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2018 Supreme(SC) 578

SUPREME COURT OF INDIA
ADARSH KUMAR GOEL, ROHINTON FALI NARIMAN, UDAY UMESH LALIT, JJ.
Madhya Pradesh Rural Road Development Authority & Anr. - Appellants
Versus
M/s. L.G. Chaudhary Engineers & Contractors - Respondent
Civil Appeal No. 974 of 2012 With SLP (C) No. 15059 of 2011, Civil Appeal Nos. 2615, 2751, 2753, 2754, 2755, 2616, 2756-2757, 2758-2759, 2760-2761 & 2762 of 2018 (Arising out of SLP(C) Nos. 16889, 11615, 11617, 11618, 11619 of 2012; 35641 of 2011; 11633-11634, 11631-11632, 11628-11629 of 2012 & 796 of 2014), SLP(C) Nos. 12478 of 2016; 19637, 21017, 7416, 21037, 30773, 23107, 7407, 5076, 20744, 17070, 18212, 25319, 25321, 21434, 23682, 23685, 11383 of 2017; 1635-1637 & 1631-1633 of 2018
Decided On : 08-03-2018

Advocates:
Advocate Appeared:
Ms. Meenakshi Arora, Mr. Rahul Narayan, Mr. Shashwant Goel, Mr. Anand Kumar Sethi, Ms. Vibha D. Makhija, Ms. Abha R. Sharma, Mr. D.S. Parmar, Mr. Naman Nagrath, Mr. Aman Pandey, Mr. Harsh Parashar, Mr. Varun Amar, Mr. Naman Nagrath, Mr. Jay Savla, Ms. Renuka Sahu, Mr. Prabhat Chaurasia, Mr. Jasdeep Singh Dhillon, Mr. Brajesh Pandey, Mr. Vasu B., Ms. Spiti Sarkar, Dr. Kailash Chand, Mr. Tripura Ray, Mr. B.S. Billowria, Mr. Suresh Kumar Sharma, Mr. Vishnu Sharma, Mr. Atul Jha, Mr. Sandeep Jha, Mr. Dharmendra Kumar Sinha, Mr. Varun Amar, Mr. Shantanu Krishna, Mr. Preetesh Kapoor, Ms. Hemantika Wahi, Ms. Jesal Wahi, Ms. Mamta Singh, Mr. Apoorv Kurup, Mr. Anupam, Mr. A.C. Boxipatro, Dr. Manish Singhvi, Mr. Prashant Kumar, Mr. Saurabh S. Sinha, for M/S. Ap & J Chambers, Mr. Shekhar Sharma, Mr. A.P. Dhamija, Mr. Sarad Kumar Singhania, Mr. Rajesh Sharma, Mr. Nitin Kumar, Mr. Rajeev Kumar Gupta, Ms. Shalu Sharma, Mr. Vivek Singh, Mr. Mohit Darad, Mr. Anand Dixit L., Mr. Vardhman Kaushik, Ms. Monalisa Kosaria, Mr. Chandra Prakash, Mr. M. R. Shamshad, Mr. Aditya Samaddar, Ms. Rimjhim Naudial, Mr. Nishe Rajen Shonker, Mr. Anu K. Joy, Mr. Alim Anuar, Ms. Pragati Neekhra, Mr. Ajay Assudani, Mr. Surya Narayana Singh, Ms. Kaveri Vats, Mr. K. Krishna Kumar, Ms. Anuradha Mishra, Mr. Mishra Saurabh, Mr. Ankit Kumar Lal, Mr. Arjun Garg, Mr. Jaspreet Singh Rai, Mr. Rohit Nagpal, Mr. Harpreet Singh Rai, Ms. Harsimran Rana Rai, Ms. Sukhdeep Rana Rai, Mr. Shyamal Kumar, Mr. Shivam Singh, Mr. Apoorva Srivastava, Ms. Sugandha Batra, Mr. Ranjan Kumar Pandey, Mr. Shivam Singh, Mr. Apoorva Srivastava, Ms. Sugandha Batra, Mr. Chandan Kumar, Mr. Prateek Khanna, Dr. (mrs. ) Vipin Gupta, Mr. Niraj Sharma, Mr. Rahul Narayan

The main legal point established in the judgment is that the M.P. Act prevails over the Arbitration Act, and the arbitration proceedings may proceed under M.P. Act of 1983 and not under the A.C. Act 1996.

Headnote:
Arbitration - Works Contract - Arbitration and Conciliation Act, 1996, M.P. Madhyastham Adhikaran Adhiniyam, 1983 - Section 11, Section 2(d) - The court held that the M.P. Act prevails over the Arbitration Act and the arbitration proceedings may proceed under M.P. Act of 1983 and not under the A.C. Act 1996.
Fact of the Case:

The matter involved the appointment of an arbitrator in a dispute arising from a 'works contract' under Section 11 of the Arbitration and Conciliation Act, 1996. The appellants objected to the application under Section 11, citing the M.P. Madhyastham Adhikaran Adhiniyam, 1983. The High Court overruled the objection, but the Supreme Court held that the M.P. Act prevails over the Arbitration Act.
Finding of the Court:

The court found that the M.P. Act prevails over the Arbitration Act, and the arbitration proceedings may proceed under M.P. Act of 1983 and not under the A.C. Act 1996.
Issues: The main issue was the applicability of the M.P. Act in a dispute arising from a 'works contract' and whether the arbitration proceedings should proceed under the M.P. Act or the A.C. Act 1996.
Ratio Decidendi: The court interpreted Section 2(4) of the Central Act and held that the State law will prevail over the Arbitration Act. It also considered previous judgments to support its interpretation.
Final Decision: The court allowed the appeal, set aside the judgment of the High Court, and held that the arbitration proceedings may proceed under M.P. Act of 1983 and not under the A.C. Act 1996.

ORDER :

C.A. No. 974 of 2012:

The matter has been placed before this Bench of three Judges pursuant to order dated 24th January, 2012 which is as follows :

“In view of some divergence of views expressed in the two judgments delivered today by us, the matter may be placed before Hon'ble the Chief Justice of India for constituting a larger Bench to resolve the divergence.”

2. Appointment of arbitrator in a dispute arising out of execution of a 'works contract' was the subject-matter for consideration before the High Court under Section 11 of the Arbitration and Conciliation Act, 1996.

3. Appellants raised objection that the matter being covered by a special State Act, namely, M.P. Madhyastham Adhikaran Adhiniyam, 1983 (“M.P. Act”, in short), the application under Section 11 of the Arbitration and Conciliation Act, 1996 could not be entertained. The High Court, however, overruled the said objection relying upon the judgment of this Court in Va Tech Escher Wyass Flovel Ltd. v. MPSE Board & Another, (2011) 13 SCC 261.

4. When the matter was considered by a Bench of this Court on 24th January, 2012 (order reported in Madhya Pradesh Rural Road Development Authority and Anr. v. L.G. Chaudhary Engineers and Contractors, (2012) 3 SCC 495), this Court held that the judgment in Va Tech Escher Wyass Flovel Ltd. (supra) was per incuriam insofar as it held that the M.P. Act stands implied repealed by the Central Act. While Hon'ble Ganguly J., held that the State Act will cover a dispute even after termination of the 'works contract', Hon'ble Gyan Sudha Mishra J. took a different view as follows:

“51. It is no doubt true that if the matter were before an Arbitrator appointed under the Arbitration and Conciliation Act, 1996 for adjudication of any dispute including the question regarding the justification and legality as to whether the cancellation of works contract was legal or illegal, then the said Arbitrator in view of the ratio of the judgment of the Supreme Court in Maharshi Dayanand University & Anr. Vs. Anand Coop L(C) Society, (2007) 5 SCC 295, as also in view of the persuasive reasoning assigned in the judgment and order reported in Heyman & Anr. Vs. Darwins, Limited, (1942) 1 All E.R. 337 (HL), would have had the jurisdiction to adjudicate the dispute regarding the justification and legality of cancellation of works contract also. But the same cannot be allowed to be raised under the M.P. Act of 1983 since the definition of 'works contract' unambiguously lays down in explicit terms as to what is the nature and scope of 'works contract' and further enumerates the specific nature of disputes arising out of the execution of works contract which would come within the definition of a 'works contract'. However, the same does not even vaguely include the issue or dispute arising out of cancellation and termination of contract due to which this question, in my considered opinion, would not fall within the jurisdiction of the M.P. State Arbitration Tribunal so as to be referred for adjudication arising out of its termination.”

5. We find from the definition under Section 2(d) of the Arbitration and Conciliation Act, 1996 that even after a contract is terminated, the subject-matter of dispute is covered by the said definition. The said provision has not been even referred to in the judgment rendered by Hon'ble Gyan Sudha Mishra, J.

6. In view of above, we are of the opinion that the view expressed by Hon'ble Ganguly J. is the correct interpretation and not the contra view of Hon'ble Gyan Sudha Mishra J. Reference stands answered accordingly.

7. Taking up appeal on merits, we find that the High Court proceeded on the basis of the judgment of this Court in Va Tech Escher Wyass Flovel Ltd. (supra) which has been held to be per incuriam. The M.P.Act cannot be held to be impliedly repealed.

8. We are, thus, is agreement with the proposed opinion of Hon'ble Ganguly J. in para 42 of the reported judgment which reads as follows:

“42. Therefore, appeal is allowed

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