,/' r- » - . ..-i i- • joi-' INJ-H E HIGH COURT OF CHHATTISGARH AT BILAS PUR WRIT PETITION (C) N0 3LJ2-0 /2010 PETITIONER / Samadhan Seva Samiti, Through: Its Chairman, Sanjay kumar, aged about 37 years, S/o Ramlakhan Prasad, R/o New Patliputra Colony, Patna (Bihar) Versus RESPONDENTS, , o ^." ^<8S:3^ -^ •••"/1. State of Chhattisgarh - Through- The Secretary, Department of Urban Administration and Development, Dau Kalyan Bhawan Mantalaya Raipur Chhattisgarh 2. Municipal Council Kawardha, Through: Its Chief Municipai Officer, Municipal Council Kawardha, Disirict Kabirdham (C.G.) 3. Sulabh Internation Sociai Service Organization, through: the Chairman Chhattisgarh State Branch 147, Adarsh Chowk Sunder Nagar, Raipur (C.G.) VVRiT PETITION UNDER ARTICLE 226 OF THE CONSTITUTiON OF __LJ1-U^ fj hi.i-uaii <i. HIGH COURT OF CHHATTISGARH. BILASPUR W.PfCl. No. 3420 of 2010 PETTTIONER RESPONDENTS! Samadhan Seva Samltt Vs. State of Chhattlsgarh and two others WRTT PCrmON UNDER ARTCCLE 226 OF THE coNSTmmoN OF INDIA APPEARANCE Shrl P. K. Bhaduri, counsel ft>r the priitloner. Shri Vinay Harit, Deputy Advocate General with Mr. Vlnay Harit, counsel for the State/respondents 1 & 2. Shri Naha Roy, counsel for respondent no.3. ORAL JUD6MENT 15.07.2010 I.M. OUDDUSI. J 1. Heard flnalty with the consent of learned counsel for the parties. 2. Respondent no.3, Sulabh Internatlonal Social Servlce Organlzation, was given contract for maintenance of public latrines by respondent no.2/Munidpal Coundl, Kawardha, District Kabirdham on 16.06.2003 and thereafter on 24.05.2006. But somehow respondent no.2 terminated the agreement wlth respondent no.3 on 30th Sept. 2009 and thereafter the contract was given to the petftloner on 3rd of October, 2009. Thereafter r^pondent no.3 flled a writ petition in this Court which was registered as W.P(C). 3. —?- 6860/2009, In whlch the Instant petltioner was also a party/respondent no.3. The satd wrtt petltlon was dedded on 10.12.2009 wlth an observation that In the agreement between respondent no.2 and respondent no.3, there is a clause of arbftratlon which speaks that fn the event of any dispute briween the parties arlslng out thts agreement the parties hereby agree to refer the matter for arbitration to an officer of the State Government not below the rank of a Secretary to the Government as may be appointed by the State Government, whose dedsion shall be final and binding on the partles. On the basis of the sald clause the petltioner of that wrtt petftlon namely Sutabh Intematlonal SoclalService Organization sought permission to withdraw that petition wlth liberty to avall the remedy of Arbttratlon. The same was allowed by the Court and the writ petltlon was disposed of as withdrawn with the aforesaid llberty granted In favourofthe petitioner, respondent no.3 herein. Consequently, respondent no.3 approached the State Government for appolntment of an Arbitrator. The Secretary, Urban Administration and Development Department, was appolnted as arbitrator who gave hls award on 25.6.2010. The arbttrator observed that before cancellation of the agreement between Sulabh Intemational Organlzation and Munldpal Council, the stamp paper was purchased in favour of the instant petltloner and Sulabh International Social Service Organization was not given proper opportunity and hence he had cancelled the .•/"''' ^% ""-rf^' ^^id-'"' 4. 5. 6. -i- agreement dated 03.10.2009 entered Into between the petttloner and respondent no.2. The petitioner being aggrieved by the impugned order dated 25.06.2010 approached this Court by flling the instant writ petition. Learned counsel for the petitloner has submitted that the arbitrator has gone beyond hls Jurlsdlction in canceltng the contract made by way of agreement dated 03.10.2009 between the pe'titioner and respondent no.2. He has further submitted that the instant petitioner was not made a party to the arbltration proceedlngs and hence the whole award is liable to be quashed. The arbltration proceedfngs are held under the Arbltration and Conciliation Act, 1996. Those proceedings are conducted by the Arbltrator between the parties to the contract. There is no scope of making a thtrd person as party/respondent who was not party to the contract in any way. In the instant matter, the agreement was between respondents 2 and 3 In which the arbltratlon dause was existed. The aggrieved party approached the State Government for appointment of the Arbitrator and hence the arbitrator conducted the proceedings between the parties to the agreement. Therefore, there is no question of giving any opportunity or maklng the instant petitioner as party respondent in the arbltration proceedings. The Arbitrator has cancelled the agreement executed between the petltloner and respondent no.2 subsequent to N/' < ^' -b' the cancellatlon of the termfnation of the agreement between respondentno.2 and respondent no.3. Therefore, cancellng the subsequent agreement is an executive action which was not requlred to be done by the arbitrator. Though the arbitrator was the secretary to the Department of Urban Administration and Development, but white actlng as an arbitrator, he should not have thought himself to be an authorlty of the Government and therefore, in our opinion, the arbitrator has exceeded his Jurisdlction in canceling the agreement dated 03.10.2009 whlch was executed after termination of the agreement executed between respondent no.2 and respondent no.3. He should have restricted himself only in maklng award between respondents 2 and 3 holding that termination of the agreement between respondents 2 and 3 was lllegal and respondent no.3 was llable to be continued as per the contract. The disputes which are referable to arbltration are those disputes whlch are in respect of 'defined legal relatlonshlp' between the partles to the agreement whether contractual or not. It does not relate to atl klnds of dlsputes. In case of Rukmani Bai Guota -vs- Collector. Jabatpur. reported in AIR 1981 SC 479. the Hon'ble Apex Court has categorlcally said the prindpal that arbitratlon agreement is not required to be in any particular form. What is required to be ascertained »s whether the parties have agreed that If dlsputes arise between them In respect of subjeet matter of the contract 3W"" -s- . such disputes shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement, therefore, the scope of arbitration is conflned to only between the partles to the agreement and not beyond that and In any other way it is confined to signatories to the arbitration agreement. 8. In case of Associated Enaineerina Company -vs- Government of Andhra Pradesh. AIR 1992 SC 232, the Hon'ble Apex Court has held that the arbitrator cannot act arbitrarily, irrationally, capridously or Independently of the contract. Hls sole functioning is to arbltrate in terms of the contract meanlng thereby that the arbltrator has no power apart from what the parties have given hlm under the contract. If he has traveled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained withln the parameters of the contract act and has constructed the provisions of the contract, hts award can be interfered only if there is an error apparent on the face of it. A consdous disregard of law or the provisions of the contract from which he has derived his authority vitiates the award. 9. Therefore, we are of the opinion that only last part of the impugned order passed by the Arbitrator to the extent that he has cancelled the order No.261 dt.30.09.2009 passed by the Chief Munidpal Officer, Kawardha and the agreement dated 03.10.2009 executed between the instant petitioner <• 10. 11. -6- and Municipal Council, Kawardha, Is beyond the scope of arbitratlon proceedlngs and hence llable to be expunged. We have been Informed that respondent no.3 Sulabh International Social Servfce Organization has been restored to its original position following the terms and condltlons of the original agreement executlng the award wtth effect frem 03rd of July 2010. In vlew of the above, none of the parb'es to the arbltratlon proceedlngs is aggrieyed and the Instant petltloner has no locus standl to challenge the arbltratlon proceedlngs between respondents 2 and 3 and therefore, this Courtls not indined to interfere in the arbttration award more so when It ts not the approprlate forum to conslder the same. Further while executlng the award, tt was binding on respondent no.2 to restore the contract between respondents 2 and3 and consequences of the same are to be followed. Hence there was no need for the arbitrator to cancel the agreement executed subsequently b^ween the petitloner and respondent no.2 on 03.10.2009 as that was not the subject matter of the arbltratlon proceedfngs and respondent no.2 was quite competent to take approprtate action consequent upon the execution of the arbitration award. In vlew of what has been dlseussed above, only the last portion of the impugned order passed by the Arbltrator while maktng arbltration award to the extent tbat *he has cancelled the order No.261 dt.30.09.2009 passed by the Chief Municipal OfRcer, Kawardha and the agreement dated B " Y*^ ";%s£ ''^^B^: i^^^- -7- 03.10.2009 executed between the Instant petitioner and Munlcipal Council, Kawardha", is expunged. Respondent no.2 is free to take appropriate actlon and the instant petitloner is also free to take recourse to the remedies available to him under the law. 12. Accordlngly, this writ petition stands flnally disposed of at the motion stage Itself. No cost. Sd/- I.M.Quddusi Judge Sd/- N.K. Agrawal Judge Rao