N.VENKATACHALA - (1.) QUESTION of constitutionality of the Arbitration (Orissa Second Amendment) Act, 1991, to be referred to hereinafter as the 1991 Amendment Act, which has amended the Arbitration Act, 1940, to be referred to hereinafter as the 'Principal Act,' in its application to the State of Orissa, arises for our consideration and decision in the present writ petitions filed under Article 32 of the Constitution.
(2.) PETITIONER in Writ Petition No. 1151 of 1991 had entered into two contracts with the Orissa Government in the year 1969 and 1970 for construction of 'high level bridges' ( one over the river Daya and another over the river Rushikulya. Any dispute to arise between the parties under the said contracts, was required to be resolved by having recourse to Arbitration under the Principal Act because of the Arbitration clause that stood incorporated in each of them, by agreement of parties. The Orissa Government which rescinded both the contracts ( one in the year 1974 and another in the year 1975, it appears, did not concede to the petitioner's claim, exceeding rupees one crore made in relation to each of them. This situation appears to have led the petitioner to institute two separate proceedings under the Principal Act in the Court of Sub-Judge, Bhuvaneshwar - 'the Court of Sub-Judge' seeking appointment of arbitrators to decide the disputes relating to his claims made in respect of the said two contracts. The appointment of a separate arbitrator for deciding each of the said disputes, it appears was made by the Court of Sub-Judge in the year 1981. But, in the year 1982 when the Principal Act, as applicable to the State of Orissa , was amended by the Arbitration (Orissa Amendment) Act, 1982 - the 1982 Amendment Act, providing forum of Arbitration Tribunal for deciding arbitral disputes arisen or arising from contracts as those of the petitioner, a controversy appears to have cropped up, as to whether the arbitrators appointed by the Court of Sub-Judge, in the proceedings before, had to be replaced by an Arbitration Tribunal to be constituted 'according to the 1982 Amendment Act.' When the said controversy had still to be resolved, the Arbitration (Orissa Amendment) Act, 1984 - 'the 1984 Amendment Act,' it is said came into force amending the Principal Act insofar as it became applicable to the Orissa State by providing for a Special Arbitration Tribunal to be constituted by the State Government, for deciding arbitral disputes arisen or arising in relation to the contracts, as those of the petitioner, where claim involved was, of rupees one crore or above. The aforesaid controversy, whether the arbitrators earlier appointed by the Court of Sub-Judge, should be replaced by Special Arbitration Tribunal to be appointed by the State Government as required under the 1984 amendment Act, which had cropped up because of the coming into force of the said two Amendment Acts, it is said, ultimately ended in this Court with the replacement of arbitrators who had been appointed by the Court of Sub-Judge, by Special Arbitration Tribunals constituted by the State Government with power conferred on those Special Arbitration Tribunals to decide the arbitral disputes raised by the petitioner in respect of this two contracts which had been entered into with the State Government but rescinded by the latter. Two Special Arbitration Tribunals which were so constituted by the State Government, it is said, decided the arbitral disputes of the petitioner referred to them , by the making of awards -- one in the year 1988 and another in the year 1989. The Court of Sub-Judge, before which those two awards had come to be placed for making them 'Rules of Court' are said to have been made 'Rules of Court' by its judgments and decrees. The 'Rule of Court' so made in relation to each award by the Court of Sub-Judge, is said to have been affirmed by the High Court of Orissa. When the 'Rule of Court ' so affirmed by the High Court in both the matters were brought up before this Court by the Orissa Government in S. L. P.'s one of them has been dismissed while in the other leave has been granted, however, allowing the petitioner to take Rs. 25 lakhs out of the amount payable under the concerned award made in his favour by one of the Special Arbitration Tribunals. It appears, one of those awards which was made a 'Rule of Court' by the Sub-Judge and unsuccessfully challenged up to this Court by the Orissa Government, is under execution in an execution proceeding before the Court of Sub-Judge. Thus, when, the amount payable under one award which was made a 'Rule of Court' was pending realisation before the Executing Court and another arbitral award which was made a 'Rule of Court' by the Court of Sub-Judge, was pending consideration by this Court in a civil Appeal, the State Government, it is said, promulgated the Arbitration (Orissa Amendment) Ordinance, 1991, amending the Principal Act as amended by the earlier amendment Acts, in its application to the State of Orissa. However, that ordinance came to bereplaced the 1991 Amendment Act. As the 1991 Amendment Act has in effect nullified the aforesaid two awards made in favour of the petitioner by two Special Arbitration Tribunals Constituted by the State Government under the 1984 Amendment Act, even after each of them had been made a 'Rule of Court' and directed the petitioner to get the arbitral disputes raised by him, resolved afresh by the Arbitration Tribunal constituted under the principal Act as stood amended by the 1982 Amendment Act, the constitutionality of the 1991 Amendment Act, has been challenged by the petitioner by filing the Writ Petition. Coming to the petitioner in Writ Petition No. 491 of 1992, he is a contractor who had entered into two contracts in the Year 1972 with the Orissa Government for improving two sections of the National Highway No. 5. In the year 1974 certain disputes having arisen between the parties in relation to execution of works concurred in the contracts. , the petitioner who was a party to such contracts, appears to have instituted a proceeding before the Court of Sub-Judge, seeking reference of the disputes to an arbitrator to be appointed by it under the Principal Act, since the Arbitration clause found in each of those contracts required reference of such arbitral disputes to an Arbitrator. Thereafter the Court of Sub-Judge appears to have appointed a retired District Judge as an arbitrator and referred the arbitral disputes to him for being decided by him. That arbitrator, appears to have, accordingly, decided the arbitral disputes by his awards made in the year 1981, itself. Though the Court of Sub-Judge appears to have refused to make each of the said awards a 'Rule of Court' the High Court is said to have made each of them a' Rule of Court' in the year 1990. The S. L. P.'s of the Orissa Government filed before this Court against the judgment of the High Court, it is said, came to be dismissed in the year which had been made 'Rules of Court' were sought to be realised in execution of 'Rules of Court,' directions appear to have been given to the State Government by the Executing Court to pay all the amounts payable under the said awards to the petitioner. Some proceedings taken by the Orissa Government before the Court of Sub-Judge under Section 47, of the code of civil Procedure, 1908 questioning the order made in execution proceedings appear to have proved futile., all through. The 1991 Amendment Act, according to the petitioner, has the effect of nullifying the awards made in this favour by the arbitrator, even though each of them is made a 'Rule of Court' by the High Court and affirmed by this Court and making him have his arbitral disputes resolved by the Arbitration Tribunal constituted under the Principal Act as amended by the Amendment Acts. That is the reason, it is said, as to why the petitioner has filed the writ petition to challenge the constitutionality of the 1991 Amendment Act.
(3.) THE petitioners in the present Writ Petitions have since challenged the constitutionality of the 1991 Amendment Act, which is found in the notification published in the Orissa Gazette Extraordinary on 22/01/1991, that Notification itself, for the sake of convenience, is reproduced: "No. 1117-Legis. ( THE following Act of the Orissa Legislative Assembly having been assented to by the President on the 22/01/1992 is hereby published for general information. ORISSA ACT 3 OF 1992 THE ARBITRATION (ORISSA SECOND AMENDMENT) ACT, 1991 An Act to amend the Arbitration Act, 1940 in its application to the State of Orissa. Be it enacted by the Legislature of the State of Orissa in the Forty-second year of the Republic of India as follows : - 1. (I) This act may be called the Arbitration (Orissa Second Amendment) Act, 1991. (II) It shall be deemed to have come into force on the 24th day of September, 1991. 2. In the Arbitration Act, 1940 in its application to the State of Orissa (hereinafter referred to as the principal Act), in Section 41-A, after sub-section (1), the following sub-section shall be deemed to have been inserted with effect from the 26th day of March, 1983 and in force during the period between the said date and the 24th day of January, 1990 (both the days inclusive), namely :- (1-A) no reference to Arbitration of any dispute specified in sub-section (1) involving a claim of rupees one crore or above shall be made under the said sub-section to a Special Arbitration Tribunal, unless the amount agreed to by the parties in the contract out of which such dispute has arisen is more than half the amount of such claim. 3. Notwithstanding anything to the contrary in the principal Act, or in any award made by Special Arbitration Tribunal in relation to any dispute, or in any judgment, decree or order passed by any Court in relation to any such dispute or award, - (i) the amendment made by Section 2 shall apply to and in relation to every dispute in respect of which award has been made by Special Arbitration Tribunal, whether such award has been, or is pending to be, made the Rule of the Court under Section 17 of the principal Act; (ii) any reference made to Special Arbitration Tribunal in respect of a dispute referred to in clause (i) inconsistently with the provision of sub-section (1-A) of section 41-A of the principal Act as inserted by Section 2, of this Act shall be deemed to be invalid as if the said sub-section (1-A) of S. 41-A was in force at the time when such reference was made; and (iii) in the case of every dispute, the reference in respect of which is so deemed to be invalid under clause (ii), a fresh reference to Arbitration shall be made to the Arbitration Tribunal within ninety days from the date of publication of the Arbitration (Orissa Amendment) Ordinance, 1991 in the official Gazette. Explanation - for the purpose of this section, the expression Special Arbitration Tribunal shall mean a Special Arbitration Tribunal constituted under sub-section (1) of Section 41-A, of the principal Act as it stood prior to the 25th day of January, 1990. 4. (1) the Arbitration (Orissa Amendment) Ordinance, 1991 is hereby repealed. (2) Notwithstanding such repeal, anything done or any action taken under the principal Act as amended by the said Ordinance shall be deemed to have been done or taken under the principal Act as amended by this Act. By order of the Governor Sd/- P. K. PANIGRAHI Secretary to Government.";