CASE NO.: Appeal (civil) 703 of 2008 PETITIONER: STATE OF CHHATTISGARH & ORS. RESPONDENT: RAMAVTAR ROAD CONSTRUCTIONS PVT. LTD. DATE OF JUDGMENT: 22/01/2008 BENCH: ALTAMAS KABIR & P. SATHASIVAM JUDGMENT:
JUDGMENT
O R D E R
(Arising out of SLP(C) No. 3942/06)
Leave granted.
The respondent herein appears to have entered into contracts with different
departments of the State of Chhattisgarh for execution of certain works. The
contracts entered into between the parties provide for reference of disputes
between the parties to arbitration. The said provision is contained in clause 29
of the Agreement which provides as follows :-
Clause 29 Except as otherwise provided in this contract all
questions and disputes relating to be meaning of the specifications,
designs drawings and instructions herein before mentioned as to thing
whatsoever in any way arising out of or relating to the contract,
designs, drawings, specifications, estimate, concerning the works, or
the execution or failure to execute the same, whether arising during
the progress of the work, or after the completion or abandonment
thereof shall be referred to the Superintending Engineer in writing for
his decision for his decision, within a period of 30 days of such
occurrence. There upon the Superintending Engineer shall give his
written instructions and/or decisions within a period of 60 days of
such request. This period can be extended by mutual consent of
parties.
Upon receipt of written instructions or decisions, the parties shall
promptly proceed without delay to comply such instructions or
decisions. If the Superintending Engineer fails to give his
instructions or decisions in writing within a period of 60 days or
mutually agreed time after being requested and if the parties are
aggrieved against the decision of the Superintending Engineer the
parties may within 30 days prefer an appeal to the Chief Engineer
who shall afford an opportunity to the parties of being heard and to
offer evidence in support of his appeal. The Chief Engineer will give
his decision within 90 days. If any party is not satisfied with the
decision of the Chief Engineer he can refer such disputes for
arbitration to an Arbitration Tribunal to be constituted by the State
Government. In case such an Arbitration Tribunal is not constituted
by the State Government, then the aggrieved party shall invoke
Arbitration and Conciliation Act, 1996 as amended till the date of
such reference.
It is to be noted that arbitration proceedings in the State of Madhya Pradesh
were being conducted under the Madhya Pradesh Madhyastham Adhikaran
Adhiniyam,1983, which provided for the constitution of an Arbitration
Tribunal. Pursuant to the Madhya Pradesh State Reorganization Act,2000, the
State of Chhattisgarh was carved out of Madhya Pradesh with effect from 1st
November,2000. In terms of the aforesaid Act the Tribunal constituted under
the Madhya Pradesh Madhyastham Adhikaran Adhiniyam,1983, continued to
function to exercise jurisdiction over the State of Chhattisgarh for a period of
two years from the appointed day. According to the above, the Arbitration
Tribunal constituted under the Madhya Pradesh Madhyastham Adhikaran
Adhiniyam, 1983, continued to have jurisdiction in the State of Chhattisgarh
upto 31st October,2002. The said Tribunal, thereafter, ceased to have
jurisdiction in the State of Chhattisgarh with effect from 1st November,2002.
As it appears from the materials on record, the State Government of
Chhattisgarh adopted the Madhya Pradesh Madhyastham Adhikaran
Adhiniyam,1983, and restyled the same as Chhattisgarh Madhyastham
Adhikaran Adhiniyam,1983, and the Arbitration Tribunal was constituted by
the State of Chhattisgarh under Section 3 of the Chhattisgarh Madhyastham
Adhikaran Adhiniyam, 1983 with effect from 1st March,2005. However, the
said Tribunal, so constituted by the State Government, started functioning only
with effect from 2nd September,2005.
The respondent herein, along with others, filed six different applications before
the Chhattisgarh High Court under Section 11 of the Arbitration and
Conciliation Act,1996, for appointment of arbitrators to adjudicate upon the
disputes arising between the said parties and the State of Chhattisgarh before
the Arbitration Tribunal under the Chhattisgarh Act began to function with
effect from 2005. The said applications were taken up by the High Court and
appropriate orders were passed therein.
Before the High Court an objection was taken on behalf of the appellant herein
that, inasmuch as, the Arbitration Tribunal had already been constituted on 1st
March,2005, the subsequent applications under Section 11 of the 1996 Act were
not maintainable, and, in any event, should have been transferred to the
Tribunal when it started functioning. Having regard to the provisions of clause
29, the High Court of Chhattisgarh held that pending applications under
Section 11 of the Arbitration and Conciliation Act, 1996, prior to coming into
operation of Arbitration Tribunal were maintainable under the 1996 Act in
terms of the said clause, and, accordingly, passed appropriate orders
thereupon.
It may be relevant to point out that out of the six applications allowed by the
common order of the Chhattisgarh High Court, only one Special Leave Petition,
namely, against MCC No. 143 of 2005 has been challenged in this Court by
way of Special Leave Petition (C) No. 3942/06. For reasons best known to the
appellant, no further steps were taken with regard to the remaining five
applications and we are informed that arbitration proceedings continued in
respect of all the six matters, including this matter, and the appellant herein
also participated in all the proceedings which are almost at the final stage. We
are also informed that in the present matter the hearing has been concluded and
only passing of the award is to be effected, but the same has also not been done
on account of the order of stay passed by this Court on 9.10.2006.
Appearing on behalf of the appellant, learned counsel submitted that having
regard to the constitution of the Arbitration Tribunal under the Chhattisgarh
Act on 1st March,2005, the applications before the High Court under Section 11
of the 1996 Act were not maintainable. It was also submitted that, in any event,
the same could not also be saved by the provisions of Section 20(2) of the
Madhya Pradesh Madhyastham Adhikaran Adhiniyam,1983, having regard to
the fact that, no arbitration proceeding was pending at the time when the
Arbitration Tribunal started functioning in the State of Chhattisgarh with effect
from 2nd September,2005. Learned counsel was unable to explain as to how the
appellant did not choose to move further in respect of the other five
applications.
On behalf of the respondent, it was pointed out that despite the fact that the
Arbitration Tribunal had been constituted in the State of Chhattisgarh with
effect from 1st March,2005, the same did not function prior to 2nd
September,2005, and it is during this period that the application was filed by
the respondent before the High Court under Section 11 of the 1996 Act.
Questioning the submissions made on behalf of the appellant that no arbitration
proceedings were pending when the Arbitration Tribunal under the
Chhattisgarh Act begun functioning, learned counsel referred to Annexure R-1
of his counter which is a notice dated 19th October,2004, addressed to the
Superintending Engineer, Office of the Development Commissioner, Bilaspur,
in relation to the Agreement whereunder payments appear not to have been
made in respect of the final bill which had been raised. In the said notice it was
specifically mentioned that the respondent was invoking his rights under clause
29 of the conditions of the contract. Learned counsel also pointed out that
since there was no response from the Superintending Engineer, a further letter
was addressed to the Chief Engineer, Office of the Development
Commissioner, PMGSY, Raipur, on 6th April,2005 in respect of the same
dispute and a prayer was made by the respondent for an opportunity of
hearing in person to resolve the dispute. According to the learned counsel,
there was no response by the Chief Engineer as well and the respondent was,
therefore, constrained to move the application under Section 11 of the
Arbitration and Conciliation Act,1996, before the Chhattisgarh High Court on
10th May,2005.
Learned counsel also pointed out that the said two opportunities had been
given as per the provisions of the 2nd paragraph of Clause 29 which provided
that in case of any further dispute remaining after the Chief Engineer had an
opportunity to look into the matter, parties would be at liberty to move the
High Court under the provisions of the 1996 Act.
According to the learned counsel, the application under Section 11 had been
made strictly in accordance with the provisions of the Agreement and also
having regard to the fact that the Arbitration Tribunal under the Chhattisgarh
Act was not available at the time when applications were made.
Having heard learned counsel for the respective parties, we see no reason to
differ with the order passed by the High Court since in our view the respondent
had fulfilled all the conditions even under Clause 29 of the Agreement before
moving the application under Section 11 of the Arbitration and Cociliation
Act,1996. It is pertinent to note that when the applications were made, the
Arbitration Tribunal was not available so that the respondent could move the
said Tribunal.
What is equally significant is the fact that out of the six applications the State of
Chhattisgarh chose to prefer this Special Leave Petition in respect of only one
of six applications and appear to have accepted the order of the High Court as
far as the other five matters are concerned. In our view, the present appeal is
also not maintainable on that score as well.
We, accordingly, see no reason to interfere with the judgment of the High
Court and the appeal is, therefore, dismissed, but without any order as to costs.
The interim order passed in the Special Leave Petition is vacated.