The main legal point established in the judgment is the jurisdiction of the arbitrator under the Act, 1996, and the applicability of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 to the dispute.

JUDGMENT :

1. The appellant/State of Chhattisgarh has filed the instant Arbitration Appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (For short, “the Act, 1996”) against the order dated 25-11-2010 passed by the learned learned District Judge, Sarguja, Ambikapur in Civil Suit No.8-A/2008 by which learned District Judge, Sarguja, Ambikapur has rejected the application filed under Section 34 of the Act, 1996 against the award passed by the sole Arbitrator on 21-3-2008.

2. Brief facts, as reflected from the record, are that the State of Chhattisgarh, Panchayat and Rural Development issued notice inviting tender (NIT) on 20-12-2001 for construction and upgradation of rural roads under Pradhan Mantri Gram Sadak Yojna known as package No. 101, 1201 for District Koriya, Sarguja. The probable amount of contract is Rs.692.19 lakhs. The NIT also provides arbitration clause. Clause 29 of NIT is extracted as under:-

“Clause 29- Except as otherwise provided in this contract all questions and disputes relating to be meaning of the specifications, designs drawings and instructions herein before mentioned as to the thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimate, concerning the works, 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 Superintending Engineer in writing for his decision, within a period of 30 days of such occurrence. There upon the Superintending Engineer shall give his written instructions and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of parties.

Upon receipt of written instructions or decisions, the parties shall promptly proceed without delay to comply such instructions or decisions. If the Superintending Engineer fails to give his instructions or decisions in writing within a period of 60 days or mutually agreed time after being requested and if the parties are aggrieved against the decision of the Superintending Engineer the parties may within 30 days prefer an appeal to the Chief Engineer who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal. The Chief Engineer will give his decision within 90 days. If any party is not satisfied with the decision of the Chief Engineer he can refer such disputes for arbitration to an Arbitration Tribunal to be constituted by the State Government. In case such an Arbitration Tribunal is not constituted by the Sate Government, then the aggrieved party shall invoke Arbitration and Conciliation Act, 1996 – as amended till the date of such reference.”

3. A dispute arose between the parties with regard to final bill for the total amount of Rs.78,27,936/- calculated on the basis of measurement conducted by the consultants’ representative and claimants. The respondent sent reminder on 07.09.2004 for release of the amount, but the appellant has not released the payment despite submission of application to the Development Commissioner, PMGSY, Raipur on 30.04.2005 and prays for resolving the dispute. Thereafter, the claimant/respondent moved an application for appointment of arbitrator which was not considered, therefore, an application was filed before this court under Section 11 of the Act, 1996. The appellant raised objection that the Arbitration Tribunal has already been constituted on 1-3-2005, as such application under Section 11 of the Act, 1996 was not maintainable and prayed for transfer of the matter to the Arbitration Tribunal. This Court vide its order dated 16.09.2005 has appointed Hon’ble Justice Shri S.K. Tiwari, Retired Judge, High Court of Kolkata as Sole Arbitrator in the matter. The relevant paragraph reads as under:-

“Mr. VVS Murthy, Dy. Advocate General, on the other hand, submitted that now the Arbitration Tribunal has been constituted under the Chhattisgarh Madhyastha