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Andhra High Court · body

2008 DIGILAW 1072 (AP)

Uma Engineering Co. v. superintending Engineer Irrigation & CAD

2008-12-18

L.NARASIMHA REDDY

body2008
Judgment :- The petitioner is a partnership firm. It submitted a tender for the work of Lining of Thunga Bhadra Project Low Level Canal in two bits. Contract was awarded, and certain disputes have arisen thereafter. The dispute is, in relation to the rates quoted by the petitioner. In its tender, the petitioner quoted Rs.84/- for 10 cubic metres of material. It is stated that the quantity 10 cubic metres was quoted, instead of one cubic metre. It is pleaded that in the ordinary parlance, the quantities in the works of this nature are, in the units of 10 cubic metres, and on that assumption, the rate was quoted. Some correspondence has ensued between the petitioner, and the various authorities of the department. The petitioner wanted its dispute to be referred to arbitration. However, two Government orders, viz., G.O.Ms.No.430, dated 24-10-1983, as amended by G.O.Ms.No.160, Irrigation & CAD (Projects Wind) Department, dated 01-06-1987; come in the way of the petitioner. Therefore, the said GOs are challenged. Smt. Tirumala Rani, learned counsel for the petitioner submits that the agreement between the parties contained the specific clause, to the effect that the dispute shall be resolved by having recourse to the arbitration, under the provisions of the Indian Arbitration Act, 1940 (for short ‘the 1940 Act’), with any statutory modifications thereof. She contends that the scope of 1940 Act was very limited and the Arbitration and Conciliation Act, 1996, (for short ‘the 1996 Act’), which repealed the 1940 Act, is comprehensive in nature, and irrespective of the monetary value of dispute, the arbitration, under the 1996 Act has to be resorted to. She submits that the Gos, referred to above, which insist that, any dispute, involving an amount, exceeding 50,000/- cannot be subject-matter of arbitration; virtually lost their significance with the subsequent enactment of 1996 Act. Learned Government Pleader for Irrigation, on the other hand, submits that it is for the parties to a dispute, whether Government, or private, to choose the mechanism of resolution, and there is noting in the 1996 Act, which mandates that, irrespective of the intention of the parties, the dispute must be resolved only through arbitration. It is also alleged that an earlier attempt made by the petitioner, to invoke the arbitration procedure, did not fructify. The petitioner entered into an agreement with the respondents for execution of a work. It is also alleged that an earlier attempt made by the petitioner, to invoke the arbitration procedure, did not fructify. The petitioner entered into an agreement with the respondents for execution of a work. According to it, the rates were quoted for 10 cubic metres, by mistake, instead of one cubic metre. There is no dispute that, clause 53 of the agreement between the parties, indicates the procedure for settlement of disputes through arbitration. If, inter alia, provides as under: “The arbitration shall be conducted in accordance with the provisions of Indian Arbitration Act of 1940, or any statutory modification thereof.” This, however, shall be subject to the condition, that the arbitration shall be only for claim, up to Rs.50,000/-. In G.O.Ms.No.430, dated 24-10-1983, the Government directed that, any claim over and above 50,000/- shall be resolved ‘by a Civil Court of competent jurisdiction’. The expression ‘Court of competent jurisdiction’ was interpreted in some cases as to take in its fold, the procedure for arbitration also. This gave rise to issuance of G.O.Ms.No.160, Irrigation & CAD (Projects Wing) Department, dated 01-06-1987, clarifying that the claims exceeding Rs.50,000/- shall be decided by “civil court of competent jurisdiction, by way of regular suit”. The attempt of the petitioner is, to place an interpretation on the clause, contained in the agreement, with reference to 1996 Act. It is urged that, with the repeal of 1940 Act and enactment of 1996 Act, the concept of arbitration has undergone substantial change, and the emphasis is, to encourage the parties, to go for arbitration, On this premise, it is contended that, with the change in law, the limits of dispute, virtually become insignificant, and it is in that context, the annulment of G.O.Ms.No.430 dated 24-10-1983 and G.O.Ms.No.160, dated 01-06-1987; is sought. In this context, it needs to be noted that, arbitration, as a method of resolution of disputes; was in existence for the past more than a century, in an institutionalized form. Substantial changes were, no doubt, brought about, through the 1996 Act. However, certain basic tenets of arbitration remain unchanged. For instance, it is always in the discretion of the parties, whether or not, to choose arbitration, as a method of resolution of disputes. The 1940 Act and 1996 Act only stipulate the procedure to be followed, in the event of the parties choosing to go for arbitration. However, certain basic tenets of arbitration remain unchanged. For instance, it is always in the discretion of the parties, whether or not, to choose arbitration, as a method of resolution of disputes. The 1940 Act and 1996 Act only stipulate the procedure to be followed, in the event of the parties choosing to go for arbitration. Unless and until there is an agreement between the parties, express, or implied, no one can compel them to have recourse to arbitration. The 1996 Act did not bring about any change, in this regard. Further, encouraging the parties to resolve their disputes through arbitration is one thing, and compelling them to have recourse to the same, contrary to their intention, is another. Even the sovereign Government cannot compel a citizen, to choose a particular forum, in relation to resolution of his disputes. Similarly, the State cannot be compulsorily be made a party to an arbitration, unless it has agreed for it, either through a clause in a contract, or general orders, issued in this regard. The Government has indicated its option, through the impugned GOs, in the matter of choosing the mechanism of arbitration. While it has identified arbitration as an invariable mechanism for resolution of disputes, involving an amount of Rs.50,000/-, or less, it has taken a conscious decision, to prescribe the civil suit, as the means, to resolve the disputes, involving on amount, exceeding Rs.50,000/-. It is not even suggested that the 1996 Act contains any provision, which scuttles the discretion of any party, to choose a forum. The GOs are not ultra vires the provisions of any enactment. Therefore, the writ petition is dismissed. There shall be no order as to costs.