EXECUTIVE ENGINEER, TILARI DAM DIVISION, BELGAUM v. B. T. PATIL AND SONS, BELGAUM
1994-09-07
R.RAMAKRISHNA
body1994
DigiLaw.ai
R. RAMAKRISHNA, J. ( 1 ) THE executive engineer, tilari dam division, belgaum, has filed this appeal through the government Advocate questioning the validity and correctness of the order passed by the principal civil judge, belgaum, in arbitration case No. 1 of 1988. By this Order, the learned trial judge has held that clause 30 of the agreement which was entered between the appellant and respondent in respect of the work of "a tunnel on power canal in km. No. 13" is an arbitration clause and therefore, the dispute is entitled to be referred to an arbitrator suggested by the parties. ( 2 ) TO apprete the order of the trial court and clause 30 ofthe agreemen. , narration of few facts of the case is necessary and they are as follows: ( 3 ) THE respondent was a contractor for the construction of dams, tunnels, etc. His tender for the work of a tunnel on power canal was opened on 11-2-1980. He has also submitted revised rates on 24-3-1980. Having accepted his tender, an agreement was entered between the appellant and the respondent. The work was commenced on 5-5-1980 and was completed in january, 1983. ( 4 ) CLAUSE 49 of the agreement related to price, escalationclause. The respondent raised a dispute regarding the increase and the quantity of work and claimed amounts for the additional work. Since there was no proper calculation, he had a cause of action. By virtue of clause 30 of the agreement he has approached the superintending engineer to resolve the dispute acting as an arbitrator. Due to his avoidance to act as an arbitrator, he has approached the court under Section 20 of the Indian Arbitration Act to appoint any technically qualified person as an arbitrator and to decide the issues arising between the parties. ( 5 ) THE learned principal civil judge, belgaum has acceptedthat clause 30 of the agreement is an arbitration clause and consequent to such a conclusion, he has directed the parties to submit suitable names of arbitrators including the name of the superintending engineer, kolhapur engineering circle, kolhapur. This order was made on 30-9-1989. Ultimately, one Sri H. S. Bhat was appointed as an arbitrator who is an advisor and chief consultant and member of the Indian council of arbitration, Bangalore. This was made by an Order, dated 16-12-1989.
This order was made on 30-9-1989. Ultimately, one Sri H. S. Bhat was appointed as an arbitrator who is an advisor and chief consultant and member of the Indian council of arbitration, Bangalore. This was made by an Order, dated 16-12-1989. ( 6 ) SRI y. v. parthasarathy, the learned high courtgovernment pleader, submits that clause 30 of the accepted b-2 tender is not an arbitration clause and therefore, the impugned order is liable to be set aside. The learned Advocate has mainly relied on a decision in the state of Uttar Pradesh v tipper chand. ( 7 ) CLAUSE 30 of the b-1 and b-2 tender conditions reads asfollows:"except where otherwise specified in the contract and subject to the powers delegated to him by government under the code rules then in force, then decision of the superintending engineer of the circle for the time being shall be final, conclusive, and binding on all parties to the contract upon all questions, 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 of failure to execute the same, whether arising curing the progressing of the work, or after the completion or abandonment thereof. " ( 8 ) IN the above cited decision, the respondent, a contractor,invoking clause 22 of the agreement entered between him with the irrigation department of the petitioner's state as an arbitration clause. The first appellate court held the sale clause as an arbitration agreement. On a revision, a learned single judge of the High Court of Allahabad has set aside the orders directing the respondent to proceed with the suit filed by him. Clause 22 of the agreement which was extracted in the judgment is almost identical with clause 30 of the agreement in question, on some of the material facts. The Supreme Court has accepted the finding of the high court that this clause merely conferred power on the superintending engineer to take decision of his own and that he did not authorise the parties to refer any matter to his arbitration.
The Supreme Court has accepted the finding of the high court that this clause merely conferred power on the superintending engineer to take decision of his own and that he did not authorise the parties to refer any matter to his arbitration. The hign court particularly averted to the marginal note to the said clause which was to the effect "direction of work. " ( 9 ) SRI H. B. Datar, the learned senior Advocate representingthe respondent, submits that the finding of the Supreme Court on clause 22 of that contract is made altogether in a different context and therefore, the said finding is not applicable to the facts of this case. ( 10 ) CLAUSE 22 of the agreement was proceeded with amarginal note "direction of work". In clause 30 of the agreement in question, the marginal note indicates that decision of superintending engineer to be final. The wordings in this agreement shows that "except where otherwise specified in the contract and subject to the powers delegated to him by government under the code rules then in force, the decision of the superintending engineer of the circle for the time being shall be final, conclusive and binding on all the parties to the contract. . . (emphasis supplied) these wordings are absent in clause 22 of the agreement cited in the aforesaid decision. These wordings invested power to the superintending engineer is nothing short of an arbitration clause. By these wordings, the superintending engineer is expected to resolve the disputes arising between the government and the contractor. This is obviously to enable the contractor to first obtain an order from the superintending engineer in connection with the disputes arising in the contract and thereafter he will have the civil rights to agitate the matter. In the event, the superintending engineer refused to resolve the dispute, as it happened in this case, the contractor is at liberty to move the court for appointment of an arbitrator for resolving the dispute. ( 11 ) THIS type of agreement shall be determined oninterpreting the same as to how the parties have understood of such agreement. The order of the Hon'ble Supreme Court was passed on 22-2-1980. ( 12 ) THE code rules referred in the clause relates to thecirculars of the government that used to be issued.
( 11 ) THIS type of agreement shall be determined oninterpreting the same as to how the parties have understood of such agreement. The order of the Hon'ble Supreme Court was passed on 22-2-1980. ( 12 ) THE code rules referred in the clause relates to thecirculars of the government that used to be issued. A circular memorandum No. Cat 1070/460-desk-2, mantralaya, Bombay, dated 9-5-1977 is issued as to how the clause 30 shall be interpreted. The points raised was whether clause 30 of b-1 and b-2 tender forms can be construed to mean an arbitration clause, the government has given the clarification that clause 30 of b-1 and b-2 tender forms is an arbitration clause. Another point raised was whether the superintending engineer under clause 30 acts as an arbitrator under the Arbitration Act. The clarification was that the superintending engineer is to act as an arbitrator under this clause. Therefore the parties to the contract are of the clear understanding that clause 30 is an arbitration clause. ( 13 ) MY attention was drawn to a decision of the supremecourt in state of maharashtra v M/s. Ranjeet construction. In that decision, the question involved was again the interpretation of clause 30 of the agreement. It is noted that the high court has taken the view that having regard to the conduct of the parties they are entitled to seek a reference of the dispute to an arbitrator under the Provisions of Arbitration Act, 1940. A reference was made to the decision in the state of Uttar Pradesh v thipper chand and the Supreme Court observed that on going through the clause 22 and clause 30 they found practically no difference between the two. But, however, the Supreme Court has not interfered with the selection of an arbitrator Hon'ble Mr. Justice m. s. apte, a former judge of the High Court of Bombay, in view of the agreement made between the parties before the High Court of Bombay. ( 14 ) IN M/s. Ram lal jagannath v punjab state throughcollector, nissar and another , construction and form of agreement entered into between the parties where the word 'arbitrator' has not specifically mentioned, came up for consideration before a full bench. The conditions that require interpretation was:"in matter of dispute the case shall be referred to the superintending engineer of the circle, whose order shall be final.
The conditions that require interpretation was:"in matter of dispute the case shall be referred to the superintending engineer of the circle, whose order shall be final. "in para 5 of the judgment the court held:"looking at the agreement which concerns us, it is clear that condition No. 5 printed at the back of the work order form in express words provides that in the event of dispute, the case shall be referred to the superintending engineer of the circle whose order shall be final. The existence of dispute, the reference of the case of the superintending engineer of the circle and the express unequivocal intention to attach finality to the order of the superintending engineer are extremely significant factors, which seem to clothe the superintending engineer with a quasi judicial character. Considering this clause rationally in its context, the conclusion seems to be almost irresistible that the parties intended the superintending engineer to act as an arbitrator and in no other capacity. The absence of words like 'arbitrator' or 'arbitration' seems to me in the context and the attending circumstances to be wholly immaterial because their omission is more than amply supplied by the language expressly providing that the case, in the matter of dispute, shall be referred to the superintending engineer of the circle whose order shall be final. " ( 15 ) IN rukminibai gupta v the collector, jabalpur andothers , clause 15 containing in a mining lease between the government of a state and a lessee was interpreted at para 6 of the judgment thus:"clause 15 provides that any doubt, difference or dispute, arising after the execution of the lease deed touching the construction of the terms of the lease deed or anything therein contained or any matter or things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable thereunder, the matter in difference shall be decided by the lessor whose decision shall be final. The reference has to be made to the lessor and the lessor is the governor. His decision is declared final by the terms of the contract.
The reference has to be made to the lessor and the lessor is the governor. His decision is declared final by the terms of the contract. His decision has to be in respect of a dispute or difference that may arise either touching the construction of the terms of the lease deed or disputes or differences arising out of the working or non-working of the lease or any dispute about the payment of rent or royalty payable under the lease deed. Therefore, clause 15 read as a whole provides for referring future disputes to the arbitration of the governor. Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such dispute shall be referred to arbitration, then such an agreement would spell out an arbitration agreement. " ( 16 ) IN government of Uttar Pradesh v tipper chand (supra),the interpretation of clause 22 was on the basis of the wordings contained in the said clause. Clause 30 of the agreement in this appeal makes a specific reference to the superintending engineer to give decision under the powers delegated to him by the circular adverted to above. The circular was issued in the year 1977 and it was in force when the respondent entered into an agreement. The parties are proceeded with a clear mind that clause 30 is an arbitration clause. Therefore, the facts and circumstances of this case required to be decided on its own merits. ( 17 ) CONSEQUENT to the order passed by the learned civiljudge, an arbitrator was already appointed and the said appointment is not questioned in this appeal. No separate revision also filed questioning the appointment of the arbitrator. ( 18 ) IN these facts and circumstances, the finding of thelearned civil judge does not call for any interference. ( 19 ) IN the result, this appeal fails and the same is herebydismissed with costs. The trial court is directed to reissue its reference to the arbitrator appointed already and to fix up a time limit to submit his award. --- *** --- .