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2009 DIGILAW 571 (GAU)

Inderjeet Mehta v. Union of India

2009-08-14

H.BARUAH

body2009
JUDGMENT H. Baruah, J. 1. All the above civil revision petitions have cropped up from orders dated 20.6.2006 passed by Additional Deputy Commissioner, East Khasi Hills District, Shillong in ARB. MAC Nos. 1 (T) of 1999, 2(T) of 1999, 3(T) of 2000 and 4(T) of 2000. By the aforesaid order(s), learned Additional Deputy Commissioner set aside the orders dated 31.7.1998 and 31.8.2000. 2. By these revision petitions the Petitioner, M/s. Inderjeet Mehta has sought for setting the orders dated 31.7.1998 passed in (ARB) Misc. Case Nos. 76(T) of 99, 77(T) of 99, 78(T) of 1999 and 79(T) of 1999; and order dated 31.8.2000 passed in (ARB) Misc. Case Nos. 80(T) of 1997, 81(T) of 1997, 84(T) of 1997 and 85(T) of 1997 at rest whereby the learned Assistant to Deputy Commissioner allowed applications preferred under Section 8/20 of the Arbitration Act, 1940 referring all the left out claims to the arbitrator for adjudication. 3. All the above civil revision petitions are taken up together for a decision by this common judgment since the facts and the law involved in each of the revisions are similar in nature. 4. The contract agreements being No. CESZ/MHB/11 of 1988-89 for the work of "Provision of certain ACCM for Officers with Allied Services at Mohanbari (Zone-7)" (In CR (P) No. 33 of 2006); No. CESZ/MHB/27 of 1987-88 for the work of "Provision of MD. ACCM for Officers with Allied Services at Mohanbari" (In CR (P) No. 34 of 2006); No. CESZ/MHB/26 of 1987-88 for the work of "Provision of certain ACCM for Officers with Allied Services at Mohanbari (Zone-7)" (In CR (P) No. 35 of 2006) and No. CESZ/MHB/23 of 1987-88 for the work of "Provision of MD. ACCM for Officers with Allied Services at Mohanbari" (In CR (P) No. 36 of 2006) were entered into between the Petitioner, M/s. Inderjeet Mehta, MES Contractor G/1817, Trust Lane. Birla Mill Colony, Bhatinda - 151005, Punjab with the Respondent, Union of India for execution of the works as indicated in the agreements. The said works were to be completed within time frame settled as per agreement. The Petitioner failed to complete the said works within the time frame so fixed. Birla Mill Colony, Bhatinda - 151005, Punjab with the Respondent, Union of India for execution of the works as indicated in the agreements. The said works were to be completed within time frame settled as per agreement. The Petitioner failed to complete the said works within the time frame so fixed. However, (Petitioner) completed the aforesaid contract works during the extended time frame extended per condition 11(C) of IAFW 2249." After completion of the aforesaid works the Respondent authority did not make payment for several items of works carried out by the Petitioner. The Petitioner while submitting the final bill submitted a list of 24 (twenty four) claims under Appendix-A and 3(three) claims under Appendix-B (in CRP No. 33 of 2006), 19 (nineteen) claims under Appendix-A and 6(six) claims under Appendix-B (in CRP No. 34 of 2006), 17 (seventeen) claims under Appendix-A and 11(eleven) claims under Appendix-B (in CRP No. 35 of 2006) and list of 28 (twenty eight) claims under Appendix-A and 8(eight) claims under Appendix-B (in CRP No. 36 of 2006) for payment. Respondent rejected all the claims and made payment of the final bill on 21.3.1993 and 10.8.1993 only for the agreed portion to the bill, which was received by the Petitioner under protest. On account of creeping of some disputes in connection with the contract works, the Petitioner requested the Respondents to appoint an Arbitrator as per arbitration Clause 70 of IAFW 2249 and to refer all his claims to the arbitrator for adjudication. Vide letter dated 8.1.1997 Sri M.N.S. Nanda, Chief Engineer was appointed as the sole arbitrator and referred only 24, 19, 17 and 28 Nos. of claims of the Petitioner to him under Appendix-A in the respective cases for adjudication leaving out the rest of 3, 6, 11 and 8 Nos. of claims contained in Appendix-B. The sole arbitrator accordingly on his appointment entered into reference and proceeded to adjudicate with the claims referred to for adjudication. of claims of the Petitioner to him under Appendix-A in the respective cases for adjudication leaving out the rest of 3, 6, 11 and 8 Nos. of claims contained in Appendix-B. The sole arbitrator accordingly on his appointment entered into reference and proceeded to adjudicate with the claims referred to for adjudication. The claims under Appendix-B being not referred to for adjudication to the sole arbitrator, the Petitioner being aggrieved thereby filed applications in the Court of learned Assistant to the Deputy Commissioner, Shillong with a prayer to appoint Sri M.N.S. Nanda, Chief Engineer as the sole arbitrator and refer the left out claims numbering 3, 6, 11 and 8 under the respective cases for adjudication under Appendix-B. The said applications so preferred under Section 8 / 20 of the Arbitration Act 1940 were registered as (ARB) Misc. Case Nos. 76(T) of 99, 77(T) of 99, 78(T) of 1999 and 79(T) of 1999, 80(T) of 1997. 81(T) of 1997, 84(T) of 1997 and 85(T) of 1997 and came to be allowed vide order dated 31.07.1998 and 31.08.2000 directing the Respondents to refer all the left out claims to the sole arbitrator Sri. M.N.S. Nanda for his adjudication within 30 days with further direction to the sole arbitrator to adjudicate the claims and publish the award within 4(four) months. Being aggrieved by the judgment(s) as indicated above, the Respondents preferred appeal before the Court of Additional Deputy Commissioner, Shillong challenging the legality and correctness of the judgment and order passed by the Assistant to the Deputy Commissioner, Shillong. Those appeals were registered as ARB. MAC No. 4(T) of 2000, ARB, MAC No. 2(T) of 1999, ARB. MAC No. 3(T) of 2000 and ARB. MAC No. 1 (T) of 1999 and the learned Additional Deputy Commissioner by his order dated 20.6.2006 allowed the appeals preferred by the Respondent. Union of India. Hence these present revisions. 5. Mr. S.R. Sen, learned Senior counsel assisted by Mrs. P.D.B. Baruah, learned Counsel for the Petitioner, M/s. Inderjeet Mehta and Mr. S.C. Shy am, learned CGC for the Respondent, Union of India were heard at length. 6. (Now), the issue before us is, whether the impugned order(s) dated 20.6.2006 by which the appeals preferred by the Respondent, Union of India were allowed would be sustainable in law. 7. Mr. P.D.B. Baruah, learned Counsel for the Petitioner, M/s. Inderjeet Mehta and Mr. S.C. Shy am, learned CGC for the Respondent, Union of India were heard at length. 6. (Now), the issue before us is, whether the impugned order(s) dated 20.6.2006 by which the appeals preferred by the Respondent, Union of India were allowed would be sustainable in law. 7. Mr. S.R. Sen, learned Senior counsel at the very out set of his argument put emphasis that when a dispute arises in between the parties to a contract agreement in certain claims. Court of ordinary civil jurisdiction cannot interfere with the claim and render a judgment which (claim) is to be adjudicated upon by an arbitrator only. The entire domain would be with the arbitrator to be appointed either by the Court or by mutual consensus. Some disputes having been cropped up in respect of certain claims, such claims are required to be settled by referring the same to the arbitrator so appointed. The Court, therefore, cannot assume jurisdiction of the Arbitrator by rendering a judgment that such claims so made by the contractor cannot be referred to for arbitration. It is, according to Mr. S.R. Sen, learned Senior counsel, the learned Additional Deputy Commissioner committed error and illegality in setting aside the judgment and order passed by the learned Assistant to the Deputy Commissioner in the applications preferred under Section 8 / 20 of the Arbitration Act, 1940. It was argued by Mr. S.R. Sen, learned Senior counsel for the Petitioner that appellate Court failed to consider the settled legal position that the parties are not the judge to sit and decide as to which claims are arbitrable and which are not. It is for the arbitrator alone to decide which claims are genuine and acceptable for adjudication. The Respondent, Union of India when did not refer few claims only on the ground that these are out side the purview of contract agreement and the decision of the concerned officer is final and binding as per contract agreement cannot sustain in law Mr. Sen argued. Such dispute when arises between the parties, such dispute falls in the courtyard and jurisdiction of the arbitrator to interpret the terms of the contract and to decide accordingly. Sen argued. Such dispute when arises between the parties, such dispute falls in the courtyard and jurisdiction of the arbitrator to interpret the terms of the contract and to decide accordingly. Therefore, the order passed by the learned Assistant to the Deputy Commissioner directing the Respondent to refer all disputed claims under Appendix-B was within the jurisdiction of the Court and rejection of the same by the Additional Deputy Commissioner sitting in appeal, according to Mr. Sen is unjustified, erroneous and illegal. The learned Additional Deputy Commissioner being a Court of ordinary civil jurisdiction cannot usurp jurisdiction to give a finding, which of the claims is referable and which is not. The learned Additional Deputy Commissioner, according to Mr. S.R. Sen override his/her jurisdiction by setting aside of the order(s) passed by the Court of Assistant to the Deputy Commissioner, Shillong in the Arbitration Misc. Cases as stated above. 8. Mr. S.R. Sen, learned Senior counsel in support of his contention relied in the decision in the case between Union of India and another vs. L.K. Ahuja and Co. reported in AIR 1988 SC 1172 wherein the Apex Court held that on the completion of the work, right to get further payments gets weakened but the claim subsists and whether it does subsist, is the matter which is arbitrable. According to Mr. S.R. Sen, the Petitioner received the final payment under protest and requested to refer the disputed claims to the sole arbitrator under Appendix-A and Appendix-B. Respondent, however, referred the claims to the sole arbitrator under Appendix-A but refused to refer the claims under Appendix-B. Though the Petitioner accepted the final payment under protest, he requested the Respondent for a reference of the disputed claims under Appendix-B, therefore, the dispute(s) in between the Petitioner and the Respondent. Union of India still subsist and the same are to be adjudicated upon by the arbitrator only. The decision of the officer concerned of the Respondent, Union of India to brand the claims as arbitrable and not arbitrable is beyond his jurisdiction. Such decision is always within the domain of the Arbitrator to interpret the terms of the contract and to decide the arbitrability of the claims. It was further submitted by Mr. S.R. Sen that parties to a contract agreement cannot be allowed to interpret the clauses of the contract; such interpretation is always with the arbitrator. 9. Such decision is always within the domain of the Arbitrator to interpret the terms of the contract and to decide the arbitrability of the claims. It was further submitted by Mr. S.R. Sen that parties to a contract agreement cannot be allowed to interpret the clauses of the contract; such interpretation is always with the arbitrator. 9. In the case M/s. L.K. Ahuja and Co. (supra) their Lordships of the Apex Court while deciding the case held that the contractor executing construction work accepting payments and giving no claim declaration, if subsequently claimed certain amounts as due on contracts and claiming reference to arbitrator, denial thereof, entitles the claimant to prefer an application under Section 20 of the Arbitration Act, 1940 and such application was held to be maintainable by the Apex Court. The Apex Court while deciding the case (supra) in Paragraph 3 and 8 of the judgment held as under: 3. The sole question, involved in this appeal, is whether the High Court was right in dismissing the application. In matters of this nature, the main question is whether the application under Section 20 was within time. Though there was some doubt before but now it is well-settled in view of the decision of this Court in Kerala State Electricity Board, Trivandrum v. T.P.K.K. Amsom and Besom, Kerala, (1977)1 SCR 996 : AIR 1977 SC 282 , that Article 137 would apply to any petition or application filed under any Act to a Civil Court. The words "any other application" this Court held under Article 137, cannot be read on the principle of ejusdem generic to be applications under the Code of Civil Procedure other than those mentioned in part I of the third division. 8. In view of the well-settled principles we are of the view that it will be entirely wrong to mix-up the two aspects, namely, whether there was any valid claim for reference under Section 20 of the Act, and, secondly, whether the claim to be adjudicated by the arbitrator, was barred by lapse of time. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation. The second is a matter which the arbitrator would decide unless, however, if on admitted facts a claim is found at the time of making an Order under Section 20 of the Arbitration Act, to be barred by limitation. In order to be entitled to ask for a reference under Section 20 of the Act, there must be an entitlement to money and a difference or dispute in respect of the same. It is true that on completion of the work, right to get payment would normally arise and it is also true that on settlement of the final bill, the right to get further payment gets weakened but the claim subsists and whether it does subsist, is a matter which is arbitrable. In this case, the claim for reference was made within three years commencing from April, 16, 1976. We are, therefore, of the view that the High Court was right in this case. See in this connection the observations of this Court in Major Retd. Inder Singh Rekhi vs. D.D.A. (1988) 2 JT 6 ; AIR 1988 SC 1007 . Mr. S.R. Sen taking clue of the ratio laid down by the Apex Court in the case (supra) submitted that the order passed by the Assistant to the Deputy Commissioner directing the Respondent to refer the claims not referred to in spite of request of the Petitioner is not liable to be interfered with by the appellate Court since the claims subsist or not is a matter to be adjudicated by the arbitrator only not by the Court. Mr. S.R. Sen, learned Senior counsel, therefore, argued that the order(s) dated 20.6.2006 cannot sustain in law. 10. Further, Mr. S.R. Sen taking the ratio laid down in the case between Sudarsan Trading Co. vs. Government of Kerala and another reported in AIR 1989 SC 890 submitted that the interpretation of a contract is a matter for the arbitrator. Court cannot substitute its own decision in regard to reference of a claim whether it subsists or not. Mr. S.R. Sen put reliance in the paragraphs 31, 32 and 33 of the judgment, which may be reproduced as under: 31. Court cannot substitute its own decision in regard to reference of a claim whether it subsists or not. Mr. S.R. Sen put reliance in the paragraphs 31, 32 and 33 of the judgment, which may be reproduced as under: 31. An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction and evidence of matters not appearing on the face of it will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has to be determined outside the award whatever might be said about it in the award or by the arbitrator. See in this connection, the observations of Russell on the Law of Arbitration, 20th Edition 427. Also see the observations of Christopher Brown Ld. v. Genossenschaft Oesterreichischer (1954) 1 QB 8 at P. 10 and Dalmia Diary Industries Ltd. v. National Bank of Pakistan (1978) 2 Loyd's Rep 223. It has to be reiterated that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. In Halsbury's Laws of England (4th Edition Vol. 2 para 622) one of the misconducts enumerated is the decision by the arbitrator on a matter which is not included in the agreement or reference. But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. See the observations in Anisminic Ltd. v. Foreign Compensation Commission II (1969) ACC 147 and Regina vs. Noseda, Field, Knight & Fitzpatrick (1958) 1 WLR 793. But, in the instant case the Court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator has acted correctly or incorrectly. This, in out opinion, the Court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained was a decision within the competency of the arbitrator in this case. Whether a particular amount was liable to be paid or damages liable to be sustained was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. It has to be determined that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. See Commercial Arbitration by Sir M.J. Mustill and Stewart C. Boyd page 84. 32. The High Court in the judgment under appeal referred to the decision of the Division Bench of the Kerala High Court in State of Kerala vs. Poulose (1987 1 Ker Lt 781) (supra). Our attention was also drawn to the said decision by the counsel for the Respondents that if an arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not vest in him, that would be a ground to impeach the award. If an arbitrator, even in a non-speaking award decides contrary to the basic features of the contract, that would vitiate the award, it was held. It may be mentioned that in so far as the decision given that it was possible for the Court to construe the terms of the contract to come to a conclusion whether an award made by the arbitrator was possible to be made or not, in our opinion, this is not a correct proposition in law and the several decisions relied by the learned Judge in support of that proposition do not support this proposition. Once there is no dispute as to the contract, what is the interpretation of that contract is a matter for the arbitrator and on which Court cannot substitute its own decision. 33. Reference was also made to the decision in State of Kerala vs. Raveendranathan (1987)1 Ker LT 604. Insofar as the Court held therein that an arbitrator deciding a dispute under the contract is bound by the contract the Court is right. The Court cannot, however, substitute the decision of the arbitrator as to what was meant by the contract, once that dispute is conceded to the arbitrator. Insofar as the Court held therein that an arbitrator deciding a dispute under the contract is bound by the contract the Court is right. The Court cannot, however, substitute the decision of the arbitrator as to what was meant by the contract, once that dispute is conceded to the arbitrator. In so far and to the extent the aforesaid decision of the Kerala High Court decided to the contrary, the same is not the correct law. 11. Per contra to the submission advanced by Mr. S.R. Sen, learned Senior counsel for the Petitioner, Mr. S.C. Shyam, learned CGC representing the Respondent, Union of India submitted that in terms of the condition 11 (c) of IAFW 2249 there is specific prohibition for raising any claim on account of extension of time and further accepting officer's decision for extension shall be final and binding. The claims as indicated in Appendix-B were matters to be decided by the Officer concerned and not referable for adjudication. Condition 11(c) of IAFW 2249 when contains the words "final and binding powers" the dispute(s) in Appendix-B per decision of the Officer being not referable, the Petitioner cannot naturally ask for reference of the claims for adjudication. The order(s) passed by the Assistant to the Deputy Commissioner which was impugned in the appeal in view of the terms of the condition 11(c) of IAFW 2249 is erroneous and illegal directing a reference of the claims to the arbitrator for adjudication to the Respondent, Union of India. Of the claims, which is to be referred or which is not a matter to be decided by the officer concerned empowered under condition 11(c) of IAFW 2249. But the question is, who is the appropriate authority to decide the dispute(s) involved between the parties finally? The natural answer would be that such dispute(s) can be decided or adjudicated upon by the arbitrator only and not by the Court. When the Petitioner raised dispute(s) in respect of some of the claims such disputed claims can only be resolved by referring them to the arbitrator only. Ordinary Civil Court cannot have the jurisdiction to adjudicate such disputed claims that arisen in between the parties to the contract. The Petitioner seemed to have not deviated from that certain claims were not referred to arbitration. Ordinary Civil Court cannot have the jurisdiction to adjudicate such disputed claims that arisen in between the parties to the contract. The Petitioner seemed to have not deviated from that certain claims were not referred to arbitration. But on account of leaving of some claims incorporated in Appendix-B, the Petitioner sought refuge under Section 20 of the Arbitration Act, 1940 by filing applications before the Court of Assistant to the Deputy Commissioner. The Court of Assistant to Deputy Commissioner on filing such application directed the Respondent to refer the left out claims for adjudication by the sole arbitrator. Sri M.N.S. Nanda, Chief Engineer. The learned Additional Deputy Commissioner when appealed against the impugned order(s) found fault with the order(s) passed by the Assistant to the Deputy Commissioner and was pleased to set aside the order(s) by the impugned order(s). 12. The ratio laid down by the Apex Court in the cases (supra) makes the position clear that even in spite of acceptance of final payment if the claimant raises dispute in regard to certain items such dispute/claims can be referred to the arbitrator for its adjudication and the arbitrator has the sole power to adjudicate those disputed claims finally and not by the Court of ordinary civil jurisdiction. In the case Sudarsan Trading Co. vs. Government of Kerala and another (supra) the Apex Court held that a Court of ordinary civil jurisdiction cannot substitute its own decision. In view of the facts and circumstances of the case and the ratio laid down by the Supreme Court, I do not see any force in the argument advanced by Mr. S.C. Shyam, learned CGC representing the Respondent, Union of India. 13. At this stage it would be apposite to mention that the Petitioner being aggrieved by the admission of the appeal and stay of the impugned order by the Additional Deputy Commissioner, Shillong without giving an opportunity to the caveator-Petitioner filed a civil revision before this Court being No. CR (P) 20 (SH) of 2000 and this Court vide order dated 23.5.2000 stayed the operation of the order dated 22.12.1999 providing further that in case before the final hearing of the appeal the arbitrator concludes the hearing of the proceedings before him and passes the award the same shall not be acted upon without further order from the Court and the appellate Court was directed to proceed with the appeal. Pursuant to the order of this Court the arbitrator proceeded with the arbitration wherein both the parties (Petitioner and Respondent) took part and the arbitrator passed and signed the award on 8.6.2001. The appellate Court while setting aside the order passed by the Assistant to the Deputy Commissioner also directed that the award passed by the arbitrator excluding the items of Appendix B shall be deemed to be final award. 14. In view of the above, it is noticed that the sole arbitrator adjudicated upon the claims under Appendix-A and B as well. Therefore, the order(s) dated 20.6.2006 setting aside the order(s) passed by the Assistant to the Deputy Commissioner turn infructuous, since the arbitrator had in the meantime adjudicated upon the disputed claims indicated in Appendix-A and B. In that view of the matter, I am of the considered view that this impugned order(s) dated 20.6.2006 cannot sustain in law and the same are accordingly set aside and quashed. 15. It is noticed that this Court by order dated 4.4.2008 passed in CMC No. 517 (SH) of 2007 and CMC No. 518 (SH) of 2007 directed the Registry to communicate sole arbitrator to transmit the entire records of the arbitration proceeding along with the awards in original in connection with contract agreement No. CESZ/MHB/27 of 1987-88 and No. CESZ/MHB/23 of 1987-88 and to keep the same in the safe custody of the registry in sealed cover. Pursuant to the order, the sole arbitrator forwarded the arbitration proceeding along with the awards of the above 2(two) contract agreements to the Court, receipt of which is, however, not indicated by the Registry in the concerned records. However, Registry is directed to transmit the records of the arbitration proceeding and the awards with proper notice to the parties to the appropriate forum to make a rule of the Court as per the terms of the award per provision of Section 17 of the Act. 16. If the sole arbitrator in respect of the disputed claims under contract No. CESZ/MHB/11 of 1988-89 and contract No. CESZ/MHB/26 of 1987-88 in the meantime published the award, the same shall be remitted to the appropriate Court as per provision of Section 14 of the Arbitration Act, 1940 for making a rule of the Court under Section 17 of the Act. 17. With the above directions, these revision petitions are disposed of. No cost.