amendments,  

typed additions and deletions and handwritten corrections, an endeavour  

shall be made to give effect to all the provisions. However, in the event of  

apparent or irreconcilable inconsistency, the following rules of construction  

will normally apply :  

(i) The cyclostyled amendments will prevail over the printed terms;    (ii) The type-written additions will prevail over the printed terms and  

cyclostyled amendments;    (iii) Hand written corrections will prevail over the printed terms,  

cyclostyled amendments and typed written additions.    

The above rules have evolved from the well known maxim of construction  

that “written, stamped or typed additions, when inconsistent with the printed  

terms, would normally prevail over the printed terms” and proceeds on the  

assumption that the printed form contained the original terms, and changes  

thereto were incorporated by the cyclostyled amendments, followed by  

changes by type-written additions and lastly the hand written additions. The  

logical explanation for such assumption is this: The printed form contains  

standardized terms to suit all contracts and situations. It is not drafted with

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reference to the special features of a specific contract. When such a standard  

form is used with reference to a specific contract, it becomes necessary to  

modify the standard/general terms by making additions/alterations/deletions,  

to provide for the special features of that contract. This is done either by way  

of an attachment of an annexure to the standard printed form, incorporating  

the changes, or by carrying out the required additions/alterations/deletions in  

the standard form itself. Such additions/alterations/deletions are done by  

typing/stamping/hand. We may refer to the following oft-quoted enunciation  

of the legal position by Lord Ellenborough in Robertson v. French [1803-

13] All ER Rep.350 with reference to printed form of contract with hand-

written additions :  

“....... that the words super added in writing are entitled,  nevertheless, if there should be any reasonable doubt on the sense  and meaning of the whole, to have a greater effect attributed to  them than to the printed words, inasmuch as the written words are  the immediate language and terms selected by the parties  themselves for the expression of their meaning and the printed  words are a general formula adapted equally to their case and that  of all other contracting parties on similar occasions and subjects”.    

Another parallel principle that is equally relevant is that where the contract  

has several annexures/attachments, prepared at different points of time,  

unless a contrary intention is apparent, the latter in point of time would  

normally prevail over the earlier in point of time.   

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11. In this case, as noticed above, the contract consists of a type-written  

contract agreement between appellant and second respondent (which does  

not contain any terms and conditions, but which merely states that the  

contract is for execution of the described work as per the accompanying  

Articles of agreement, plan, specification and conditions of contract  

approved by the Project Director (S.E.), National Highway (ADB), Circle  

Adappally, Cochin) with several printed forms with cyclostyled additions as  

annexures and hand written corrections.  The printed form of Articles of  

agreement has an attachment slip.  The contract does not contain any hand  

written terms in regard to arbitration. The contract has printed clauses  

barring arbitration (clauses 24   and 24(a) of the Notice inviting Tenders for  

Works and a preamble clause and clause 3 in the articles of agreement). A  

cyclostyled slip signed by both parties containing the words “arbitration  

clause as per Ministry of Surface Transport’s letter No. RW/NH-

34041/3/94-DO-III dated 28.9.1994 will be applicable” is attached to the  

printed articles of agreement. By applying the well settled principles relating  

to construction of contract the following position will emerge: (i) the terms  

of the articles of agreement will prevail over the terms of Notice inviting  

Tenders for Works and (ii) the term contained in the cyclostyled attachment  

to the printed form of articles of agreement will prevail over the terms of the  

printed articles of agreement. Consequently, the contents of the attachment

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slip to the printed form of Articles of Agreement providing for arbitration  

will prevail over the bar on arbitration contained in the Notice inviting  

Tenders for Works and the articles of agreement. As a result, it has to be  

held that there is a provision for arbitration in regard to the disputes between  

the respective appellant and the respondents.  

12. In this case, the entire confusion arose on account of using outdated  

printed forms and also adding deleting and modifying the terms and  

conditions contained in several distinct documents which are made  

annexures to the formal agreement. The contract terms and conditions will  

have to be gathered from the Articles of Agreement, notice inviting tenders  

for works, conditions of contract, Madras Detailed Standard Specifications,  

Special Conditions and Additional Special Conditions. There are printed  

forms, cyclostyled amendments and attachments and typed agreement. In  

fact there is a typed ‘contract agreement’ and printed ‘Articles of  

Agreement’ with blanks filled in hand. Standard forms which contain  

provisions for several contingencies, most of which are inapplicable or  

redundant were used, without making any effort to edit the various  

documents and have a consolidated Agreement. For example, we fail to  

understand why State of Kerala in 1999-2000 should use Madras Detailed  

Standard Specification of 1930 vintage. Nor are we able to understand why

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parties should execute a contract agreement and articles of agreement on the  

same day. Be that as it may.  

GENERAL OBSREVATIONS      13. The use of multi-layered agreements, with several printed annexures,  

each with cyclostyled amendments, typed and hand written additions and  

deletions lead to confusion, uncertainty, delays in execution and apart from  

giving rise to avoidable disputes. Having a contract with different annexures  

dealing with the same issues with various attachments, in construction  

contracts (and some times insurance contracts) is a nightmare to anyone  

wanting to understand, implement or enforce them. Complicating contracts  

with several annexures and attachments with inconsistent, irrelevant,  

superseded or redundant provisions results in creating a lush dispute  

generating field. It helps greedy and unscrupulous contractors to make  

bloated imaginary claims. It enables Rule-Minded or corrupt officers to play  

havoc with honest and bonafide contractors. The best form of agreement is  

where all the relevant clauses/terms are incorporated in a single                 

document with several sections dealing with different aspects/subjects,  

avoiding any overlapping. The difficulty arises if the same subject is dealt  

with in more than one section or in more than one document. Confusion and  

difficulties also arise using certain forms with conditions which were

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finalized and printed at an earlier point of time and using other sets of  

conditions which are finalized and printed at different subsequent points of  

time, without taking care to specify which of the earlier terms were deleted  

or modified. For example in this case, we have the 1959 terms that is Madras  

Detailed Standard Specifications forming part of the contract, and we have  

the general conditions of the Kerala Government which were modified from  

time to time in particular 1986 and we have the standard instructions of the  

Ministry of Surface Transport of 1994 which were applicable to National  

Highway Projects.  The result is several years after completing of the work,  

parties are still trying to find out what the agreed terms and conditions are  

and whether there is a specified dispute resolution process by way of  

arbitration. On account of such confusion, several efficient and honest  

contractors stay away from participating in such tenders. The vagueness and  

confusion give unwarranted discretion and freedom to officers, leading to  

corruption and nepotism. Clear, simple and straight forward agreement is the  

need of the hour. Tens of thousands of engineering contracts are being  

entered all over the country everyday in regard to infrastructural works,  

without the necessary clarity, leading to avoidable disputes and considerable  

strain on the exchequer. With use of computers, with user friendly editing  

procedures with cut and paste facilities, it is fervently hoped that contract  

forms appropriate to the work would be prepared, to avoid redundancy,

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confusion, vagueness and inconsistency and to increase efficiency,  

expedition, reduction of disputes and saving of funds. Be that as it may.   

 CONCLUSION      14. Where a contract consisted of standard terms finalized in 1959 and  

further terms which were finalized subsequently, necessarily the terms that  

were finalized subsequent to 1959 terms, would prevail. That is why if it is a  

PWD contract, even though the MDSS which is made a part of the contract,  

specifically provided for arbitration in clause 73, the same is held to be  

inapplicable, having regard to the subsequent additions incorporated by the  

Government of Kerala in 1986 and 1988 barring arbitration. Where the said  

form of PWD barring arbitration is used in respect of National Highways  

Contracts, which has a policy of having arbitrations to settle disputes, a slip  

signed by both the parties is attached to the standard form of agreement  

stipulating that the arbitration clause will be applicable. It is clear that the  

said slip will prevail over the printed conditions that there can be no  

arbitration. We therefore conclude that there is an arbitration agreement  

between the parties in terms of the standard arbitration clause prescribed by  

the Ministry of Surface Transport, Government of India.   

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15. We find from the record that the respondents, apart from contending  

that there was no arbitration agreement at all, had also contended that the  

appellants had given full and final settlement receipt with a no claim  

undertaking in regard to the respective contract and therefore no dispute  

much less arbitral disputes can exist. On the other hand, appellants had  

contended that such certificates have been obtained by coercion and  

pressure.  Whether no claim certificate were obtained by coercion or by  

applying pressure is a question of fact that will have to be considered in the  

proceedings under Section 11 of the Act. The High Court while deciding the  

petitions under Section 11, considered only the question whether there is an  

arbitration agreement or not. As it held that there was no arbitration  

agreement, it did not examine the further objection of the respondents that  

there was a full and final settlement and consequently there is no arbitral  

dispute. In the absence of any material on that issue, we are not in a position  

to decide the same.   

16. We therefore allow these appeals and set aside the order of the High  

Court, holding that there is an arbitration agreement between the parties in  

both appeals. We remand the matter to the High Court to consider and  

decide the other objections raised by the respondents in accordance with  

law.

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           …………………………J.        (R V Raveendran)        New Delhi;     ………………………..J.  July 7, 2009.    (J M Panchal)