P.C.Mallick, J. - (1.) THIS is an application under Section 33 of the Indian Arbitration Act challenging the validity of an arbitration agreement and an award passed thereunder. The petitioner undertook the construction of a runway at Gauhati Airfield under a contract with the Government evidenced by a tender submitted by him and accepted on behalf of the President, Indian Union by the Chief Engineer, C.P.W.D., Aviation Wing, on or about October 28, 1950. Time allowed for completion of the work was six months from the date of the written order: to commence the work, which, in the instant case, is November 15, 1950. Work of construction was not completed within time and it is alleged in the petition that not only the petitioner cannot be held responsible for this delay but that it has been recognised in writing by the senior Government officials-that this delay is not attributable to any fault OF laches on the part of the contractor. The construction work was actually completed on October 29, 1951. On April 25, 1952, the contractor by his letter to the Executive Engineer claimed refund of the security deposit including the earnest money deposited by the contractor. It is alleged by the Government that by an order dated August 30, 1952, the Chief Engineer directed that the security deposit may he refunded after deducting 3 per cent of the cost of the work as penalty. On October 9, 1952, the security deposit was actually refunded to the petitioner after deducting Rs. 16,512/- and the amount was received by the petitioner under protest. The said sum of Rs. 16,512/- represents 3 per cent of the total cost. The petitioner's case is that he was never told that the deduction had been made as and by way of penalty. In fact the petitioner does not admit the imposition of the penalty at all. The petitioner repeatedly demanded the refund, of the amount and also wanted to know on what account the said sum had been deducted but to no effect, according to this petitioner. By a letter dated May 5, 1954 addressed by the petitioner's Advocate, the Government was requested to refer the dispute to arbitration in terms of the arbitration clause in the contract. By a letter dated July 23, 1954, the Additional Chief Engineer referred the dispute to arbitration. The petitioner did not attend the arbitration proceedings. In due course, an award was published by the Superintending Engineer who was appointed arbitrator. Thereupon the present proceedings have been started by the petitioner.
(2.) IT is convenient at this stage to state the two clauses in the agreement which are relevant for the purpose of this application. Clause 25 of the agreement is the arbitration; Clause 2 is the penalty clause which read as follows:-- Clause 25: "Except where otherwise provided-in the contract all questions and disputes * * * in any way arising out of or relating to the contract * * * shall be referred to the sole arbitration of the Chief Engineer/Additional Chief Engineer, Central Public Works Department and if the Chief Engineer/Additional Chief Engineer is unable or unwilling to act to the sole arbitration of some other person appointed by the Chief Engineer/ Additional Chief Engineer willing to act as arbitrator * * * Clause 2 : The time allowed for carrying- out the-work as entered in the tender shall be strictly observed by the contractor * * * * and the-contractor shall pay as compensation an amount equal to 1 per cent or such smaller amount as the Superintending Engineer (whose decision in writing shall be final) may decide, on the amount of estimated cost of the whole work as shown by the tender for every day that the work remains uncommenced or unfinished after the proper dates. * * * Provided always that the entire amount of compensation to be paid under the provisions of this clause shall not exceed 10 per cent on the estimated cost of the work as shown in the tender." Mr. U.C. Law, the learned Counsel for the petitioner urged the following points in support of this application: (1) The arbitration agreement is void for uncertainty and cannot be enforced. It is not certain who is to act as arbitrator, the Chief Engineer or the Additional Chief Engineer. (2) In any event, the appointment of the Additional Chief Engineer's nominee as arbitrator is invalid, having regard to the fact that there is no evidence that the Chief Engineer or the Additional Chief Engineer is unable or unwilling to act as arbitrator. (3) There was no dispute between the parties prior to the date of submission. The Government no doubt deducted 3 per cent of the total cost, but the petitioner was never informed that such deduction was as and by way of penalty. Not having known it, the petitioner, prior to reference, did not as he could not, dispute the Government's claim to impose penalty. Hence there was no dispute which can be referred to arbitration. (4) A dispute with respect to the imposition of penalty is outside the arbitration clause. The opening clause of the arbitration agreement indicates that not all disputes can be referred to arbitration. The question of penalty having been dealt with in Clause 2 of the contract is outside the arbitration clause and all disputes as to whether the penalty should be imposed in the circumstances of the case or its quantum can only be decided in a suit and not by an arbitration under the arbitration clause. (5) Whenever any 'penalty' is sought to be imposed under a contract, it must be governed by Sections 74 and 55 of the Indian Contract Act. The question therefore becomes a pure question of Jaw and unless a question of law is specifically referred to arbitration under the Arbitration Agreement, it cannot be the subject-matter of a submission.
(3.) TAKING the first point first, it has to be considered whether the arbitration agreement is void for uncertainty. It is contended by Mr. Law that it is not clear who is to act as arbitrator. The agreement refers to "Chief Engineer/Additional Chief Engineer". It is submitted that an element of uncertainty has been introduced in the clause and it is not certain whether the Chief Engineer or the Additional Chief Engineer was intended to act as arbitrator under the arbitration clause. Mr. Kar appearing for the Government submitted that the clause means that "the Chief Engineer and failing him the Additional Chief Engineer is to act as arbitrator" and on this construction the arbitration agreement becomes definite and not void for uncertainty. Inspiration of this argument is derived from an observation made by Banerjee, J. in the case of Dwarkadas and Co. v. Daluram Goganmull decided by a Full Bench of this Court and. The arbitration agreement in the cited case reads as follows: "If any dispute shall arise in respect of the goods or in reference to any conditions thereof such dispute shall be referred to the survey or arbitration of two merchants, one to be appointed by you and one by me/us, and in the event of such surveyors or arbitrators being unable to agree, the dispute shall be referred to the Bengal or Indian Chamber of Commerce for umpirage." The observation relied on by Mr. Kar is to be found at pp. 567 and 568 of the report (Cal WN): (at p. 24 of AIR) and reads as follows: "Counsel said that the word "or" between the words "the Bengal" and 'Indian Chamber of commerce for umpirage" introduced an element of uncertainty into the arbitration clause, for it could not be said with certainty whether the Bengal Chamber of Commerce or the Indian Chamber of Commerce was to be the umpire. I am not sure whether any uncertainty is introduced. "Or" after a primary statement appends of secondary alternative. The "umpire clause" may be read to mean failing Bengal Chamber of Commerce, the Indian Chamber of Commerce is to act as umpire. It is a rule of construction that between different meanings that is to be preferred which tends to support the contract; according to the maxim "verbs it a sunt intelligenda, ut res magis vatert quam pereat." But it is not necessary for me to express any final opinion on this point in this case." The opinion of Banerjee, J. is clearly tentative and is not final. In any event, the observation is an obiter. It is to be conceded, however, that Banerjee, J. was inclined to accept the contention urged by Mr. Kar. The opinion of an experienced Judge of this Court is entitled to very respectful consideration. It is however, necessary to remember that the arbitration clause in the cited case is not the same as in the instant case and there are important points of difference. In the first place, there is no 'or' between the Chief Engineer and the Additional Chief Engineer in the arbitration clause we are considering, but there is a stroke ("/") in between the Chief Engineer and Additional Chief Engineer. In order to make the observation of Banerjee J. applicable to the instant case, the stroke ("/") should be read as 'or'. The arbitration clause is to be found in the printed form of the Government contracts and I am apt to think that it was intended that at the time of execution of each contract either the "Chief Engineer" or the "Additional Chief Engineer" is intended to be retained by striking off the other. The second point of difference to be noted is that in the instant case it has been provided in express terms what would happen if the Chief Engineer/Additional Chief Engineer is unable or unwilling to act, namely, the appointee of the Chief Engineer/Additional Chief Engineer to act as the sole arbitrator. If, it was the intention of the parties that the Chief Engineer would act in the first place and if he is unable or unwilling to act, then the Additional Chief Engineer would act, as such I would expect the same phrase being used as has been used subsequently. I am, therefore, unable to read the stroke ("/") in between the Chief Engineer and the Additional Chief Engineer to mean "or if he is unable or unwilling to act." In my judgment, it is not permissible, specially having regard to the language immediately following that the stroke ("/") in between Chief Engineer and Additional Chief Engineer should be read in the manner indicated by Mr. Kar and lo hold by way of construction that the stroke ("/") means 'or' and then to construe 'or' after the Chief Engineer as appending a secondary alternative. The arbitration Agreement in the instant case shows on it, face that the authors have expressed alternative intentions without deciding in favour of either. Through inadvertence or negligence the parties have not struck out either the "Chief Engineer" or "Additional Chief Engineer" from the standard clause which is absolutely necessary to give the clause a definite meaning. Ambiguity is therefore patent and Clause 25 of the contract must be Held to be void for uncertainty, unless the ambiguity can be cured by election. Words used however, do not give any indication that either of the parties or even the Chief Engineer as the first named arbitrator has been given the election to resolve the ambiguity. In my judgment, the arbitration agreement is void for uncertainty.;