Research › Search › Judgment

Rajasthan High Court · body

2006 DIGILAW 1776 (RAJ)

M. C. Modi & Co. v. State of Rajasthan

2006-05-19

SHIV KUMAR SHARMA

body2006
JUDGMENT 1. - The non applicants raise objection in regard to maintainability of this application seeking appointment of the arbitrator on the ground that clause 39 of the agreement is not an arbitration clause. 2. Clause 39 of the agreement reads as under : "39. That all disputes arising out of this agreement and all questions relating to the interpretation of this agreement shall be decided by the Government and the decision of the Government shall be final." 3. It is averred in the application by the applicant that after the dispute with reference to work done, wrongful rejection of work, wrongful deduction of the payment and denial of payment arose, the applicant gave a notice to the non applicants on August 7, 2003 seeking demand of appointment of arbitrator but no heed was paid by the non applicants. In reply to this contention non applicants stated that through notice illegal demands were made by the applicant to which he was not entitled. 4. Learned counsel for the non applicants placed reliance on State of Rajasthan v. Nav Bharat Constructions Co., 2006 (1) WLC (SC) Civil 127 : (2005) 11 SCC 197 , State of MP v. K.K. Shukla, (2001) 10 SCC 194 , Executive Engineer v. Suresh Chand Panda, (1999) 9 SCC 92 . Bharat Bhushan Bansal v. UP Small Industries Corporation, (1999) 2 SCC 166 and Prabartak Commercial Corporation v. Chief Administrator, (1991)1 SCC 498 . 5. Learned counsel for the applicant canvassed that the case law cited on behalf of the non applicants is distinguishable since in all those cases contractual clause made provision for settlement of questions relating to specification, design, quality, workmanship and other technical aspects by officer of one of the parties whereas in the instant matter clause 39 provided for reference of any doubt, differences or disputes to the State for final decision. In support of his submission learned counsel for the applicant placed reliance on Rukmani Bai v. Collector Jabalpur (1980) 4 SCC 556 and Uttam Wires v. State of Rajasthan, AIR 1990 Delhi 72 . 6. I have pondered over the submissions and weighed the material on record and case law placed for my perusal. 7. In support of his submission learned counsel for the applicant placed reliance on Rukmani Bai v. Collector Jabalpur (1980) 4 SCC 556 and Uttam Wires v. State of Rajasthan, AIR 1990 Delhi 72 . 6. I have pondered over the submissions and weighed the material on record and case law placed for my perusal. 7. A look at clause 39 in the instant case clearly demonstrates that parties have entered into an agreement, secondly that disputes arising out of this agreement and all questions relating to the interpretation of the agreement are to be decided by the Government, and thirdly, the decision of Government shall be final. In my opinion substance of this clause construed to mean it 'arbitration clause' since this clause implies that the decision of the Government shall decide all questions referred to it relating to the interpretation of the agreement, finally. This clause has definitely a reference to the Government arbitrator. 8. In K.K. Modi v. K.N. Modi, (1998) 3 SCC 573 , their Lordships of the Supreme Court had the occasion to consider the essential ingredients of an arbitration clause. Among the ingredients which are described in the said judgment, two important ingredients are : (i) That the agreement between the parties must contemplate that substantive rights of parties will be determined by the agreed tribunal, and (ii) that the tribunal will determine the rights of the parties in an impartial and judicial manner 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. 9. In Bharat Bhushan Bansal v. UP Small Industries Corporation Ltd. (supra) the Hon'ble Apex Court categorially indicated that there is a difference between an expert determination and arbitration. Their Lordships have referred extract incorporated at page 164 of Law of Arbitration and Conciliation by S.K. Chawla thus : "4. Arbitration agreement to be distinguished from agreement for decision by an engineer or expert -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. Arbitration agreement to be distinguished from agreement for decision by an engineer or expert -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. As pointed out by Bernstein, 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 involve is not arbitration and the Arbitration Act does not apply to it." (underlining is mine) 10. Evidently clause 39 of the agreement does not relate to 'Expert Determination.' This clause is unquestionably an 'arbitration clause' and provisions contained in section 11(4) (a) are attracted. 11. As a result of the above discussion, I allow the instant application and appoint Hon'ble Justice Ranveer Sahay Verma (Retired) as arbitrator to settle the disputes. Fees and other terms and conditions of arbitration shall be settled by the Arbitrator.Application Allowed. *******