SETH MOHANLAL HIRALAL Vs. STATE OF M.P.

JUDGEMENT

(1.) In these appeals preferred under section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") the parties have assailed the validity of the judgment dated 23-1-2006 passed by trial Court, by which the objections preferred by the appellant as well as respondent under section 34 of the Act against the award passed by the Arbitrator dated 28-7-2004, have been rejected. Since common questions of law and facts arise in these appeals, therefore, the appeals were heard analogously and are being decided by this common order. In order to appreciate the challenge to the impugned judgment, few facts need mention which are stated infra. M/s. Seth Mohanlal Hiralal (hereinafter referred to as the "appellant") was awarded contract of construction of 'Sukha' acquaduct under Agreement No. 2/1977-78. A dispute arose between the parties, pursuant to which, the appellant made a request for appointment of an Arbitrator on 14-1-1980 to the Superintending Engineering. Thereafter, the appellant filed an application for appointment of an arbitrator under section 8 read with section 20 of the Arbitration Act, 1940 (for short "1940 Act") before the District Judge, Hoshangabad on 26-9-1984. In the meantime, the State Legislature enacted Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (for brevity "1983 Act") with a view to establish a Tribunal to adjudicate the disputes, to which, the State Government or the Public Undertaking is the party. The 1983 Act came into force with effect from 12-10-1983 land on 1-3-1985 the M.P. Arbitration Tribunal was constituted. The District Judge, Hoshangabad decided the application submitted by the appellant under section 8 read with section 20 of 1940 Act by order dated 18-8-1998 and one Mr. K.S. Inaamdar, Retired Chief Engineer was appointed as an Arbitrator to adjudicate the dispute between the parties.

(2.) It is not disputed that the order dated 18-8-1998, by which the Arbitrator was appointed, was not challenged by the State Government (hereinafter referred to as the "respondent") before any higher forum. The Arbitrator with the consent of the parties directed that the claims of the respective parties shall be adjudicated as per the provisions of 1996 Act. It is also not in dispute that both the parties appeared before the Arbitrator without raising any objection and participated in the proceeding which was held under the 1996 Act. The Arbitrator passed an award on 28-7-2004 under the 1996 Act to the tune of Rs. 2,80,980/- in favour of the appellant. However, rest of the claims filed by the appellant were rejected. The award passed by the Arbitrator was challenged by the parties under section 34 of the 1996 Act. The trial Court by judgment dated 23-1-2006 partially allowed the objection of the respondent and rejected the claim No. 8(ii) of the appellant which was allowed by the Arbitrator and upheld the award for rest of the claims i.e. claims No. 1, 2 and 4. In the aforesaid factual background the appellant has challenged the aforesaid award in M.A. No. 1820/2006, whereas the respondent has challenged the validity of the same in M.A. No. 2870/2006.

(3.) Learned counsel for the appellant submitted that since prior to constitution of the Tribunal i.e. 1-3-1985 the appellant had filed an application for appointment of an Arbitrator before the District Judge, therefore, the proceeding initiated by the appellant under the provisions of 1940 Act was saved in view of section 20(2) of 1983 Act. In support of aforesaid submission reliance has been placed on the decision of Full Bench of this Court in the case of State of M.P. and others vs. M/s. Chahal and Company, New Delhi, 1995 MPLJ 885. It is further submitted that respondent all along had participated in the proceeding which was conducted by the Arbitrator under 1996 Act and at no point of time, raised an objection that provisions of 1983 Act would apply. It is also pointed out that no such objection has either been taken in objection filed by respondent under section 34 of the Act or in the memo of appeal. It is further submitted that the order passed by the District Court has attained finality and binds the parties. It is also urged that the trial Court grossly erred in interfering with the award of the Arbitrator insofar as it pertains to claim No. 8(ii). It was also pointed out that a sum of Rs. 2,80,000/- was awarded to the appellant by the Arbitrator on account of extra item of de-watering which was not included in the contract. It was further pointed out that witness of the respondent had admitted in the cross-examination that the work of de-watering was executed by the appellant. It was argued that the finding recorded by the Arbitrator that an award of Rs. 1 lakh has been awarded to the appellant contrary to the terms and conditions of the contract is perverse and the judgment passed by the trial Court deserves to be set aside to the extent it interferes with the award passed by the Arbitrator.