Punjab-Haryana High Court
State Of Punjab vs Ashwani Kumar on 29 March, 2006
Equivalent citations: (2006)144PLR540
Author: Hemant Gupta
Bench: Hemant Gupta
JUDGMENT Hemant Gupta, J.
1. The challenge in the present revision petition is to the order passed by the learned trial Court on 10.7.1994 revoking the authority of the Arbitrator appointed by the petitioner in terms of Clause 25 of the agreement and appointing another Arbitrator other than the named Arbitrator in the agreement as well as against the order passed by the learned first Appellate Court, holding that the appeal is not maintainable.
2. Learned Counsel for the petitioner has argued that without going into the question whether the appeal was maintainable before the learned first Appellate Court or not, this Court may examine the legality and validity of the order passed by the learned trial Court on 30.7.1994. In any case, if the appeal is not maintainable, the said order is still subject matter of challenge before this Court in the revision petition.
3. In pursuance of tender submitted by the respondent for widening and improving National Highway No. 15 in the area of District Gurdaspur, the respondent submitted his tender on 7.1.1991, which was accepted on 13.1.1991. An agreement was executed and the work allotted to respondent on 13.3.1991.
4. The respondent sought the intervention of the Civil Court vide an application under Section 20, 5 and 8 of the Arbitration Act, 1940 (hereinafter referred to as 'the Act') to adjudicate the matter in dispute. The learned trial Court found that as per Clause 25 of the agreement, all disputes between the parties are to be referred to Superintending Engineer of National Highway, Circle Public Work Department (Buildings and Roads Branch) Amritsar, but found that Shri B.S. Bajwa, present Superintending Engineer, NH Circle PWD, Amritsar cannot be appointed as Arbitrator on the ground of alleged bias. Thus, the learned trial Court ordered the appointment of an Arbitrator superior to the rank of Superintending Engineer so that interest of justice would be met and consequently appointed Shri L.B. Rai, Chief Engineer, Punjab, PWD (B & R), Patiala, as an Arbitrator.
5. Learned Counsel for the petitioner has vehemently argued that in terms of Clause 25 of the agreement, the disputes between the parties were required to be referred for arbitration to Superintending Engineer, NH Circle, Punjab PWD (Buildings and Road Branch) Amritsar. Since an Arbitrator has been named in the agreement, the appointment of another official as an Arbitrator is not justified and in fact contravenes the terms of the agreement entered upon by the parties at the time of execution of the contract. It is further argued that Shri B.S. Bajwa, the then Superintending Engineer, has since retired. Therefore, the matter can be referred for arbitration of the present Superintending Engineer of HN Circle Public Work Department (Buildings and Roads Branch) Amritsar.
6. Before proceeding further, the relevant clause i.e. Clause 25 of the agreement is reproduced as under:
If any question, difference or objection whatsoever shall arise in any way connected with or arising out of this contract or the meaning of operation of any part thereof or the rights, duties or liabilities of either party then, save in so far as the decision of any such matter is herein before provided for and has been decided. Every such matter including whether its decision has been otherwise provided for and/or whether it has been finally decided accordingly or whether the contract should be terminated or has been rightly terminated and as regards the rights and obligations of the parties as the result of such termination shall be referred for arbitration to the Superintending Engineer of NH Circle, Punjab Public Works Department, Buildings and Roads, Branch, Amritsar, within 180 days or six months from the date of final bill or a registered notice given to the contract acting as such at the time of reference and his decision shall be final and binding where the matter involves a claim for or the payment or recovery or deduction of money, only the amount, if any, awarded or deduction in such arbitration shall be recoverable in respect of the matter so referred. If the matter is not referred to arbitration within the specified period, all the rights and claims under the contract shall be deemed to have been forfeited and absolutely barred.
7. In The Secretary to the Government Transport Department Madras v. Munuswamy Mudaliar and Ors. , the Hon'ble Supreme Court found that unless there were allegations against the named Arbitrator against his honestly, capacity or mala fide or interest, in the subject matter of reasonable apprehension of the bias a named and agreed arbitrator cannot and should not be removed in exercise of discretion vested in the court under Section 5 of the Act. The Court found that when the parties enter into an agreement, they include the terms including the arbitration clause. Therefore, mere fact that the Arbitrator is subordinate to the Chief Engineer of a particular circle, would not be a ground for removal. The matter was remanded to the trial Court to direct the Government to appoint the Superintending Engineer to be an Arbitrator in accordance with the arbitration agreement.
8. In S. Rajan v. State of Kerala and Anr. , it was held by the Hon'ble Supreme Court that it was obligatory upon the subordinate Judge to refer the dispute to the Arbitrator specified in the agreement. It was not open to him to ignore the said clause in the agreement and to appoint another person as an Arbitrator. The Subordinate Judge was bound to refer the dispute only to the Arbitrator named and specified in the agreement.
9. In view of the above, since there was allegation of bias against Shri B.S. Bajwa (who has since retired), who was then posted as Superintending Engineer, there is no reason as to why the reference to the named Arbitrator should not be made.
10. Therefore, the present revision petition is disposed of with the direction to the petitioner to refer the disputes for arbitration of Superintending Engineer of National Highway Circle, Public Works Department (Buildings and Roads Branch), Amritsar, in terms of Clause 25 of the arbitration agreement.