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CASE NO.: Appeal (civil)  2350 of 2008

PETITIONER: Mahipatlal Patel

RESPONDENT: Chief Engineer & Anr

DATE OF JUDGMENT: 01/04/2008

BENCH: TARUN CHATTERJEE & HARJIT SINGH BEDI

JUDGMENT: J U D G M E N T NON-REPORTABLE

CIVIL APPEAL NO 2350 OF 2008. (Arising out of SLP ( C) No.8500 of 2006)

1.      Leave granted. 2.      This appeal is directed against an order passed by the  Chief Justice of the High Court of Orissa at Cuttack dated 20th  of May, 2005 on an application under Section 11 of the  Arbitration and Conciliation Act, 1996 (in short ’the Act’) for  appointment of an arbitrator and for referring the dispute  between the parties to him for adjudication. By the impugned  order, the Chief Justice of the High Court on consideration of  Clause 50 of the agreement entered into by the parties which  provides for arbitration and in view of Section 85 of the Act,  held that no appointment could be made under Section 11 of  the Act and further held that the appellant in terms of Clause  50 of the agreement had to approach the arbitration tribunal  and, accordingly, the application for appointment of arbitrator  was rejected. Feeling aggrieved, the appellant has come up by  way of a special leave petition which on grant of leave was  heard in the presence of the learned counsel for the parties.  

3.      The core question involved in this appeal relates to the  interpretation of Section 85 of the Act. In order to appreciate  the question, it is appropriate to refer to Section 85 of the Act  which runs as under :- "85. Repeal and saving \026 The Arbitration (Protocol  and Convention) Act, 1937 (6 of 1937), the  Arbitration Act, 1940 (10 of 1940) and the Foreign  Awards (Recognition and Enforcement) Act, 1961  (45 of 1961) are hereby repealed. (2) Notwithstanding such repeal. \026

(a)     the provisions of the said enactments shall  apply in relation to arbitral proceedings which  commenced before this Act came into force  unless otherwise agreed by the parties but this  Act shall apply in relation to arbitral  proceedings which commenced on or after this  Act comes into force; (b)     all rules made and notifications published,  under the said enactments shall, to the extent  to which they are not repugnant to this Act, be  deemed respectively to have been made or  issued under this Act."    

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4.      The High Court, by the impugned order, while  interpreting Section 85 of the Act has given a construction to  the language of Section 85 of the Act and held that the  provisions of the repealed Act 1940 in the present case would  apply. Before we proceed further, we may consider the  arbitration clause as entered into by the parties in the  agreement. Clause 50 of the agreement contains provisions for  arbitration which provides, inter alia, that except as otherwise  provided in the contract, all questions and disputes relating to  the meaning of the specifications, designs, drawings and  instructions mentioned therein before and as to the quality of  the workmanship or materials used in the work or as to any  other question, claim, right, matter or thing whatsoever in any  way arising out of or relating to the contract, designs,  drawings, specifications, estimates, instructions, orders of  these conditions concerning the work or the execution or  failure to execute the same with or arising during the progress  of the work after completion of or abandonment thereof shall  be referred to the arbitration by the Arbitration Tribunal  constituted by the State Government which shall consist of  three members of whom one shall be chosen from among the  officers belonging to Orissa Superior Judicial Service (Sr.  Branch), one from Engineers in the active service of  Government not below the rank of a Superintending Engineer  and the remaining member shall be chosen from officers  belonging to the Orissa Finance Service not below the rank of  Class-I officer. 5.      It was held by the High Court in the impugned order that  in view of clause 50 of the agreement, it was only the  arbitration tribunal before which the disputes and differences  could be referred and, therefore, no appointment could be  made under Section 11 of the Act. The High Court in the  impugned order while rejecting the application for appointment  of an arbitration under Section 11 of the Act further held that  the arbitration clause 50 clearly provides that if the contractor  did not make any payment for arbitration in respect of any  claim in writing within 90 days after receiving intimation from  the Government that the bill was ready for payment, that claim  of the contractor shall be deemed to have been waived and  absolutely barred and the government shall be discharged and  released of all the liability under the contract in respect of   such claim. 6.      Having heard the learned counsel for the parties and  after considering the impugned order rejecting the application  for appointment of arbitrator and the provisions under Section  85 of the Act and Clause 50 of the agreement in detail, we are  of the view that the order of the High Court is not sustainable  in law. An order of the Orissa High Court on the question of  existence of an arbitration tribunal was brought to our notice  by the learned counsel for the parties from which it clearly  appears that the arbitration tribunal created under the  Arbitration Act, 1940 does not exist for deciding the disputes  which had arisen out of an agreement entered into after the  Arbitration Act, 1940 was repealed. Accordingly, it has been  held that the arbitration tribunal set up by the Arbitration Act,  1940 does not exist as on date and the present dispute  between the parties cannot be referred to the said tribunal  which is not in existence in the eyes of law. It has also been  accepted by the learned counsel for the parties that against  this order of the High Court, no appeal was filed or steps taken  by either of the parties, that is to say, that it has now been  accepted that there is no existence of any arbitration tribunal.  On the basis of the aforesaid judgment of the Chief Justice of  the High Court, it has been accepted that no arbitration  tribunal is in existence. Therefore, without going into the

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merits and in view of the aforesaid decision of the Orissa High  Court, we are of the view that in the absence of existence of  any arbitration tribunal, it is only the High Court to exercise its  power under Section 11 of the Act to appoint an arbitrator to  go into the disputes and differences between the parties.  Accordingly, we set aside the order of the High Court.   We now  request the High Court to decide the application under Section  11 of the Act on merits.  It is expected that the said application  shall be decided and dispose of within three months from the  date of supply of a copy of this order to it.  This appeal is thus  allowed to the extent indicated above.  There will be no order as  to costs.