ORDER
M.Y. Eqbal, J.
1. In this application under Section 11(6) of the Arbitration and Conciliation Act 1996 the petitioner has prayed for appointment of an Arbitrator to adjudicate the dispute exists between the petitioner and the respondents with regard to payment of difference of cost of material
2. The facts of the case lie in a narrow compass:
The respondent-Road Construction Department invited tender for the work of widening and strengthening of Kandra-Khuti Ichagarh Road. The value of work was Rs. 6,31,56,890/-. The petitioner being the lowest bidder was allotted work and agreement was executed on 23.5.2002. As per direction of respondent No. 4 Executive Engineer, R.C.D. Road Division Jamshedpur, the petitioner commenced the work for completing the same within the specified time. According to the petitioner, in terms of Clause 23 of the Contract any dispute or differences arises between the parties shall have to be referred to Superintending Engineer of the Circle for decision. Petitioner's case is that as per special condition all materials was to be supplied from P.W.D. godown and empty Bitumen drams was to be returned in good conditions by the contractor to the godown wherefrom Bitumen was issued. It is alleged that the respondent-Department did not supply Bitumen and the contractor was asked to purchase the Bitumen from the market. The rate of the Bitumen was fixed by the department at the time of execution of agreement. Further case is that petitioner was made to understand that the price fixed by the department for the Bitumen, if enhanced, it was to be paid by the department. Petitioner accordingly requested the Department to pay difference of costs of Bitumen, which was rejected by the Executive Engineer on the ground that the work was not completed within the specified time Consequently disputes arose between the parties and the petitioner vide letter dated 13.6.2005 requested respondent No. 3 Superintending Engineer to appoint Arbitrator amongst three names given by it as per Clause-23 of the agreement for adjudication of the dispute. It is stated that respondent No. 3 did not take any action for appointment of Arbitrator nor respondent No. 4 passed any order on the representation of the petitioner. Hence the application.
3. Respondent No. 3 filed counter affidavit stating inter alia that Clause-23 of F-2 Contract had been abolished vide Government of Bihar, R.C.D. Resolution No.-A2/Niam-08/1992 6113(5) dated 18.11.1992 and it was published in the extra ordinary issue of Gazette and the petitioner is fully aware about the abolishment of Clause-23 of F-2 Contract. According to respondent there is no such Arbitration Clause and, therefore, question of reference of dispute for adjudication does not arise. Respondents have also denied the fact that there was any condition for supply of Bitumen by the Department, rather the Contractor had to manage himself for purchase of Bitumen from Indian Oil Corporation, Hindustan Petroleum or Bharat Petroleum Corporation. The respondents have taken various other defences in respect of their case that difference of amount is not payable by the respondents.
4. Petitioner has annexed xerox copy of the original agreement entered into between the petitioner and the Executive Engineer, as Annexure 2 to the application. From perusal of the said contract dated 23.5.2002, it transpires that Clause-23 still exists in the said contract. Clause 23 of the Contract reads as under:
Clause 23: In case any dispute or difference shall arise between the parties or either of there upon any question relating to the meaning of the specification, designs, drawings and instructions herein before mentioned or as to the quality of workmanship or materials used on the work or as be the construction of any of the conditions or any clause or thing there in contained, or as to any question, claim rights, or liabilities of the parties, or any clause or thing whatsoever, in any way arising out of or relating to the contract designs, drawings, specifications estimates, instructions order or these conditions or otherwise concerning the work, or the execution, failure to execute the same whether arising during the progress of the work, or after the completion or abandonment thereof, or as to the breach of this contract, then either part shall forthwith give to the other notice of such dispute or difference and such dispute or difference shall be referred to the Superintending Engineer of the Circle and his decision thereon shall be final conclusive and binding on all the parties.
5. Learned Counsel for the petitioner firstly drawn my attention to Annexure-2, which is a Xerox copy of the original contract and submitted that in the original contract, Clause-23 still exists and it was not deleted. Learned Counsel submitted that even in reply to the notice by which petitioner invoked Clause-23 of the Contract respondents never refuted the claim of the petitioner for reference of dispute to arbitration. According to the learned Counsel even if any resolution was taken for deletion of Clause-23 of the Contract, the same having not been deleted in the instant contract, petitioner is entitled to invoke the said clause. Learned Counsel for the petitioner relied upon the decision of a Division Bench of this Court in the case of Sharda Construction v. State of Jharkhand and Ors. (2004) 4 JCR786.
6. On the other hand, Mr. Manjul Prasad, learned Counsel for the respondent-State firstly submitted that Clause-23 of the General Terms of the Contract was abolished vide Resolution dated 18.11.1992 and was published in the Official Gazette. Learned Counsel therefore, submitted that by publishing in the Gazette it was notified to all concern regarding deletion of Clause-23 from the Contract. Learned Counsel relied upon the decisions rendered in the case of B.K. Srinivasan and Ors. v. State of Karnataka and Ors. : [1987]1SCR1054 and in the case of Pankaj Jain Agencies. v. Union of India and Ors. : 1994ECR28(SC) .
7. Learned Counsel also drawn my attention to the P.W.D. Rules, particularly Rule 165 and 169 and submitted that Arbitration Clause shall be deemed to have been deleted from the contract agreement.
8. The moot question that falls for consideration in this application is as to whether in view of the deletion/abolition of Clause 23 by Resolution dated 18.11.1992, there exists arbitration clause in the contract agreement in question.
9. Before appreciating the submissions of the learned Counsel, I would like to discuss the decision referred to by the learned Counsel for the State.
10. In the case of B.K. Srinivasan and Ors. v. State of Karnataka and Ors. (Supra) the question that falls for consideration before the Supreme Court was whether publication of a notice in official gazette is sufficient compliance with Section 13(4) of the Karnataka Town and Country Planning Act, 1961. Section 13(4) of the Act contemplates besides permanently displaying the plan and the particulars in the offices of Director and Planning Authority and keeping available a copy for the inspection of the public at the office of planning Authority, publication of a public notice in the Official Gazette that the Plan and Regulations are permanently displayed and are available for inspection by the public with a view to invite comments from the public. Their Lordships going with the aforesaid question and also the question as to when notice becomes effective held as under:
There can be no doubt about the proposition that where a law, whether Parliamentary or subordinate, demands compliance, those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the 'conscientious good man' seeking to abide by the law or from the standpoint of Justice Holmes's 'Unconscientious bad man' seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all-pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative power is not as important if not more important, than governance by Parliamentary legislation. But unlike Parliamentary legislation, which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognized official channel, namely, the official gazette or some other reasonable mode of publication. There may be subordinate legislation which is concerned with a few individuals or is confined to small local areas. In such cases publication or promulgation by other means may be sufficient.
11. In the case of Pankaj Jain Agencies. v. Union of India and Ors. (Supra) the petitioner assails the vires of the Notification dated 13.2.1986 of the Central Government issued in exercise of powers under Section 25(1) of the Customs Act, 1962, amending the earlier Notification dated 17.3.1985. Section 25 of the Act deals with the grant exemption by issuing notification. Their Lordships following the earlier decision in Srinivasan Case (Supra) held that Notification is not violative under Article 19 of the Constitution.
12. In the instance case, in course of argument, learned Counsel for the State could not show me any legislative enactment or any subordinate legislation under which the terms of contract were settled and power of deletion or abolition of terms of contract was vested in any of the authority by publication in the Official Gazette. On the contrary it will appeal from the Public Works Department Code (in short P.W.D.Code) that certain principles have been laid down for the guidance of the authorities in the matter of entering into contract. In my considered view, therefore, the decision of the Supreme Court will not apply in the facts of the present case.
13. Now I shall deal with the relevant rules of the Bihar Public Works Department Code (P.W.D.Code) as referred by the learned Counsel appearing for the State.
14. Mr. Manjul Prasad, learned Counsel for the State referred Rule 165 and 169 of the Code. Rule 165 lays down the general provisions for carrying out the works otherwise than by the employment of daily labour. Rule 165 reads as under:
Rule 165 : The recognized system for carrying out works otherwise than by the employment of daily labour, are 'Piece Work'. Piece work is that for which only a rate is agreed upon without reference to the total quantity of work to be done or the quantity to be done within a given period. The term 'Contract', as used in this Chapter, does not include agreements for the execution of work by piece-work nor does it include mere ordinary purchase of materials of stores. All other work doned under agreement is termed 'Contract work' and in agreements for such work, which should invariably be in writing there should generally be a stipulation as to the quantity of work to be done and the time within which it is to be completed.
15. Section 169 of the Code lays down the principles for the guidance of authorities in the matter of entering into the contract or agreement. Section 169 reads as under:
Rule 169: The following general principles have been laid down for the guidance of authorities who have to enter into contracts or agreements involving expenditure from public funds:
(i) The terms of a contract must be precise and definite and there must be no room for ambiguity o misconstruction therein.
(ii) As far as possible, legal and financial advice should be taken in the drafting of contracts and before they are finally entered into.
(iii) Standard forms of contracts should be adopted wherever possible, the terms to be subject to adequate prior scrutiny.
(iv) Such standard forms of contract will be prescribed by the Public Works Department in consultation with the Law and Finance Departments. When prescribing such standard form, the draft may also be shown for advice to the Audit whose function is to examine contracts or agreements for works or supplies entered into by Government servants on behalf of Government (See Article 124 of the Audit Code).
(v) Certified copies of important contracts valued at [Rs. 12.5 lakh and above entered into by the Officers of the Public Works Department shall be furnished to the Audit Office.
(vi) The terms of contract once entered into should not be materially varied without the previous consent of the authority competent to enter into the contract as so varied. No payments to contractors by way of compensation or otherwise, outside the strict terms of the contract or in excess of the contract rates may be authorized without the previous approval of the Finance Department.
(vii) No contract involving an uncertain of indefinite liability or any condition of an unusual character should be entered into without the previous consent of the Finance Department.
(viii) Contracts should always be placed only after tender have been openly invited (See also Section H on tenders)
(ix) [x x x]
(x) Even in cases where a formal written contracts is not made, no order for supplies, etc. should be placed without at least a written agreement as to the price.
(xi) Provision must be made in contracts for safeguarding Government properly entrusted to a contractor.
(xii) Where a contract is likely to endure for a period of more than five years, it should, wherever possible, include a provision for an unconditional power of revocation or cancellation by government at any time on the expiry of six months' notice to that effect.
16. From perusal of the aforesaid Rules, it is manifestly clear that Rule 169 lays down the guidelines which inter alia provides that terms of contract once entered into should not be materially varied without the previous consent of the authority competent to enter into the contract.
17. The contention of the respondent-Department is that Clause 23 of F-2 Contract was abolished vide Resolution dated 18.11.1992 and it was published in the gazette. A copy of the gazette notification has been annexed as Annexure-A to the counter affidavit. It transpires from the said notification dated 18.11.1992 that the Government of Bihar took a decision to abolish Clause 23 of the F-2 agreement, which is an arbitration clause. It does not appear from the said notification that it was issued in exercise of statutory power.
18. Notwithstanding, the aforesaid Gazette Notification for abolition of Clause 23 of F-2 Agreement, respondents entered into the instant agreement with the petitioner, which was duly signed by the Executive Engineer, Road Construction Department. The instant agreement contains Clause 23, which is an arbitration clause. In Clause 27 of the contract it is clearly mentioned that the terms and conditions of the agreement have been read over and explained to the executants who is the Managing Director of the petitioner-company and the Executive Engineer, Road Construction Department. It is not the case of the respondents that petitioner was made aware about the abolition of arbitration Clause 23 from the agreement by resolution of 1992 nor is the case of the respondents that before filing of the instant application, petitioner was intimated about the deletion of Clause 23 of F-2 agreement by gazette notification.
19. The legislature in its wisdom has enacted Arbitration and Conciliation Act 1996 and the object of the enactment is to safeguard the effort of one party to scuttle contractual obligation which they have entered into an arbitration agreement. Admittedly Clause 23 which is an arbitration clause has been incorporated in the F-2 contract. Learned Counsel appearing for the State could not show me any of the provisions of law which debar the authorities of the respondents forever from entering into an arbitration agreement on the ground of the alleged abolition of arbitration clause by Gazette notification.
20. It is well settled that arbitration agreement is a contract within the meaning of Section 91 of the Evidence Act and when the parties to an agreement refer a dispute which arises between them, they can not lead evidence to vary or add to the terms of agreement by saying that arbitration agreement was not in existence.
21. In the case of Bomanji Ardeshir Wadia and Ors. v. Secretary of State A.I.R. 1929 Privy Council-34 their Lordships observed that when parties have entered into a formal contract that contract must be construed according to its own terms and not to be explained or interpreted by the antecedent communings which laid up to it.
22. Considering the fact of the case, I am of the view that principle of 'Expressio Unios Est Exclusio Alterius' shall apply, according to which where there is an express mention in the instrument of a certain thing, it will exclude any other thing of a similar nature. It is well settled principle of law that when an terms of a contract or of a grant, or of any other disposition of property, have been reduced to the form of a document or of a contract then no evidence shall be given in proof of the terms of the contract except the document itself. In my view if a particular clause, although incorporated but excluded from the contract, parties against whom it is to be operated must be given reasonable notice of its non-existence.
23. Considering the entire facts of the case, in my considered opinion Clause 23 has been incorporated in the agreement duly consented by the petitioner and the Executive Engineer of the respondent after reading and fully understanding the contents of the said agreement. Since Clause 23 does exists in the contract in question, the petitioner has rightly invoked Clause 23 of the contract. Consequently, the instant application under Section 11(6) of the Arbitration and Conciliation Act for reference of dispute to arbitration as per Clause 23 is maintainable.
24. Hence, this application is allowed and the dispute is referred to Superintending Engineer of the Circle who is the named arbitrator with a direction to enter into the reference and give an award within Four month from date of entering into the reference.