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2013 Supreme(Ker) 360

High Court of Kerala
THOTTATHIL B. RADHAKRISHNAN & C.T. RAVIKUMAR, JJ.

James Varghese, Government Contractor & Another
Versus
State of Kerala, represented by The Chief Secretary To The Government of Kerala, Secretariat & Others
OP. No. 4206 of 1998 (A)
Decided On : 09-07-2013

Advocates Appeared:
For the Petitioners:K.L. Varghese, Sr. Advocate, K. Babu Thomas, Rajiv A. George, Advocates.
For the Respondents:R1 to R6, C.S. Manilal, Government Pleader, R7, P. Parameswaran Nair, ASG of India, R8, K. Radhakrishnan, Senior Advocate, B. Sahasranaman, K. Jagadeesh, T.S. Harikumar, Shoby K. Francis, Advocates.

Headnote:Revocation of Arbitration Clauses and Reopening of Awards Act, 1998 (Kerala), Sections 1(4), 3, 4, 5 and 7 - Constitution of India, 1950, Article 253 - Arbitration and conciliation Act, 1996 - Arbitration Act, 1940 - Provisions held under 1998 act is unconstitutional and defective.

Judgment :

Thottathil B. Radhakrishnan, J.

1. These petitions are filed challenging the constitutional validity of the Kerala Revocation of Arbitration Clauses and Reopening of Awards Act, 1998, for short, "impugned Act", which is deemed to have come into force on 14.11.1997 as per Section 1(3) thereof and which, as per Section 1(4), applies to all agreements executed in terms of Local Competitive Bidding Specification, hereinafter referred to as "LCBS".

2. Section 3(1) of the impugned Act provides that notwithstanding anything contained in the Indian Contract Act, 1872 or in the Arbitration Act, 1940, for short, "1940 Act", or in the Arbitration and Conciliation Act, 1996, for short, "A & C Act" or in any other law for the time being in force or in any judgment, decree or order of any court or other authority or in any agreement or other instrument, the arbitration clauses in every agreement executed in terms of the LCBS for various works of the Government of Kerala shall stand cancelled. LCBS -"Local Competitive Bidding Specification" - means such specification adopted by the Government in G.O. (Ms).No.3/81/I & R dated 20.1.1981. Authority of an arbitrator appointed under any such agreement is revoked and the arbitration clause in such agreement shall cease to have effect in so far as it relates to the matters in dispute or difference referred, with effect on and from the date of commencement of the impugned Act.

3. Sub-section 2 of Section 3 of the impugned Act provides that nothing in sub-section 1, which provided for the cancellation of the arbitration clauses and revocation of authority of arbitrators, shall be a bar for any party to an agreement to file a suit in the court having jurisdiction in the matter to which the agreement relates and all matters in dispute and difference between the parties to the agreement shall be decided by the court, as if arbitration clauses had never been included in the agreement. Sub- section 4 provided a period of limitation for such suits, notwithstanding anything contained in the 1940 Act, the A & C Act and the Limitation Act, 1963.

Section 4 of the impugned Act excludes anything contained in the 1940 Act, A & C Act, Limitation Act and prescribes a period of six months for suits provided for in Section 3(2).

4. Section 5 of the impugned Act provides a right of appeal for the Government notwithstanding anything contained in the 1940 Act, A & C Act, Limitation Act or in any other law for the time being in force or in any judgment, decree or order of any court or other authority or in any agreement or other instrument, where it appears to the Government that any award passed is not in accordance with the terms of the agreement or there was failure to produce relevant data or other particulars before the Arbitrator before passing the award or the award passed is of unconscionable amounts.

5. Section 7 of the impugned Act provides that the provisions of that Act shall apply to any proceedings instituted under that Act notwithstanding anything inconsistent therein with the provisions of the 1940 Act or the A & C Act or any other law for the time being in force.

6. The impugned Act is captioned stating that it is an Act to provide for the cancellation of arbitration clauses in agreements executed in terms of the local competitive bidding specification, for the revocation of authority of the arbitrators appointed under such agreements, for filing of appeals by the Government against certain awards and decrees in arbitration cases and for extending the period of limitation for filing such appeals. The Preamble to the impugned Act is to the effect that inclusion of arbitration clauses in the agreements executed in terms of the LCBS for the Kallada Irrigation Project was with a view to enable speedy settlement of matters in dispute or difference in a just and equitable manner, however that, the arbitration references did not have the desired effect as several arbitrators have wrongly and arbitrar




























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