Research › Search › Judgment

Orissa High Court · body

2003 DIGILAW 42 (ORI)

Suresh Chandra Pradhan v. State of Orissa

2003-01-17

body2003
JUDGMENT P. K. BALASUBRAMANYAN, C.J. — This is an application under Sections 7 and 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’). The petitioner is a con¬tractor to whom the works connected with the construction of H. L. Bridge over river Tikera were entrusted. The date of agreement is not indicated, but it must have been some time at the end of the year 1978 or the beginning of the year 1979. From the copy of the agreement, Annexure-1, it is not possible to discover the date thereof. But, it is pleaded in the petition that the date of commencement of the work was 25.1.1979, and the date of comple¬tion was 25.4.1979. Thus, the contract period was three months. According to the petitioner, he applied for extension of time up to 31.3.1980, but the same was not acceded to by the opposite parties. Though amounts had been paid towards the bills submitted by the petitioner, the final payment has not been made to him. The petitioner had submitted a bill along with the letter dated 19.10.1979 and the same had been received by opposite party No. 1 on 22.10.1979. The amount was not paid. After about 20 years, the petitioner sent a final demand notice enumerating the claims and demanding payment within 15 days of receipt of the notice. There was no response from the opposite parties. In that situation, the petitioner had sent a notice through his Advocate invoking Clause 11 of the contract. The Superintending Engineer of the Circle concerned did not act as envisaged in Clause 11 of the contract. Hence, the petitioner approached this Court under Sections 7 and 11 of the Act. The present petition was filed on 19.4.2000. 2. The petitioner pleads that there was an arbitration clause wherein it has been specified that in case of a dispute, a reference will be made to the Arbitration Tribunal constituted by the Arbitration (Orissa Amendment) Act, 1982 (Orissa Act 3 of 1983). But, since the Arbitration Act, 1940 to which an amendment had been made by Orissa Act 3 of 1983, had been repealed by the Arbitration and conciliation Act, 1996, the Tribunal constituted by the Orissa Act, Act 3 of 1983, even though continues to exist to deal with pending matters, has been stripped of its future jurisdiction. But, since the Arbitration Act, 1940 to which an amendment had been made by Orissa Act 3 of 1983, had been repealed by the Arbitration and conciliation Act, 1996, the Tribunal constituted by the Orissa Act, Act 3 of 1983, even though continues to exist to deal with pending matters, has been stripped of its future jurisdiction. Hence, the petitioner was entitled to have an Arbi¬trator appointed under Section 11 of the Act of 1996. It may be noted here that the arbitration clause as amended provides that any dispute arising out of the contract shall be referred to the Arbitration Tribunal, Bhubaneswar constituted by the State Gov¬ernment, which shall consist of three members. It also sets out the qualifications of the members. 3. The opposite parties have filed a counter affidavit contending that the prayer for appointment of an Arbitrator under the Arbitration and Conciliation Act, 1996 was thoroughly miscon¬ceived. Section 85 of the Arbitration and Conciliation Act, 1996 is referred to, to point out that the Act applies only in rela¬tion to arbitral proceedings which commenced on or after the 1996 Act came into force. It is also contended that the saving clause stipulates that the provisions of the Arbitration Act, 1940 shall be made applicable, if the parties to the agreement agree to the same. The opposite parties are not agreeable to have an Arbitra¬tor appointed under the Act of 1996. The Act could not be made applicable to arbitral proceedings based on the dispute which had arisen in the year 1979. The petitioner left the work incomplete. He stopped the work on 23.8.1979. He submitted a bill on 19.10.1979. That bill was repudiated by communication dated 2.11.1979. The petitioner refused to receive that letter. Hence, the repudiation was published in the Newspaper on 6.8.1980. Thereby, the petitioner was asked to come for taking measurements of the work done. But, he failed to turn up. The claim was dorment. It could not be revived now. The delay and lapses in moving the Court disentitles the petitioner to claim relief from this Court. The application was liable to be dis¬missed. 4. In his rejoinder, the petitioner reiterated that the dispute arose out of the agreement executed in the year 1978-79, and that the opposite parties had not prepared the final bill and had not settled the claim of the petitioner. The petitioner had executed additional work. The application was liable to be dis¬missed. 4. In his rejoinder, the petitioner reiterated that the dispute arose out of the agreement executed in the year 1978-79, and that the opposite parties had not prepared the final bill and had not settled the claim of the petitioner. The petitioner had executed additional work. It was not correct to say that he had not attended the office of the opposite parties. In response to his letter in that behalf, opposite party No. 1 had called for the relevant files. The petitioner had been requesting the au¬thorities all these years to act. The petitioner had hoped that the authorities would disburse the amounts to him. The Arbitra¬tion Act, 1940 was not applicable in view of Section 85 (1) of the Arbitration and Conciliation Act, 1996. The petitioner was entitled to move this Court under Sections 7 and 11 of the Act as the opposite parties have not paid the dues of the petitioner towards his final bill. The petitioner was, therefore, entitled to relief. 5. It is clear from the pleadings that the repudiation of the claim of the petitioner took place on 2.11.1979 (or, on 6.8.80, if we go by the public notice). Only in the notice rais¬ing a claim on 27.1.2000, the petitioner called upon the Superin¬tending Engineer to adjudicate on the dispute in terms of Clause 11 of the Contract. On 19.4.2000 the present petition was filed. Thus, the demand for appointing an Arbitrator is made after 19 years in this case. 6. It is true, that in Konkan Railway Corporation v. Rani Constructions Ltd : 2002 (1) SCALE 465 , the Supreme Court has held that the Arbitrator appointed by the Chief Justice in an application under Section 11 (6) of the Act, can decide his own jurisdiction and the existence or otherwise of an arbitrable dispute. It has also been clarified that the function of the Chief Justice is only an administrative one. With respect, does it mean that while performing his duty or function under Section 11 (6) of the Act, the Chief Justice cannot even ask himself the question, whether the claim is not stale and whether a dispute long dormant or buried or a claim that has been lost by lapse of time can now be resurrected ? With respect, does it mean that while performing his duty or function under Section 11 (6) of the Act, the Chief Justice cannot even ask himself the question, whether the claim is not stale and whether a dispute long dormant or buried or a claim that has been lost by lapse of time can now be resurrected ? Is he to act mechanically and name an Arbitrator even if the claim arose out of a dispute, a century old ? I am inclined to think that this is not the position or this may not be the position. The argument that the Arbitrator can decide this question also, does not preclude the Chief Jus¬tice from considering whether the claim that is sought to be raised is one that has been lost by efflux of time and whether it would be proper to appoint an Arbitrator. 7. The process of arbitration conceived of as an Alternate Dispute Redressal machinery, was intended to be quick, inexpen¬sive and final. But, what is happening in practice is that it has become tardy, prolonged, unduly expensive and merely a prelude to further litigation. In that context, the argument that the Chief Justice should consider whether there is a live or subsisting claim before exercising his jurisdiction under Section 11(6) of the Act, has force, I am therefore not inclined to accept the argument that I cannot look into any aspect other than the exist¬ence of an arbitration agreement, whether a claim is duly made, and it arises out of a contract between the parties. 8. The Arbitrator appointed, it is true, can also decide the question. But, once an Arbitrator is appointed the parties have to incur expenditure both by way of his fees and by way of expenses, in addition to paying their own lawyers. The experience is that even before a preliminary question is decided, the par¬ties incur significant expenditure. The expenditure goes up depending on the status of the Arbitrator. But, the experience is that the cost to be incurred is at no time insignificant. 9. The performance of duty under Section 11 (6) of the Act carries with it the right or obligation to decide whether that duty is to be performed. The expenditure goes up depending on the status of the Arbitrator. But, the experience is that the cost to be incurred is at no time insignificant. 9. The performance of duty under Section 11 (6) of the Act carries with it the right or obligation to decide whether that duty is to be performed. While taking that decision, the Chief Justice is entitled to decline, once he is satisfied that the claim is not a subsisting one or that it has become unenforceable due to passage of time or it has become stale. Tested in this background, I am satisfied that the claim of the petitioner nineteen years old being stale, it is not proper or correct to appoint an Arbitrator as prayed for by him. Hence I decline to appoint an Arbitrator as prayed for. I dismiss the petition. Petition dismissed.