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Nav Bharat Construction Vs. State of Rajasthan - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Appeal No. 95 of 1983
Judge
Reported in1984WLN769
AppellantNav Bharat Construction
RespondentState of Rajasthan
DispositionAppeal allowed
Cases ReferredDhanrajmal Gobindram v. Shyamji Kalidas and Co.
Excerpt:
arbitration act - section 20--court not to go into merits of dispute if covered by arbitration agreement--held, district judge was not right in refusing claims mentioned in items (ii), (iii) & (iv).;the court while dealing with an application under section 20 of the arbitration act is not required to go into the merits of the dispute and ail that the court is required to se is as to whether the said dispute is one which is covered by the arbitration agreement between the parties. the district judge was, therefore, not right in refusing to refer the claims mentioned in the item nos. (ii), (iii), and (iv) on the ground that the same were without any legal foundation.;appeal allowed. - .....same and they cannot be referred to arbitration.4. being aggrieved by the said order passed by the district judge, the appellant has filed this appeal.5. mr. r. p. garg, the learned counsel for the appellant has submitted that the district judge has committed an error in not referring for arbitration the disputes relating to item nos. (ii), (iii) & (iv) on the ground that there was, no merit in the said claims and they were without any legal foundation' the submission of mr. garg is that while dealing with an application under section 20 of the arbitration act the court is not entitled to go into the merits of the dispute and all that the court has to see is whether the dispute sought to be referred is covered by the arbitration agreement. in this connection mr. garg has placed reliance.....
Judgment:

S.C. Agrawal, J.

1. This appeal has been filed under Section 39 of the Arbitration Act. It is directed against the order dated 11th November, 1982 passed by the District and Sessions Judge, Jhalawar on an application submitted by the appellant under Section 20 of the Arbitration Act.

2. The facts of the case, briefly stated, are that the appellant entered into a contract with the Irrigation Department of the Government of Rajasthan, for construction woikat Bhim Sagar Dam. In connection with the aforesaid construction work, certain disputes arose between the appellant and the State Government. The contract contains an arbitration clause. The appellant moved an application under Section 20 of the Act for referring the following disputes for arbitration in accordance with the arbitration agreement contained in clause 41 of the contract:

(1) Extra payment for Chisal Dressed Face Stones which was used for the construction.

(2) Additional payment on account of the increase in the minimum wages of the workers under the orders of the State Government passed after the contract had been entered into.

(3) Additional payment in respect of the increase in the rate of royalty on the material used for the construction purposes under order passed by the State Government.

(4) Additional payment doe with the Contractor on account of increase in transport charges as a result of the increase in the cost of diesel oil.

3. The District & Sessions Judge by his order dated 11-11-1982 held that claim relating to item No. (I) was covered by the arbitration agreement, and he therefore, directed that the aforesaid claim may be referred to arbitration in accordance with the Clause 41 of the contract. As regards the other claims raised by the appellant, the District & Sessions Judge held that there was no legal basis for the same and they cannot be referred to arbitration.

4. Being aggrieved by the said order passed by the District Judge, the appellant has filed this appeal.

5. Mr. R. P. Garg, the learned Counsel for the appellant has submitted that the District Judge has committed an error in not referring for arbitration the disputes relating to item Nos. (ii), (iii) & (iv) on the ground that there was, no merit in the said claims and they were without any legal foundation' The submission of Mr. Garg is that while dealing with an application under Section 20 of the Arbitration Act the court is not entitled to go into the merits of the dispute and all that the court has to see is whether the dispute sought to be referred is covered by the arbitration agreement. In this connection Mr. Garg has placed reliance on the decisions of the Supreme Court in A. M. Mair and Co. v. Gordhandas Sagarmal : [1950]1SCR792 , and Vulcan Ins. Co. v. Maharaj Singh : [1976]2SCR62 .

6. In At M. Mair and Co. v. Gordhandas Sagarmal (Supra) it has been hid down that once the disoute is found to be within the scope of the arbitration clause, it is not part of the province of the Court to enter into merits of the dispute.

7. Similarly in Vulcan Ins. Co. v. Maharaj Singh (Supra) the Supreme Court held that if the difference which has arisen between the parties was one to which the arbitration clause in question applied then the application under Section 20 of the Act could not be dismissed on the ground that the claim would not ultimately succeed either on facts or in law and that the matter has to be left for the decision of the Arbitrator.

8. In view of the aforesaid decisions it must be held that the Court while dealing with an application under Section 20 of the Arbitration Act is not required to go into the merits of the dispute and all that the Court is required to see is as to whether the said dispute is one which is covered by the arbitration agreement between the parties. The District Judge was, therefore, not right in refusing to refer the claims mentioned in the item Nos. (ii), (iii), and (iv) on the ground that the same were without any legal foundation.

9. The learned Government Advocate has submitted that the claims in items Nos. (ii), (iii), (iv) cannot be said to be covered by the arbitration agreement contained in clause 41 of the Contract. I am unable to agree with the contentions urged by the learned Govt. Advocate. Clause 41 of the contract provides that in the event of any question or disputes 'arising in connection with the contract' the matter in disputes shall be referred to (sic)arbiuaiiou in the manner as prescribed therein. The expression 'any question or dispute arising in connection with the contract' is of very wide amplitude. In this connection reference may be made to the decision of the Supreme Court in Dhanrajmal Gobindram v. Shyamji Kalidas and Co. : [1961]3SCR1029 . In that arbitration clause contained the expression arising out of or in relation to contract and it held that the said words were sufficiently wide to compreh0end matters, which can legitimately arise under Section 20. In that case it was held that the words 'in relation to' are sufficietly wide to comprehend a case where a party questions the very existence of a contract. In my opinion the words 'in connection with' used in clause 41 of the contract are of no less amplitude.

10. Here the case of the appellant is that he is entitled to claim the additional payments in relation to item Nos. (ii) (iii) & (iv) on account of his having performed the contract for construction undertaken by him.

11. It may be that eventually the appellant may not be able to show, that he is entitled to claim the additional payments. But for the purpose of reference of the dispute to arbitration under Section 20 of the Act, it cannot be said that the said disputes are not disputes arising in connecting with the contract. In my opinion, therefore, the appeal must succeed and the order of the District and Sessions Judge Jhalawar insofar as he has refused to refer the dispute relating to item Nos. (ii) (iii) and (iv) to arbiration must be set aside.

12. In the result, the appeal is allowed. The order passed by the District and Sossions Judge, (sic)Jhlawar dated 11-11-1982 in so fir as it relates to refusal to refer to arbitration the disputes referred to in item Nos. (ii) (iii) & (iv) is set-aside and the aforesaid disputes are also referred to arbitration under Section 20 of the Arbitration Act.

13. No order as to costs.


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