- (1.) Is the decision of a party to an arbitration contract about non-arbitrability of a dispute (excepted matters under the contract) final between the parties? At what stage, can objections regarding non-arbitrability of a dispute be taken? These are some of the interesting questions involved in this case. FACTS
(2.) Northern Eastern Railway, Gorakhpur (the Railways) was constructing bridge over Kosi river. They entered into contract on 3rd November, 1981 with Madnani Construction Corporation (Pvt.) Limited (the contractor) for constructing bridge island Nos. 13 and 14. There were special conditions in the contract (the S.C.C.) and it states that General Conditions of Contract and standard specification of the Northern Eastern Railways (the G.C.C.) shall form a part of this contract. This construction was to be completed by 15th February, 1982. After completion, some payments were made to the contractor but were received by him under protest. The contractor served a notice dated 16.11.1983, for appointment of an arbitrator to settle the dispute. The General Manager of the Railways (the G.M.) rejected it on 24th March, 1986, on the ground that the dispute was non-arbitrable as it fell under excepted matters of the contract.
(3.) The contractor filed an application on 18th August, 1987 under Section 20 of the Arbitration Act, 1940 (the Act) for appointment of an arbitrator. This application was transferred on 21st February, 1990, to the Court of JSCC/Additional Civil Judge (the Court below). The Court passed an order on 2.3.1990 that 'file received, put up on the date fixed'. Subsequently, the Court appointed one Sri B.N. Shukla, advocate as an arbitrator on 31.5.1991. The Railways filed an F.A.F.O. No. 534 of 1991 (the earlier F.A.F.O.) against this order. It was dismissed on 27.8.1991. The arbitrator gave his award on 13.4.1992 holding that the Railways should pay an amount of Rs. 4,48,873.22 along with compoundable bank interest prevalent at that time from 16.11.1983 to 21.3.1992.;