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Dalmiya Engineering Private Limited Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 70 of 1971 and Special Suit No. 19 of 1970
Judge
Reported inAIR1975Cal77
ActsArbitration Act, 1940 - Section 20; ;Central Public Works Department Labour Regulations - Rules 12, 13 and 14
AppellantDalmiya Engineering Private Limited
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateDipankar Gupta, Adv.
Respondent AdvocateP.K. Sen, Adv.
DispositionAppeal allowed
Cases ReferredKanpur v. Union of India
Excerpt:
- .....took the view that there was a dispute to which the arbitration clause which according to the learned judge was in very wide terms would be applicable but for the opening portion of clause 25 of the contract which says 'except where otherwise provided in the contract.' undoubtedly the regulations form part of the contract documents. the learned trial judge took the view that because of the provisions in clauses 12, 13 and 14 of the regulations this particular dispute is specifically excluded. to quote the words of the learned trial judge.'it is clear from wording of the arbitration act that for the application of that section a difference must arise to which the agreement applied. as in this case the particular dispute has been specifically excluded from the arbitration agreement by.....
Judgment:

T.K. Basu. J.

1. The point involved in this appeal lies within a very short compass. The appeal is directed against a judgment and order of K. L. Roy. J. dated the 10th November, 1971 by which the learned trial Judge dismissed an application made by the appellant under Section 20 of the Arbitration Act (hereinafter referred to as the Act), containing the usual prayers for the filing of the arbitration agreement and appointment of arbitrator or arbitrators by this Court. In the original petition a prayer for the revocation of the authority of the respondent No. 2 to appoint an arbitrator under Section 5 of the Arbitration Act, 1940 was made. We are however not concerned with that prayer in this appeal.

2. The contract out of which the present appeal arises was concluded between the appellant and the respondent No. 1 by the usual method of offer and acceptance of a tender with regard to the construction of certain buildings at Sin-ghee Park, Calcutta. Clause 25 of the Contract contains the usual arbitration clause to the following effect:--

'Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on 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, intimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the 'Additional Chief Engineer, Central Public Works Department.....'

3. There is no dispute and in fact the learned trial Judge has found that this arbitration clause is of the widest possible amplitude. The dispute which is now sought to be referred to arbitration arises in the following way.

4. It appears that on the 10th September, 1969 one Manick Singh made acomplaint before the Labour Welfare Officer under Clauses 12 and 13 of the Central Public Works Department Labour Regulations (hereinafter referred to as the Regulations) alleging that he was engaged as a sub-contractor and as such a sub-contractor he had engaged certain labourers from time to time. Out of the total amounts payable to those labourers. he had mot received the whole amount but only a part thereof. The claims of ten of his employees were also forwarded to the Labour Welfare Officer. The Labour Welfare Officer held an enquiry and by his award dated the 31st December, 1969 he rejected the claim of Manik Singh and allowed the claim of the other workers. Thereafter the petitioner filed an appeal against the award before the Regional Labour Commissioner being the appellate authority under Clause 14 of the Regulations who by his order dated the 6th June, 1970 allowed the appeal in part and reduced the amount found due to the labourers to a sum of Rs. 2073.75 paise and directed the petitioner to pay the said sum within ten days from the date of the order.

5. The dispute that the petitioner now seeks to raise with the respondent Union of India is with regard to the validity and legality of the conduct of the proceedings before the Labour Welfare Officer and the Regional Labour Commissioner. Jt is contended that the proceedings were vitiated by non-observance of the rules of natural justice and fundamental principles of judicial procedure, It us said that no enquiry within the meaning of the Regulations were properly held. It is further contended that no effective opportunity of cross-examination was given. It further appears from the correspondence and in particular from the letter at page 165 of the Paper Book that the legality and validity of the relevant Regulations themselves viz. Regulations 12, 13 and 14 are being sought to be challenged by the petitioner on various grounds in the proposed arbitration proceedings.

6. It must be pointed out at this stage that the only requirements which are to be satisfied before the Court makes an order under Section 20 of the Act is that there must be a dispute or difference between the parties and that the arbitration agreement must apply to that dispute or difference. At this stage the Court is not called upon to consider the ultimate outcome of that dispute or difference 'r otherwise to go into the merits of the dispute. This aspect of the matter need not detain us any further because the learned trial Judge took the view that there was a dispute to which the arbitration clause which according to the learned Judge was in very wide terms would be applicable but for the opening portion of Clause 25 of the Contract which says 'except where otherwise provided in the contract.' Undoubtedly the Regulations form part of the contract documents. The learned trial Judge took the view that because of the provisions in Clauses 12, 13 and 14 of the Regulations this particular dispute is specifically excluded. To quote the words of the learned trial Judge.

'it is clear from wording of the Arbitration Act that for the application of that section a difference must arise to which the agreement applied. As in this case the particular dispute has been specifically excluded from the arbitration agreement by the opening words of Clause 25, Section 20 can have no application to this case and, in my opinion, the application is misconceived.'

7. Mr. Dipankar Gupta, the learned counsel appearing on behalf of the appellant contended that in arriving at this finding the learned trial Judge committed a fundamental error. The learned Judge failed to appreciate the fact that Clause 25 of the Contract was a clause which was attracted in the case of a dispute between the contracting parties viz. the appellant and the respondent Union of India, whereas Clauses 12, 13 and 14 of the Regulations applied only to a dispute between the contractor and its workmen and contemplated a decision thereon. Although Clause 14 of the Regulation speaks of the decision being final and binding on the contractor, that decision is arrived at in the case of a dispute raised between the contractor and his workmen. The workmen of the contractor not being a party to the contract which is before us, Clauses 12, 13 and 14 of the Regulations can have no application in the case of a dispute contemplated by Clause25 which as we have already said is a dispute between the contractor and the Union of India.

8. In our view this contention of Mr. Gupta is sound. Clause 25 and Regulations 12, 13 and 14, it appears to us, operate on entirely different fields. Clause26 of the Contract cannot possibly have any applicability in a dispute between the contractor and its workmen for the simple reason that the workmen of the contractor are not parties to the contract.

9. In any event, as we have al-ready noted above the validity and legality of the Regulations themselves viz., Regulations 12, 13 and 14 being under; challenge in the proposed arbitration between the appellant and the Union of India, this is clearly a difference or dispute contemplated by Section 20 of the Act to which Clause 25 of the Contract isapplicable. In that view of the matter, the learned trial Judge, in our opinion, was in error when he held that the application was misconceived.

10. Mr. P. K. Sen, the learned counsel appearing on behalf of the respondent Union of India relied on a number of decisions of the Punjab High Court. He first referred to a Division Bench decision of the Punjab High Court in the case of Mohindra Supply Co., Kashmere Gate, Delhi v. Governor-General in Council, reported in . In that case it was held that because a decision as to the rejection of the Inspector was final under the contract, this rejection could not be challenged in arbitration proceedings. Our attention was also drawn to another decision in the case of R. Prince and Co. v. Governor-General in Council reported in AIR 1955 Punj 240 where the following observation occurs:--

'It is clear from these clauses of the contract that the decision of the Inspector is final and any dispute relating to his decision cannot be adjudicated upon by the arbitrators or umpire, such dispute does not fall within the scope of the arbitration agreement and reference does not embrace the dispute relating to the Inspector's decision.'

11. Lastly, our attention was drawn to a decision in the case of Raghunath Enamels Ltd., Kanpur v. Union of India reported in v here it was held that where a matter was specially provided for in the contract, the arbitration clause had no application in view of the language thereof.

12. Mr. Gupta for the appellant does not dispute the provisions contained in these decisions. In fact, he admits the position that if the contract otherwise contained any specific provision for a settlement of the type of dispute which is now sought to be raised by the contractor, the arbitration clauses would not be attracted. As we have already noted, Mr. Gupta's contention has been that Regulations 12, 13 and 14 do not contain any specific provision for this type of dispute because as we have already held those Regulations apply to a dispute between the contractors and their workmen and not between the contractor and the Union of India. In that view of the matter, it must be held that the Punjab decisions are of no assistance to the respondents in the present case.

13. For the reasons given above, this appeal is allowed and the judgment and order of K. L. Roy, J. dated the 10th November, 1971 is set aside. There will be an order in terms of prayers (a) and (b) of the petition before the learned trial Judge.

14. There will be no order as to the costs of this appeal.

15. The operation of this Order is stayed for a period of four weeks from date.

S.K. Mukherjea, J.

16. I agree.


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