9911796707
TMI Blog1987 (6) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... was accepted by the State Government and agreement No. 12DL/1983-84 was entered into and the petitioner commenced its work. Clause G.C. 52 of the Agreement provided for settlement of disputes by recourse to arbitration. As per this clause, all the disputes and differences in respect of which the decision has not become final and conclusive shall be referred for arbitration. The Chief Engineer, Narmada Tapti Basin, shall send to the contractor a list of three officers of the rank of Superintending Engineer or higher who have not been connected with the work under the agreement to act as arbitrators. The contractor was then required within 15 days of the receipt of the letter to select and communicate as to who out of the three should the sole arbitrator. Thereafter the dispute has to be referred to the arbitrator so named. On the failure of the Chief Engineer to submit the names of the arbitrators within 30 days, it would be open to the contractor to send a list of three officers who may be appointed as arbitrators and the Chief Engineer may then select any one of the officers so named within 15 days and on his failure to do so it would be open to the contractor to name the sole arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rock and hard rock and for removal of the same to a depth of 28 meters. The petitioner found difficulties in excavating the cut off trench and claimed special rate for the work. The Department explained that the material excavated was classified as conglomerate as per Geologist's advice and the petitioner was being paid accordingly. The petitioner vide letter dt. 22-11-1984 called upon the Superintending Engineer who was the final authority under the agreement to settle the claims. By order dt. 27-12-84 the Superintending Engineer rejected the claims preferred by the petitioner. The petitioner thereupon called upon the Chief Engineer to refer the dispute under Clause G.C. 52 to arbitrator. The Chief Engineer then suggested a panel of 3 names on 15-1-1985 and the petitioner gave his preference on 22-1-1985 in favour of Shri K.K. Dhurv, Chief Engineer (Survey Investigation). By letter dt. 14-3-1985 the Chief Engineer made a reference to the sole arbitrator who then entered into a reference. The petitioner submitted its claim statement and the Department submitted its reply. The arbitrator then fixed 6-8-1985 for hearing. However, the Chief Engineer, Narmada Tapti Basin by letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal constituted under the Act. Realising this mistake, the Chief Engineer rightly revoked the order referring the dispute to the arbitrator. Under the Act, there is a provision for statutory arbitration and, as such, the arbitration agreement for referring the dispute to the arbitrator stands superseded. It it the Tribunal constituted under Section 7 which has to decide the dispute and under Section 20 from the date of the constitution of the Tribunal it alone has to decide the dispute and no civil Court shall have jurisdiction to entertain or decide any dispute of which cognizance can be taken by the Tribunal. Since the Act was enacted with the assent of the President of India obtained on 7-10-83 and published in M.P. Gazette on 12-10-83, this Act will supersede the Indian Arbitration Act. 1940, in view of Article 254 of the Constitution so far as State of M.P. is concerned. As this is a special enactment in the field, it will prevail and merely because there has been an agreement between the parties, the same cannot override the provisions of the Act. The petitioner can make no complaint based on Article 14 of the Constitution as long the forum created under the Act has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State saying I have no arbitration proceedings were pending on 1-3-85 inasmuch as the reference was made to the arbitrator only on 3-4-85 i.e. after the Act came into force. Therefore, the order of reference was without jurisdiction because the dispute has to be decided by the Tribunal constituted under the Act and by none else. Though the letter making reference to the arbitrator is dt. 23-1-85, but actually it was issued on 5-4-1983. 7. Shri Venugopal elaborating his arguments contended that the enactment is antithesis of arbitration. Under the Act, a Tribunal of its own choice has been constituted by the State and it is misnomer to call it as an arbitration tribunal by merely using catch-phrases. An arbitration is brought into being by agreement between the parties to exclude normal forum and to settle the dispute by a chosen forum and arbitration cannot be forced on a party. The appointment of the members of the Tribunal solely vests in the State which is itself a party to the dispute which means the State has a power to suspend of remove any member and it cannot be a judge of its own cause. It is not permissible under the Constitution to permit a sitting Judge to act as Chair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, notwithstanding anything contained in the Arbitration Act or in any agreement, no Court shall have jurisdiction to entertain or decide any dispute of which cognizance can be taken by the Tribunal under the Act. Arbitration commences when reference is made to the arbitrator. Here the reference was made on 14-3-1985 when the Act had already come into force. As such, the Chief Engineer had no jurisdiction to refer the dispute to the arbitrator when the same has to be adjudicated by the Tribunal constituted under the Act. So no arbitration was pending when the Act came into force and Section 20(2) is not attracted. There is a reasonable classification of works contract which can be distinguished from other types of contracts and there is no discrimination in making the Act applicable only to works contract. Since the reference was not validly made, the Chief Engineer rightly cancelled the same. There are enough safeguards provided under the Act and the anxiety has been to appoint a high power tribunal which can act with impartiality and decide the disputes without delay. There is no unfettered power given to the State Government to appoint and extend the terms of the members nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of cases pending. The Chairman and the members shall be paid such salaries, allowances and other perquisites as may be prescribed under the rules, as per Section 6 Under Section 7(1) either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal. Section 9 empowers the Chairman to constitute one or more Benches of one or more uneven number of members as he thinks fit., Under Section 10 the Tribunal may make regulations for transaction of business before it. Section 11 empowers the Tribunal to regulate it shown procedure us it may think just and fair. Unite/ Section 12 the Tribunal shall have the same powers us are vested in a Court under the Civil P.C. The Tribunal is required to give a ward under Section 16. Finality is attached to the award under Section 17 which can be executed as a decree by civil Court under Section 18. Revision is provided against the award to the High Court under Section 19 on grounds similar to those provided under Section 115. C.P.C. and those contained in Section 30 of the Arbitration Act. Under Section 20. notwithstanding anything contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and not reasonable basis, is upon the person who impeaches the law as violative of the guarantee of equal protection. The allegation must be clear, specific and unambiguous and must give particulars. The Supreme Court in Motidas v. S.P. Sahi AIR 1959 SC 942 has held as under :- It is now well settled that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation, and in order to pass the test of permissible classification two conditions must be fulfilled, namely (1) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases such as, geographical, or according to objects or occupations and the like. Here the Act classifies works contract from other contracts and provides for arbitration by a statutory tribunal of the dispute arising out of such contracts. Evidently, there is a reasonable classification with the object to ensure speedy and imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 held that the Legislature has not violated Article 14 by incorporating Section 25B, Delhi Rent Control Act, 1958, providing for summary disposal of cases filed by the landlord to evict tenants on the grounds of his bona fide need in order to get quick and expeditious relief. Such needy landlords are separate class by themselves and there is a reasonable classification. Again the Supreme Court in Air India v. Nergesh Meerza AIR 1981 SC 1829 held that even if there be one class of service having several categories with different attributes and incidents, such a category becomes a separate class by itself and no difference or discrimination between such category and the general members of the other class would amount to any discrimination or to denial of equality of opportunity. Further in R.K. Garg v. Union of India (AIR 1981 SC 2138) of the same Volume, it has been reiterated that Article 14 does not forbid reasonable classification of persons, objects and transactions by the legislature for the purpose of attaining specific ends, but the classification must not be arbitrary, artificial or evasive. Again in Ravi Dutt Sharma v. Ratan Lal Bhargava. AIR 1984 SC 967 the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuant to arbitration agreement and as if that other Act were an arbitration agreement. The chapter enumerates constitution of statutory tribunals under several enactments. Evidently Arbitration Act, 1940, deals with arbitration under an agreement. Besides such arbitrations, there may be statutory arbitrations in accordance with provisions of certain Act. The provisions of the Arbitration Act, except with few exceptions, will apply even to those arbitrations unless they are inconsistent with the provisions of those Acts. This is made clear by Section 46 of Arbitration Act that except certain provisions of this Act, the other provisions shall apply to every arbitration under any other enactment as if the arbitration was pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as this Act is inconsistent with the other enactment or with any other rules made thereunder. The Supreme Court in Hanskumar v. Union of India AIR 1958 SC 947 has held that the position in law is the same when the reference to arbitration is made not under agreement of parties but under provisions of a statute. The result of those provisions again is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or not to refer the dispute to the Tribunal. It is true that under Section 17 of the Act there is finality to the award and under, Section 18 it has a force of decree but this is subject to the High Court's power of revision under Section 19 on any of the grounds enumerated in Section 115, CPC and Section 30 of the Arbitration Act. Section 20 bars jurisdiction of civil Court to entertain or decide any dispute of which cognizance can be taken by the Tribunal under the Act. Admittedly, no appeal is provided and the grievance is that under the Arbitration Act the a ward can be challenged before the civil Court under Section 30 and appeal lies against the judgment of the civil Court under Section 39 and in some cases there may be second appeal also but under the present Act there is no appeal and only a revision is provided which is not an adequate remedy. Besides, the Tribunal is not bound to disclose reasons while in the agreement between the parties reasons have to be given by the arbitrator if the award exceeds rupees one lac. It is true that the jurisdiction of the civil court has been excluded against the a ward or the proceedings of the Tribunal under Section 20 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly subservient to the Government. It is true that under the rules the service conditions and other perquisites have been laid down and their previous service conditions prior to their appointment are preserved. Therefore, the rules do not leave the Chairman and Members completely at the mercy of the Government so far as their service conditions including salary are concerned. The proceedings before the Tribunal are regulated by the Regulations framed by it and not by the Government. Under Section It, the Regulations have to be just and fair and a party shall not be denied its right of being represented by an Advocate or a recognised agent. The Regulations framed by the Tribunal more or less adopt the procedure applicable to suits under C .P.C. except that i t is not necessary to take down and record evidence at length but only a memorandum of the substance of what the witness has deposed. Therefore, the provisions are not arbitrary or discriminatory in nature and the Act is not violative of Article 14 of the Constitution. The case of the Supreme Court in State of Karnataka v. Rameshwara Rice Mills (1987) 2 JT 578 : (AIR 1987 SC 1359) has no application to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to the coming into force of the Act, but this provision is for the purpose of computing limitation and not for any other purpose. In fact, the arbitration commences when the reference is made to the arbitrator. Admittedly, in these two cases, references were made after the Act came into force. Section 48 of the Arbitration Act provides that provisions of that Act will not apply to any reference pending on the commencement of the Act. A Division Bench of this Court in Chouthmal v. Ramchandra AIR. 1955 Nag 126 has held that a reference begins to pend the moment the agreement has been placed in the hands of the chosen arbitrators and they have signified their assent to deal with the matter. Obviously, this was after the present Act came into force. Under Section 7 of the Act the dispute so referred can only be adjudicated by the Tribunal constituted under the Act and not by any other arbitrator or Court as there is a mandate under Section 7 that the dispute has to be referred to the Tribunal for adjudication irrespective of the fact whether the agreement contains an arbitration clause or not. Though there is no non obstante clause in Section 7 but such a clause is there in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present Act came into force and not any arbitration proceedings that can take place in view of the prior agreement executed before the coming into force of the Act. If the arbitration proceedings are not pending, the agreement becomes inoperative so far as arbitration clause is concerned after the present Act came into force. G. P. Singh, J. in his book on Principles of Statutory Interpretation, 3rd Edition at page 348 has observed : But then there are very often posterior laws which seriously affect the performance of existing contracts and the commonest example is where a contract is frustrated by supervening impossibility brought by subsequent statutes or by governmental steps taken under them (Mugneeram Bangur and Co. (P) Ltd. v. Gurbachan Singh AIR 1965 SC 1523). A statute which in the words of Cockburn, C J. engrafts an enactment upon existing contracts has in effect a retrospective operation (Duke of Devonshire v. Barrow Haematite Steel Co. Ltd. (1877) 2 QBD 286). Byelaws framed under Forward Contract (Regulation) Act. 1952, which deal with forward contracts in cotton and refer to every contract and every on call contract in so far as cotton is uncalled thereunder , and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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