1983 (10) TMI 291 - SC - Indian Laws

Summary

Issues:
1. Validity of the appointment of an arbitrator under Section 8 read with Section 20 of the Arbitration Act, 1940.
2. Interpretation of Clause 23 of the Agreement regarding the appointment of a Superintending Engineer as an arbitrator.
3. Impact of subsequent legislation by the State Legislature inserting new Section 41A to the Act.

Analysis:

Issue 1:
The appeal challenges the order of the Orissa High Court summarily dismissing a revision filed by the appellant against the appointment of an arbitrator under Section 8 read with Section 20 of the Arbitration Act, 1940. The Subordinate Judge had set aside the appointment of the Superintending Engineer, Irrigation by the Chief Engineer as the arbitrator and appointed a retired District & Sessions Judge instead.

Issue 2:
The dispute revolves around the interpretation of Clause 23 of the Agreement, which dictates that all questions and disputes relating to the contract shall be referred to the sole arbitration of a Superintending Engineer of the State Public Works Department unconnected with the work. The Subordinate Judge held that the appointment of the Superintending Engineer, Irrigation as an arbitrator was invalid as he was directly subordinate to the Chief Engineer, violating the terms of Clause 23. However, the Court found that the term "State Public Works Department" includes various departments like Irrigation, and the restriction of being "unconnected with the work" refers to the specific works contract in question, not the department.

Issue 3:
The subsequent legislation by the State Legislature inserted a new Section 41A to the Act, establishing an Arbitration Tribunal for disputes involving the State Government or related entities. This new provision supersedes the previous appointment of arbitrators under Section 8 and Section 20 of the Arbitration Act, 1940. The appeal was allowed, setting aside the previous orders and referring the dispute to the newly constituted Arbitration Tribunal as per Section 41A of the amended Act.

In conclusion, the judgment clarifies the interpretation of contractual clauses, highlights the impact of subsequent legislative changes, and emphasizes the importance of adherence to legal provisions in arbitration proceedings.