Research › Search › Judgment

Madras High Court · body

2006 DIGILAW 1479 (MAD)

State of Tamil Nadu, rep. by the Secretary to Government, Highways Department, Chennai and Others v. Metro Road Construction (Madras) Pvt. Ltd. , rep. by its Managing Director, Chennai-50 and Another

2006-06-23

S.RAJESWARAN

body2006
JUDGMENT Per S. RAJESWARAN, J. This O.P. No. 294 of 2006 has been filed by the petitioner/Government to terminate the mandate given to the arbitral Tribunal vide order dated 30.6.2005 by this Court in O.P. No. 141 of 2002. 2. It is the case of the petitioners/Government that the 1st respondent herein filed a petition in O.P. No. 141 of 2002 for appointment of arbitrator for resolution of dispute with regard to agreement dated 8.8.1997. In O.P. No. 141 of 2002, the petitioner/Government, as respondent, raised a specific plea contending that the arbitration clause in the agreement is confined to claims of Rs. 2.00 lakhs and below only and for claim of Rs. 2.00 lakhs and above, the 1st respondent herein would have to approach the Civil Court. 3. O.P. No. 141 of 2002 was one of the batch of other connected O.Ps., wherein similar arbitration clause contained in the agreement and hence, all the O.Ps. were treated as a batch and posted before this Court on 30.6.2005. The learned Advocate-General who appeared for the Government in all the O.Ps. mentioned for adjournment. But O.P. No. 141 of 2002 was inadvertently omitted to be mentioned along with other O.Ps. resulting in an ex-parte order being passed by this Court on 30.6.2005 appointing the 2nd respondent as an arbitrator. 4. Consequently an application was filed by the petitioner-Government to set aside the ex-parte order, but the same was dismissed by this Court observing that the issue with regard to the existence of an arbitration agreement could be raised before the 2nd respondent under Section 16 of the Act, 1996. Pursuant to the order, the petitioner-Government raised the preliminary objection under Section 16 of the Act, 1996 before the 2nd respondent along with a memo praying to keep the arbitration proceedings in abeyance till the disposal of the batch of similar O.Ps. But the 2nd respondent by an order dated 18.1.2006 held that the arbitration clause contained in the agreement would extend to claims of Rs. 2.00 lakhs and above. 5. Thereafter the batch of the O.Ps. were taken up by this Court for hearing and by an order dated 3.2.2006, this Court held that the arbitration clause contained in the agreement was confined only to the value of Rs.2.00 lakhs and the claim of above Rs.2.00 lakhs would be referred to Civil Court. 2.00 lakhs and above. 5. Thereafter the batch of the O.Ps. were taken up by this Court for hearing and by an order dated 3.2.2006, this Court held that the arbitration clause contained in the agreement was confined only to the value of Rs.2.00 lakhs and the claim of above Rs.2.00 lakhs would be referred to Civil Court. Thus, according to the petitioner/Government the order passed previously by 2nd respondent under Section 16 of the Act is contrary to order passed by this Court subsequently on 3.2.2006. Therefore they brought to the notice of the 2nd respondent the order passed by this Court on 3.2.2006 and filed a memo requesting the 2nd respondent to dismiss the claim petition as not maintainable. But the 2nd respondent has held that as the issue was already decided by him prior to the passing of the order by this Court, the order of this Court is not binding precedent. Hence this petition has been filed by the petitioner-Government under Section 14(1)(a) of the Act, 1996 for the aforesaid relief. 6. Heard the Additional Government Pleader (Civil) and Mr. Muthukumarasami, the learned senior counsel appearing on behalf of the 1st respondent. 7. This petition was filed by the petitioner-Government under Section 14(1)(a) of the Act, 1996. According to Section 14(1)(a), the mandate of an arbitrator shall terminate if he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay. 8. It is not the case of the petitioner-Government that the 2nd respondent has become de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay. Their only contention is that the order passed by the 2nd respondent in the petition filed under Section 16 of the Act, 1996 holding that the arbitration clause contained in the agreement would extend to the claims of Rs. 2.00 lakhs and above is contrary to the order of this Court passed subsequently, in similar agreement containing similar arbitration clause, on 3.2.2006 holding that the claims above the value of Rs. 2.00 lakhs would not be referred to arbitration. 9. 2.00 lakhs and above is contrary to the order of this Court passed subsequently, in similar agreement containing similar arbitration clause, on 3.2.2006 holding that the claims above the value of Rs. 2.00 lakhs would not be referred to arbitration. 9. Under Section 16(5) of the Act, 1996, the arbitral Tribunal shall decide on a plea about the existence or non-existence or validity of the arbitration agreement and when the Tribunal takes a decision rejecting the plea, it shall continue with the arbitral proceedings and make an arbitral award. The party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34 of the Act, 1996. 10. Hence the petitioner-Government cannot maintain the petition under Section 14(1)(a) of the Act, 1996 and they have to wait until an award is passed by the 2nd respondent and only thereafter the existence or non-existence or validity of the arbitration agreement can be challenged by them under Section 34 of the Act, 1996. 11. Under Section 5 of the Act, 1996 the extent of judicial intervention in arbitral proceedings is restricted to the provisions contained in the Act, 1996 and the provisions have to be strictly followed by this Court to intervene in the arbitration proceedings. 12. Hence this original petition is not maintainable and the same is dismissed. Consequently, the stay application No. 1983 of 2006 is also dismissed.