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SUPREME COURT OF INDIA
STATE OF ORISSA
Versus
ASIS RANJAN MOHANTY
Decided on : January 5, 1999
ARBITRATION - APPOINTMENT OF NEW ARBITRATOR - SCOPE OF ARBITRATION - CLAIMS RAISED BEFORE NEW ARBITRATOR - WHETHER CONFINED TO DISPUTES BEFORE FIRST ARBITRATOR - ARBITRATION ACT, 1940, S. 14(2).
Fact of the Case:
A contractor entered into an agreement with the appellant for execution of work. Disputes arose between the parties and the contractor requested for appointment of an arbitrator under the arbitration clause in the contract. The Chief Engineer appointed an arbitrator who declined to act. The Court then appointed a new arbitrator. Before the new arbitrator, the contractor filed additional claims. The arbitrator granted the contractor a sum of money in respect of both the original and additional claims. The appellant challenged the award on the ground that the contractor was not entitled to raise additional claims before the new arbitrator.
Finding of the Court:
The Court held that the contractor was entitled to raise additional claims before the new arbitrator since the claims pertained to disputes which were in existence at the time the arbitration clause was invoked and were within the scope of the arbitration clause and the reference.
Issues: Whether the contractor was entitled to raise additional claims before the new arbitrator.
Ratio Decidendi: The scope of an arbitration on appointment of a new arbitrator is not confined to disputes which were the subject-matter of arbitration before the first arbitrator. New disputes arising subsequent to the reference to arbitration could not be raised.
Final Decision: The appeal was dismissed.
( 1 ) THE respondent had entered into an agreement with the appellant for execution of the work of restoration of scoured bank of Balibandha and retired line to protect Naraj Weir, being Agreement No. 32 F-2 of 1976-77. The respondent did not complete the work within the extended time and did not fully execute the work according to the appellant. There were disputes between the parties.
( 2 ) ACCORDING to the appellant, the respondent contractor wrote a letter dated 28-4-1977 in which the respondent stated that his total claim is rs 37,106. According to the appellant, at the request of the respondent, he was paid Rs 38,396 and a sum of Rs 3710 was withheld.
( 3 ) ULTIMATELY on account of the disputes between the parties, the respondent, by his letter dated 15-9-1977, requested the Chief Engineer of the appellant to appoint an arbitrator under clause 23 of the contract which was a clause for reference of disputes between the parties to arbitration. Clause 23 of the contract reads as under:"except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, 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 what so ever, in any way arising out of, or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the work or the execution, or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof shall be referred to the sole arbitration of a Superintending engineer of the State Public Works Department unconnected with the work at any stage nominated by the concerned Additional Chief engineer. If there be no such Superintending Engineer it should be referred to the sole arbitration of the Additional Chief Engineer concerned. There will be no objection to any such appointment that the arbitrator so appointed is a government servant. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to this contract. "
( 4 ) THE clause is, therefore, wide enough to cover all disputes arising out of the said contract.
( 5 ) IN the said letter of 15-9-1977 the respondent also mentioned that the cause for such disputes was patent as there was default in making final payment for the work done including payment for the extra work executed under the contract.
( 6 ) PURSUANT to the said notice, the Chief Engineer, Irrigation, by his memorandum dated 19-9-1977 appointed one Mr S. N. Sinha, Superintending engineer, Baripada Irrigation Circle as an arbitrator to decide the disputes pertaining to the above work. Before the arbitrator so appointed, the respondent filed a statement of claims totalling nine in number and amounting to Rs 1,35,959. Thereafter, as the said arbitrator declined to act as an arbitrator, the Court of the Subordinate Judge, Cuttack by its order dated 5-11-1979, appointed retired Justice H. Mohapatra, as an arbitrator who was directed to enter upon the reference and submit report by 13-3-1980.
( 7 ) BEFORE the new arbitrator so appointed, the respondent filed further claims. There were numbered as Claims 10-18. The claims were for an additional amount of Rs 4,05,584. Thus the total claim before the arbitrator was Rs 5,41,543.
( 8 ) BY his impugned award, the arbitrator has granted to the respondent in respect of Claims 1-9 a sum of Rs 1,32,249 and in respect of Claims 10-17 a sum of Rs 95,952 together with interest and costs as set out in the said award. The award is a non-speaking award. The objections filed by the appellant to this award have been dismissed and the award has been made the rule of the court. Hence the present appeal.
( 9 ) LEARNED counsel for the appellant contends that since in his original letter dated 28-4-1977, the respondent contractor had o
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