I N v. Union Territ oryChandigarhand ot hers

raising disput esarising out of t he cont ract Such com m unlcat ion by t he Execut ive Engineeron 0408988 rej ect ingt he clailns raised by t he pet it ionerlt was t hereaft ert he pet it ioner invoked t he j urisdict ionof t he Civil Court under Sect ion 20 of t he Act on 10081988 The applicat ionof t he pet it ionerhas been declined by t he Court s below int er alia for t he reasoll t hat t he disput ehas not been raised by t he pet it ionerwit hin 180 daysfroin t he dat e of receiptof paym ent and t hat t he pet it ionerhas failed t o produceon record evidence t o show t hat t he Engineerhas iniseconduct edt he proceedings Arbit rat ion Clause ie Clause 2A of t he Agreem entreads as Clause 25A 1f any quest iondifference of obj ect ion what soevershall arise in any wav connect edwit h or arisingout t he m eaningor operat ionof any part t his inst ruinent sor t hereof t he rlght sdut ies or I iabilit ies of eit her part y t hen in so far as t he decision of any such m at t eris hereinbefore providedfor and has been So decided every such m at t er includingwhet her it s decision has been ot herwiseprovidedfor andlor whet her it has been finallydecided accordinglyor whet her t he cont ract should be t erininat edor has been right ly t erm inat ed and as regardst he right sand obligat ionsof t he part iesas t he result of such t erm inat ion shall be referred for arbit rat ion t o t he S Engineer of t he Circle Chandigarhor act ingas such at t he t im e of referencewit hin 180 daysVlZ SlX m ont hsfrom t he dat eof inakingfinal paym ent t o t he cont ract or or when t he cont ract or is not willing t o recelve 1 r 0 0 I C5 I Z I 08 0 I vno Z t l . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh t he paym ent from t he dat e a regist erednot ice is sent t o him t hat his final bill is readyfor paym entand his decision shall be final and bindingand where t he m at t er involves a claim s or t he be JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 0 t i 60 OeReNo1161of2001 3 paym entof rccovery or deduct on of m oney only t he am ount if any awarded in such arbit rat ion shall be recoverable in respectoft he m at t er so referred I f t he m at t er is not referred t o arbit rat ion wit hin t he specifiedperiod all t he right sand claim s under t he Cont ract shall be deem edt o have been forfeit ed and absolut elybarred Relyingupon t he said Clause I earnedcounsel for t he pet it ioner has arguedt hat t hough Engineeris nam ed as an Arbit rat or 1 r 0 0 I C I Z m L 08 m e Z by designat ionbut such t he Engineerhas failed t o claim of t he pet it ionersubm it t edon 08041987 vide ExAVe21A and t hus t he nondecision of such clailn renderst he Engineeras unflt t o be an Arbit rat or Therefore t he pet it ionerhad right lyinvoked t he j urisdict iont o refer t he disput et o an Arbit rat or under Sect ion 20 oft he Act Therefore t he orders passedby t he Court s below decliningt he applicat ion under Sect ion 20 oft he Act not sust ainable lt is also cont endedt hat t he pet it ionerhas raised claiin wit hin 180 daysof t he dat eof final paym entand has also invoked t he j urisdict ionof t he Court under Sect ion 20 of t he Act wit hin a periodof six m ont hs t herefore t he disput esraisedbyt he pet it ioner arerequiredt o be referredt o an independentArbit rat or Learned counsel for t he pet it ionerhas relied upon a j udgm entof t his Court report edas Jugdish Chander Gupt a Vse Lachhm an Dass and ot hers AI R 1968 1UH 413 t o cont endt hat t he Court has j urlsdict ionunder Sect ion 20 oft he Act for ofan Arbit rat or and cannot be t aken away m erelybecauset he pet it ionerhas not servednot ice for appoint inentof an Arbit rat or under Sect ion 8 of t he Act I t is t hus cont ended t hat t he dislout esraised by t he pet it ionerare requiredt o be adj udicat edupon by an independentArbit rat or . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 61 CRNo1161 of2001 0 4 0 l 1 0 0 0 I C5 I Z Ci 08 7 Z 1 Sect ion 20 of t he Act em powers any part yt o an agreem entt o ihvoket hej urisdict ionof t he Court inst eadof under Chapt erI I for filingof an agreem entin Court Sulsect ion 641of Sect ion 20 of t he Act t hat t he Court shall order t he agreem entt o be 61ed and shall m akean order ofreference t o t hc arbit rat orappoint edby t he part iesor where t he part iescannot agree upon an arbiirat or t o an arbit rat orappoint edby t he Cou A Division Bench of Allahabad High Court a j udgm ent report ed as Union of I ndia Vs Gorakh Mohan and anot her AI R 1964 Allahabad 4 77 has considered t he scope of Sect ions 8 and 20 of t he Arbit rat ionAct 1940 lt has been held t hat Sect ion 80f t he Act confers powerupon t he Court t o appointan arbit rat oron an appiicat ionwhere t he part iesconcur in t he ofan arbit rat or whereasSect ion 20 oft he Act ent it lespart yt o applyfor fllingoft he arbit rat ionagreem entin Coun and t he Court t o inake an order ofreference t o t he arbit rat orappoint ed byt he part iesI t was held t o t he followingeffect 9 The provinceof t he t wo provisionsis quit edist inct confers power upon t he Court t o appolntan arbit rat orwhere t he of an arbit rat or t he part iesdo not concur in t he ot her ent it les a part yt o applyfor t he filing of t he arbit rat ion agreem entin Court and einpowerst he Court t o m ake an order if referencet o t he arbit rat or appoint edby t he part iesand in t he absenceof such appoint lnentt o t he arbit rat or appoint edby it I n t he foriner case aft ert he Court hasappoint edan arbit rat or it is t he part ieswho refer t he disput et o him ln t he lat t ercaseit 1S t he Court which refers t he disput e I n Thawar Das Pherum al Vs Union of I ndiaS1 AI R 1955 SC 468 lt was observed . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh A refclrencerecluirest he assent ofbot h sides I f one side is not preparedt o subm it a given m at t er t o JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 62 0 CeReNo1161 of2001 5 I l L 1 arbit rat ionwhen t hereis an agreeinentbet wcen t hem t hat should be referred t hen recourse m ust be had t o t he Court under Sect ion 20 of t he Act and t he recalcit rant part y can t hen be com pelledt o subm it t he m at t er under subsect ion 49 I n t he absenceof eit her agreem entby bot h sides about t he t erm s of reference or an order of t he Court under Sect ion 20 649com pellinga reference t he arbit rat or is not vest ed wit h t he necessary exclusive j urisdict ion252 I n Union of I ndia Vs SVKrishna Rao AI R 1970 Madhva Prudesh 49 it was held t hat t he purpose of Sect ions 8 and 20 are alt oget her different I n t hose cases where t he part ieshave agreedat t he t im e of ent eringint o a cont ract t hat any disput earisingout of it shall be set t ledby arbit rat ionand where no arbit rat orshave been nam edand where t he panies do not agree on t he choice of t he arbit rat or Sect ion 8 com es lnt o operat iOn I t givespower t o t he Court t o appointan arbit rat or On t he ot her hand Sect ion 20 what t he Court has t o decide is as t o whet her t he arbit rat ion agreelnentshould be fi I ed before it or not When t he Court com est o t he conclusion ihat a disput ehas ansen bet ween t he part iest hen t he Court is requiredt o m ake an order of reference t o t he arbit rat or appoint edby t he part ies whet her in t he agreem entor ot herwise The provisionsof sulsect ion 41of Sect ion 20 m ust be in t his m anner Not only t he agreeinentt o refer t be disput et o arbit rat or but also t he agreem entregardingarbit rat ion by t he nained arbit rat or is also t o be enforced A Division Bench of Pat na HighCourt in a j udgm entreport ed as Panna Lal Khom ani Vs St ot e ofBihur und unot her AI R 1984 Pat nu 1 iZ 0 C3 I C5 I Z C I 08 OO 7 Z t l 09 was seized ofsom ewhat siinilar issue as in t he presentcase The Court . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 63 0 CeKeNoell6l of2001 has held t o t he followingeffect 6 1 6 1earned counsel for t he respondent splacedreliance of 3 m 0 C0 I C5 I Z a2 08 W2 Z r decisions nam elyThe Union of I ndia Vs Om Prakash 6AI R 1976 SC 17459St at e of Raj ast hanVs Sharm a 8 Co 6AI R 1981 Raj l9 and Excalcer Vs St at eofWest BengalAI R 1980 Cal 869 The raliO of all t hese cases is t hat if not hingis done pursuantt o a not ice bcing sent by a part y aggrievedt o t he arbit rat or under t he arbit rat ion agreem ent t o ent er upon arbit rat ion or t o appointhis nom inee and t hen if t he part y com es t o t he court for a direct ion t o t he ot her side t o Sle t he arbit rat ion agreelnentand t o appointan arbit rat orand refer t he inat t ers in disput et o arbit rat ion t he m at t erwilI four corners ofSect ion 20 041oft he Act m adepursuantt o t he not ice sent by t hepart yaggrievedor fall wit hin t he ifa nom inat ion is But ift he COUrt on such an asks t he sole arbit rat or eit her t o arbit rat e or agreem entand t he arbit rat orreadilydoes t o nonlinat e his nom inee under t he t erm s of t he such cases m ay well be said t o fall wit hin t he provisionsofSect ion 8 3 The Honble Suprem eCourt a j udgI nentreport edas The Union ofI ndiu Vs Shri Om Prakash AI R 1976 SC 45 has explained t hat t he Act lnt ervent ion of t hree kinds of arbit rat ioli1 arbit rat ion wit hout a court dealt wit h in chapt erll of t he Act which includes Sect ion 3 t o Sect ion 19 1i0 arbit rat ionwit h int ervent ion of a court where t hereis no suit pendingdealt wit h in Chapt erI I l which consist sofonlyone sect ion viz Sect ion 20 and i iil arbit rat ion in suit s which covered by chapt erI V Thus lt was held t hat in t erlns of t he provisionsof Chapt er4I aller t he appoint m entof arbit rat or t he are t o be out side court and up t o t he st age of filing t he award int ervent ion of court is not unless any occasion arises requiringt he court t o rem ove arbit rat or under Sect ion ll . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh An agreem ent t o subm it differences t o t he JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 64 0 CRNoell6l of2001 7 4 arbit rat ionim plies an agrecinenl t o refer t he di ffercnces t o t he arbit rat or Sect ion8 only t he court t o appointan arbit rat orwhere t he panies do not concur in t he Sect ion 20 occurringin Chapt erI lI cont ains provisionsfor arbit rat ion wlt h t he int ervent ion of a court where t hereis no suit pending A perusalof arbit rat ionclause bet ween t he part iesshows t hat t he Engineerwas nained as an Arbit rat or by I n SRaian Vs St at e ofKeralu and anot herAI R 1992 SC 1918t heCouMwas considering a disput earisingout of an agreem entcont ainingsim ilar clause ofarbit rat or by and held t o t he followingeffec 12 Thus t his 1S a case where t he agreem entit self species and nam es EngineerBuildingsand Roads Circle Trivandrum I n such a sit uat ion it t he arbit rat or is t he I t was obligat oryupon t he I earnedSubordinat eJudge in case he was sat isfied t hat t he disput eoughtt o be referredt o t he arbit rat or t o refer t he disput et o t he arbit rat or speciSed111 t he agreem entI t was not open t o hlm t o ignoret he said clause of t he agreem entand t o appointanot herperson as an arbit rat or Only if t he arbit rat or specifledand nam ed in t he agreem ent refuses or fails t o act t he Court does get t he j urisdict iont o appointanot herperson or persons ast he arbit rat or Thisist he clear purportof subsect ion 41 I t says t hat t he referenceshall be t o t he arbit rat or appoint edby t he part ies Such agreed appoint lnentm ay be cont ained in t he agreenlentit selfor m ay be expressedseparat ely To repeat only in cases where t he agreem entdoes not specifyt he arbit rat orand t he part iescannot also agree upon an arbit rat or does t he court gett hej urisdict ion t o appointan arbit rat or 79 I n anot lierj udgm entreport edas Dhurm u Prat hisht hanam Vs 0 0 C I C5 I Z 0 I cr5 Oo n7 Z Ll Madhok Const ruct ion U1 Lt d . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh 10519 SCC 686 t he Honble Suprem e JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document Court held t hat an arbit rat orundcr Arbit rat ion Act 1940 1S not st at ut ory I t 65 0 CeReNoe1161of2001 8 1S a Forum chosen by t he consent of t he part iesas an alt em at et o resolut ion J byt he ordinaryforLilnof I aw court s I t was held t o t he following effect 7 Furt her t his was not a case wheret he arbit rat ionclause aut horizedone oft he part iest o appointan arbit rat orwit hout t he consent of t he ot her Two t hingsare t herefore of essence lI l l ike t he presentonel flrst ly t he choice of t he t ribunal or t he arbit rat or and secondlyt he referenceof t he disput et o t he 10 0 0 C5 I Z 08 m 7 Z t l arbit rat or Bot h should be based on consent giveneit her at t he t im e of choosingt he arbit rat orand m akingreferenceor else at t he t im e of ent eringint o t he cont ract bet ween t he part iesln ant icipat ionof an occasion for set t lelnentof disput esarisinglll fut ure 95 I n view of t he referred t o above t he part ieshave consent edfor resolvingt heirdisput esby an arbit rat or by The part iesare bound t o resolve disput es111t enns of subsect ion of Sect ion 20 of t he Act by such arbit rat or alone The pet it ionercannot seek appoint m entof an arbit ralor de hors t he t erlns of t he agreem entfor t he reason t hat t he Engineerhas failed t o decide t he claim s earlier Learned counscllort he pet it ionerhas arguedt hat Since t he agreem entdoes not specificalJyexclude raisingof disput epriort o t he paym entof final bill t herefore t he Engineerwas bound t o decide t he disput eraised by t he pet it ionervide com m unicat ion dat ed 08041987 6ExAH21A1 Since t he said com m unicat ion has not been adj udicat edupon t herefore t he Engineerhas failed t o discharget he dut iesof an arbit rat or I do not . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh f1nd anv m erit lll t he said argum ent s Clause 2A JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document t he agreem entallows any part y t o t he agreem entl0 raise disput eaft er 0 1 r 0 CO I C5 I Z a 08 00 7 Z t l 66 CeKeNo11610f2001 9 and t hat t oo wit hin a periodofsix m ont hs Such clause t b im plicat ionexcludes raisingof disput esin any ot her m anner Once t he part ieshave agreedt o ralse disput eaft er t he flnal bill is t nade t hen it was not open t o one of t he parly t o ralse t he disput eduringt he course of t he execut lOI l of t he work Clause 254 of t he agreelnentexcludes raisingof disput eduringt he course of execut ion of t he cont ract Since t here was no obligat ionwit h t he Engineert o decide t he claim raised by t he pet it ionerbefore sublnlssion of t he final bill agreedarbit rat or has refused it cannot be said t hat t he failed t o act which m ay warrant his rem oval The pet it ionerhaspleadedt hatt here is reasonable t hat full rat es for ext ra it eillS as claim ed by pet it ionerwould not be allowed byt he Engineeras he will t ry t o absolve him self from t he responsibilit ywhich he failed t o dischargeThe pet it ionerapprehendst hat t he Engineerof t he respondentwill not do j ust icebeing em ployeeof respondentand is also biased againstt he pet it ionerAW3 DGill part nerof t he pet it ionerdeposedon oat h t hat duringexecut ion of t he work a disput eregardingrecovery of st ealand wat er chargesarose and t heyrequest edt he EngineerunosoleArbit rat or vide let t er dat ed 8A 1987 for t he set t lenlentof disput ebut t he Arbit rat or did not ent er upon t he reference He has furt herdeposedt hat he does not expectj ust ice from t he Engineerbecausehe is not t aken any act ion when t he arbit rat ionclause was invoked beingt he official of t he arbit rat or inay kindly be appoint edt o set t lc t he disput ebet ween t he part ies I n t erlns of subscct ion 641Sect ion 20 of . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh t he Act an Arbit rat or JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document chosen byt he pait iesalone can be appoint edas an arblt rat or Mere fact t hat 1 0 67 CeReNo1161 of2001 10 t he 1 Engineerls an offlcial of t he Adm inist rat ion is not a on t he basis of which t he agreedarbit rat orcan be changed I t 1S 1O 0 0 I 9 I Z r I 08 Z t l m ere ipsidixit of t he pet it ionert hat he does not expectj ust icefrom t he Engineeronlyfor t he reason t hat his earlier m isconceived and unt enableclaim was not ent ert ainedby t he Engineer Therefore I do not 6nd t hat t he pet it ionercan seek of an arbit rat or de hors t he agreeinentin proceedingsunder Sect ion 20 oft he Act The fact rem ains t hat paylnent of Snal bill was m ade on 1202 1988 The pet it ionerraised t he disput eon 22071 988 vide ExAV 311 The said let t er was not addressedt o t he arbit rat or but t o t he Execut ive EngineerThe Execut ive Engineercould have referredt he said leuer t o t he arbit rat or but inst ead of referringt o t he arbit rat or t he Execut ive Engineer com m unicat ed on 040 819 88 vide Ex rej ect ingt he claim of t he pet it ioner Soon t herealt er Oll 100 1988 t he pet it ionerhas invoked t he j urisdict ionoft he Court under Sect ion 20 oft he Act Such pet it ionwas filed wit hin 6 m ont hs of t he paym entof final bill on 12021988 Sincet he Execut ive Engineerhas refused t o appointan Arbit rat or and t he pet it ioner has flled a pet it ionbefore t his Court for fillng of t he arbit rat ion agreem ent and for referringt he disput et o t he arbit rat or it sat ist lest he precondit ionsof seekingresolut ion of disput esby an arbit rat or in Clause 2544 of t he agreem entTherefore t he disput ebet ween t he part iesare requiredt o be resolvedby t heagreedarbit rat orie Engineer The Court s below have erredin decliningt he applicat ionunder Sect ion 20 of t he Act for t he reason t hat t he dem and was not inade t o t he arbit rat orbut t o t he Execut ive Engineer The Court s overooked t he fact . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document 4 1 68 Cl CR1Vo1161of2001 11 11 t hatt hepet it ionerunder Sect ion 20 oft he Act was also Sled wit hin 6 m ont hs oft he flnal bill I n view oft he said fact s t he orderspassedbyt he Court s beiow are set aside The t nat t er is ordered t o be rem it t edback t o t he leam ed t rial Court for decidingt he applicat ionunder Sect ion 20 of t he Act for 6lingof t he arbit rat ionagreem entand referringt he disput est o t he nam ed arbit rat or 1e t he Engineer The pet it ionert hroughhis counsel is direct ed t o appear before learned t rial Courl Oll t oI lI o furt her lt l accordancewit h law7 11010 1 JUDGE V . Rashm i 2012.08.09 14: 44 True Scanned Copy Of t he Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:22 I attest to the accuracy and integrity of this document W r 0 0 I C I Z C 08 OO Wm o Z Llm 41 6 I l 197 7 I A