GAURISHANKAR BHAGWANDASJI DUBEY v. M P HOUSING BOARD BHOPAL
1976-04-07
B.R.DUBEY, J.S.VERMA
body1976
DigiLaw.ai
JUDGMENT : ( 1. ) THIS appeal arises out of the order dated 3rd September 1973 passed by the learned sixth Additional District Judge, Indore in C. S. No. 42-B of 1972, whereby an application filed under section 34 of the Arbitration Act for staying the suit was allowed and the suit was consequently stayed. ( 2. ) THE appellant is a building contractor. Respondent No. 1 the M. P. Housing Board, Bhopal invited tenders to execute the work of external sewer line from S. I. H. S. quarters Nehru Marg, Indore to P. H. E. mains near pancham Ki Phel on Palasia Road Indore. The appellants tender was accepted by the Housing Commissioner and Secretary M. P. Housing Board, Bhopal, respondent No. 2. The contract to that effect was executed between the parties and signed by the appellant and the Executive Engineer, Housing Board Division, indore. The appellant in pursuance of the said contract started the work. ( 3. ) THE trouble arose when on completion op the construction of the manhole chambers the office of the Executive Engineer, M. P. Housing Division, indore, applied the ordinary building masonary rates to the construction of manholes in the bill which was prepared by it. The appellant raised an objection to the applicability of those rates and invited the attention of the department to the terms of the contract. The appellant, therefore, insisted for the payment of the construction of the manhole chambers at the rates prescribed for manhole chambers construction in the P. W. D. Sanitary schedule. The housing Commissioner and Secretary M. P. Housing Board, Bhopal, however, informed the appellant that his claim in respect of manhole chamber for the sum of Rs. 7,810 was rejected. The appellant received a letter from the Executive Engineer, Housing Board, Division, Indore to the effect that the unexecuted part of the contract had been taken from the hands of the appellant and that it was being given to another contractor to be completed at the appellants risk. Thereafter on 18-1-72 the Executive Engineer Housing Board Division, Indore has engaged respondent No. 3 to complete the unfinished part of the work in question. The appellant, therefore filed the suit against the respondents in which he claimed a sum of Rs. 18,286 from respondents 1 and 2 for the work alleged to , have been completed by him.
Thereafter on 18-1-72 the Executive Engineer Housing Board Division, Indore has engaged respondent No. 3 to complete the unfinished part of the work in question. The appellant, therefore filed the suit against the respondents in which he claimed a sum of Rs. 18,286 from respondents 1 and 2 for the work alleged to , have been completed by him. He also sought permanent injunction restraining respondent Nos. 1 and 2 from getting the unfinished part of the work under contract completed through respondent No. 3. Injunction was also sought against respondent No. 3 to restrain him from undertaking the execution of the unfinished part of the work for which the contract was taken by the appellant. ( 4. ) THE respondent Nos. 1 and 2 made an application before the trial court under section 34 of the Arbitration Act on the allegation that as per clause 29 of the agreement, the matter be referred to the Housing Commissioner for arbitration and that till then the suit be stayed. The said application was opposed by the appellant on the ground that clause 29 of the agreement did not speak of an arbitration agreement. It was further averred that respondent nos, 1 and 2 had waived the right of reference to arbitration as they did not express any intention to refer the matter to arbitration after receiving, the appellants notice. The appellant lastly urged, that respondent No. 2, the Housing commissioner being an interested party could not be appointed as an arbitrator. ( 5. ) THE trial Court, after considering the said application, negatived the contentions of the appellant and stayed the suit under section 34 of the Arbitration Act. The appellant has, therefore, come to this Court against that order. ( 6. ) THE main point for consideration in this appeal is whether clause 29 of the agreement between the parties is an arbitration clause. The said clause reads thus:- "except where otherwise specified in.
The appellant has, therefore, come to this Court against that order. ( 6. ) THE main point for consideration in this appeal is whether clause 29 of the agreement between the parties is an arbitration clause. The said clause reads thus:- "except where otherwise specified in. the contract the decision of the Housing Commissioner of the circle for the time being shall be final conclusion and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs drawing 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 work, or after the completion or abandonment thereof". ( 7. ) SECTION 2 (a) of the Arbitration Act, 1940 defines an "arbitration agreement" to mean a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not. In Governor general in Council v. Simla Banking Industrial Co. Ltd. New Delhi and another, AIR 1947 Lahore 215. a clause in the agreement between the parties similar to clause 29 of the agreement in the instant case, with the only difference that in that case the matter was to be referred to the Superintendent Engineer of the circle, whereas according to clause 29 of the instant case the matter has to be referred to the Housing commissioner of the circle,came for consideration before the Lahore High court. After construing the clause in that agreement, it was held by that Court as under : "it is true the words "arbitration", "arbitrator" or "arbitration agreement" do not appear in the clause but that is, in my view, immaterial as long as the parties can be found to have agreed to allow the matter to be decided by a person of their own selection whose decision was to be final, conclusive and binding on them.
A perusal of the clause would show that not only the questions as the "quality of workmanship or materials used on the work" were left to be decided by "the Superintending Engineer of the circle for the time being" but "any other question, claim, right, matter or thing whatsoever, in anyway arising out of, or relating to the contract" etc. were, after they had arisen between the parties also agreed to be left to him for his decision. " The decision of the Lahore High Courts in Governor General in Council v. Simla banking and Industrial Co. Ltd. (supra) was followed by a Full Bench of the punjab High Court in M/s. Ram Lal Jagan Nath v. Punjab State through collector Hissar and another, AIR 1966 Punj. 436. on principle although the relevant clause of the agreement held to be an arbitration clause, was differently worded. Similar view was taken in the decision in Dewan Chand v. State of J. and K. AIR 1961 J. and K. 58. ( 8. ) THE learned counsel for the petitioner placed reliance on the decision in Des Ram v. Secy, of State, AIR 1936 Sind 201. in which the clause in the agreement alleged to be arbitration clause was similar to that, as in the instant case, as well as that, in the Lahore case. The Sind High Court, however construing the agreement which was for consideration before it held as under:- "a mere agreement between two persons to be concluded by the decision of a third does not by itself constitute such third person as an arbitrator. To give him that character it should be intended that such person should determine the disputes in a quasi-judicial manner. What is the intention of the parties in any particular case must necessarily depend upon the true construction of the agreement between them. Where an architect or other technical expert in the service of one of the parties to contract is clothed with authority to settle disputes between the parties, which he is required to decide merely by the exercise of his own skill and judgment such architect or expert is not an arbitrator. " It may be pointed out that the aforesaid decision of the Sind High Court is prior to the Arbitration Act, 1940 when the term "arbitration agreement" was not defined.
" It may be pointed out that the aforesaid decision of the Sind High Court is prior to the Arbitration Act, 1940 when the term "arbitration agreement" was not defined. Moreover, on going through the decision in Des Ram v. Secy, of state of the Sindh High Court it appears that the learned Judge, after looking to the correspondence between the parties and the language of the clause in question before him, was of the opinion that there was nothing, either in the clause in question or, in the rest of the contract form, to suggest that the Superintending Engineer was required to give his decision in a quasi-Judicial manner. It may be observed that where a person is called upon to make a decision over a dispute affecting the rights of the parties either under any statute or on the choice of the parties has to act in a quasi-judicial manner. We are, therefore, of the firm opinion that clause 29 of the agreement in the case before us, despite the fact that it does not use the words "arbitrator" or "arbitration", does authorise the Housing Commissioner to decide the disputed questions relating to the terms of the contract and hence is required to act in a quasi-judicial manner. We are therefore of the view that the said clause in the agreement is an arbitration clause within the meaning of section 2 (a) of the Arbitration Act. ( 9. ) THE learned counsel for the appellant nextly contended that the appellants* claim was with respect to the money for the work completed by the appellant in pursuance of the contract and simply because the claim has been repudiated by respondents Nos. 1 and 2 would not make it a dispute which could be referred to arbitration. It is further contended that the respondents nos. 1 and 2 having rescinded the contract and engaged respondent No. 3 to complete the contract, who is also made a party in the suit and against whom relief of permanent injunction is sought, the dispute would not be covered by clause 29 of the agreement and hence the suit ought not to have been stayed under section 34 of the Arbitration Act. In our opinion these contentions have also got no force.
In our opinion these contentions have also got no force. The office order dated 5-10-1971 issued by the Executive engineer, Housing Board, which was referred to us from the paper book at page 25 indicates the dispute between the appellant and respondents Nos. 1 and 2 with respect to the work contemplated under the contract and which led to the decision on the part of the Executive Engineer to engage respondent No. 3 for completing the work. Therefore, simply because the appellant filed the suit for a specific sum of money it cannot be said that there is no dispute between the parties covered under clause 29 of the agreement. ( 10. ) AS regards the appellants claim for permanent injunction against the respondent No. 3 it may be firstly pointed out that it is very small portion of the relief claimed which is not covered by the arbitration clause. As a matter of fact the main subject-matter of the dispute is between the appellant and respondents Nos. 1 and 2 and that is within the arbitration clause. In Sheodatta lonkaran and another v. Prakash Distributors and others, 1954nlj450=air 1954 Nag. 289. it has been held by a division Bench of the Nagpur High Court consisting of Hidayatullah and r. Kaushalendra Rao JJ. (as they were then) that only where a small portion of the relief claimed is not within the scope of the arbitration clause, it is not a sufficient reason for refusing to stay proceedings where the main subject of the action is within the arbitration clause. The above decision was cited with approval in a later decision of the Nagpur High Court in the Central Hindustan orange and Cold Storage Co. Ltd. , Nagpur and others v. Sir Brijnath Singhji and another, 1956 N L J 589=air 1956 Nag. 61. In the aforesaid decision it was observed that the matter of stay is entirely within the discretion of the Court and if that discretion has been exercised in accordance with the well established principles governing such eases, there is no reason for the High Court to examine too nicely the reasons given by the Court below in support of its order refusing to stay the suit. The same principle will apply in a case where the trial Court exercises its description in staying the suit.
The same principle will apply in a case where the trial Court exercises its description in staying the suit. It is not necessary for us to express any opinion whether respondent No. 3 is a necessary party to the suit and whether the appellant could get specific performance of the contract so as to seek the relief of permanent injunction. Suffice it to say that the Court below, looking to the nature of the dispute between the parties has exercised the discretion in staying the suit which cannot be called to be unjudicious, capricious or unreasonable and hence no interference is called for by this Court in appeal. "this view is supported by the decision in Uttar Pradesh Co-operative Federation Ltd. v. Sunder Bros. , delhi, AIR 1967 SC 249 . ( 11. ) THE learned counsel for the appellant nextly contended that respondent No. 2 Housing Commissioner being an interested party, the appellant should be allowed to get out the arbitration clause. In support of this contention reliance is placed by the learned counsel on the decision in U. P. Co-operative Federation Ltd. v. Sunder Bros. , Delhi (supra) in which it was held that the legal position is that an order of stay of suit under section 34 of the Indian arbitration Act will not be granted if it can be shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute between the parties. We are of the view that the said decision will not help the appellant in this case. There is no material on record to show that the Housing Commissioner will not act fairly in the matter. The contention of the learned counsel for the appellant that the Housing Commissioner having rejected an item of rs. 7810 arising out of the dispute in the suit, the appellant has an apprehension that he has already made up his mind, is not tenable. It may be noted that the Housing Commissioner has simply communicated the decision of the executive Engineer rejecting the aforesaid claim. By such an official communication it cannot be said that the Housing Commissioner has got a bias against the appellant.
It may be noted that the Housing Commissioner has simply communicated the decision of the executive Engineer rejecting the aforesaid claim. By such an official communication it cannot be said that the Housing Commissioner has got a bias against the appellant. When the appellant with open eyes entered into a contract along with an arbitration clause whereby the Housing Commissioner was appointed as the arbitrator, he cannot get out of that contract without showing adequate ground for the same. ( 12. ) THE learned counsel for the appellant lastly contended that there is no authority in existence like "housing Commissioner of the Circle" and hence the arbitration clause cannot be acted upon on account of its being vague. Even this contention is devoid of any merit. The Housing Board is a body corporate under the M. P. Housing Board Act, 1950. Section 8 of the said Act provides for the appointment of a Housing Commissioner. There is thus the only one housing Commissioner for the whole of M. P. There is nothing in the Act to indicate that there would to an independent Housing Commissioner for each circle, of the Housing Board. The appellant, therefore knew that there was only one Housing Commissioner. Therefore, whoever may be the Housing Commissioner at the time of the reference shall be the arbitrator to arbitrate in the matter in dispute which may be referred to him. Under these circumstances, there is no vagueness in the arbitration clause. ( 13. ) FOR the above reasons this appeal having got no force is hereby dismissed with costs. Rs. 100 be taxed as counsels fee if certified. Appeal dismissed.