GANNON DUNKERLEY AND CO Vs. UNION CARBIDE INDIA LTD
LAWS(CAL)-1961-5-11
HIGH COURT OF CALCUTTA
Decided on May 25,1961

GANNON DUNKERLEY AND CO. Appellant
VERSUS
UNION CARBIDE (INDIA) LTD. Respondents

JUDGEMENT

P.C.Mallick, J. - (1.) THIS is an application under Section 20 of the Indian Arbitration Act for an order that the arbitration agreement be filed in Court and reference made. The arbitration agreement is a clause in a building contract subsisting between the parties. The defendant employed the plaintiff to do the construction work of a factory building to be used and occupied by Eveready Flashlight Company. The building contract provided for the certification of workmanship by a firm of architects to wit Messrs. Ballardie Thompson and Matthews. The contact further provided that the works shall be carried out to the reasonable satisfaction of the Architect whose decision as to sufficiency and quality of the work and material shall Be final and binding upon all parties. The plaintiff is the contractor and the building work is alleged to have been completed sometime in 1957. During the progress of the work eight running bills were submitted and paid in terms of the contract. The payment of the ninth bill, however, was withheld on the ground that the roof of the factory building constructed was leaking at several places. It appeare that the contractor at first attempted to effect repair. The repairs effected however, was not found to be satisfactory. The Architect was of opinion that the workmanship was bad which was disputed by the contractor. The dispute between the parties as appearing in the correspondence will appear from the letter addressed by the plaintiff to the Chief Engineer, Central Public Works Department of May 23, 1980 which is set out hereunder : "Whereas National Carbon Company has complained about leakages, the arbitrator should examine and give an award as to the said leakages, reasons and extent thereof, and determine the res-ponsibilily, if any, of Gannon Dunkerley for the same, and, if so the extent of cost recoverable from Gannon Durkerley for its rectification. The arbitrator shall also give directions as to the date of payment of monies due to Gannon Dunkerley and Co., and consider whether, and the extent to which, interest is admissible on the same." In that letter the plaintiff purported to refer the dispute stated in the said letter to the arbitration of the Chief Engineer Central Public Works Department, in terms of the arbitration clause. The Chief Engineer in reply protested that he never agreed either to arbitrate or to nominate an arbitrator and wondered how his name came to be incorporated in the agreement without his consent. Thereupon the present notice has been taken out by the plaintiff under Section 20 of the-Indian Arbitration Act.
(2.) CLAUSE 30 of the contract contains the arbitration agreement which reads as follows : "30. Provided always that in case any dispute or difference shall arise between the employer, or the Architects on his behalf, and the Contractor, either during the progress of the works, or after the determination, abandonment or breach of the Contract as to the construction of the Contract, or as to any matter or thing arising thereunder (except as to the matters left to the sole-discretion of the Architects under CLAUSEs 1, 4, 9, 16, 19, 19A and 28 and as to the exercise by them under CLAUSE 18 of the right to have any work opened up), or as to the withholding by the Architects of any certificate to which the Contractor may claim to be entitled, then either party shall forthwith give to the other written notice of such dispute or difference which notice shall specify the matters which are in dispute, and such dispute or difference of which such notice has been given and no other, shall be and is hereby referred to the arbitration and final decision of the Chief Engineer Central Public Works Department, if able and willing to act, otherwise any person nominated by the Chief Engineer, Central Public Works Department, and the award of such Arbitrator shall be final and binding on the parties. Such reference shall not be entered upon until after the completion or alleged completion of the works or until three weeks or more shall have elapsed after the practical cessation of the works arising from any cause unless with the written consent of the Employer or Architects and the Contractor, the Arbitrator shall have power to open up review and revise any certificate, opinion, decision, requisition or notice, save in regard to the said matters expressly exempted above, and to determine all matters in dispute which shall be submitted to him and of which notice shall have been given as aforesaid. Upon every and any such reference the cost of and incidental to, the reference and award respectively, shall be in the discretion of the arbitrator who may determine the amount thereof, and shall direct by whom and to whom and in what manner the same shall be borne and paid. This submission shall be deemed to be a submission to arbitration within the meaning of the Indian Arbitration Act, 1940. and any statutory modification thereof for the lime in force. The Employer and Contractor hereby also agree to any right of action under the contract with regard to the matters hereby "expressly agreed to be so referred to arbitration." The grounds on which the application is resisted have been set out in paragraph 24 of the affidavit filed on behalf of the defendant by J. W. Hutchinson. It is contended that (1) in terms of the contract the Architect was to decide whether the workmanship was good and satisfactory and the Architect having already indicated that the workmanship was not satisfactory, there is no dispute between the parties under the said contract which can be referred to arbitrator, (2) that before a dispute can be referred to arbitration there must be a notice of dispute which is a pre-condition to arbitration. Notice of dispute, as indicated before, contained in the letter dated May 23, 1960, appears to be somewhat difference to the dispute that is sought to be referred. These are the substantial points taken apart from the other points of law that will be noted presently.
(3.) THE arbitration clause covers disputes as to construction of the contract or as to matters and things arising thereunder. But the exception clause takes out of the arbitration clause dispute as to matters left to the sole discretion of the architect under different clauses of the contract. "When a dispute has arisen which is covered by the arbitration clause, "then either party shall forthwith give notice to the other party in writing of such dispute," and "such dispute and no other dispute shall be referred to arbitration." "THE Chief Engineer, Central Public Works Department if able and willing to act, otherwise any person nominated by the Chief Engineer is to act as arbitrator and "the award of such arbitrator shall be final and binding on the parities.";


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