STATE OF BIHAR Vs. R B OJHA FOR OJHA BROTHERS

JUDGEMENT

(1.) THIS is an appeal under Section 39 (1) (vi) of the Arbitration Act, 1940 on behalf of State of Bihar against an order rejecting the prayer made on behalf of the appellant to set aside an award.

(2.) IT is an admitted position that a contract was entered between the appellant and M/s. Ojha Brothers, the respondent, for execution of work in Hayadhar Syphon of the Eastern Kosi Canal. The contract was executed in the prescribed form, on 29-3-1961 (Ext. 3) and was signed by the Chief Engineer, Kosi Project on behalf of the Governor, and Mr. Ojha on behalf of the firm. After the contractor had executed some part of the contract, some dispute arose between the contractor and the local officers resulting in ultimate recession of the said contract by the State Government. On 21-12-1963, the respondent made a protest regarding the unilateral recession of the contract. By letter dated 18-2-1964 (Ext. 4), the respondent made a request for reference of the dispute for arbitration in terms of Clause 23 of the aforesaid contract. In that very letter it was stated on behalf of the respondent that in view of the animus of the local engineers against the respondent, the dispute should be referred to a person other than an officer of the River Valley Project Department. Under Clause 23 of the Contract, the dispute was to be referred to the Superintending Engineer of the Circle. By letter dated 26-2-1964 (Ext. 5), the then Deputy Secretary of the River Valley Project Department of the State Government informed the respondent that State Government was agreeable to refer the dispute to another Superintending Engineer of the River Valley Project. By a letter dated 5-3- 1964 (Ext. 6) the respondent again made the request for arbitration by an outsider and suggested names of eight persons who were at one time Chief Engineer of one Department or other. The State Government, out of the persons suggested, accepted the name of Shri A. L. Das, ex-Chief Engineer, Damodar Valley Corportion and the said acceptance was communicated by letter dated 16-5- 1965 (Ext. 6/A) under the signature of the aforesaid Deputy Secretary. The respondent was also asked to deposit Rs. 2000/- as his contribution to the remuneration of the aforesaid arbitrator. Respondent, while accepting the appointment of Shri A. L. Das forwarded a demand draft for that amount, by a letter dated 23-5-1964 (Ext. 6/B). On 29-5-1964, the aforesaid Deputy Secretary informed Shri A. L. Das about the arbitration and requested him to visit the site. The draft of the agreement for reference to aforesaid Shri A. L. Das was sent along with letter dated 6-6-1964 (Ext. 6/G) to the respondent by the State Government and on 8-8-1964 the agreement (Ext. 1) to refer the dispute to aforesaid Shri A. L. Das was executed. On behalf of the Governor, it was signed by Shri B. P. Srivastava, the Deputy Secretary of the River Valley Project Department. The arbitrator inspected the site and entered into reference. After the hearing had commenced, on 5-12-1964 a letter (Ext. A) was addressed to Shri A. L. Das by one Shri B. N. Sinha, the Deputy Secretary to the Government, saying that he was directed to say that on examination of the agreement for arbitration dated 8-8-1964, it had been discovered that the said agreement was not in conformity with Article 299 of the Constitution of India, as such, no useful purpose will be served by bringing the arbitration to the conclusion, which will result in an invalid award. The State Government, however, participated during the hearing and the arbitration proceeded. On 23-12-1964, the arbitrator gave, his award that the respondent was entitled for an amount of Rs. 9,58,506. The award was filed in the court concerned where a prayer was made on behalf of the respondent to make it a rule of the court. An objection was filed on behalf of the appellant on 2-2-1965. As already stated above, learned Subordinate Judge after consideration of the question involved, has rejected the objection filed on behalf of the appellant; hence this appeal.

(3.) BEFORE I examine the legal and factual aspect of the matter, one fact must be taken note of that it is an admitted position that the decision to substitute Shri A. L. Das for the Superintending Engineer of the Circle has been taken at the highest level, i. e., by the State Government. BEFORE the learned Subordinate Judge all the materials in connection with the same were produced and I may incidentally refer to some of the oral and documentary evidence on that point. D. W. 1, who was examined on behalf of the State Government, has stated on that point as follows:--