STATE OF M. P. v. CHANDY & COMPANY — 1999 DIGILAW 983 (MP)

ORDER S. P. SRIVASTAVA, J. - M/s. Chandy & Company, Civil Lines, Datia through its Managing Partner John Chandy filed an application, under Section 8 of the Indian Arbitration Act, 1940, on 2.11.1982 praying for the appointment of the Arbitrator to determine the dispute between the applicant and the non-applicants/the State of M.P., the Secretary, P.W.D., Government of M.P., the Engineer-in-Chief, P.W.D. (Buildings and Roads), the Superintending Engineer P.W.D. (Buildings and Roads) Circle No. 1, Gwalior and the Executive Engineer P.W.D. (Buildings and Roads), Division Datia and to refer the dispute for arbitration as the non-applicants had failed to appoint an Arbitrator. 2. On 9.7.1983, M/s. Chandy & Company moved an application (I.A. No. 1) under Order 6, Rule 17, Civil Procedure Code praying for permitting to amend the application filed under Section 8 of the Arbitration Act. Under the proposed amendments, in the title of the case after Section 8, Section 20 was sought to be added. In the prayer clause, another relief to the effect "and further a reference of the dispute be made to the appointed Arbitrator" was sought to be added. 3. The objections were filed against the proposed amendments on the ground that it was not tenable, baseless and not legally maintainable and further that it will change the entire nature of the proceedings. 4. The trial Court however vide its cyiptic order dated 7.9.1983 allowed the said application without assigning any reason subject to payment of costs of Rs. 25/-. 5. In view of the amendments allowed to be incorporated in the application, the application which had been filed by M/s. Chandy & Company under Section 8 of the Arbitration Act became a composite application under Sections 8 and 20 of the Arbitration Act with an additional prayer that a reference of the dispute be made to the appointed Arbitrator. 6. In the aforesaid application, M/s. Chandy & Company had come with a case that it was entitled to an amount of Rs. 1,29,39,141/-, the dispute between the parties in which regard was required to be referred for arbitration. 7. The aforesaid application was contested by the respondents denying the allegations contained in the application. It was also asserted that in fact there was no arbitration clause in the agreement and there being no foundation for making the reference, the application deserved to be rejected. 8. 7. The aforesaid application was contested by the respondents denying the allegations contained in the application. It was also asserted that in fact there was no arbitration clause in the agreement and there being no foundation for making the reference, the application deserved to be rejected. 8. It may be noticed that initially it had not been disputed in paragraph 19(2)(i) of the reply filed by the appellants in the proceedings of Misc. Civil Case No. 10/82 in opposition to the application filed by the contesting respondent that the matter could be referred to arbitration by any party if decision of P.W.D. authorities was not acceptable, adding further that in this case the contractor did not refer any dispute. However, by amendment, which was allowed, paragraph 25 of the reply was amended taking up a plea that the reference of the dispute could not be made to the appointed Arbitrator as there was no arbitration provision in the terms and conditions of the agreement between the applicant and the non-applicants, hence the disputed matter could not be referred to the Arbitrator. 9. Under the contract, M/s. Chandy & Company had to construct the new District Office building Datia. In their reply, the appellants had admitted this Company had executed an agreement for the construction of District Office building at Datia and the work order to start the work was given on 9.11.1976. It was also admitted that the contractor had started the work on 10.11.1976. This work had to be completed upto 8.5.1978. This target however could not be achieved. Upto 7.8.1978 the progress of the work done by the contractor was short by 61.70% and upto 22.12.1977 the progress was short by 65.30% and upto 28.5.1978 the progress was short by 70.70% (average). The contractor had applied for extension of time. The contractor ultimately completed the work till 28.11.1981. It was also asserted that the final bill had been finalised and whatever was payable to the contractor as per agreement shall be paid to him at the earliest and the deposit and earnest money will be paid to the contractor after the finalisation of the recovery from him. 10. In the reply, the correctness and genuineness of the various claims set up by the contractor were denied. The revision of the rate of contract on account of escalation in price, labour charges, etc. 10. In the reply, the correctness and genuineness of the various claims set up by the contractor were denied. The revision of the rate of contract on account of escalation in price, labour charges, etc. as claimed by the contractor were specifically denied. It was however admitted that the work had been completed on 28.11.1981 and extension upto that date had been duly sanctioned by the Superintending Engineer vide his order dated 30.8.1982. 11. The aforesaid plea was considered by the Additional District Judge in his judgment and order dated 25.10.1983. The Additional District Judge in his aforesaid decision referring to the admission of the appellants in their reply dated 21.12.1982 rejected the plea raised by way of amendment in paragraph 25 of their reply. It was also indicated that in his notice dated 11.8.1981 the plaintiff had required the Superintending Engineer to resolve the dispute but he had rejected that request, which fact was accepted. It was also observed that since the Superintending Engineer had already expressed his opinion, therefore it was not proper to refer the dispute to him as contemplated under Clause 29 of the agreement, specially when he had been impleaded as defendant No. 4. 12. The trial Court vide its judgment and order dated 25.10.1983 came to the conclusion that a dispute existed between the parties and taking into consideration the reply of the appellants dated 21.12.1982 and other facts brought on record held that the applicant was entitled to get an Arbitrator appointed. The trial Court heavily relied upon the alleged admissions contained in Paragraph 19(2)(i) of the reply filed by the non-applicants ignoring the specific plea set-up in Paragraph 25 of the same about there being total absence of arbitration clause and allowing the application it was directed that for determination of the dispute referred to in sub-paragraphs (i) to (iii) and (iv) (A) to (iv) (F) of Paragraph 20 of the application, an Arbitrator be appointed. The parties were further directed to submit the names of the Arbitrators within seven days. 13. The Government of M.P. and others tried to challenge the aforesaid order before this Court without any success as the Civil Revision No. 776/84 filed by them against the said order was dismissed vide the judgment and order dated 4.8.1984, rejecting the application seeking condonation of delay in filing the revision. 14. 13. The Government of M.P. and others tried to challenge the aforesaid order before this Court without any success as the Civil Revision No. 776/84 filed by them against the said order was dismissed vide the judgment and order dated 4.8.1984, rejecting the application seeking condonation of delay in filing the revision. 14. On 31.10.1983, an application was filed by M/s. Chandy & Company wherein the names of five Arbitrators were submitted pursuant to the order dated 15.10.1983, out of whom the consent of only Shri R. L. Chandnani had been received. M/s. Chandy & Company therefore proposed the name of Shri R. L. Chandnani to be appointed as the Arbitrator. 15. It appears that in view of the direction of the Court, the non-applicants referred to hereinabove had submitted the name of the Superintending Engineer Shri Parashar for being appointed as the Arbitrator. 16. The trial Court vide the order dated 18.11.1983 observing that the Superintending Engineer had already expressed his opinion earlier and it will not be proper to appoint him as an Arbitrator passed an order appointing Shri R. L. Chandnani as the Arbitrator, whose name had been suggested by the applicant, M/s. Chandy & Company. A copy of the order dated 25.10.1983 was directed to be supplied to the Arbitrator along with the copy of the application filed by M/s. Chandy & Company. The arbitrator was required to file the award on file basis of the order dated 25.10.1983. The parties were directed to appear before the Arbitrator at the place indicated by him and produced their evidence and the documents which were required to be produced by the Arbitrator. 17. The Arbitrator vide the award dated 8.4.1984 determined an amount of Rs. 79,00,219/- to be payable to the claimant M/s. Chandy & Company. Out of this amount, it was noticed by the Arbitrator that the plaintiff-Company had already received an amount of Rs. 21,32,694/-. Deducting the aforesaid amount, therefore, from the total amount of Rs. 79,00,219/-, the amount found due and payable to the plaintiff-Company was found to be only Rs. 57,67,525/-. The defendants were found liable to pay the plaintiff-Company the aforesaid amount and the award was passed accordingly. 18. The plaintiff-claimant as well as the defendants - State of M.P. and others felt aggrieved by the award and filed separate objections. 19. 79,00,219/-, the amount found due and payable to the plaintiff-Company was found to be only Rs. 57,67,525/-. The defendants were found liable to pay the plaintiff-Company the aforesaid amount and the award was passed accordingly. 18. The plaintiff-claimant as well as the defendants - State of M.P. and others felt aggrieved by the award and filed separate objections. 19. M/s. Chandy & Company in its objection, to the award, dated 11.4.1984 had prayed for the modification of the award seeking interest from 28.11.1981 or the date of institution of the proceedings i.e., 29.10.1982 or from 8.4.1984 to the date of the payment. The rejection of the claim in item Nos. 3 and 11 of the award was also challenged. The present appellants had filed the detailed objection dated 20.4.1984 challenging the award praying that the same may be set-aside. In their objections, the present appellants had raised a specific plea that there was no provision for arbitration and they had never agreed in the course of arguments that the issue No. 1 did not call for any decision. It may be noticed that the issue No. 1 was to the effect as to whether the non-applicants were liable to refer the matter for arbitration. 20. The learned Additional District Judge vide the impugned judgment and order dated 29.11.1984 disposed of the Misc. Civil Case No. 10/82 registered on the basis of the application filed under Section 8 of the Arbitration Act, which was later on allowed to be amended rendering the said application as a composite application under Sections 8 and 20 of the said Act and upholding the award to the extent of Rs. 52,62,525/- only, directed for the payment of interest at the rate of 6% per annum on the said amount from the date of the said order till realisation and passed an order and decree to the said effect. 21. Thus the impugned order became a composite order disposing of the objections as well as a decree. 22. It may be noticed that Clause 29 of the terms and conditions of the contract in question was to the following effect : "Clause 29. Decision of the Superintending Engineer to final. 21. Thus the impugned order became a composite order disposing of the objections as well as a decree. 22. It may be noticed that Clause 29 of the terms and conditions of the contract in question was to the following effect : "Clause 29. Decision of the Superintending Engineer to final. - Except where otherwise provided in the contract, the Superintending Engineer of the Circle for the time being shall decide all questions relating to the meaning of the specification to the quality of workmanship, or materials used on the work, or as to any other question, claim, fight matter or thing whatsoever in anyway arising out of or relating to, the contract designs drawings, specifications, estimates, instructions, orders or these conditions otherwise concerning the work or the same whether arising during the progress of the work or after the completion or abandonment thereof : Provided that the Superintending Engineer shall before giving his decision in the matter give an opportunity of being heard to the parties to the contract. If any party of the contract is not satisfied with the decision of the Superintending Engineer it may make a reference to the Chief Engineer, P.W.D., Madhya Pradesh, through the Executive Engineer, concerned within 30 days from the date of communication of the decision of the Superintending Engineer, and the Chief Engineer will give the decision after hearing the parties and his decision thereon shall be final, conclusive and binding on all the parties to the contract. In case no reference is made within the period specified above, the decision of the Superintending Engineer shall be final, conclusive and binding on the parties." Clause 13 of the Contract in question was to the following effect - "Clause 13. Alternations in Specification and Designs. In case no reference is made within the period specified above, the decision of the Superintending Engineer shall be final, conclusive and binding on the parties." Clause 13 of the Contract in question was to the following effect - "Clause 13. Alternations in Specification and Designs. - The Engineer-in-charge shall have power to make any alterations in, omissions from additions to or substitutions for the original specification, drawings, designs and instruction that may appear to him to be necessary or advisable during the progress of work and the contractor shall be bound to carry on the work in accordance with any instructions which may be given to him in writing signed by the Engineer-in-charge and such alteration omission, additions or substitutions shall not invalidate the contract or 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 carried out by the contractor on the same condition in all respects on which he agreed to do the main work and at the same rates as are specified in the tender for the main works. Extension of time in consequence of Alteration - The time for the completion of the Work shall be extended in the proportion that the altered additional or substituted work be also the original contractor's work and certificate of the Engineer-in-charge shall be conclusive as such proportion. Rates for works not in estimate or schedule of rates of the district. - And if the altered additional or substituted work include any class of work for which no rate is specified in this contract, then such clauses of work shall be carried out at the rate entered in the schedule of rates of the ...... Rates for works not in estimate or schedule of rates of the district. - And if the altered additional or substituted work include any class of work for which no rate is specified in this contract, then such clauses of work shall be carried out at the rate entered in the schedule of rates of the ...... District which was in force at the time of the acceptance of the contract or provided that when the tender for the original work as a percentage below/above the schedule of rate the altered additional or substituted work required as aforesaid shall be chargeable at the said schedule of rate minus/plus the same percentage deduction, addition and if such class of work is not entered in the and arrange to carry it out in such manner as may be considered 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 of expenditure incurred by him prior to the date of the determination of the rates as aforesaid according to such rate of rate as shall be fixed by the Engineer-in-charge. In the events of a dispute the decision of the Superintending Engineer of the Circle shall be final." Clause 14 of the contract was to the following effect - "Clause 14. No claim to any payment or compensation or alteration in or restriction of work. In the events of a dispute the decision of the Superintending Engineer of the Circle shall be final." Clause 14 of the contract was to the following effect - "Clause 14. No claim to any payment or compensation or alteration in or restriction of work. - If at any time after the execution of the contract documents the Engineer-in-charge shall for any reason whatsoever require the whole or any part of the work as specified in the tender to be stopped for any period or shall not require the whole or part of the work to be carried out at all or to be carried out by the contractor he shall give notice in writing of the fact to the contractor who shall thereupon suspend or stop the work totally as the case may be in any such case except as provided hereunder the contractor shall have no claim to any payment or compensation whatsoever on account of any profit or advantage which he might have derived from the execution of the work in full but which he did not so derive in consequence of the full amount of the work not having been carried out or on account of any loss that he may be put to on account of materials purchased or agreed to be purchased or for unemployment of labour recruited by him. He shall not also have any claim for compensation by reason of any alterations having been made in the original specification drawing designs and instructions which may involve any curtailment of the work as originally contemplated where, however, materials have already been purchased or agreed to be purchased by the contractor shall be paid for such materials at the rates determined by the Engineer-in-charge, provided they are not in excess of requirements and are of approved quality and/or shall be compensated for the loss, if any, that he may be put to in respect or material agreed to be purchased by him, the amount of such compensation to be determined by the Engineer-in-charge, whose decision shall be final. If the contractor suffers any loss on account of his having to pay labour charges during the period during which the stoppage of work has been ordered under this clause the contractor shall on application be entitled to such compensation on account of labour charges at the Engineer-in-charge whose decision shall be final, may consider reasonable provided that contractor shall not be entitled to any compensation on account of labour charge if in the opinion of the Engineer-in-charge the labour could have been employed by the contractor elsewhere for the whole or part of the period during which the stoppage of the work has been ordered aforesaid." 23. In the present case what is apparent from a perusal of the record of the proceedings of Misc. Civil Case No. 10 of 1982 that the application filed by M/s. Chandy & Company on 2.11.1982 was initially only an application under Section 8 of the Arbitration Act, 1940. This application had been heard finally on 26.8.1983 and was posted for delivery of judgment for 6.9.1983. The order-sheet dated 6.9.1983 indicates that the judgment/order could not be made ready and the next date fixed for the delivery of the same was 7.9.1983. On 7.9.1983 an application seeking amendment in the application which had already been heard and posted for judgment, was filed with the object of making the application under Section 8 of the Arbitration Act to be an application under Section 20 of the said Act also. The proposed amendment to which a reference has already been made hereinabove were allowed to be incorporated in the application. The judgment and order disposing the application under Section 8 of the Act was delivered on 25.10.1983 requiring the parties to submit the list of Arbitrators. The Arbitrator was appointed on 18.11.1983. Under the order dated 18.11.1983 besides appointing the Arbitrator the Additional District Judge made a reference to the Arbitrator requiring him to file the award within two months of the date of receipt of the order dated 25.10.1983 and the copy of the application filed by M/s. Chandy & Company which had been presented on 2.11.1982. Parties were directed to appear before the Arbitrator on the date fixed by him and tender him the evidence and produce before him the documents etc. 24. Acting on the reference so made the Arbitrator proceeded to give the award. Parties were directed to appear before the Arbitrator on the date fixed by him and tender him the evidence and produce before him the documents etc. 24. Acting on the reference so made the Arbitrator proceeded to give the award. It was this award which was challenged before the Additional District Judge giving rise to the impugned order/decree in the present appeal which has been filed under Section 39 of the Indian Arbitration Act. 25. The appellants have prayed for setting aside of the impugned order and decree passed by the learned Additional District Judge as well as the award of the arbitration proceedings leading to the decree. 26. We have heard file learned counsel for the appellants as well as the contesting respondent at some length and have carefully perused the record. 27. The learned counsel for the contesting respondent has raised preliminary objection contending that the present appeal is directed against the decree passed by the Court below and the grounds available for assailing the decree which could be urged under the law have to remain confined to the grounds as envisaged under Section 17 of the Arbitration Act. In this connection it has been urged that the appellants cannot raise any dispute as envisaged under Section 30 or 33 of the Arbitration Act challenging either the order dated 25.10.1983 or assail the award on the ground that there was no arbitration agreement or the reference was bad in law. 28. The learned counsel for the appellants has, however, urged that the order passed by the Additional District Judge in Miscellaneous Civil Case No. 10 of 1982 taking into consideration the facts and circumstances noticed hereinabove which has been impugned in this appeal filed under Section 39 of the Arbitration Act is a composite order rejecting the objections in regard to inherent lack of jurisdiction and incompetency to make a reference as well as the passing a decree accepting the award only in part. Such being the nature of the order, it is urged, in the present appeal all the grounds going to the root of the matter including those relating to the absence of the arbitration clause and other grounds demonstrating the award to be otherwise invalid can be urged and pressed in support of the appeal without any legal impediment. 29. Such being the nature of the order, it is urged, in the present appeal all the grounds going to the root of the matter including those relating to the absence of the arbitration clause and other grounds demonstrating the award to be otherwise invalid can be urged and pressed in support of the appeal without any legal impediment. 29. In the aforesaid connection, we are of the considered opinion that after the award had been filed and an application was made to the Court for setting aside it and the said application is dismissed passing a decree making the award a rule of the Court under the same order, an appeal is competent and the appellants are entitled to all the grounds of attack as envisaged under Sections 33 and 39 of the Act. 30. A Division Bench of the Patna High Court in its decision in the case of Union of India v. B. C. Basu and others ( AIR 1983 Pat. 25 = 1983 Arb. LR 145) had after considering various decisions had held that the right of appeal conferred by the Legislature cannot be lightly defeated and all orders of the nature specified in Section 39 of the Arbitration Act would be open to appeal even if they have been incorporated in the decree or a decree has been passed in the case in meantime. It was emphasized that the mere drawing up of a decree will not take away the right of appeal against the order. If the appeal against the order is allowed, the decree will automatically become inoperative. There may be cases where the Court passes a composite order which on the one hand dismisses the objection of the defendant to the award and on the other hand adopts the award and directs that decree should be prepared in terms of the judgment passed by it. Such an order should be treated to be an order refusing to set aside an award and an appeal would be maintainable against the order under Section 39 of the Arbitration Act. 31. Such an order should be treated to be an order refusing to set aside an award and an appeal would be maintainable against the order under Section 39 of the Arbitration Act. 31. This Court in its decision rendered by a Division Bench, in the case of Jay Kumar Jain v. Om Prakash and another ( AIR 1970 MP 119 ) had also held that so far as this Court is concerned, the settled view is that in the case of a composite order, by which a Court refuses to set aside an award and also passes a decree in accordance with its terms the order refusing to set aside the award and the decree both appealable as the provisions contained in Sections 17 and 39 are not mutually exclusive. Therefore, it was pointed out, the fact that a decree has been passed does not preclude an appeal against the order refusing to set aside the award. If the order is set aside, the decree which is founded on it would lapse and consequently it cannot operate as a bar to the appeal against the order. A fortiori the making of two separate order does not take away the right of appeal given under Section 39 of the Arbitration Act to a person aggrieved by an order setting aside or refusing to set aside an award. 32. We do not find any justifiable ground for taking at different view and hold that the appeal as framed is maintainable and it is open to the appellants to assail the award on all the grounds as envisaged under Section 33 as well as Section 39 of the Arbitration Act. 33. The preliminary objection of the learned counsel for the contesting respondent is totally misconceived and is rejected. 34. Learned counsel for the appellants has strenuously urged that reference to the Arbitrator made by the Court in the present case was clearly without jurisdiction and the award given by the Arbitrator was a nullity. The contention is that taking into consideration the terms and conditions of the contract to which a reference has already been made hereinabove there could be no manner of doubt that there was no agreement between the parties to the contract for making a reference to the arbitration in the event of their being a dispute in the absence of any arbitration clause in the contract. It was urged that it was open to the Court to either appoint an Arbitrator or make a reference to the Arbitrator and that too in the proceedings which had been initiated under Section 8 of the Arbitration Act. 35. The learned counsel for the contesting respondent has, however urged that the order passed by the Civil Court of competent jurisdiction dated 25.10.1983 allowing the application under Section 8 of the Arbitration Act had attained finality and in view of the finding returned against the appellants in that proceedings up-holding the existence of an arbitration agreement it was not open to the appellants to agitate this matter again especially when a revision filed against that order under Section 115 of the Code of Civil Procedure had been dismissed. 36. We have given our careful consideration to the aforesaid submission. 37. So far as the dismissal of the revision is concerned, it may be noticed that a perusal of the order dismissing the Civil Revision No. 776 of 1984 indicates that this Court had declined to interfere in the exercise of its discretion envisaged under Section 115, Civil Procedure Code on the ground that the appellants had not approached this Court within limitation. The order dismissing the revision dearly indicates that the delay in filing the revision was not condoned and, therefore, the revision was dismissed as barred by time. In such a circumstance, it cannot be held that this Court while exercising its revisional jurisdiction had upheld the order of the Additional District Judge dated 25.10.1983. The aforesaid order dismissing the revision as barred by time therefore, cannot come in the way of the appellants as urged. 38. It may further be noticed that the order of reference dated 18.11.1983 was made by the Additional District Judge in the same case which was registered on the application made by M/s. Chandy & Company under Section 8 of the Arbitration Act being Misc. Civil Case No. 10 of 1982. It is the original proceeding under Section 8 of the Act which has resulted in the making of the reference by the Court which culminated in the impugned award. The entire record of the aforesaid proceedings had been summoned and is before this Court. Civil Case No. 10 of 1982. It is the original proceeding under Section 8 of the Act which has resulted in the making of the reference by the Court which culminated in the impugned award. The entire record of the aforesaid proceedings had been summoned and is before this Court. A perusal of the order dated 25.10.1983 indicates that the Additional District Judge while noticing that in Paragraph 25 the present appellant had raised a specific plea denying the existence of any arbitration agreement had proceeded to ignore the said categorical assertion on file ground that in Paragraph 20(1) of the reply to the application giving rise to the Misc. Civil Case No. 10 of 1982, the Karyapalan Yantri had admitted that the matter could be referred to arbitration by any authority if decision of the P.W.D. authorities were not acceptable. 39. Along with the application filed under Section 8 of the Arbitration Act, which was later on allowed to be amended and purported to be in application under Section 20 of the aforesaid Act also, M/s. Chandy & Company had filed the contract. A perusal of the aforesaid contract demonstrates that in fact there was no arbitration-clause at all. Relevant Clauses 13, 14 and 29 of the said contract have already been reproduced hereinafter. It cannot be over-looked that although when an allegation of fact is admitted or must be deemed to be admitted, there is no need to prove what is admitted or deemed to be admitted yet there might be cases in which having regard to the nature of the circumstances the Court may insist upon proof independent of such admission by non-traverse. The provisions contained in Section 8 of the Arbitration Act in unequivocable terms stipulates as a condition precedent the existence of an arbitration agreement. In the present case on the own showing of M/s. Chandy & Company all the terms and conditions of the contract had been reduced into writing. In this view of the matter it was incumbent upon the Additional District Judge to go through the contract in order to find out about the existence of an arbitration clause. This does not appear to have been done at all. 40. In this view of the matter it was incumbent upon the Additional District Judge to go through the contract in order to find out about the existence of an arbitration clause. This does not appear to have been done at all. 40. In this connection it may be noticed that in its decision in the case of Bharat Bhushan Bansal v. U.P. Small Industries Corporation Ltd., Kanpur ( (1999) 2 SCC 166 = 1999 (1) Arb. LR 326 (SC)) the Apex Court referring to its earlier decision in the case of K. K. Modi v. K. N. Modi ( (1998) 3 SCC 573 = 1998 (1) Arb. LR 296) had clarified that mongst the essential ingredients of an arbitration clause two important ingredients are that the agreement between the parties must contemplate that substantive rights of parties will be determined by the agreed Tribunal and that the Tribunal will determine the rights of the parties in an impartial and judicial manner with the Tribunal owing an equal obligation of fairness towards both sides and also that the agreement of the parties to refer their disputes to the decision of the Tribunal must be intended to be enforceable in law. 41. The Apex Court had pointed out that contracts may contain a clause that on certain questions the decision of an engineer, architect or another expert shall be final. The decision given in such cases by the engineer etc., is not an award. Such a person is under no obligation, unless the contract otherwise provides, to receive evidence or submissions and is entitled to arrive at his decision solely upon the results of his own expertise and investigations. The procedure involved is not arbitration, and the Arbitration Act does not apply to it. On the primary material on which such person acts is his own knowledge and experience, supplemented if he thinks fit by his own investigations and or materials (which need not to conform to rules of evidence) put up before him by either party. An Arbitrator on the other hand, acts primarily on material put up before him by the parties. On the primary material on which such person acts is his own knowledge and experience, supplemented if he thinks fit by his own investigations and or materials (which need not to conform to rules of evidence) put up before him by either party. An Arbitrator on the other hand, acts primarily on material put up before him by the parties. Approving the observations to the aforesaid effect, while interpreting the clause in the contract with a similar effect as Clause 13, 14 and 29 in the present case, it was observed by the Apex Court that in respect of questions arising from or relating to any claim or right, matter or things in any way connected with the contract, while the decision of the departmental officer is made final and binding in respect of certain types of claims or questions, the decision of the departmental authority is made final and binding in respect of the remaining claim and such authorities are expected to determine the question or claim on the basis of their own investigations and material. Such clauses do not contemplate a full fledged arbitration covered by the Arbitration Act. 42. In the aforesaid decision while interpreting a clause in the contract which Was similar to the clauses in respect of the present case, the Apex Court had reiterated its earlier view in the case of State of Orissa v. Damodar Das ( (1996) 2 SCC 216 = 1996 (1) Arb. LR 221 (SC)) and State of U.P. v. Tipper Chand ( (1980) 2 SCC 341 ) and emphasising the implications arising under the expression "shall also be final, conclusive and binding on the contractor, had indicated that such clauses could not be held to have contained an arbitration agreement either expressly or by implication as an intention behind such clauses was to vest the departmental authority with supervision and administrative control over the work. 43. The application filed under Section 8 of the Arbitration Act, 1940 was held to be misconceived up-holding the rejection of the said application. 44. In the present case, the departmental authority referred to in the clauses, was more in the category of an expert who was to decide in any way the claims, rights or matters pertaining to the contract and the intention dearly appears to be more to avoid disputes than to decide formulated disputes in a quasi-judicial manner. 44. In the present case, the departmental authority referred to in the clauses, was more in the category of an expert who was to decide in any way the claims, rights or matters pertaining to the contract and the intention dearly appears to be more to avoid disputes than to decide formulated disputes in a quasi-judicial manner. Such a clause could not be taken to be an arbitration clause and the duties of the Engineer envisaged under the aforesaid clauses referred to hereinabove were clearly administrative in nature and not judicial. The condition in question did not contemplate any arbitration. 45. The question whether having made the appointment acting under sub-section (2) of Section 8, the Court can also make an order of reference to the Arbitrator was considered in quite detail by the Apex Court in its decision in the case of the Union of India v. Shri Om Prakash ( AIR 1976 SC 1745 ) 46. The Apex Court in its aforesaid decision while examining the scheme underlying the Arbitration Act, 1940 had indicated that the said Act contemplated three kinds of arbitration : (i) arbitration without intervention of a Court, dealt with in Chapter II of the Act which includes Section 3 to Section 19; (ii) arbitration with intervention of a Court where there is no suit pending, dealt with in Chapter III which consists of only one section, viz., Section 20; and (iii) arbitration in suits, which is covered by Chapter IV. It was pointed out that it was apparent from the provisions of Chapter II that after the appointment of Arbitrator, the proceedings are to be out-side Court, and upto the stage of filing the award intervention of Court is not contemplated unless any occasion arises requiring the Court to remove the Arbitrator under Section 11. It was further indicated that an agreement to submit differences to arbitration implies an agreement to refer the differences to the Arbitrator. Section 8 of the Act only empowered the Court to appoint an Arbitrator where the parties did not concur in the appointment. Section 20 occurring in Chapter III contains provisions for arbitration within the intervention of the Court were there is no suit pending. 46A. Section 8 of the Act only empowered the Court to appoint an Arbitrator where the parties did not concur in the appointment. Section 20 occurring in Chapter III contains provisions for arbitration within the intervention of the Court were there is no suit pending. 46A. The provisions contained in Section 20 of the Act confer powers on the Court to order the agreement to be filed and further to make an order of reference to the Arbitrator appointed by the parties, or where the parties cannot agree upon an appointment to an Arbitrator appointed by the Court. Sub-section (1) of Section 20 made it clear that the provisions of the section can be availed of only if no proceeding under Chapter II had been initiated. 47. The Apex Court had clarified that Section 8 of the Arbitration Act does not contain any provision empowering the Court to make an order of reference to the Arbitrator as one found in sub-section (4) of Section 20. The Court in the proceeding under Section 8 could not have any jurisdiction after appointing an Arbitrator to proceed further to make an order referring the dispute to the Arbitrator. 48. The Hon'ble Supreme Court in its aforesaid decision, while pointing out the implications arising under the expression "otherwise invalid" as occurring in Section 30(c) of the Arbitration Act, had clarified that the words "or is otherwise invalid" occurring in the aforesaid provision were wide enough to cover all forms of invalidity including invalidity of the reference. It had also indicated that an award on an invalid reference was a nullity and liable to be set aside. 49. In its another decision in the case of Sukaluram Gond v. State of M.P. and others ( 1994 (5) SCC 570 = 1994 (2) Arb. LR 254 (SC)) the Apex Court had pointed out that an award derived its force from the original contract. Parties to the contract, by consent, referred their dispute for settlement to a Tribunal of their choosing, instead of to a Court. Therefore, there should exist an agreement showing consent to refer a dispute for settlement by the Arbitrator. In cases where the Arbitrator entered into the consideration of the matters which were not referred to him or over which he had no jurisdiction to try, the question was not one of waiver or estoppel but of authority. 50. Therefore, there should exist an agreement showing consent to refer a dispute for settlement by the Arbitrator. In cases where the Arbitrator entered into the consideration of the matters which were not referred to him or over which he had no jurisdiction to try, the question was not one of waiver or estoppel but of authority. 50. The question as to whether a person, not a party to a reference but who participated in the award proceeding with objection and continued to participate in the proceedings under protest, is bound by the award had been answered by the Hon'ble Supreme Court in the negative holding that he was not bound by the award as being without authority, pointing out that after taking objection to the authority of the Arbitrator and making a protest, unless a proper reference was made by the Court, the Arbitrator does not get the authority and jurisdiction to make the award against a non-party to the contract. To constitute an arbitration agreement, there must be an agreement, that is to say, the parties must be ad idem. Agreement must be made by the free consent of the parties. The Apex Court had pointed out in unambiguous terms that it was settled law that acquiescence does not confer jurisdiction. It had been emphasised that the jurisdiction cannot be assumed by the Arbitrator on the basis of either acquiescence of the party or consent to the adjudication of the dispute without any reference and held that the award of the Arbitrator had to be treated as without jurisdiction and authority in such a situation. 51. Taking into consideration the facts and circumstances established on record, we are clearly of the opinion that the reference to the Arbitrator in the present case was dearly without jurisdiction and the impugned award is a nullity and deserves to be set-aside in its entirety. 52. This appeal therefore succeeds and the award dated 8.4.1984 as modified by the learned Additional District Judge under the impugned judgment and order is set-aside. 53. There shall however by no order as to costs. 54. It may be noticed that as indicated in the award itself, M/s. Chandy & Company had already received a sum of Rs. 21,32,694/- towards payment due under the contract in question. This fact is not disputed by the learned counsel representing the contesting respondent. 55. 53. There shall however by no order as to costs. 54. It may be noticed that as indicated in the award itself, M/s. Chandy & Company had already received a sum of Rs. 21,32,694/- towards payment due under the contract in question. This fact is not disputed by the learned counsel representing the contesting respondent. 55. Before parting with this judgment, it may further be noticed that Shri K. K. Lahoti, learned counsel for the appellants, has stated in the presence of Shri M. M. Tolwani, the Executive Engineer, P.W.D. (B&R), Datia Division, Datia, that out of the amount of Rs. 2,69,335/- shown at item No. 13 of the chart given in Paragraph 10 of the award dated 8.4.1984, an amount of Rs. 2,67,616/- has been paid to M/s. Chandy & Company over and above the amount of Rs. 21,32,694/- on various dates during the period elapsing between the date of the award and 28.2.1985 and further that the only amount, out of the aforesaid amount of Rs. 2,69,335/-, which now remains to be paid is Rs. 1,719/-, which the appellants undertake to pay within two weeks. Appeal allowed.