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High Court Of Madhya Pradesh
N. D. OJHA, C. P. SEN
SPEDRA ENGG.CORPN.E.AND C. - Appellant
Versus
STATE OF M.P. - Respondents
MISC. PETN. 3876 Of 1985
Decided On : 06/22/1987
M. P. MADHYASTHAM ADHIKARAN ADHINIYAM, 1983 - CONSTITUTIONALITY - ARBITRATION - CLASSIFICATION - DISCRIMINATION - ENTRY 13 OF LIST III OF SEVENTH SCHEDULE OF THE CONSTITUTION - RETROSPECTIVITY - VALIDITY.
Fact of the Case:
Petitioner, a contractor, challenged the validity of the M. P. Madhyastham Adhikaran Adhiniyam, 1983 (the Act), and sought to quash the order canceling the appointment of an arbitrator for deciding a dispute between the parties. The Act provided for the establishment of a Tribunal to arbitrate disputes to which the State Government or a public undertaking owned or controlled by the State Government was a party.
Finding of the Court:
The Court upheld the validity of the Act and dismissed the petitions. It held that the Act was not arbitrary or discriminatory, and that the classification of works contracts from other contracts was reasonable. The Court also held that the Act was a special enactment under Entry 13 of List III of the Seventh Schedule of the Constitution, and that it prevailed over the Arbitration Act, 1940, in the State of Madhya Pradesh. The Court further held that the arbitration proceedings were not pending when the Act came into force, and therefore they were not saved under Section 20(2) of the Act.
Issues: 1. Whether the Act was arbitrary or discriminatory and violated Article 14 of the Constitution? 2. Whether the Act was a special enactment under Entry 13 of List III of the Seventh Schedule of the Constitution? 3. Whether the arbitration proceedings were pending when the Act came into force and were therefore saved under Section 20(2) of the Act?
Ratio Decidendi: 1. The Act was not arbitrary or discriminatory because it provided for a reasonable classification of works contracts from other contracts, and because it had a rational relation to the object of ensuring speedy and impartial trial by an independent Tribunal. 2. The Act was a special enactment under Entry 13 of List III of the Seventh Schedule of the Constitution because it provided for arbitration of disputes relating to works contracts with the Government or its undertakings, and because it had an object to ensure speedy and impartial trial by an independent Tribunal. 3. The arbitration proceedings were not pending when the Act came into force because the reference to the arbitrator was made after the Act came into force, and therefore they were not saved under Section 20(2) of the Act.
Final Decision: Both the petitions were dismissed with costs.
( 1 ) THIS is a petition under Arts. 226 and 227 of the Constitution for striking down of M. P. Madhyastham Adhikaran Adhiniyam, 1983, and for quashing the order dt. 16-8-1985 of the Chief Engineer cancelling the appointment of arbitrator dt. 14-3-1985 for deciding the dispute raised by the petitioner-contractor. This Order will also govern the disposal of M. P. No. 1922/1985 between the same parties wherein the petitioner has challenged the order dt. 22-6-1985 of the State Government cancelling the appointment of the sole arbitrator to settle the dispute between the parties.
( 2 ) THE petitioner is a contractor having its registered office at Bhopal. The petitioner's tender for construction of Dejla Dawada left Earth Dam in the district of West Nimar, M. P. , was accepted by the State Government and agreement No. 12dl/1983-84 was entered into and the petitioner commenced its work. Clause G. C. 52 of the Agreement provided for settlement of disputes by recourse to arbitration. As per this clause, all the disputes and differences in respect of which the decision has not become final and conclusive shall be referred for arbitration. The Chief Engineer Narmada Tapti Basin, shall send to the contractor a list of three officers of the rank of Superintending Engineer or higher who have not been connected with the work under the agreement to act as arbitrators. The contractor was then required within 15 days of the receipt of the letter to select and communicate as to who out of the three should the sole arbitrator. Thereafter the dispute has to be referred to the arbitrator so named. On the failure of the Chief Engineer to submit the names of the arbitrators within 30 days, it would be open to the contractor to send a list of three officers who may be appointed as arbitrators and the Chief Engineer may then select any one of the officers so named within 15 days and on his failure to do so it would be open to the contractor to name the sole arbitrator amongst the three names submitted. The arbitration has to be conducted in accordance with the provisions of the Arbitration Act, 1940, or any statutory modification thereof. Performance under the agreement shall continue during arbitration proceedings and payments due to the contractor shall not be withheld. All awards shall be in writing and in case of awards amounting to rupees one lack and above, such awards shall state the reasons for the amount awarded. In the meanwhile, M. P. Madhyastham Adhikaran Adhiniyam, 1983, (hereinafter referred to as the Act) was enacted and it came into force from 1-3-1985. Under Section 7 of the Act, either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal constituted under the Act. Under Section 2 (i) 'works contract' means an agreement for the execution of any work relating to construction, repairs or maintenance of any building or superstructure, dam, weir canal, reservoir, tank, lake, road, well, bridge, culvert, factory, workshop or such other works as may be specified by the notification, entered into by the State Government or by any of its public undertakings. Under S. 19, the High Court has been given power of revision against any award. Under S. 20 (1) notwithstanding anything contained in the Arbitration Act or in any agreement or usage to the contrary, no civil court shall have jurisdiction to entertain or decide any dispute of which congnizance can be taken by the Tribunal under this Act. Under Sub-Sec. (2) nothing contained in Sub-Sec. (1) shall apply to any arbitration proceeding either pending before any arbitrator or umpire or before any court or authority under the provisions of Arbitration Act. In exercise of the power conferred by Section 29 of the Act, the State Government framed M. P. Madhyastham Adhikaran Niyam, 1984, fixing salary and other emoluments of the Chairman and members and the maintenance of reco
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