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2001 DIGILAW 24 (ORI)

Purnachandra Jena v. State of Orissa

2001-01-19

P.K.MISRA

body2001
JUDGMENT P. K. MISRA, J. — These two applications have been filed by opposite parties 1 to 4 for recalling the order dated 25.6.1999 in M.J.C. No. 525 of 1997 and for a direction staying the further proceedings before the Arbitrator. The aforesaid M.J.C. had been filed by petitioner Purnachandra Jena (hereinafter referred to as the “Contractor”) under Sec. 11 of the Arbitration and Concilia¬tion Act, 1996 (hereinafter called the Act”), for appointment of Arbitrator. 2. The relevant facts and circumstances are as follows : After issuance of notice on 8.5.1998, the case was listed on 16.4.1999, on which date the case was adjourned by three weeks and thereafter the case was again adjourned till after the Summer Vacation. Subsequently, on 25.6.1999, the following order was passed by the then Acting Chief Justice : “ 7. 25.6.1999. Heard. In view of the definite stand of petitioner that there were extra items of work executed, Clause-11, Proviso of the Agreement clearly applies to the facts of this case. Whether there was any extra work executed is a matter to be decided by an Arbitrator. With consent of parties, Shri B.K.Behera, a Retired Judge of this Court is appointed as Arbitrator. Office to intimate him for necessary follow-up-action.” As evident from the aforesaid order Justice B. K. Behera, a re¬tired Judge of this Court was appointed as Arbitrator. The present application for recalling has been filed by the original opposite parties in the M.J.C. petition on the ground that the contract between the parties does not contain any arbitration clause. By order dated 11.2.2000 passed in Misc. Case No. 221/99, further proceedings before the Arbitrator have been stayed. 3. The learned counsel appearing for the contractor contends that since the order was passed on consent, the said order cannot be recalled unless both the parties agree to such a procedure. In the alternative, it is submitted that in the absence of any provision for review in the Arbitration and Conciliation Act, 1996, the question of recalling the earlier order does not arise. 4. The submission of the counsel for the Contractor that the earlier order was passed on consent may not appear to be correct. In the alternative, it is submitted that in the absence of any provision for review in the Arbitration and Conciliation Act, 1996, the question of recalling the earlier order does not arise. 4. The submission of the counsel for the Contractor that the earlier order was passed on consent may not appear to be correct. It is apparent that the said order is in two parts; the first part purports to record the conclusion of the learned Acting Chief Justice that an Arbitrator should be appointed and the second part purports to be the appointment of Justice B. K. Beh¬era, as the Arbitrator. It only appears that the latter part regarding selection of the Arbitrator was with consent, but not the earlier part, which appears to be the conclusion of the learned Acting Chief Justice. In such view of the matter, the submission that the order having been passed on consent cannot be recalled, is not acceptable. 5. The learned counsel appearing for the State seeking recall of the earlier order states that, in fact, there is no arbitration clause in the contract between the parties and as such, there is no question of referring the matter to an Arbitra¬tor. It would be more appropriate to deal with the contention of the Contractor to the effect that in the absence of any provision contained in the Act conferring power of review, the earlier order even if erroneous should not be recalled. 6. A perusal of the provisions contained in the Act indi¬cates that there is no specific provision conferring power of review. It is well-known that power to review is a creature of the statute and unless specifically conferred, no judicial au¬thority has got inherent power of review. In the present case, the earlier order was purportedly passed under Sec. 11 of the Act. It has been now decided in a series of decisions of the Supreme Court that the Chief Justice or the designated authority or person while exercising power under Sec.11 of the Act does not function as a judicial authority, but acts in an administrative capacity. Thus the earlier order cannot be considered to be a judicial order or decision and, therefore, the submission that such an order, even if erroneous, cannot be reviewed or recalled, is not acceptable. 7. Thus the earlier order cannot be considered to be a judicial order or decision and, therefore, the submission that such an order, even if erroneous, cannot be reviewed or recalled, is not acceptable. 7. The main question which remains to be determined is as to whether the contract contains an arbitration clause. Reliance has been placed on Clause-11. of the Contract, particularly, the Proviso to Clause-11. For convenience, Clause-11 including the Proviso, is extracted hereunder: “ Clause-11 - The Engineer-in-charge shall have power to make any alterations in or additions to the original specifica¬tion, drawings, designs, and instructions that may appear to him necessary and advisable during the progress of work, and the contractor shall be bound 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 alteration shall not invali¬date the contract, and any additional work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by contractor on the same condi¬tions 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 work. The time for the completion of the work shall be extended in the proportion that the additional 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 additional 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 sanctioned schedule of rates of the locality during the period when the work is being carried on and if such last mentioned class of work is not entered on the schedule of rates of the district then the contractor shall within seven days of the date of his receipt of the order carry out the work inform the Engineer-in-charge of the rate which it is his intention to charge for such class of work, and if the Engineer-in-charge does not agree to this rate he shall by notice in writing be at liber¬ty to cancel his order to carry out such class of work and ar¬range to carry it out in such manner as he may consider advisa¬ble. No deviation from the specification stipulated in the con¬tract nor additional items of work shall ordinarily be carried out by the contractor, nor shall any altered, additional or sub¬stituted work be carried out by him, unless the rates of the substituted, altered or additional items have been approved and fixed in writing by the Engineer-in-charge. The contractor shall be bound to submit his claim for any additional work done during any month on or before the 15th. day of the following month accompanied by a copy of the order in writing of the Engineer-in-charge for the additional work and that the contractor shall not be entitled to any payment in respect of such additional work if he fails to submit his claim within the aforesaid period. Provided always that if the contractor shall commence work or incur any expenditure in regard thereof before the rates shall have been determined as lastly hereinbefore mentioned, 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 rates as aforesaid according to such rate or rates as shall be fixed by the Engineer-in-charge. In the event of dispute, the decision of the Superintending Engineer of the Circle shall be final.” In the contract, known as “F2” contract, initially a specific arbitration clause had been incorporated in Clause-23. Such Clause-23 in the model from of F2 contract has been deleted pursuant to decision of the Government in 1981. In several deci¬sions of this Court including that of (Messrs) Hindusthan Steel Ltd. v. P. Boner alias Pravash Chandra Banerjee, I.L.R., 1973 Cuttack 1218, while construing similar clauses in a contract as in present Clause-11 as well as Clause-23, which has been deleted in the present contract, it was held that Clause-23 was the arbitration clause and Clause-11 cannot be construed as an arbi¬tration clause. Clause-11 refers to any ad hoc decision to be taken by the Executive Engineer or the Superintending Engineer, but cannot be construed as an arbitration clause. Similar view has been taken in M.J.C. Nos. 337 and 338 of 1999 (Smt. Banalata Sahoo v. State of Orissa and others), disposed of today. Clause-11 refers to any ad hoc decision to be taken by the Executive Engineer or the Superintending Engineer, but cannot be construed as an arbitration clause. Similar view has been taken in M.J.C. Nos. 337 and 338 of 1999 (Smt. Banalata Sahoo v. State of Orissa and others), disposed of today. The very fact that Government wanted to delete the arbitration clause from all “F2” agreements which is apparent from the specific order of the State Government dated 24th December, 1981, it is evident that Clause-11 which was being continued in the very same form, cannot be construed as an arbitration clause. In such view of the matter, in normal course, question of referring any dispute to arbitration does not arise. The earlier order was passed on the assumption that Clause-11 contains an arbitration clause. It is, of course, true that even where there is no arbitration clause in the original agreement, parties may subsequently agree to refer a matter to arbitration. However, in the present case, it cannot be said that both parties, particularly opposite parties 1 to 4 in the original M.J.C. petitions, had agreed to refer the matter to arbitration. As a matter of act, in view of the specific decision of the Government deleting all arbitration clauses from all “F2” agreements, in normal course the parties (meaning thereby, the counsel for opposite parties) could not have agreed to refer the matter to any arbitration. 8. It is, of course, true that the question as to whether there is an arbitration clause or not, can also be determined by the Arbitrator in view of the specific provision contained in Sec. 16 of the Act and such a course can be adopted by the State. However, since similar contracts have already been interpreted and it has been held that there is no arbitration clause, it would be an exercise in futility in leaving the matter for the Arbitrator. Adoption of such a course instead of assisting the parties would result in prolonging their agony. In such view of the matter, the earlier order appointing Justice B.K.Behera as the Arbitrator is recalled. Since it is held that there is no arbitration clause, it goes without saying that the Contractor would be free to pursue his normal remedy available under the common law. In such view of the matter, the earlier order appointing Justice B.K.Behera as the Arbitrator is recalled. Since it is held that there is no arbitration clause, it goes without saying that the Contractor would be free to pursue his normal remedy available under the common law. As the matter had remained pending for appointment of Arbitrator under Sec. 11 of the Act obviously under bona fide mistake of both parties, the period of such pendency is to be excluded from the period of limitation in accordance with Sec. 14 of the Limitation Act. 9. In the result, the application for recalling the earlier order dated 25.6.1999 is allowed and consequently, M.J.C. No. 525 of 1997 is dismissed as not maintainable. Both the Misc. Cases are accordingly allowed. Misc. Cases allowed.