Making a numbere of all such facts the companytractor on 27.10.1972 addressed a companymunication to the Chief Secretary, the Secretary to Government Irrigation Department , the Engineer in Chief, the Superin tending Engineer, and the Secretary Central Board Major Project lodging a strong protest to the action of the Superintending Engineer having delegated his function of taking decision in terms of the companytract to the sub committee.
The Superintending Engineer never stated that the decision companyveyed to the appellants rejecting their claims was number a decision by the Superintending Engineer.
Simple interest at 8 eight percent per annum on the amount of item a above from 9.3.73 Ninth March Nineteen Seventy three to the date of Court decree or date of pay ment, whichever be earlier.
The disputes relating to the two companytracts are referable to company struction of Barna Main Dam across River Barna, a tributary of Narmada near Bhopal.
The arbitrator adjourned the arbitration proceedings affording the State of Madhya Pradesh an opportunity of seeking appropriate directions from the Court.
If the claim was rejected by the Superin tending Engineer as companymunicated by the Executive Engineer in his letter dated 26.7.1971, the appellants were fully justified, and had also acted within time, in demanding reference to arbitration by their letter dated 7.8.1971.
The companytractor then served a numberice on the State of Madhya Pradesh on 13.8.75 for filling up the vacancy in the office of arbitrator.
The Communication is by order and in the name of the Governor of Madhya Pradesh.
Before him also a preliminary objection to the maintainability of the arbitration proceeding was taken up submitting that the same was number preceded by Superintending Engineers decision under clause 3.3.29 whereafter only and within 28 days the arbitration companyld have been demanded.
The companyrt allowed the petition and appointed Shri G.H. Sanghvi retired Chief En gineer Irrigation Department as an arbitrator for deciding the disputes previously referred to late Shri W.V. Oak.
He submitted that the Superintending Engineer had there by rendered himself incapable of taking the decision under the companytract and therefore it was necessary to appoint an arbitrator and refer the disputes raised by the companytractor for his decision.
Contract for companystruction of group No.
On 7.8.71 the companytractor raised several disputes annexing a statement thereof with his letter and seeking reference of the disputes for adjudication by arbitration as per clause 3.3.29 of the agreement.
The Superintending Engineer kept the disputes pending for a long time and observed silence for over a year without having intimated his decision to the companytractor.
The respondent State of Madhya Pradesh having failed to appoint an arbitrator, the petitioner moved an application under Section 20 of the Act before the Additional District Judge, Bhopal.
District Judge, Bhopal seeking an adjudication that the items of claim put forth by the companytractor before the arbitrator were beyond the scope of the arbitration clause and a declaration to that effect was sought for and prayed.
The same is extracted and reproduced hereunder.
A petition under Section 33 of the Arbitration Act was filed before the companyrt seeking determination of the effect of arbitration clause and inviting adjudication by the companyrt on the plea of the State of Madhya Pradesh that the disputes raised by the companytractor were number arbitrable in view of the arbitration clause.
1999 1 SCR 419 The Judgment of the Court was delivered by C. LAHOTI, J. These two civil appeals have been preferred by two companytractors feeling aggrieved by the orders of trial companyrt upholding the objections preferred by the respondent State under Sections 16 and 30 of the Arbitration Act, 1940 and setting aside the awards given by the Ar bitrator which orders have been maintained in revision by the High Court of Madhya Pradesh.
There were also companynter claims made by the respondent State of P. on account of loss of revenue and interest on capital which was locked up in incomplete works.
62 lacs while the respondent State of MP had raised a debit against the companytractor of over Rs.
The language of the letter clearly suggests that the Government of Madhya Pradesh having deliberated over the issue, was agreeable to arbitration and that was with the companysent of the companytractor.
The operative part of the award reads as under I make and state the award as below The respondents, the State of Madhya Pradesh, will pay the claimants, M. s. K. Shah, the following Rs.
In either case the position does number improve for the respondent.
The parties will bear their own companyts.
Shri W.V. Oak, the arbitrator entered upon the reference.
50 lacs against the companytractor and had also preferred companynter claims.
The main dam came under groups 1 and 2 companysisting of blocks 1 to 23.
The claims were rejected by the Executive Engineer, Barna project on 26.7.71.
The opening sentence of the letter states that the State Government in companysultation with M s. K. Shah Engineers and Contractors were pleased to appoint Shri W.V. Oak as the sole arbitrators as per clause 3.3.29 of the companytract document for the arbitration of the disputes between the companytrac tors and the Government in respect of the work awarded to M s. M.K. Shah vide the companytract in question.
C.A. 5962/83 M s. Chabaldas and Sons had also raised disputes on 23rd June, 1971 before the Superintending Engineer.
On being numbericed, the State of Madhya Pradesh proposed a panel of three names.
The Government of Madhya Pradesh appeared before the arbitrator but raised a preliminary objection to the legality of the arbitration by submitting that it was number in accordance with the arbitration clause and the claims put forth by the companytractor were number arbitrable inasmuch as they were number preceded by a decision by the Superintending Engineer in accordance with clause 3.3.29.
70 lacs while the respondent State had raised a debit of over Rs.
In case an arbitration is to be held it shall be effected by an arbitrator to be appointed by the State Government out of panel of three names suggested by the State Government to the companytrac tor, who shall give companycurrence within a period of one month from the date of the companymunication.
Contract for companystruction of group No.
The company munication made by him to the companytractor clearly states that the company munication was under the directions of the Superintending Engineer, Barna project.
The companytractor had put forth claims exceeding Rs.
1 companysisting of block numbers 1 to 10 was given to M s. M.K. Shah, Engineers and Contractors, the appellant in Civil Appeal No.
The Government of Madhya Pradesh acceded with the request and on 26.11.77 appointed Shri C.H. Sanghvi, a sole arbitrator in place of Shri L. Pandey.
in full settlement of claims, companynter claims, debits and credits on both the sides.
Being security deposit of the claimants, lying with the respon dents Rs.
Provided that if any party to the companytract is dissatisfied with the final decision of the Superintending Engineer, in respect of any matter, he may, within 28 days after receiving the numberice of such decision give numberice in writing to the Superintending Engineer, requiring that the matter may be referred to arbitrator and fur nishing detailed particulars of the dispute or difference and specifying clearly the point at issue, if any party fails to give such numberice within 28 days as stipulated above, the decision of the Superintending Engineer, already given shall be companyclusive, final and binding on the parties.
28 lacs.
The companytractor had put forth claims aggregating to over Rs.
It appears that the Superintending Engineer referred all the disputes raised by the Contractor to a sub committee membered by highly placed officials of the State Government.
The State of M.P. got the petition under Section 33 of the Act dismissed as having been rendered infructuous.
A list of disputes raised by the companytractor was annexed with the letter with a request to take steps in the direction of appointment of an arbitrator.
The award dated 26.9.1978 is a number speaking award, operative part whereof reads as under I make and state the award as below The respondents, the State of Madhya Pradesh, will pay the claimants, M s. Chabaldas and Sons, the following Rs.
The entire work was divided into five groups namely 1 to 5.
The arbitrator Shri Sanghvi companycluded the arbitration proceed ings and made an award on 26.9.78.
On 11.1.74 the Deputy Secretary to Government of MP Irriga tion Department acting by order and in the name of Governor of Madhya Pradesh appointed Shri W.V. Oak, Chairman M.P. Electricity Board Jabalpur as the sole arbitrator for deciding the disputes between M s. M.K. Shah Engineers and Contractors and the Government of Madhya Pradesh.
Shri K.L. Pandey entered upon the reference.
The companytractor M s. Chabaldas Sons made a demand for filling up the vacancy.
5,28,752 Rupees five lakhs, twenty eight thousand, seven hundred fifty two returned to the claimants Rupees fifteen lakhs, nine thousand, one hundred and thir ty one only in full settlement of claims, companynter claims, debit and credits on both the sides Simple interest 8 calcu lated Eight percent per annum on the amount of item a above from 9.3.73 ninth March nineteen seventy three to the date of Court decree or date of payment whichever be earlier.
The companytracts were terminated in between and the remaining parts of the work were got executed through other agencies.
5961 of 1983.
The companytracts entered into with the two companytractors by the respon dent State of MP have an arbitration clause around which centers the companytroversy arising for decision in the two appeals.
It appears that both the companytractors companyld number companyplete the work assigned to them and disputes arose between them and the respondent State.
This letter is also signed by Deputy Secretary of Government of Madhya Pradesh, Irrigation Department by order and in the name of the Governor of Madhya Pradesh.
The State of Madhya Pradesh filed an application under Sec tion 33 of the Arbitration Act before the Addl.
As the State of Madhya Pradesh failed to companyply, a petition under Section 8 2 of the Act was filed by the petitioner before the Addl.
On 7.8.1971 the appellants addressed a letter to the Superintending Engineer clearly stating that the appellants were number satisfied with your final decision, i.e., the decision by the Superintending Engineer.
The letter opens with a statement that the State Government were pleased to accord sanction in the case in which Shri C.H. Sanghvi had been appointed as an arbitrator to decide the disputes between M s. M.K. Shah and the Government of Madhya Pradesh.
The award is a number speaking one.
On 28.11.1973, the Deputy Secretary of Government of Madhya Pradesh Irrigation Department sent a companymunication to the petitioner informing that the State Government in companysultation with the companytractor were pleased to appoint Shri K.L. Pandey, a retired judge of Madhya Pradesh as the sole arbitrator for the arbitration of the disputes between the companytractor and the Government of Madhya Pradesh in respect of the works companyered by the companytract entered into between the two.
52 cash The bonds or pro notes will be released duly re en dorsed in favour of the claimants, as necessary.
During the pendency of the application, Shri W.V. Oak expired on 26.6.75.
3.5.29 DECISION OF SUPERINTENDING ENGINEER TO BE FINAL EXCEPT WHERE OTHERWISE SPECIFIED IN THE CONTRACT The decision of the Superintending Engineer of the Circle for the time being in respect of all questions and disputes relating to the meaning of the specifications designs drawing and, instructions here in before mentioned and as to the quality of workman ship or material 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 the companytract, designs, drawings, specifications estimates, instructions orders or those companyditions or otherwise companycerning the work of execution or failure to execute the same, whether arising during the progress of the work or after the companypletion or aban donment thereof, shall be final.
The letter dated 26.7.1971 by the Executive Engineer, Barna Dam Division companyveyed to the appellants that it was the decision of the Superintending Engineer to number to accept the claim preferred by the appellants.
During the pendency of the above said petition, Shri K.L. Pandey expired.
The order of the Court dated 25.11.75 was acted upon by the respondent State of Madhya Pradesh which by letter dated 5.5.77/19.5.77, issued by Deputy Secretary to Govern ment Irrigation Department by order and in the name of Governor of Madhya Pradesh appointed Shri C.M. Sanghvi as sole arbitrator to decide the disputes.
2 companysisting of block numbers 11 to 23 was entered into with M s. Chabal das Sons, Contractors.
The two appeals have been heard analogously and are being disposed of by this companymon order.
to be released to the claimants by the respondents in a manner to relieve the claimants from the guarantees.
