Madhya Pradesh High Court
S.P. Gupta vs State Of M.P. And Anr. on 2 February, 1996
Equivalent citations: 1996(0)MPLJ512, 1996 A I H C 2783, (1996) JAB LJ 345, (1996) 29 ARBILR 143, (1996) MPLJ 512
Author: Shambhoo Singh
Bench: Shambhoo Singh
ORDER S.K. Dubey, J.
1. This is a revision under Section 19(1) of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 for short 'the Adhiniyam') by the petitioner-contractor against the award dated 24-9-1990, passed in Reference Case No. 108/1989, by Madhya Pradesh Arbitration Tribunal, Bhopal (for short 'the Tribunal').
2. The facts giving rise to this revision petition are thus. The petitioner's tender for the construction of box type bridge with 11 boxes at Barbata Nala in Tahsil Patan, District Jabalpur, was accepted on 30-8-1979. Time for completion of the contract was fixed as 12 months excluding rainy season. The work order was issued on 1-9-1979. The petitioner avers that after the work order, location of the bridge was shifted because of non-acquisition of the land. The bridge in its design was changed wherein on its final approval 11 boxes were reduced to a boxes. The petitioner completed the construction of the bridge as approved in September 1981. On final settlement of bills a dispute arose to certain claims which the petitioner referred under clause 29 of the Contract Agreement to the Superintending Engineer who rejected the claim vide decision Ex. P-28A, which was communicated vide Ex. P-28 dated 6-9-1984. The petitioner aggrieved of the decision preferred an appeal (Ex. P-39) in terms of clause 29(2) of the Agreement (Article-A) to the Chief Engineer. The Chief Engineer entered into the reference and after giving due notice to the respondent/State, on receipt of reply, recorded the evidence of the parties on disputed claims and after appreciating the evidence so adduced and hearing the parties dismissed the dispute so raised by reference in shape of appeal vide Ex.P-40A/Ex.D-12 of which the copy was sent to the petitioner vide letter dated 16-1-1987 (Ex.P-40). After the decision of the Chief Engineer, the petitioner made a reference petition under Section 7-A of the Adhiniyam which was contested by the respondents. Though a plea about the entertainability of the reference because of the first arbitration held by the Chief Engineer was not raised, but, the Tribunal on going through the record of the proceedings before the Chief Engineer and use of the words 'Reference' and appeal and the effect of not writing 'arbitrator' instead of Chief Engineer, after elaborate discussion in paragraphs 11 to 22, recorded a categorical finding that in view of the clause in the Agreement, the petitioner made a reference to the Chief Engineer for arbitration, and for deciding the dispute. The Tribunal dismissed the reference petition holding that as once the arbitration had taken place which was pending prior to the commencement of the Adhiniyam and was saved in view of Section 20(2) of the Adhiniyam, hence, the second reference for arbitration is not maintainable.
3. Shri V. R. Rao, learned counsel for the petitioner contended that mere use of the word 'Reference' in clause 29(2) of the Agreement which was made against the decision of the Superintending Engineer passed under clause 29(1) will not make the Reference so made as a statement of claim before the Arbitrator. It was an appeal which was entertained by the Chief Engineer on which he gave his decision. If the Chief Engineer intended to have entered into the Reference, and to have proceeded with the arbitration proceedings, he ought to have proceeded to give an award under Section 14 of the Arbitration Act, 1940 (for short 'the Act'). The decision was not filed in Court to make the award as a Rule of the Court. Therefore, the use of the word 'Reference' will not make the proceedings as an arbitration proceedings, in fact it was an appeal which was decided by the Chief Engineer. Hence there was no bar to approach the Tribunal after the decision of the Chief Engineer.
4. Shri Alok Aradhe, Panel Lawyer for the State supported the award of the Tribunal and took this Court through the record of the proceedings before the Chief Engineer and submitted that if this would have been an appeal as contended by the learned counsel for the petitioner there was no occasion to call for the reply and to record the evidence of the parties on the disputed claims. Use of the word 'decision' instead of 'award' by the Chief Engineer will not make any difference. It is the substance which has to be seen and not the form. Clause 29(2) of the Agreement clearly envisages making of a reference to the Chief Engineer whereby the parties to agreement have agreed and chosen to get the dispute decided by arbitration. It is submitted that acquiescence or consent cannot confer jurisdiction on Tribunal, therefore, when once the arbitration proceedings have ended into passing of the award. The Tribunal rightly held that there cannot be second arbitration as the proceedings for arbitration were pending prior to the commencement of the Adhiniyam. Learned counsel pressed into service the decisions State of U. P. v. Tipper Chand, AIR 1980 SC 1522, Ram Lal Jagan Nath v. Punjab State through Collector, Hissar, AIR 1966 Pun. 436 and Dewan Chand v. The State of Jammu and Kashmir, AIR 1961 J. & K. 58.
5. To appreciate the contentions it would be appropriate to refer clause 29 of the Contract Agreement which reads thus :
"Clause 29. - Except where otherwise provided in the contract the Superintending Engineer of the Circle for the time being shall decide all questions relating to the meaning of the specification, designs, drawings and constructions hereinbefore mentioned and as to the quality of workmanship, or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specification estimates, instructions, orders or these conditions, or otherwise concerning the work, or the execution, or failure to execute the same, whether arising during the progress of the work, or after the completion of abandonment thereof :
Provided that the Superintending Engineer shall before giving his decision in the matter give an opportunity of being heard to the parties to the contract.
2. If any party to the contract is not satisfied with the decision of the Superintending Engineer, it may make a reference to the Chief Engineer, P.W.D. Madhya Pradesh, through the Executive Engineer concerned within 30 days from the date of communication of the decision of the Superintending Engineer, and the Chief Engineer will give his decision after hearing the parties and his decision thereon shall be final, conclusive and binding on all parties to the contract. In case no reference is made within the period specified above, the decision of the Superintending Engineer shall be final, conclusive and binding on the parties."
A bare -reading of Clause 29(2) shows that there is no provision of appeal against the decision of the Superintending Engineer, but, it makes a provision of 'reference' in respect of the claims which the Superintending Engineer rejects, by giving his decision thereon.
6. Section 2(a) of the Act defines 'arbitration agreement' means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. Section 2(b) of the Act defines 'award' means an arbitration award. Section 2(e) defines 'reference' means a reference to arbitration. The use of the word 'reference' in clause 29(2) of the agreement denotes that matters in dispute be referred for arbitration to the named arbitrator, that is, the Chief Engineer. Hence when a dispute arises between the parties to the agreement clause 29(2) provides a machinery to decide the matter in dispute by making reference. Therefore, clause 29(2) in substance clearly and distinctly is arbitration clause by reference to the Chief Engineer and that would be, in our opinion, correct interpretation of the clause 29(2). The decisions in case of Dewanchand v. The State of J. & K. (supra) and Ramlal Jagannath v. Punjab State through Collector, Hissar (supra) which have been approved by the Supreme Court in case of State of U.P. v. Tipper Chand (supra) support our view.
7. The petitioner's reference styled as appeal under clause 29(2) of the agreement was entertained as reference to arbitrate and decide the claims in dispute after receiving the reply of the other party to dispute. The Chief Engineer then recorded evidence of the parties on the claims in dispute, who after perusal of evidence and hearing the parties gave his decision, that is, a reasoned judgment about the claims in dispute. True, the expression 'award' is neither mentioned in clause 29(2) nor in the reasoned judgment rendered by the Chief Engineer, but that would not make any difference as the award also means official decision to award something on matters in dispute.
8. Admittedly the arbitration proceedings were pending prior to the coming into force of the Adhiniyam, that is, from 1st March, 1985. Section 20 of the Adhiniyam bars the jurisdiction of Civil Court, which reads thus :
"20. Bar of jurisdiction of Civil Court. - (1) As from the date of the constitution of the Tribunal and notwithstanding anything contained in Arbitration Act, 1940 (No. 10 of 1940) or any other for the time being in force, or in any agreement or usage to the contrary, no civil Court shall have jurisdiction to entertain or decide any dispute of which cognizance can be taken by the Tribunal under this Act.
(1-A) Notwithstanding anything contained in sub-section (1), a civil Court may entertain and decide any dispute or the nature specified in the said sub-section referred to it by a person in the capacity of indigent person.
Explanation. - For the purpose of this sub-section "indigent person" shall have the meaning assigned to it in the Code of Civil Procedure, 1908 (No. 5 of 1908).
(2) Nothing in sub-section (1) shall apply to any arbitration proceeding either pending before any arbitrator or umpire or before any Court or authority under the provisions of Arbitration Act, or any other law relating to arbitration, and such proceedings may be continued, heard and decided in accordance with agreement or usage or provisions or Arbitration Act or any other law relating to arbitration in all their stages, as if this Act had not come into force."
Sub-section (2) of Section 20 serves pending arbitration proceedings at the time of commencement of the Adhiniyam. Therefore, after the decision of the Chief Engineer which attained finality, the petitioner, if aggrieved, ought to have resorted to the remedy to challenge the award of the Chief Engineer in accordance with law, but, instead of resorting to the remedy to challenge the award, the petitioner approached the Tribunal by making a reference petition under Section 7-A of the Adhiniyam. In the background of the facts Tribunal rightly held that once the arbitration had taken place which was saved under Section 20(2), the petitioner cannot resort to second arbitration.
9. It is well settled that if an authority lacks in jurisdiction in the sense that subject matter is not amenable at all to its decision, that is, the case be of patent lack of jurisdiction acquiescence of the parties would not be material, as by agreement jurisdiction cannot be conferred. Therefore, even if the respondent did not take any objection, the Tribunal rightly held that it had no jurisdiction to entertain the reference. See - the decision of the Supreme Court in case of Tarapore and Co. v. State of M. P., 1994 JLJ. 412.
10. As a result of above discussion, the revision has no merit and is dismissed with no order as to costs.