1 arp41-07 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION APPLICATION NO.41 OF 2007 M/s.Harbhajan Sarabjeet & Associates A registered partnership Firm Through Constituted Attorney Mr.Satarjjang Bahadur Kulshreshtha having its office at 16/17, Sector A N-4 CIDCO, Aurangabad -431 003. ....Applicant V/s. 1. Maharashtra Krishna Valley Development Corporation (through the Executive Engineer) having their Office at Bhama Ashed Dam Division, Swargate, Pune-411037 2. The Executive Director Maharashtra Krishna Valley Development Corporation, having their Office at Sinchan Bhavan, Mangalwar Peth Barne Road, Pune-11. ....Respondents Mr.N.G. Thakkar, Senior Counsel with Mr.Toni Sachdevani i/b Mr.V.R. Hukmani for the Applicant. Mr.Vijay D. Patil for Respondent Nos.1 and 2. CORAM : S.J. VAZIFDAR, J. DATE : 6TH OCTOBER, 2010. ORAL JUDGMENT :- 1. The arbitration application has been filed under section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator. 2. The parties admittedly had entered into a contract which 2 arp41-07 contains the following clause. Clause 30.1. Except where otherwise specified in contract and subject to the powers delegated to him by the Corporation under the Code rules then in force the decision of the Superintending Engineer of the Circle for the time being shall be final conclusive and binding on all parties of the contract upon all questions relating to the meaning of the specification, design, drawing and instructions hereinabove mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of work or after completion or abandonment thereof. 30.2 The contractor may within 30 days of the receipt by him of any order passed by the Superintending Engineer of the circle as aforesaid appeal against it to the Chief Engineer concerned with the contract work or project provided that a) The accepted value of the contract exceeds Rs.100 lacs (Rs.Hundred Lacs) b) Amount of Claim is not less than 1.00 Lacs (One Lac) 30.3 If the contractor is not satisfied with the order passed by the Chief Engineer as aforesaid the contractor may within 30 days of receipt by him of any such order appeal against it to the Executive Director Maharashtra Krishna Valley Development Corporation, Pune who if convinced that prima facie the contractor’s claim rejected by Superintending Engineer / Chief Engineer is not frivolous and that there is some substance in the claim of contractor as would merit detailed examination and decision of Executive Committee / Claim Committee shall cause to put it up to the Executive Committee / Claim Committee at Corporation level for suitable decision.” The only question is whether clause 30 is an arbitration agreement or not. Mr.N.G. Thakkar, the learned Senior Counsel appearing on behalf of the petitioner submitted that clause 30.1 and in the alternative 3 arp41-07 30.2 constitute a valid arbitration agreement. The respondents denied the same. 3. In view of two judgments of the Supreme Court, each of a bench of three learned Judges, it must be held that clause 30.1 does not constitute an arbitration agreement. The judgments are State of U.P. v. Tipper Chand, (1980) 2 SCC 341 and State of Orissa v. Damodar Das, (1996) 2 SCC 216. The clauses in these two judgments are almost identical to clause of 30.1 in the present case. Thus had the matter ended there, I would have dismissed this application. 4. The question then is whether the above judgments of the Supreme Court can be distinguished in the present case in view of clauses 30.2 and 30.3. 5. There are two ways of looking at clause 30. Mr.Thakkar submitted that clause 30.1 ought not to be considered by itself, in isolation. Clause 30 must be considered as a whole. So read clause 30.1 derives its colour from clauses 30.2 and 30.3. In other words clauses 30.2 and 30.3 indicate that clause 30.1 is an arbitration agreement although clause 30.1 read by itself does not constitute an arbitration agreement. The provision in clause 30.2 for an appeal and the reference in clause 30.2 to the decision of the Superintending Engineer in clause 30.1 being an “order” according to him supports his submission. 6. On the other hand it could be contended that once it is held that clause 30.1 is not an arbitration agreement what follows in clauses 30.2 and 30.3 cannot constitute it to be one. Clauses 30.2 and 30.3 are the subsequent steps which may be adopted by the contractor, in this case 4 arp41-07 the petitioner, qua the decision of the Superintending Engineer under clause 30.1. If clause 30.1 is not an arbitration agreement, it is axiomatic that steps taken qua the decision thereunder are only representations against the same. “Orders” are not necessarily adjudicatory in nature. 7. I must decide this matter only on precedent in view of a judgment of a learned single Judge of this Court in Misc. Civil Application Nos.1480 and 1481 of 2008, M/s.B. Narayan & Associates, Thane v. The City of Nagpur Corporation, Nagpur, dated 2.7.2010. The arbitration clause there was almost identical to clause 30.1. and 30.2 herein. There was no clause similar to clause 30.3 in this case. The learned Judge after referring to the judgments of this Court and of the Supreme Court including the judgment in State of U.P. v. Tipper Chand held as under :- “8. The consideration above clearly shows that in clause 29 before this Court, an appeal (though limited) is contemplated and hence, the S.E. while deciding under clause 29(1) has to “decide” as explained in para 16 of Mallikarjun V. Gulbarga University (supra). The decision of the Superintending Engineer of the NMC envisaged in clause 29(1) above comprehends adjudication of the dispute. Remedy of appeal in sub-clause (2) itself signifies availability of forum under sub-clause (1) of Clause 29 and hence, leave to approach it. Decision in sub-clause (1) is thus by its superior officer having technical knowledge as also experience and appeal is only by the contractor, that too to its principal executive – an I.A.S. Officer. Arrangement is thus with some purpose in as much as NMC has not reserved for itself any remedy of “second submission” or appeal to its chief executive officer under the contract. There is no challenge to this scheme and certainly Respondents can not assail it. Clause 29(1) employs words giving it widest possible field to operate and thus encompasses practically all dispute between parties to the contract at all possible stages. Clause 29(1) can not be given any restrictive interpretation as it operates even after work is over or abandoned or contract 5 arp41-07 is over. Parties have conferred power on Superintending Engineer to decide even after work is discontinued and not only when it is being executed. Parties have thus evolved a special scheme for themselves to regulate dispute resolution. In these facts it is clear that use of words like arbitrate or arbitration or arbitrator or reference or indicating opportunity either of hearing or leading evidence is not essential & decisive of nature of clause 29(1). In any case, its non-use do not in any way militate with or dilute its spirit. In absence of any other challenge or contention, this Court has to see that said scheme functions. Hence, independent of earlier decision dated 23/3/2006 of this Court between present parties and on same clause in Misc. Civ. Appl. 739/2005, I find that objections raised by Respondents in the matter are misconceived and unsustainable. Consideration afresh was necessitated as then this Court did not have advantage of hearing the various issues/facets now urged and had no occasion to appreciate the precedents. 9. Accordingly present applications are allowed and Superintending Engineer, N.M.C., is appointed as Arbitrator in both matters as per Clause 29(1) of the conditions of contracts between parties. Costs of Rs. 3000/- each payable to Applicants shall be added to the bill of costs in arbitration proceedings. Orders accordingly.” 8. As the clauses in the case before me are almost identical to the clause in the above case, I consider myself bound by the interpretation thereof. 9. The arbitration application is therefore disposed of by appointing the Superintending Engineer as the arbitrator in accordance with clause 30.1 of the General Conditions of Contract, as a sole arbitrator. There shall be no order as to costs. This order is stayed upto and including 30.11.2010 to enable the respondent to challenge the same.