Partly allowed

M/S Wagad Construction Co. v. State of Raj. and Anr.

Rajasthan HC5 Jul 2016CMAP/34/2015

Case brief

AI extract

What is this about?

Single Bench held clause 23 is not a valid arbitration clause per SPML judgment but allowed non-arbitration adjudication via standing committee mechanism under clause 23 to be constituted within four weeks.

What did the court decide?

Application under Section 11 dismissed; applicant allowed to use clause 23 standing committee mechanism; reference required within four weeks.

M/S Wagad Construction Co. Vs State of Raj. and Anr. — Arbitration | Rajasthan HC (2016)

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[1]

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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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O R D E R

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S.B. CIVIL MISC. ARBITRATION APPLICATION NO.34/2015

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M/s. Wagad Construction Co. Versus State of Rajasthan & Anr.

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Date of Order : 05.07.2016

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PRESENT

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HON'BLE MR. JUSTICE GOVIND MATHUR

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Ms. Rekha Borana for the applicant Mr. Narendra Singh Rajpurohit, Additional Government Counsel, for the respondents

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BY THE COURT :

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As per learned counsel for the respondents, in view of the Division Bench judgment of this court in the case of State of Rajasthan & Ors. Vs. SPML Infra Ltd. & Anr. reported in 2015 (4) WLC (Raj.) 375, clause 23 of the agreement/contract is not an arbitration clause; hence, this application is not maintainable.

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Learned counsel appearing on behalf of the applicant submits that the Division Bench while examining the nature of clause 23 in the case of State of Rajasthan & Ors. Vs. SPML Infra Ltd. & Anr. did not consider the law laid

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[2]

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down by another Division Bench of this court in M/s. Suri Constructions Vs. State of Rajasthan & Ors. reported in 2005 (9) RDD 3483 (Raj), wherein a view was taken that clause 23 pertains to arbitration. It is stated that the law laid down in the case of State of Rajasthan & Ors. Vs. SPML Infra Ltd. & Anr. is per incuriam being laid down without examining the earlier Division Bench judgment.

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The argument advanced by learned counsel for the applicant has already been examined by this court in M/s. Mohammed Arif Contractor Vs. State of Rajasthan & Anr. reported in 2015 (4) WLC (Raj.) 32. In the case aforesaid, a Single Bench of this court after taking notice of both the Division Bench judgments held as under :-

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“14. As such, when there are two decisions of the Division Benches expressing conflicting views, the Single Bench ought to place the papers before the Hon'ble Chief Justice for referring the issue to the Special Bench or Larger Bench, as held by the Apex Court in case of Tribhovandas Purshottamdas Thakkar vs. Ratilal Motilal Patel & Ors, AIR 1968 SC 372. However in the humble opinion of this Court, apart from the fact that in the later decision in case of State of Rajasthan vs. SPML Infra Ltd., the Division Bench has followed the decision of the Supreme Court,

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[3]

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it has also considered the Clause 51 of the agreement, which the earlier Division Bench had failed to consider. That part, the later decision of the Division Bench is also in conformity with the latest decision of the Apex Court in case of P. Dasaratharama Reddy Complex vs. Government of Karnataka & Anr., (2014) 2 Supreme Court Cases 201, in which the Apex Court while interpretating clause 29 of the agreement referred in the said case which was similar to the clause 23 of the present case has held that such clauses cannot be treated as arbitration clause.”

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In view of whatever stated above, I am in agreement with counsel for the respondents that in view of the judgment given in the case of SPML Infra Ltd. & Anr. (supra), clause 23 of the agreement is not a clause for arbitration, as such, I am not inclined to entertain this application under Section 11 of the Arbitration and Conciliation Act, 1996. Accordingly, the same is dismissed.

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However, looking to the fact that the State of Rajasthan too considered clause 23 ibid an arbitration clause and further that provides a mechanism for adjudication of the disputes between the parties, I deem it appropriate to allow the applicant to avail the remedial

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[4]

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mechanism given in clause 23. Necessary steps for making reference to the standing committee as per clause 23 shall be taken by the authority competent within a period of four weeks from today. The committee shall adjudicate and decide the dispute in accordance with law expeditiously, as far as possible within a period of six weeks thereafter.

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[GOVIND MATHUR],J.

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Pramod

M/S Wagad Construction Co. v. State of Raj. and Anr.

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M/S Wagad Construction Co. v. State of Raj. and Anr.

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