First Appeal dismissed holding that non-compliance with contractual arbitration clauses is a question for the arbitrator, not the court; appeal against non-compliance of tender terms not maintainable under Section 39 of Arbitration Act 1940.
Appeal dismissed as it is liable to be dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
FIRST APPEAL NO. 125 OF 2002 WITH
CIVIL APPLICATION NO. 888 OF 2006
versus
Shri Tilakaraj Malhotra, Age 45 years, Occ. Contractor R/o. Dadarao Plots, Parbhani District Parbhani (Through his General Power of Attorney Holder, Shri Bhagwantrao Gabaji Nawale, Age 75 years, Occ. Pensioner R/o. Padampura, Aurangabad
...Respondents
AGP for the appellants: Mr. B.V. Virdhe Advocate for respondent: Mr. S.S. Choudhari
CORAM : V. K. JADHAV, J. DATED : 25th APRIL, 2017
ORAL JUDGMENT :-
learned IInd Joint, Civil Judge, Senior Division, Aurangabad in arbitration application No. 58 of 1992, the original respondents preferred this appeal.
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a) The respondent/plaintiff had filed an arbitration application No.58
of 1992 under Section 20(4) of the Arbitration Act 1940 against the appellants/original defendants. According to the respondent/ plaintiff, he is registered contractor and in the year 1987-88, the Public Works Department of the Government of Maharashtra, wanted to construct one R.C.C. Box culvert 6v of 2M X 2M at Km 3.3 on Malsona Thora Road in Parbhani district. Accordingly, the Executive Engineer, Command Roads Division, Parbhani had invited tenders by issuing public notice to that effect. The respondent/plaintiff had submitted his tender and the same was accepted being lowest one. After completion of formalities, the respondent/plaintiff started the work as per the instructions of the Engineer in charge of the work and as per the directions given by the department. However, during the course of execution of work, the respondent/plaintiff had to incur the expenditure for extra work done on de-watering of foundation beyond tender provision and also on some other works. Furthermore, he had also suffered loss due to washing away of his stacked material on work site due to unexpected rains and floods of Nala water. Moreover, some amount also came to be deducted from his bills by carrying out wrong calculations. On all these counts, the respondent/plaintiff has suffered financial loss of Rs.54,400/and accordingly he requested the appellant-defendant to pay the
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amount. However, his request was not considered, by the Executive Engineer, who was in-charge of the work. The respondent plaintiff then requested the next higher authority i.e. Superintending Engineer, World Bank Project, Circle Aurangabad to consider and grant his claims. In view of arbitration clause 53, the respondent/plaintiff being dissatisfied with the decision taken by the Superintending Engineer, filed an application bearing Arbitration application No. 58 of 1992 for various prayers made therein.
b) The appellants/State and Chief Engineer have strongly resisted the said application by filing their say. It has been contended that the respondent/plaintiff did not prefer any appeal before the Chief Engineer against rejection order of Superintending Engineer to consider his claim as provided in clause 53 of the contract. It has also been contended that as per clause 53 of the contract, if the contractor fails to prefer an appeal before the Chief Engineer within 30 days, then the decision taken earlier shall be final and binding on the contractor. It has also been contended that the respondent/plaintiff within 30 days period from the date on which he received the decision, shall offer his intention to refer the matter for arbitration and failing therein, his application itself is not maintainable.
c) After hearing both the parties, learned C.J.S.D., Aurangabad by impugned order dated 3.12.2001, has observed that the dispute is
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related to Government work carried out by applicant and not about defect liability and further directed to the applicant to appear before the sole arbitrator for settlement of dispute. Being aggrieved by the same, the respondents have preferred this appeal.
The learned A.G.P. in order to substantiate his contentions placed reliance on the judgment in the case of State of Goa vs. Praveen Enterprises, reported in 2011 AIR (SC) 3814.
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54 of the tender document. The respondent/plaintiff has referred his claim to the Executive Engineer and Executive Engineer has refused his claim on 24.6.1989. Thereafter, in terms of provisions of clause 53, the respondent/plaintiff appealed to the higher authority i.e. Superintending Engineer and the Superintending Engineer refused the claim of the respondent/plaintiff as per letter dated 2.12.1989. Learned counsel submits that there is no whisper in clause 53 of the tender document that the contractor has to prefer an appeal to the Chief Engineer after rejecting his claim by the Superintending Engineer. After rejecting his claim by the Superintending Engineer, the respondent/plaintiff has communicated his intention to refer the dispute for arbitration and as such his application is rightly considered by the Court below. The learned counsel submits that in terms of provisions of Section 39 of the Arbitration Act 1940, this appeal itself is not maintainable. Learned counsel submits that even otherwise also, the question whether the claim was barred under certain clauses of tender documents, are not required to be decided by the court before making reference and it is for the arbitrator to take appropriate decision on it.
Learned counsel for the respondent-plaintiff in order to substantiate his contentions, placed reliance on the judgment in the case of Jai Chand Bhasin vs. Union of India and another, reported in AIR 1983 Delhi 508 .
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“ 53. SETTLEMENT OF DISPUTES
If the contractor considers any work demanded of him to be outside the requirements of the contract, or consider any drawings, record or fulling of the Executive Engineer on any matter in connection with or arising out of the contract or the carrying out of the work to be in acceptable, he shall promptly ask the Executive Engineer in writing or written instructions or decision. Thereupon the Executive Engineer shall give his written instructions or decision within a period of 15 days of such request.
Upon receipt of the written instructions or decision the contractor, shall promptly proceed without delay to comply with such instructions or decision.
If the Executive Engineer fails to give his instructions or decision in writing within a period of 15 days after being requested of if the contractor is dissatisfied with the instruction or decision of the Executive Engineer the contractor may within 15 days after receipt the instruction or decision appeal to higher authority of Department who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal. This officer, shall give a decision within a period of 60 days after the contractor has given the said evidence in support of his appeal.
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If the contractor is dissatisfied with this decision, the contractor within a period of thirty days from receipt of the decision shall indicate his intention to refer the dispute to Arbitration, failing which the said decision shall be final and conclusive.”
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“39. Appealable orders. - (1) An appeal shall lie from the following orders passed under this Act to the Court authorized by law to hear appeals from original decrees of the Court passing the order:-
An order-
Provided that the provisions of this section shall not apply to any order passed by Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.”
53 and 54 of the tender documents and accordingly passed the
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impugned order. It is open for the parties to raise all points, including the compliance or non-compliance of the provisions of clauses 53 and 54 of the tender documents before the arbitrator and the arbitrator can deal with those questions in accordance with law.
rlj/
3 issues framed by the court
Whether the appellate court can adjudicate on the maintenance of arbitration application when the contractor has not exhausted the contractual appeal mechanism under clause 53.
Whether the contractor complied with the dispute resolution mechanism under clause 53 by appealing to the Superintending Engineer and indicating intention to arbitrate.
Whether Section 39 of the Arbitration Act 1940 provides for appeal against non-compliance of clause 54 of tender documents.
Colour shows how this judgement treated each authority
State of Goa vs. Praveen EnterprisesReferred¶28
State of Goa vs. Praveen Enterprises, 2011 AIR (SC) 3814 · Who else cites this
Jai Chand Bhasin vs. Union of India and anotherReferred¶33
Jai Chand Bhasin vs. Union of India and another, AIR 1983 Delhi 508 · Who else cites this
1 provisions across 1 enactments
The State of Maharashtra Through the Secretary, P.W.D. Government of Maharashtra
Chief Engineer, P.W.D. Aurangabad
Shri Tilakaraj Malhotra
V. K. JADHAV
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
