Spm Engineers Ltd. Vs. Guwahati Municipal Corporation - Court Judgment

Excerpt:
- - -clause 26. except where otherwise specified in the contract the decision of the commissioner of the corporation for the time being shall be final conclusive and binding on all parties to the contract upon all question relating to the meaning of the specification design, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to contract design, drawings, specifications, estimates, instructions, orders or these conditions or otherwise 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. 6. it is further the..... r.s.mongia, c.j. 1. heard mr. p.c. markanda, learned counsel for the applicants and mr. h. sarma, learned counsel appearing for the respondent. 2. this order of mine will dispose of arbitration petitions nos. 17/2001, 18/2001 and 19/2001. in arbitration petition no. 17/2001, spm engineers ltd. is the applicant, whereas international construction ltd., is the applicant in arbitration petition no. 18/2001 and zoom international services ltd. is the petitioner in arbitration petition no. 19/2001. in all these cases, guwahati municipal corporation (in short, the gmc) is the respondent. 3. in all these cases, agreements were entered into between the parties for carrying out the works regarding the water supply scheme. both the contracts in arbitration petition no. 17/2001 and arbitration.....

Judgment:

R.S.Mongia, C.J.

1. Heard Mr. P.C. Markanda, learned counsel for the applicants and Mr. H. Sarma, learned counsel appearing for the respondent.

2. This order of mine will dispose of Arbitration Petitions Nos. 17/2001, 18/2001 and 19/2001. In Arbitration Petition No. 17/2001, SPM Engineers Ltd. is the applicant, whereas International Construction Ltd., is the applicant in Arbitration Petition No. 18/2001 and Zoom International Services Ltd. is the petitioner in Arbitration Petition No. 19/2001. In all these cases, Guwahati Municipal Corporation (in short, the GMC) is the respondent.

3. In all these cases, agreements were entered into between the parties for carrying out the works regarding the water supply scheme. Both the contracts in Arbitration Petition No. 17/2001 and Arbitration Petition No. 19/2001 contained the following clauses, which are numbered as Clause 26 and Clause 30, respectively. The same are reproduced as under :

'Decision of the Commissioner to be final. - Clause 26. Except where otherwise specified in the contract the decision of the Commissioner of the Corporation for the time being shall be final conclusive and binding on all parties to the contract upon all question relating to the meaning of the specification design, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to contract design, drawings, specifications, estimates, instructions, orders or these conditions or otherwise 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.'

'Definition of work. - Clause 30. The expression 'work' or 'works' where used in these conditions shall unless there be something either in the subject or context repugnant to such constructions be constructed and taken to mean the works by or by virtue of the contract constructed to be executed whether temporary or permanent and whether original altered substituted or additional, In case of any dispute arising out of this agreement, the same will be decided by the Commissioner and the decision will be final and conclusive.'

The contract in Arbitration Petition No. 18/2001 contained the following clause, which is numbered as clause D-6.21, which is as under :

'D-6.21. Decision of the Commissioner, Guwahati Municipal Corporation to be final.

Provided always thus in case any question, dispute or difference shall arise between the Engineer-in-charge and the contractor as to what additions, if any, or infairness to be made to the amount of the contract by reason of the works being delayed for no fault of the contractor, or by reason of an account of any directions or regulations of the Engineer-in-charge involving increased cost to the contractor beyond the cost properly attending in carrying out of the contract according to the true intent and meaning of the signed drawings and specification or as to the works having been duly completed, or as to the construction of these presents or as to the work or as to any other matter or thing arising under or out of this contract except as to matter left during the progress of the work to the sole decision or requisition of the Engineer-in-charge under Clause D-6.2, D-6.8 and D-6,9 in case the Contractor shall be dissatisfied with any certificate of the Engineer-in-charge shall withhold or not give any certificate, to which the contractor may be entitled, then such question, dispute or difference or such certificate of the value or matter which should be certified as the case may be is to be from time to time referred to the Commissioner, Guwahati Municipal Corporation whose decision shall be final, conclusive and binding on the contractor.'

4. It is the case of the applicants that some disputes having arisen which could not be amicably settled between the parties, the applicants in each case issued a notice on September 10, 2001, addressed to the Commissioner, GMC. Paragraph 5 of the notice dated 10.9.2001 in Arbitration Petition No. 17/2001 reads as under :

'5. That even though the contract has been illegally terminated, the arbitration clause, i.e., Clause 30 (Page No. 11/12) survives for the determination of our disputes. We, therefore, invoke the arbitration clause and once again call upon you to enter upon reference and decide our disputes, a list of which are given herewith as Annexure-A.

We call upon you to enter upon reference within a period of 30 days to adjudicate upon our disputes as listed out in Annexure-A, failing which we shall be constrained to proceed as advised.'

5. The notices dated 10.9.2001 in Arbitration Petition No. 18/2001 and Arbitration Petition No. 19/2001, also contained identical claims.

6. It is further the case of the applicants that the Commissioner, GMC having failed to act and enter upon the reference within 30 days of the receipt of the notice dated 10.9.2001, I should appoint an arbitrator under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act).

7. The receipt of the notice dated 10.9.2001 is not disputed on behalf of the respondent, GMC. However, the learned counsel for the respondent has raised a common argument in all the three cases, i.e., the aforesaid clauses 26 and 30 in Arb. Petns. Nos. 17/2001 and 19/2001 and clause D.6.21 in Arb. Petn. No. 18/2001, do not amount to any reference of any disputes to the arbitration of the Commissioner, GMC, but these clauses only envisage that the decision of the Commissioner on any of the matters referred to in the aforesaid clauses shall be final but the Commissioner, GMC, does not act as an arbitrator. Additionally, an argument has been advanced in Arbitration Petition No. 19/2001 that in fact the arbitrator had acted and entered upon the reference within 30 days of the receipt of the notice dated 10.9.2001 and, therefore, the question of appointment of arbitrator in that case by me does not arise.

8. Learned counsel for the applicants cited the Apex Court judgment in The State of UP v. Tipper Chand, AIR 1980 SC 1522, to contend that wherever a clause in the agreement provides for the decision of a dispute between the parties by any person named therein or otherwise to be named, such a clause would amount to arbitration clause. According to this authority, it is not necessary that the word 'arbitrator' or 'arbitration' must exist in the terms of the agreement. While delivering the judgment, the Apex Court was considering the earlier judgments of various High Courts, which they approved. In a Jammu & Kashmir case, the clause was as under:

'For any dispute between the contractor and the Department the decision of the Chief Engineer, PWD, Jammu and Kashmir, will be final and binding upon the contractor.'

9. The Apex Court observed that the words 'any dispute between the contractor and the Department' were significant and such a clause would amount to an arbitration clause. Similarly, while discussing a Full Bench judgment of the Punjab High Court in Ram Lal v. Punjab State, AIR 1966 Punj. 436 (FB), where the clause was :

'In matter of dispute the case shall be referred to the Superintending Engineer of the Circle, whose order shall be final.'

It was held to be an arbitration clause.

10. In Smt. Rukmanibai Gupta v. The Collector, Jabalpur and Ors., AIR 1981 SC 479, the Apex Court was considering the following clause in the agreement:

'15. Whenever any doubt/difference or dispute shall hereafter arise touching the construction of these presents or anything herein contained or any matter or things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable hereunder the matter in difference shall be decided by the lessor whose decision shall be final.'

11. The Apex Court held that the aforesaid clause amounted to an arbitration clause.

12. Really speaking it is to be seen whether the parties to the agreement intended that any disputes arising between them should be decided by a particular person after holding an enquiry in the nature of judicial enquiry and after hearing the cases of respective parties. If such is the intention, then it is an arbitration clause irrespective of the fact that the words 'arbitrator' or 'arbitration' are not used in such clause.

13. In the present case, reading of the Clauses 26 and 30, as well as Clause D-6.21 of the agreements quoted above, it is apparent that it was envisaged that any dispute arising out of the agreements, the decision thereon shall be taken by the Commissioner. Consequently, I do not agree with the contention of learned counsel for the respondent, GMC, and hold that there exists an arbitration clause.

14. In Arbitration Petition No. 17/2001, the first communication which was received after September 10, 2001 from the Commissioner, GMC is dated 13.11.2001. Admittedly, it is after 30 days of the receipt of the notice dated 10th September, 2001. In Arbitration Petition No. 18/2001, the notice dated 10.9.2001 was duly received by the respondent, but, there was no reply to it till the filing of the petition, i.e., 18.10.2001. In Arbitration Petition No. 19/2001, the learned counsel for the respondent referred to a communication dated 28th September, 2001, from the Commissioner, GMC. In that communication, reference is being made to the Chief Engineer's letter dated 13.3.2001, which was addressed to the applicant asking them to attend the office of the Chief Engineer along with copy of the agreement and other relevant documents in respect of the work 'Labour charge and supply of barge, installation of MS pipeline for Kamakhya Water Supply Scheme' on 15.3.2001 at 3.00 PM.

15. The communication dated 28th September, 2001 is not in response to the notice dated 10th September, 2001 in which disputes were referred. This petition was filed on 18.10.2001. From the aforesaid facts, I am of the considered view that the named arbitrator, i.e., the Commissioner, GMC failed to enter upon the reference and act as an arbitrator within 30 days of the receipt of the notices dated 10.9.2001.

16. In view of the above, I proceed to appoint an arbitrator under Section 11(6)(c) of the Act.

17. The matter relates to engineering disputes and it would be better if some engineer is appointed as an arbitrator. One such arbitrator is in the list of arbitrators maintained by the Indian Council of Arbitration, Assam. In these three cases, Mr. N.C. Deka, Commissioner, PWD (Retd.), opposite Nehru Stadium, Dr. B. Barooah Road, Guwahati, is appointed as arbitrator. He should enter upon the references within 30 (thirty) days of the receipt of the copy of the order from this office or a certified copy thereof from any of the parties whichever is earlier. He would decide the disputes in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

The parties' addresses are:

(1) In Arbitration Petition No. 17/2001:

Applicant : SPM Engineers Ltd., through its Manager, Dugar Building, HB Road, Fancy Bazar, Guwahati-1.

Respondent : Guwahati Municipal Corporation, through its Commissioner, Panbazar, Guwahati-1.

(2) In Arb. Petn. No. 18/2001:

Applicant : International Construction Ltd., through its Manager, Dugar Building, HB Road, Fancy Bazar, Guwahati-1.

Respondent : Guwahati Municipal Corporation, through its Commissioner, Panbazar, Guwahati-1.

(3) In Arb. Petn. No. 19/2001:

Applicant : Zoom International Services Ltd., through its Manager, Dugar Building, HB Road, Fancy Bazar, Guwahati-1.

Respondent : Guwahati Municipal Corporation, through it Commissioner, Panbazar, Guwahati-1.

The three Arbitration Petitions, i.e., Arb. Petn. Nos. 17/2001, 18/2001 and 19/2001 stand disposed of.

The Office is directed to send a copy of this order to the aforesaid named arbitrator.