Tarun Chatterjee, J. - (1.) DELAY Condoned. Leave granted.
(2.) THIS appeal is directed against the judgments and final orders dated 29th July 2004 and 8th April, 2005 passed by a learned Judge of the High Court of Madhya Pradesh at Jabalpur in M.C.C. No. 3295 of 2003 and M.C.C. No. 1579 of 2004. By the order dated 29th July 2004, learned Judge of the High Court appointed Mr. Justice B.C. Verma, a retired Chief Justice of the Punjab and Haryana High Court, as sole arbitrator to adjudicate upon disputes between the appellants and the respondent herein. The order dated 8th April, 2005 passed in MCC No. 1579 of 2004 is under challenge as the application for review and/or recall of the order dated 29th July 2004 at the instance of the appellants was also rejected. Notice was issued on the application for condonation of delay and also on the special leave petitions by this Court on 12th September 2005. After exchange of affidavits an order was passed by this Court on 5th January 2007 in which one of us was a party. The said order of this Court may be relevant for our decision which is as follows: Having regard to the facts of the case, we suggested to the parties that the Municipal Corporation may be directed by this Court to constitute a Board of Arbitrators under Clause 29 of the Agreement without any preconditions. Such an appointment should be made within three weeks from this Court's order and the Board of Arbitrators will take up the matter from the stage at which it has reached before the Arbitrator appointed by the High court. The Board of Arbitrators shall thereafter conclude the proceedings within six months. However, this suggestion of this Court made on 5th January 2007 was not accepted by the respondent and for that reason, we heard the appeal on merits. The appellants floated a notice inviting tender for construction of a road. Finally, half of the job was awarded to the respondent by entering into a contract on the same terms and conditions as contained in the tender. The tender contained various clauses; one amongst the same being Clause 29 which pertained to arbitration in case any dispute arose between the parties and reads thus: Except as otherwise provided in this contract all questions and disputes relating to the meaning of the specifications, drawing and instructions herein before mentioned and as to thing whatsoever, in any way arising out or relating to the contract, designs, drawings, specifications, estimates 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 there of shall be referred to the City Engineer in writing for his decision, within a period of 30 days of such occurrence. Thereupon the City Engineer shall give his written instructions and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of the parties. Upon receipt of written instructions of decisions, the parties shall promptly proceed without delay to comply such instructions or decisions. If the City Engineer fails to give his instructions or decisions in writing within a period of 60 days or mutually agreed time after being requested if the parties are aggrieved against the decision o f the C. E., the parties may within 30 days prefer an appeal of the M.P.L., Com. who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal. The M.P.L. Com will, give his decision within 90 days. If any party is not satisfied with the decision of the M.P.L. Com, he can refer such disputes for arbitration by an Arbitration Board to be constituted by the Corporation which, shall consist of three members of whom one shall be chosen from among the officers belonging to be Urban Administration and Development Department not below the rank of B.E. one Retired Chief Engineer of any Technical Department and City Engineer Nagar Nigam Jabalpur, The following are also the terms of this contract, namely,: a) No person other than the aforesaid Arbitration Board constituted by the Corporation (to handle cases of all Technical Departments) shall act as Arbitrator and it for any reason that is not possible the matter shall not be referred to Arbitration at all. b) The Corporation may at any time effect any change in the personnel of the Board and the new members or members appointed to the Arbitration Board shall be entitled to proceed with the reference from the stage it was left by his or their predecessors. c) The party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute(s). d) Where the party invoking arbitration is the contractor no reference for arbitration shall be maintainable, unless the contractor furnishes a security deposit of a sum determined according to the table given below, and the sum so deposited shall on the determination of arbitration proceeding, be adjusted against the cost, if any awarded by the Board against the party and the balance remaining after such adjustment or in the absence of the such cost being awarded the whole of the sum shall be refunded to him within one month from the date of the award. JUDGEMENT_304_TLPRE0_2007Html1.htm Reference to Sub-clauses (e) to (h) of the Arbitration Clause 29 would not be necessary in view of the fact that the said sub-clauses are not required to be considered for decision and accordingly are omitted.
(3.) IN 2002, the respondent filed an application under Section 11(6)(c) of the Arbitration and Conciliation Act 1996 (hereinafter called the "Act") in the High Court of Madhya Pradesh at Jabalpur seeking appointment of an arbitrator to adjudicate upon disputes between it and the appellants, which came to be registered as M.C.C No. 285/2002. By an order dated 7th May 2003, a learned Judge of the High Court allowed the application directing the appellant, Municipal Corporation, to invoke the arbitration clause and appoint an arbitrator in compliance with Clause 29 of the contract at the earliest to resolve the disputes between the parties. The learned Judge directed: IN view of the aforesaid circumstances, the application filed by the applicants under Section 11(6)(c) of the Act is hereby allowed. The respondents are directed to invoke the arbitration Clause 29 and it is directed that as early as possible the arbitrator be appointed to resolve the dispute between the applicant and the respondent Nos. 1 and 2. A bare perusal of this direction made by the High Court, while allowing the application under Section 11(6)(c) of the Act, would clearly indicate that the Corporation was directed to invoke the arbitration clause and appoint an Arbitration Board in compliance with Clause 29 of the contract. In that view of the matter, we examined Clause 29 of the contract and its sub clauses in detail from which the followings emerge: [I] No reference for arbitration shall be maintainable unless the contractor furnishes the security deposit of a sum determined as per the table given in Sub-clause (d) of the contract by the Corporation. [II] Obligation of the Corporation would arise to constitute an Arbitration Board only after the security deposit is determined by the Corporation and deposited by the contractor. [III] The Corporation shall constitute a Board called 'Arbitration Board' for arbitration which shall consist of three members of whom one shall be chosen from among the officers belonging to the Urban Administration and Development Department not below the rank of B.E., one Retired Chief Engineer of any Technical Department and City Engineer, Nagar Nigam, Jabalpur; subject to compliance of (I) and (II) as noted herein above. ;