Decided on September 06,1967

S.V.KRISHNA RAO Respondents


- (1.) THIS revision Is by the Union of India through the General Manager, South-Eastern Railway, Calcutta (hereinafter referred to as the 'railway Administration')against the order of the lower Court, dated 20-1-1967, passed under Section 20 of the Arbitration Act appointing Shri N. S. Tayabji, Chief Engineer (Construction), eastern Railway, Calcutta, as the arbitrator.
(2.) THE facts of the case are that the non-applicant S. V. Krishna Rao (herein-after referred to as 'the contractor') had entered into a contract dated 2-12-1963 with the Railway Administration for carrying out certain work at Manendra-garh Station. The contractor was also required to undertake certain additional work, the details of which are given in the application filed by the contractor under Section 20 of the arbitration Act. It is the case of both the parties that the General Conditions of contract framed by the Railway Administration formed part of the contract dated 2-12-1963. Condition No. 62 of the General Conditions provides that all disputes or differences of any kind arising out of or in connection with the contract, whether during the progress of the works or after their completion and whether before or after the determination of the contract, shall be referred by the Contractor to the railway and the Railway shall within a reasonable time after their presentation make and notify decision thereon in writing. This condition further provides that the decision and the directions issued by the Railway Administration shall be final. Condition No. 63 then provides for arbitration. That condition is in the following terms: "63- (1) If the Contractor be dissatisfied with the decision of the Railway, on any matter in question, dispute or difference, on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to or if the Railway fails to make a decision within a reasonable time, then and in any such case but except in any of the Excepted Matters referred to in Clause 63 of those conditions the contractor may within 10 days of the receipt of the communication of such decision or after the expiry of the reasonable time as the case may be, demand in writing that such matter in question, dispute or difference be referred to arbitration. Such demand for arbitration shall be delivered to the Railway by the Contractor and shall specify the matters which are in question, dispute or difference and only such dispute or difference of which the demand has been made and no other shall be referred to arbitration. (2) Work under the contract shall, unless otherwise directed by the engineer, continue during the arbitration proceedings, and no payment due or payable by the Railway shall be withheld on account of such proceedings provided however it shall be open for the arbitrator or arbitrators to consider and decide whether or not such work should continue during arbitration proceedings. (3) (a) Matters in question, dispute or difference to be arbitrated upon shall be referred for decision to: (i) A sole Arbitrator who shall be the General Manager or a person nominated by him in that behalf in cases where the claim in question is below Rs. 50,000/-and in cases where the issues involved are not of a complicated nature. The General manager shall be the sole judge to decide whether or not the issues involved are of a complicated nature, (ii) Two Arbitrators, who shall be Gazetted Railway Officers of equal status to be appointed in the manner laid down in Clause 3 (b) for all claims of Rs. 50,000/-and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager shall be the sole judge to decide whether the issues are of a complicated nature or not. In the event of the two Arbitrators being divided in their opinions the matter under dispute will be referred to an Umpire to be appointed in the manner laid down in Clause 3 (b) for his decision, fb) For the purpose of appointing two arbitrators as referred to in Sub-Clause (a) (ii)above, the Railway will send a panel of more than three names of officers of the appropriate status of different departments of the Railway to the contractor, who will be asked to suggest a panel of three names out of the list so sent by the Railway. The General Manager will appoint one Arbitrator out of this panel as the contractor's nominee, and then appoint a second arbitrator of equal status as the Railway's nominee either from the panel or from outside the panel, ensuring that one of the two arbitrators so named is invariably from the Accounts department. Before entering into reference, the two arbitrators shall nominate an Umpire to whom the case will be referred in the event of any difference between the two arbitrators, (c) The Arbitrator or Arbitrators or the Umpire shall have power to call for such evidence by way of affidavits or otherwise as the Arbitrator or Arbitrators or Umpire shall think proper, and it shall be the duty of the parties were (sic)to do or cause to be done all such things as may be necessary to enable the Arbitrator or Arbitrators or Umpire to make the award without any delay, (d) It will be no objection that the persons appointed as Arbitrator. Arbitrators or Umpire are government servants, and that in the course of their duties as government servants they have expressed views on all or any of the matters in dispute, (e) Subject as aforesaid. Arbitration act 1940 and the Rules thereunder and any statutory modification thereof shall apply to the Arbitration proceedings under this clause. " The case of the contractor is that during the working of the contract certain disputes arose which the Railway Administration failed to decide. It is alleged that not only the disputes were not decided but the Railway Administration took over the work from the contractor and started completion thereof departmental-ly. In these circumstances, the contractor again asked the Railway Administration to refer the dispute in terms of Condition No. 63. No heed was paid by the Railway administration to the said request and hence the contractor served the Railway administration with a notice under Section 80 of the Code of Civil Procedure calling upon the Railway Administration to initiate arbitration proceedings under Condition No. 63. After waiting for a reasonable time, the contractor filed an application under Section 20 of the Arbitration Act. In the application the contractor has given details as to the poin in dispute and the various claims put forth by him. It is not necessary to reproduce them here.
(3.) IN the written statement filed by the Railway Administration it has been stated that the contractor was not carrying out the work diligently and even after reminders the speed was not increased. Ultimately, the contractor abandoned the work and in those circumstances the Railway Administration was required to take it over for completing it departmentally. All the facts and circumstances alleged by the contractor were controverted. On the point of failure to act under Condition no. 63, the plea of the Railway Administration was that so long as the work was not completed, it was not possible to determine the amount of work that was left unfinished by the contractor and his claim till that stage was reached could not be properly determined. It was stated that the Railway Administration was always willing to take action under Condition No. 63 but was only waiting till the completion of the work. It was again reiterated before the Court that till the work was finished it was not possible to refer the matter for arbitration. In other words, the plea of the Railway Administration was that the application was premature.;

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