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High Court Of Madhya Pradesh
P. K. Tare and K. K. Dube, JJ.
HEAVY ELECTRICALS (INDIA) LTD., - Appellant
Versus
PANNALAL DEVCHAND MALVIYA - Respondents
Misc. First Appeal 190 Of 1970
Decided On : 09/05/1972
The contract for work in Clause 62 provided that all the disputes between the parties (except those for which the decision of some Officer of the company giving the work is expressed to be final and conclusive or binding in the contract) shall be referred to an arbitrator appointed by the company.
Clause 54 of the contract provided that the rates for deviation items or new items of work will be fixed by the accepting officer whose decision shall be final and conclusive and binding on the other parties, that is, the contractor.
The contractor plaintiff presented a Bill for the work done. The company defendant, deducted an amount of Rs.17,169.52 from the Bill on two counts, (i) difference in measurement of the work done; and also (ii) on account of deviation.
For the second deduction the contention of the defendant company was that as the Chief Engineer of the company had held that there was deviation, the decision was final and binding on the contractor under Clause 54.
The trial Court referred two questions to the arbitrator under clause 62 of the agreement, namely (i) the extent of work and (ii) justification for deduction. The trial Court also held that the question relating to deductions on those counts which have been finally decided by the Chief Engineer, as per Clause 54 of the agreement could not be referred to the arbitrator.
Held: By virtue of clause 62 of the agreement, any dispute which has become final by virtue of clause 54 of the agreement cannot at all be referred to arbitrator. [Paras 4 & 7
There can be no doubt that an employee of one of the parties whose decision is made final, binding and conclusive is required to act judicially and he cannot merely decide the question administratively or departmentally Therefore, the Court, when the matter comes before it, has always the power to examine whether the officer whose decision is made final has acted judicially or administratively. If the Court finds that the officer had acted judicially, the Court may uphold his decision but, if the Court finds that the officer had acted administratively, in that event, the Court has the jurisdiction to set aside the acts not performed judicially. AIR 1935 Mad. 356 relied on. [Paras 4 & 9
The only proper wav would be for the Court to examine the decision of the named officer and decide whether it is a judicial or a quasi judicial decision or a mere administrative or a departmental decision. If it be a departmental or an administrative decision the Court ought to reject it and hold it not to be final and binding on the parries In that event, the Court ought to decide the question on merits upon whatever material the parties might produce before the Court. After doing that, the Court might refer the dispute to arbitration in accordance with Clause 62 of the agreement in the present case.
(2) Arbitration-decision of some engineer or architect on some points made final-is quasi-agreement/or arbitration-value of the decision of the architect or engineer in such cases.
Where there is an arbitration clause and also a clause making the decision of an architect or engineer final on some matters, such an agreement amounts to quasi-agreement of arbitration. The architect or the engineer should act judicially. If the Court finds that there is a judicial decision, it may give effect to the same. If the Court finds that there is no decision judicially arrived at by the architect or engineer, in that event the Court might declare that decision of the architect or engineer to be of no legal effect and it will be open to the parties to have that adjudicated upon in a Court of law or at any rate, in the proceedings that might be pending in the law Courts. 1913 AC 229, 1913 AC 241 and AIR 1935 Mad. 356 relied on. [Para 13
( 1 ) THIS order shall govern the disposal of Misc. (First) Appeal No. 209 of 1970, (Pannalal Malviya v. The Heavy Electricals Ltd. Bhopal) also. These appeals are directed against the same order (wrongly described as a judgment) dated 3-91970, passed by the Third Addl. District Judge, Bhopal in Civil Suit No. 1-A of 1970.
( 2 ) THE Heavy Electricals Ltd. , which is a Government undertaking, but which is a separate corporation having its separate legal entity, gave a contract for the work of filling certain area. Under the agreement the contractor was to be paid 3% above the rate of Rs. 00. 80 paise per cubic meter for morum or sand spreading, including dressing 50 meters lead, and 1. 5 meters free lift The extent of work done as also the rate at which the payment was to be made were points of dispute between the parties. When the contractor submitted the final bill, the Heavy Electricals deducted an amount of Rs. 17. 169. 52 paise.
( 3 ) THE plaintiff Pannalal's contention was that he, had done the work of 23,334. 47 cubic meters. The defendant alleged that the work done was of 8041. 03 meters. Thus, the extent of the work involved a sum of Rs. 2309. 64. The second point of difference was about the rate. The plaintiff maintained that there was no deviation and, therefore, he was entitled to obtain payment at the agreed rate. The defendant alleged that there was deviation and as such, the corporation, namely, the Heavy Electricals Ltd. was entitled to make payment at a lower rate fixed by the Chief Engineer. This involved the sum which had been deducted put of the final bill. The other point of dispute, was that the plaintiff contended that the question whether there was in fact deviation or not would be a question which the arbitrator would be competent to decide. On the other hand, the defendant's contention was that this question could not be referred to the arbitrator as a decision had already been given by the Chief Engineer and which decision was binding on the parties, as per Clause 54 of the written agreement. The learned trial Judge, by the order impugned, referred the other two questions regarding the extent of the work done and justification for deduction to the named arbitrator. But held that the question relating to deviation and the deductions on those accounts which had been finally decided by the Chief Engineeer, as per Clause 54 of the agreement could not be referred to the arbitrator. Hence aggrieved by the said order both the sides have filed the appeals.
( 4 ) THE contention of the Heavy Electricals is that the plaintiffs application under section 20 of the Arbitration Act was not maintainable and, therefore, the matter could not be settled through arbitration. We may observe that there is no substance in the said stand taken on behalf of the Heavy Electricals. The agreement in question, which is in a printed form, is an agreement of arbitration and under Clause 62, the dispute would certainly be referable to the arbitrator named in the clause. It may be relevant to reproduce Clause 62 of the agreement, which is as follows:-" clause 62:-- All disputes, between, the parties to the contract (other than those for which the decision of the C. E. (C) or any other officer of the Company is by the Contractor expressed to be final and conclusive or binding shall after written notice by either party to the contract to the other of them be referred to the sole arbitration of an Engineer Accounts officer to be appointed by the Chairman, General Manager. H. E. (I)Ltd. , Bhopal in his sole discretion, unless the parties otherwise agree, such reference shall not take place until after the completion, alleged completion or abandonment of the work or determination of contract. The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The award of the Arbitrator shall be final, conclusive and binding on both parties to the contract". Therefore. Clause 62 contem
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