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2013 DIGILAW 313 (CHH)

P. C. JAIN v. STATE OF C. G.

2013-10-31

SANJAY K.AGRAWAL

body2013
ORDER 1. This order shall govern the disposal of Arbitration Applications No.82, 83, 84 and 85 of 2013 as the question of law involved in all the four applications is one and the same. However, for the sake of convenience, Arbitration Application No. 82 of 2013 is taken-up as the lead case. 2. All the four arbitration applications are filed by applicant-P.C. Jain under Section 11(6) of the Arbitration and Conciliation Act, 1996 (henceforth 'the Act, 1996') seeking appointment of an Arbitrator in terms of agreement dated 04/06/2011 entered into between the applicant and the non-applicants. Facts: 3. Facts leading to filing of the lead case, i.e., Arbitration Application No. 82 of 2013 may briefly be noted thus: 3.1 On 04/06/2011, the non-applicants issued the work order and the agreement bearing No. 25/DL/2011-12 was executed by the parties and thereafter, the agreement was terminated vide order dated 28/02/2012 stating inter alia that applicant has failed to complete the work by stipulated date of completion. 3.2 Being aggrieved with the order of termination of contract, applicant has challenged the same under Clause 29 of the agreement before the Superintending Engineer vide application dated 29/03/2012 submitted on 31/03/2012 (Annexure-A/5), disputing the action of the termination of contract and raised the quantified claim for settlement of the dispute and payment. When no response was received by the applicant as per Clause 29 of the agreement, again preferred an appeal to the Chief Engineer vide letter dated 27/06/2012 (Annexure- A/6). Both the authorities under the agreement failed to decide and settle the dispute, therefore, the applicant referred the matter as per Clause 29 of the agreement to the State Government for constitution of Arbitration Board as per the provisions of agreement for settlement of dispute vide letter dated 11/10/2012 (AnnexureA/7), but neither the Board was constituted nor the dispute was settled. 3.3 It was further pleaded that since the work of drilling of tubewell was awarded by the non-applicants to the applicant which does not fall within the ambit of works-contract as defined under Clause (i) of sub-section (1) of Section 2 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983 (for short "the Adhiniyam, 1983"). 3.4 The notices were issued to the State/non-applicants on 21/10/2013 and time was sought to file reply. On 29/10/2013, Mr. 3.4 The notices were issued to the State/non-applicants on 21/10/2013 and time was sought to file reply. On 29/10/2013, Mr. Vinay Harit, learned Deputy Advocate General appearing on behalf of the State/non-applicants would submit that State is not proposing to file reply and he would be making submission. Submission of counsels : 4. Mr. Rahul Jha, learned counsel appearing for the applicant would submit that applicant has raised the dispute as per Clause 29 of the agreement firstly before the Superintending Engineer on 31/03/2012 (Annexure-A/5) thereafter, before the Chief Engineer on 27/06/2012 (Annexure-A/6) and ultimately, when both the parties have failed to settle the dispute, he has made a request to the State Government for constitution of an Arbitration Board (Annexure-A/7) vide letter dated 11/10/2012. When no action was taken, he has left with no other option except to make application before this Court for appointment of an Arbitrator under Section 11 (6) of the Act, 1996. He would further submit that under Clause 29, an agreement was entered into between the parties, in which, he was party to contract and there is valid and enforceable agreement between the parties, The Chhattisgarh High Court is appropriate High Court for appointment of an Arbitrator. He would finally submit that drilling of tube wells is not a subject matter of the agreement of works contract, therefore, the sole Arbitrator be appointed to resolve the dispute. 5. Per contra, Mr. Vinay Harit, learned Deputy Advocate General appearing for the non-applicants/State would submit that the applicant has failed to make out a case for appointment of Arbitrator and would further submit that the drilling of tube-well is works-contract within the meaning of under Clause (i) of sub-section (1) of Section 2 of the Adhiniyam, 1983 and therefore, the instant application is not maintainable and it be rejected. 6. I have heard and considered the rival submissions and have perused the papers available. Points for determination : 7. Having regard to the pleadings and submissions made by the parties, the following points arise for consideration: (i) Whether drilling of tube-well is a works contract within the meaning of Clause (i) of sub-section (1) of Section 2 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983, which is cognizable by Chhattisgarh Arbitration Tribunal, 1983? (ii) If not, whether the applicant is entitled for appointment of an arbitrator under the provisions of Arbitration and Conciliation Act, 1996? (ii) If not, whether the applicant is entitled for appointment of an arbitrator under the provisions of Arbitration and Conciliation Act, 1996? Answer to point No.(i) : 8. The "Works-Contracts' employed in Section 2(1) (i) of the Adhiniyam, 1983 has a special and limited connotation, in as much as, it is expressly defined in one of the interpretation clauses of the Adhiniyam. It cannot' escape one's notice that the Adhiniyam is a State enactment. It has a limited ambit. As the preamble of the Adhiniyam itself States that the Adhiniyam has been enacted for the establishment of a Tribunal to arbitrate in disputes to which the State Govt. or a Public Undertaking, wholly or substantially owned or controlled by the State Govt., is a party, and for matters incidental thereto or connected therewith. Even all kinds of 'Works-contracts' in which the State Govt. or any Public Undertaking under State Govt.'s absolute or dominant ownership or control is a party, are not the subject-matter of the jurisdiction of this Tribunal. The definition of 'Works-contracts' has been so couched as to include within the expression only some kinds of 'Works-contract', with a provision that by notification more works may be brought within the ambit of the definition. It is proper to reproduce here the definition of 'Works-contract' given in Clause (i) of Sec. 2(1) of the Adhiniyam, 1983. It follows:- "2(1) (i) "Works-contract" means an agreement in writing for the execution of any work relating to construction, repair or maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory, work-shop, powerhouse, transformers or such other works of the State Government or Public Undertaking as the State Government may by notification, specify in this behalf at any of its stages, entered into by the State Government or by an official of the State 'Government or Public Undertaking or its official for and on behalf of such Public Undertaking and includes an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works." 9. It will be seen that the above definition uses both the works, 'means' and 'includes'. The Supreme Court in its decision Maha Lakshmi oil Mills Vs. It will be seen that the above definition uses both the works, 'means' and 'includes'. The Supreme Court in its decision Maha Lakshmi oil Mills Vs. State of A.P. AIR 1989 SC 335 , has observed that where definition consists of two separate parts, which specify what the expression 'means' and also what it 'includes' the definition is meant to be exhaustive. It is further to be noticed that when the work 'includes' is used in a definition, it is generally used in order to enlarge the scope of the definition and when it is so used, the definition must be construed as comprehending not only such things as fall within it according to their natural import, but also those things which the inclusive clause declares that they shall include. 10. On an analysis of the above definition, it will be seen that certain works are particularly described as coming within the definition of 'workscontract'. Those particular works are:(i) building or superstructure, (ii) dam, (iii) weir, (iv) canal, (v) reservoir, (vi) tank, (vii) lake, (viii) road, (ix) well, (x) bridge, (xi) culvert, (xii) factory, (xiii) work-shop, (xiv) power-house and (xv) transformers. After the description of particular works, there is a general reference to such other works of the State Govt. or Public Undertaking, as the State Govt. may, by notification, particularly specify in that behalf. Thus, any work which does not fall within any of the particulars works described in the definition may also come with the definition, if the work is of the State Govt. or Public Undertaking and the State Govt. notifies the same. The inclusive clause brings within the sweep of the definition, even a supply-contract, with the limitation that it should be in relation to the execution of any of the works specified in the main clause. 11. Thus, it appears that definition of works-contract, drilling of tubewell does not fall within the definition of "works-contract". The Full Bench of M.P. Arbitration Tribunal, Bhopal by its order dated 06/07/1995 in a decision in Ganeshmal K. Jadwani, Raipur Vs. State of MP. & another 1995 ATLR 501, has noted that works including drilling of tube-wells are not included in the works contract and suggested the State Government to bring those works in the definition of "works-contract" and held thus: "14. It appears that the works of P.H.E. Deptt. State of MP. & another 1995 ATLR 501, has noted that works including drilling of tube-wells are not included in the works contract and suggested the State Government to bring those works in the definition of "works-contract" and held thus: "14. It appears that the works of P.H.E. Deptt. (which is a" major department) such as, intake well, pump house, R.C.C. Tank rising main, treatment plant (water and waste water) distribution system, underground sewerage system, open drains, septic tank, oxidation pond, drilling of tubewells, electrical sub-section etc, have not been covered under the definition. Moreover, the work scenario has changed considerably over the last 10 years and more construction activities are being undertaken by the Deptt. Of Rural Development. Agriculture, Forest, Fisheries etc., and other Public Undertakings. The govt. may be advised to review the situation and the definition of the 'Works-contract' may be suitably expanded by a notification so that the purpose for which this Tribunal has been created is fully served. We direct that a copy of this order be sent to Chief Secretary to the Govt. of M.P. Mantralaya, Bhopal, and Principal Secretary, Law & Legislative Affairs Department. Govt. of M.P. Bhopal, to enable them to take necessary action in the matter." 12. In compliance of the direction/order issued by M.P. Arbitration Tribunal, State Government by its notification dated 04/11/1996 has amended the definition of 'works-contract' and has only brought work of construction, repairing or maintenance of water supply including in the list of works-contract, but has not included the drilling of tube-wells in the meaning of Clause (i) of sub-section (1) of Section 2 of the Adhiniyam, 1983. 13. Thus, the drilling of tube-well is not works-contract within the meaning of Section 2(1)(i) of the Adhiniyam, 1983. It has also been so held by this Court in Arbitration Application No. 31/2012 (P.C. Jain v. State of Chhattisgarh and another), thus, this point is answered accordingly. Answer to point No.(ii) : 14. It has already been held in foregoing paragraphs, drilling of tubewell is not 'works-contract' within the meaning of Section 2(1)(i) of the Adhiniyam, 1983, therefore, in case of any dispute, same is required to be referred in accordance with Clause 29 of the agreement entered into between the parties. Answer to point No.(ii) : 14. It has already been held in foregoing paragraphs, drilling of tubewell is not 'works-contract' within the meaning of Section 2(1)(i) of the Adhiniyam, 1983, therefore, in case of any dispute, same is required to be referred in accordance with Clause 29 of the agreement entered into between the parties. Clause 29 thereof provides thus: "Clause 29- Except as otherwise provided in this contract all question and dispute relating to the meaning to the specifications; designs, drawings and instructions herein before mentioned and as to thing whatsoever in any way arising out of or relating to the contract designs, drawings, specification, estimates concerning the works or the execution or failure to execute the same, whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the Superintending Engineer in writing for his decision within a period of 30 days of such occurrence. Thereupon the Superintending Engineer shall give his-written instruction and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of the parties. Upon receipt of written instruction or decisions the parties shall promptly proceed without delay to comply such instructions or decisions, if the Superintending Engineer fails to give his instructions in writing within a period of 60 days or mutually agreed time after being requested if the parties are aggrieved against the decision of the S.E. the parties may within 30 days prefer an appeal to the Chief Engineer who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal. The Chief Engineer will give his decision within 90 days. If any party is not satisfied with the decision of the Chief Engineer he can refer such disputes for arbitration by an Arbitration Board to be constituted by the State Government which shall consist of three members of whom one shall be chosen from among the officers belonging to the Department not below the rank of S.E. one retired Chief Engineer of any Technical Department and one serving officer not below the rank of S.E. belonging to another technical Department. The following are also the terms of this contract namely:- (a) No person other than the aforesaid Arbitration Board constituted by the Government (to handle cases of all technical Departments) shall act as arbitrator and if for any reason that is not possible, the matter shall not be referred to Arbitration at all. (b) The State Government may at any time effect any change in the personnel of the Board, and the new members or members appointed to the Arbitration Board shall be entitled to proceed with the reference from the stage at which it was left by his or their prodecessors. (c) The party invoking Arbitration shall specify the dispute or disputes to be referred to Arbitration under this clause together with the amount or amounts claimed in respect of each such dispute(s). (d) Where the party invoking arbitration is the contractor no reference for Arbitration shall be maintainable, unless the contractor furnishes a security deposit of a sum determined according to the table given below, and the sum so deposited shall on the determination of Arbitration proceedings be adjusted against the cost, if any awarded by the Board against the party and the balance remaining after such adjustment or in the absence of the such cost being awarded, the whole of the sum shall be refunded to him within one month from the date of the award. Amount of claim Rate of security deposited For claim below Rs.10,000 5% of the amount claimed For claims of Rs.10,000 above 3% of the amount claimed but below Rs.1,00,000 Subject to minimum of Rs.500 For claims of Rs.1,00,000 2% of the amount claimed & above subject to a minimum of Rs. 3,000 (e) If the contractor does not make any demand for Arbitration in respect of any claim (s) in writing within 90 days on receiving intimation from the Executive Engineer that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred & the Government shall be discharged or released of all liabilities under the contract in respect of such claims. (f) The Arbitration Board may from time to time, with the consent of the parties extend the time for making the award. (f) The Arbitration Board may from time to time, with the consent of the parties extend the time for making the award. (g) A reference to the Arbitration Board shall be no ground for not continuing the work on the time part of the contractor and payment as per terms and conditions of the agreement shall be continued by the Department. (h) Except where otherwise provided in this contract, the provisions of the Arbitration Act 1940 and the rules made there under for the time being inforce, shall apply to the Arbitration proceedings under this clause." 15. In accordance with the agreement, the applicant invoked Clause 29 by raising the dispute before the Superintending Engineer on 31/03/2012 (Annexure A/5) and having no response. As per Clause 29 of the agreement, preferred an appeal to the Chief Engineer on 27/06/2012 (Annexure A/6), and when both the authorities have failed to decide and settle the disputes as per Clause 29 of the agreement, a request was made to the State Government for constitution of an Arbitration Board on 11/10/2012 (Annexure A/7), but neither the Board was constituted nor the dispute was settled leading to filing of this application. 16. Thus, the Clause 29 of the agreement has been invoked in its true letter and spirit, and when dispute was not settled, this application was filed. In view of fact that there is valid and enforceable agreement between the parties, in which, applicant is a party and non-applicant has failed to act on the request of the applicant for appointment of an Arbitration Board and considering that arbitral dispute has arisen out of the contract agreement, this Court is of the opinion that a case for appointment of an Arbitrator is made out to adjudicate the dispute arisen between the parties. Thus, this point is answered accordingly. Conclusion : 17. Consequently, with the consent of the parties, Mr. Justice L.C. Bhadoo, Former Judge, High Court of Chhattisgarh is appointed as an Arbitrator to resolve the dispute involved in all the four arbitration applications in accordance with law. 18. In the result, all the four arbitration applications under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator are hereby allowed in the terms indicated above. 19. Registry is directed to communicate this order to Mr. Justice L.C. Bhadoo, Former Judge, High Court of Chhattisgarh. 18. In the result, all the four arbitration applications under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator are hereby allowed in the terms indicated above. 19. Registry is directed to communicate this order to Mr. Justice L.C. Bhadoo, Former Judge, High Court of Chhattisgarh. Parties shall pay the fees and expenses of the Arbitrator. The learned Arbitrator is free to take assistance of technical expert in conducting arbitration. Application Allowed.