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1970 DIGILAW 42 (ORI)

A. C. PARIJA v. SECRETARY IN CHARGE OF THE GENERAL P. W. D. OF THE UNION OF INDIA (UOI)

1970-02-05

R.N.MISRA, S.K.RAY

body1970
JUDGMENT : R.N. Misra, J. - This is an appeal against the order of the learned First Additional Subordinate Judge, Cuttack, on an application u/s 20 of the Arbitration Act. 2. Some of the admitted facts may be stated. The Appellants were the contractors who had undertaken the execution of certain works under the Central Public Works Department of the Union of India. There was an agreement on 28-1-1913. Certain additional works not covered by the agreement were required to be done by the contractors. The rates for such additional work had not been provided in the agreement. Under Clause 12 of the agreement provision was made indicating' the manner in which the rates for such additional work not covered by the contract would be fixed. A dispute arose about the fixation of rate. The Appellants claimed at the rate of Rs. 25/-. per 100 oft., of such additional work, while initially a rate of Rs. 23-6-0 was approved, but later the Superintending Engineer fixed, it at Rs. 18/- and made payment on that hasis. The Appellants pursued their claim not being satisfied with the rate fixed by the Superintending Engineer, and ultimately the' Chief Engineer 'fixed the rate at; Rs. 10/- per 100 oft. Once that rate was fixed, the Executive Engineer called upon the Appellants to refund Rs. 71, 599-12-0 on the hasis that the Appellants had been over paid to that, extent. 3. On 15.2.1956, an application u/s 20 of the Arbitration Act was made and the same was registered as a regular suit. That application was resisted upon notice by the Respondents. Before the learned Trial Judge no oral evidence was adduced, but a number of documents on either side were placed and marked as exhibits on admission. The learned Trial Judge rejected the application mainly on three counts: (a) The dispute being one covered by Clause 12 of the agreement finality attached to the decision of the Superintending Engineer and as such no reference could be made under Clause 25 of the agreement (Ext. 1) ; (b) The petition u/s 20 of the Arbitration Act was barred by limitation; and (c) The Appellants had, by their conduct, waived and abandoned their right of claiming arbitration under Clause 25 of the agreement. 1) ; (b) The petition u/s 20 of the Arbitration Act was barred by limitation; and (c) The Appellants had, by their conduct, waived and abandoned their right of claiming arbitration under Clause 25 of the agreement. He, therefore, considered that there was no reason to direct the Defendants to file the agreement in Court and to make any reference u/s 20(4) of the Arbitration Act. 4. Mr. Sahu, learned Counsel for the Appellants, contends that the learned Trial Judge has clearly gone wrong in examining the question of limitation and as to whether the dispute in question was one which was squarely covered by Clause 12 and as such not referable under Clause 25 of the Agreement. According to him, there is no limitation and Article 181 of the First Schedule of the Limitation Act of 1908 has no application to the case. The scope of enquiry u/s 20 of the Arbitration Act is a limited one and is normally to be confined to an enquiry as to whether there is a written contract, terms whereof provide for arbitration and as to whether there was a dispute raised in terms of the agreement. Once these conditions were satisfied, the Court exercising jurisdiction u/s 20 of the Arbitration Act was found to make a reference, and disputes that arose between the parties including the question of limitation and as to whether a dispute was cognizable and a claim on the (sic) of any such dispute was maintainable, were matters strictly within the jurisdiction of the Arbitrator. 5. A matter of this type came up recently for examination before their Lordships of the Supreme Court Wazirchand Mahajan and Another Vs. Union of India (UOI). Shah, J. delivering the judgment of the Court stated, There is no doubt that Clause (1) of Section 37(1) the Arbitration Act deals only with the authority of the Arbitrator to deal with and decide any dispute referred to him; it has no concern with an application made to the Court to file an arbitration agreement and to refer a dispute to the arbitrator. After an agreement is filed in Court and the matter is referred to the arbitrator, it is for the arbitrator to decide by the application of the Jaw contained in the Limitation Act, whether the claim is barred. After an agreement is filed in Court and the matter is referred to the arbitrator, it is for the arbitrator to decide by the application of the Jaw contained in the Limitation Act, whether the claim is barred. But Section 37(1) does not confer authority upon the Court to reject the application for filing of an arbitration agreement u/s 20 of the Arbitration Act, because the claim is not made within three years from the date on which the right to apply arose. In dealing with an application for filing an arbitration agreement, the Court must satisfy itself about the existence of a written agreement which is valid and subsisting and which has been executed before the institution of any suit and also that a dispute has arisen with regard to the subject matter of the agreement which is within the jurisdiction of the Court. But the Court is not concerned in dealing that application to deal with the question whether the claim of a party to the arbitration agreement is barred by the law of limitation; that question falls within the province of the arbitrator to whom the dispute is referred. The aforesaid decision not only makes it clear that the question of limitation is not one for decision by the Court, but it also indicates as to what facts need be taken into account in disposing of an application u/s 20 of the Arbitration Act. 6. Clause 25 of Ext. 1 contains provisions for arbitration. The aforesaid decision not only makes it clear that the question of limitation is not one for decision by the Court, but it also indicates as to what facts need be taken into account in disposing of an application u/s 20 of the Arbitration Act. 6. Clause 25 of Ext. 1 contains provisions for arbitration. The entire clause may now be extracted: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions, 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, specifications, estimates, instructions, orders or these conditions, or otherwise 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 arbitration of the Superintending Engineer of the circle for the time being in the manner provided by law relating to arbitration for the time being in force who after such investigation as he may think proper shall deliver his awasd which shall be final, conclusive and binding on all parties to this contract. It is contended by the learned Government Advocate appearing for the Respondents that the non-obstante clause "except where otherwise provided" takes the present dispute out of the purview of Clause 25. It is contended by the learned Government Advocate appearing for the Respondents that the non-obstante clause "except where otherwise provided" takes the present dispute out of the purview of Clause 25. He placed reliance on Clause 12 of the agreement which reads as follows: The Engineer-in-charge shall have power to make any alterations in, omissions from, additions to, or substitutions for, the original specifications, drawings, designs and instructions, that may appear to him to be necessary or advisable during the progress of the work, and the contractor shall be found to carry out the work in accordance with any instructions which may be given to him in writing signed by the Engineer-in-charge, and such alterations, omissions, additions or substitutions shall not invalidate the contract, and any' altered, additional or substituted work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respects on which be agreed to do the main work, and at the same, rates as are specified in the tender for the main work. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the original contract work, and the certificate of the Engineer-in-charge shall be conclusive as to such proportion. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the original contract work, and the certificate of the Engineer-in-charge shall be conclusive as to such proportion. And if the altered, additional or substituted work includes any class of work, for which no rate is specified in this contract, then such class of work shall be carried out at the rates entered in the schedule of rates of the Cuttack district which was in force at the time of the acceptance of the contract minus/plus the percentage which the total tendered amount bears to the estimated cost of the entire work put to tender; and if the altered, additional or substituted work is not entered in the said schedule of rates, then the contractor shall within seven days of the date of his receipt of the order to carry out the work inform the Engineer-in-charge of the rate which is in his intention to charge for such class of work and if the Engineer-in-charge does not agree to his rate he shall, by notice in writing, be at liberty to cancel, his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable provided always that if the contractor shall commence work or incur any expenditure in regard thereto before the rates shall have been determined as lastly hereinbefore-mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. In the event of a dispute, the decision of the Superintending Engineer of the circule shall be final. It is this finality as provided in Clause 12 which is raised in defence by the learned Government Advocate as the hasis of his contention. A dispute seems to have arisen as to whether the claim of the contractors is covered by Clause 12 or is not hit by it. That dispute relating to determination of the nature of the claim would ultimately turn upon the finding as to whether the work was done prior to the rate was fixed or subsequent thereto. A dispute seems to have arisen as to whether the claim of the contractors is covered by Clause 12 or is not hit by it. That dispute relating to determination of the nature of the claim would ultimately turn upon the finding as to whether the work was done prior to the rate was fixed or subsequent thereto. It would also depend upon the determination of certain other facts. Ultimately the question would depend upon the interpretation of the Agreement itself. Clause 25 indicates that a dispute regarding the conditions is also within the purview of that clause. In Heyman v. Darwins Ltd. 1942 AC 356 it was stated that on reference of disputes arising out of the contract, the arbitrator may decide a dispute as to the construction of the contract itself. A similar view was also taken in Willes ford v. Watson 1873 (8) Ch. AC 473. Lord Selborne, Lord Chancellor, took the view that a dispute as to tile interpretation of the arbitration clause was one within the purview of the arbitrator. 7. Bearing in mind the principles indicated by their lordships of the Supreme Court in the decision referred to above and the terms of the contract as quoted already, we are of the view that as to whether the stand taken by the Respondents is justified should be left for ultimate determination of the arbitrator. Before the arbitrator the question of limitation, the defence on the stand that there is waiver and that a dispute of the present type is covered by Clause 12 and as such is not within his purview can at all be raised and he would be free to decide these aspects on the materials placed before him. We are satisfied that the learned Additional Subordinate Judge went wrong in taking these aspects into consideration and thereby refusing to make a reference u/s 20(4) of the Arbitration Act. We would, therefore, allow this appeal with costs and call upon the learned Trial Judge to proceed to comply with the provisions of Section 20(4) of the Arbitration Act and dispose of the case in accordance with law. The Appellants shall be entitled to a hearing fee of Rs. 250/-. S.K. Ray, J. 8. I agree.