Bombay High Court
Ved Prakash Gupta vs Municipal Corporation Of Greater ... on 7 October, 1998
Equivalent citations: 1999(1)BOMCR112, 1999(1)MHLJ209
Author: M.B. Shah
Bench: M.B. Shah, Y.S. Jahagirdar
ORDER M.B. Shah, C.J.
1. Both these Appeals can conveniently be disposed of by a common judgment.
2. These appeals are filed against the judgment and order dated 23rd April 1998 passed by the learned Single Judge in Arbitration Suits Nos. 3285 of 1995 and 3286 of 1995. It was contended before the learned Single Judge that the appellant's (original plaintiff) tender for the work of concreting of R.C. Marg, Chembur, Bombay, was accepted by the B.M.C. in the year 1992. As large amount was locked up by respondent No. 1-Corporation, the appellant (original plaintiff), by his letter dated 16-5-1994, addressed to respondent No. 3, requested for referring the dispute to arbitration. As the said request was not acceded to, the aforesaid Arbitration suits were filed by the appellant (original plaintiff) with a prayer for referring the matter to arbitration. The learned Single Judge, after considering clauses upon which the reliance was placed by the learned Counsel for the appellant, arrived at the conclusion that there was no arbitration agreement between the parties.
3. In our view, the decision of the learned Single Judge, cannot, in any way, be said to be illegal or erroneous. We would like to note that prior to 1995, under the general terms and conditions of the contract, Clause 97 provided for referring the dispute to arbitration. Clause 97, inter alia, was as under :--
"97. All disputes or differences whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof or this contract or the construction, execution, or maintenance thereof or this contract or the construction meaning operation or effect thereof or, to the rights or liabilities of the parties or arising out of or in relation thereto whether during or after completion of the contract or whether before or after determination, foreclosure or breach of the contract (other than those in respect of which, the decision of any person is by the contract expressed to be final and binding) shall after written notice by either parry to the contract to the other of them specify the nature of such dispute or difference and call for the point or points at issue to be referred to the arbitration.
Arbitration shall be effected-
(i) ...............................
(ii) ...............................
(iii) ...............................
(iv) ..............................."
4. After deleting Arbitration Clause 97, Clause 96 is substituted, which reads as under :--
"96. If any dispute, difference or claim is raised by the contractor relating to any matter arising under the contract, the Engineer may refer such matter to the superior not below the rank of Chief Engineer and other than Municipal Commissioner or Additional Municipal Commissioner who, on examining the dispute, difference or claim, shall give decision in writing. Such decision will be final and binding upon all parties. This decision will not be arbitrable at all."
Clause 96 of the contract between the parties clearly provides that decision rendered by the Municipal Commissioner or Additional Municipal Commissioner will not be arbitrable at all.
5. The learned Counsel appearing for the appellant contended that Clause 96 specifically provides that if any dispute is raised by the contractor relating to any matter arising under the contract, the Engineer is required to refer such matter to the superior not below the rank of Chief Engineer or Additional Municipal Commissioner. He, therefore, submitted that Clause 96 provides for referring the dispute to arbitration and the arbitrator would be superior officer not below the rank of Chief Engineer. In our view, this contention cannot be accepted because as per Clause 96, that if any dispute arises, the Engineer may refer such dispute to the superior who, on examining the dispute, is required to give decision in writing and such decision is final and binding upon the parties. It is necessary to mention here that it does not mean that the Engineer is required to act as an arbitrator. Clause 96 only empowers higher officer to examine the contentions raised by the contractor and give an administrative decision.
Further, in view of the decision rendered by the Apex Court in the case of K.K. Modi v. K.N. Modi & others, , we think that this question is not required to be discussed in detail. In that case also, the Court interpreted Clause 9 of the Memorandum of Understanding between the parties. The said Clause 9 reads as under :--
"Implementation will be done in consultation with the financial institutions. For all disputes, clarifications etc. in respect of implementation of this agreement, the same shall be referred to the Chairman, I.F.C.I. or his nominees whose decisions will be final and binding on both the groups."
In that case, after considering various decisions, the Court observed as under :--
"The purport of Clause 9 is to prevent any further disputes between Groups A and B. Because the agreement requires division of assets in agreed proportions after their valuation by a named body and under a scheme of division by another named body. Clause 9 is intended to clear any other difficulties which may arise in the implementation of the agreement by leaving it to the decision of the Chairman, I.F.C.I. This clause does not contemplate any judicial determination by the Chairman of the I.F.C.I. He is entitled to nominate another person for deciding any question. His decision has been made final and binding. Thus, Clause 9 is not intended to be for any different decision than what is already agreed upon between the parties to the dispute. It is meant for a proper implementation of the settlement already arrived at."
6. Same is the position in the present case, because Clause 96 provides that a higher officer has to find out as to whether the view taken by the Engineer with regard to the contention raised by the contractor is correct or not. It is not like a judicial interpretation by recording evidence. A decision is based upon examining the dispute from the record which is available with the Engineer. Further, Clause 96 envisages that only the Engineer may refer such matter to the superior officer for his decision and the superior officer also applies his mind to the contentions raised by the contractor. This is something like a statutory notice which is contemplated before filing a suit against statutory bodies so that superior officers can apply their mind and arrive at a particular decision. The superior officer has to decide in his absolute discretion and not by holding any enquiry worked out in a judicial manner.
For this purpose, the learned Counsel appearing for the respondents has rightly relied upon the decision of the Supreme Court in the case of State of Orissa & another v. Damodar Das, . We note that this decision rendered by the Apex Court is also relied upon in K.K. Modi's case (supra). In that case, the Court considered a clause in the contract and held that the said clause did not envisage that any difference or dispute that may arise in execution of the works should be referred to arbitration of an arbitrator. The Court held that the clause cannot be interpreted to mean an agreement between the parties to submit to arbitration of the disputes which may arise between them in respect of the tender. In that case, the Court held that there was no recital in the clause of contract to refer any dispute or difference, present or future, to arbitration. The Court further held that for resolution of any dispute or difference arising between two parties to a contract, the agreement must provide expressly or by necessary implication, a reference to an arbitrator named therein or otherwise of any dispute or difference and in its absence it is difficult to spell out existence of such an agreement for reference to an arbitration to resolve the dispute or difference between the contracting parties. In the present case also, there is no specific clause containing an express arbitration agreement and it is difficult for us to draw an inference by implication that there is a clause to refer the dispute to arbitrator. On the contrary, previously, there was a specific arbitration clause in the general conditions forming part of the contract, but that clause was specifically deleted.
7. Further, in K.K. Modi's case (supra), before discussing the question whether there is an arbitration clause or not, the Court has referred to Mustill and Boyd on "Commercial Arbitration" and quoted with approval as under :--
"..... that in a complex modern State there is an immense variety of tribunals, differing fundamentally as regards their compositions, their functions and the sources from which their powers are derived. Dealing with tribunals whose jurisdiction is derived from consent of parties, they list, apart from arbitral tribunals, persons (not properly called Tribunals) entrusted by consent with the power to affect the legal rights of two parties inter se in a manner creating legally enforceable rights, but intended to do so by a procedure of a ministerial and not a judicial nature (for example, persons appointed by contract to value property or to certify the compliance of building works with a specification)."
In paragraph 19 of that judgment, the Court has quoted with approval the following observations from Russell on Arbitration, with regard to the question how to distinguish between an expert determination and arbitration :--
"Many cases have been fought over whether a contract's chosen form of dispute resolution is expert determination or arbitration. This is a matter of construction of the contract, which involves an objective enquiry into the intention of the parties. First, there are the express words of the disputes clause. If specific words such as arbitrator, arbitral tribunal, arbitration or the formula as an expert and not as an arbitrator are used to describe the manner in which the dispute resolver is to act, they are likely to be persuasive although not always conclusive ..... Where there is no express wording, the Court will refer to certain guidelines. Of these, the most important used to be, whether there was an issue between the parties such as the value of an asset on which they had not taken defined positions, in which case the procedure was held to be expert determination; or a formulated dispute between the parties where defined positions had been taken, in which case the procedure was held to be an arbitration. This imprecise concept is still being relied on. It is unsatisfactory because some parties to contract deliberately choose expert determination for dispute resolution. The next guideline is the judicial function of an arbitral tribunal as opposed to the expertise of the expert; ..... An arbitral tribunal arrives at its decision on the evidence and submissions of the parties and must apply the law or if the parties agree, on other consideration; an expert, unless it is agreed otherwise, makes his own enquiries, applies his own expertise and decides on his own expert opinion....."
8. Applying the aforesaid principles to the present case, the intention of the Municipal Corporation is clear because arbitration clause, which was in existence, was deleted. There are also no express words in the said Clause stating that matter requires to be referred to arbitrator, arbitral tribunal or arbitration. It is also necessary to mention that in the present case, higher officer is not required to decide the matter after recording evidence and consider submissions of the parties, but he is required to make enquiries, apply his mind and render decision with regard to the contentions raised by the contractor. Said Clause 96 specifically provides that the decision of a superior officer will not be arbitrable at all.
9. In the facts and circumstances of the case, there is no substance in both these appeals and hence, the same are dismissed.
10. Appeals Dismissed.