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IN THE HIGH COURT OF BOMBAY
Reddy K. Madhava, C.J.
State of Maharashtra others.... Petitioners.
Versus
Ranjeet Construction.... Respondent.
Civil Revision Application No. 52 of 1985, decided on 7-8-1985.
Advocates appeared :
N.D. Hombalkar, A.G.P., for petitioners.
R.S. Bhonsale with Smt. V.R. Bhonsale
ARBITRATION - CLAUSE 30 OF THE AGREEMENT - INTERPRETATION - WHETHER AN ARBITRATION CLAUSE - APPOINTMENT OF ARBITRATOR - JURISDICTION OF COURT - ESTOPPEL.
Fact of the Case:
The applicant, a contractor, entered into a contract with the State of Maharashtra for the construction of a hostel. The contract contained Clause 30, which provided that the decision of the Superintending Engineer of the Circle for the time being shall be final, conclusive, and binding on all parties to the contract upon all questions relating to the contract. A dispute arose between the parties, and the applicant invoked Clause 30 and called upon the Superintending Engineer to arbitrate. The Superintending Engineer entered upon the arbitration, but later received a clarification letter from the Government stating that Clause 30 did not constitute an arbitration clause. The Superintending Engineer accordingly closed the proceedings. The applicant then moved the Court under section 8-B of the Arbitration Act, 1940 for the appointment of an Arbitrator.
Finding of the Court:
The Court held that Clause 30 of the agreement was an arbitration clause. The Court noted that both the parties had always understood Clause 30 as an arbitration clause and had referred their disputes to the arbitration of the Superintending Engineer of the Circle. The Court also noted that the Government had issued circulars clarifying that Clause 30 was an arbitration clause. The Court further held that even if Clause 30 did not constitute an arbitration clause, the parties had referred the dispute to arbitration and the Superintending Engineer had entered upon the reference. The Court held that the Government was not competent to direct the Superintending Engineer not to act as such and terminate the proceedings. The Court also held that the applicant was entitled to have another Arbitrator appointed by the Court.
Issues: 1. Whether Clause 30 of the agreement was an arbitration clause. 2. Whether the Government was competent to direct the Superintending Engineer not to act as an Arbitrator and terminate the proceedings. 3. Whether the applicant was entitled to have another Arbitrator appointed by the Court.
Ratio Decidendi: 1. The Court held that Clause 30 of the agreement was an arbitration clause based on the following factors: a. Both the parties had always understood Clause 30 as an arbitration clause and had referred their disputes to the arbitration of the Superintending Engineer of the Circle. b. The Government had issued circulars clarifying that Clause 30 was an arbitration clause. 2. The Court held that the Government was not competent to direct the Superintending Engineer not to act as an Arbitrator and terminate the proceedings because: a. The parties had referred the dispute to arbitration and the Superintending Engineer had entered upon the reference. b. The Government's action was unilateral and violated the applicant's right to have the dispute resolved through arbitration. 3. The Court held that the applicant was entitled to have another Arbitrator appointed by the Court because: a. The Superintending Engineer had refused to act as an Arbitrator. b. The applicant had a right to have the dispute resolved through arbitration.
Final Decision: The Court allowed the applicant's petition and appointed a retired Judge of the Court as the Arbitrator to take up the proceedings from the stage at which the Superintending Engineer declined to act.
2. That the tender was accepted by the Government and communicated to the application at his Pune address where he carries on business is admitted. Though the contract itself was formally executed at Kolhapur, that was in pursuance of the acceptance of the tender communicated to the applicant at Pune. The contract itself does not specify any Court in particular as having jurisdiction in respect of any dispute arising under that contract. In the absence of any such specific stipulation in the agreement, the Court within the jurisdiction of which part of the cause of action arises, has jurisdiction to entertain the petition. Cause of action comprises of a bundle of facts and all these facts may not necessarily occur within the jurisdiction of the same Court. Part of the cause of action may arise within the jurisdiction of one Court and part within the jurisdiction of another Court. Section 20 of the Civil Procedure Code lays down that subject to the limitations in sections 15, 16, 17, 18 and 19 of Civil Procedure Code, every suit shall be instituted in a Court within the local limits of whose jurisdiction the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain or the cause of action, wholly or in part, arises. When the acceptance of the tender was communicated by the opponent-Government to the applicant at Pune, it must be held that the part of cause of action arose at Pune and, therefore, he could have filed a suit at Pune. So also the opponent which is Government can be said to be carrying on its business throughout the State, therefore, the Court at Pune had jurisdiction to entertain the petition. The objection of the opponents-petitioners herein, hat the petition should have been filed in a Court at Kolhapur, because the contract was accepted in Kolhapur, is untenable. The ap
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