Case: Gulbarga University Vs. Mallikarjun S. Kodagali

The parties hereto entered into a contract of construction of an indoor stadium on or about 21.5.1993. The said contract contained a clause pertaining to resolution of dispute between the parties by the Superintending Engineer, PWD, Gulbarga contained in clause 30 of the contract, which reads as under:The decision of the Superintending Engineer of the Gulbarga Circle for the time being shall be final, conclusive, and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or material 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 those conditions or otherwise concerning the works or the execution, or, failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof in case of dispute arising between the contractor and Gulbarga UniversityThe parties filed their claims and counter claims before the said authority. A purported award was passed in terms thereof on or about 30.7.1999. However, a copy thereof was not supplied to the respondent. Respondent filed a writ petition before the High Court of Karnataka for issuance of a writ of or in the nature of mandamus directing the said authority to supply it a copy of the said award. The writ petition was filed on 17.2.2000. It was allowed by an order dated 13.6.2000 whereby and whereunder the Superintending Engineer was directed to furnish a copy of his decision to the respondent. Pursuant thereto, the same was furnished on 19.8.2000Treating the said award to be one made under the Act as also on the premise that no objection thereto was filed by the appellants in the court of Principal Civil Judge within the period prescribed for questioning the validity thereof and, thus, became an executable decree, an execution application was filed on or about 18.9.2000. An objection thereto was filed by the appellant herein purported to be under Section 47 of the Code of Civil Procedure. The said objection was dismissed. A Revision Application was filed there against and by a judgment and order dated 30.11.2001, it was held by the High Court that the said clause does not constitute an arbitration agreementA special leave petition was filed there against by the respondent and in a decision of Three Judge Bench of this Court, since reported in Mallikarjun v. Gulbarga University [(2004) 1 SCC 372] , the decision of the High Court was reversed holding that clause 30 constituted an arbitration agreement. This Court, in support of the said decision, noticed an earlier decision of this Court in Bharat Bhushan Bansal v. U.P. Small Industries Corporation Limited [(1999) 2 SCC 166] , stating:

Court's reasoning:
16. Once clause 30 is constituted to be a valid arbitration agreement, it would necessarily follow that the decision of the arbitrator named therein would be rendered only upon allowing the parties to adduce evidence in support of their respective claims and counter-claims as also upon hearing the parties to the dispute. For the purpose of constituting the valid arbitration agreement, it is not necessary that the conditions as regards adduction of evidence by the parties or giving an opportunity of hearing to them must specifically be mentioned therein. Such conditions, it is trite, are implicit in the decision-making process in the arbitration proceedings. Compliance with the principles of natural justice inheres in an arbitration process. They, irrespective of the fact as to whether recorded specifically in the arbitration agreement or not are required to be followed. Once the principles of natural justice are not complied with, the award made by the arbitrator would be rendered invalid. We, therefore, are of the opinion that the arbitration clause does not necessitate spelling out of a duty on the part of the arbitrator to hear both parties before deciding the question before him. The expression decision subsumes adjudication of the dispute. Here in the instant case, it will bear repetition to state, that the disputes between the parties arose out of a contract and in relation to matters specified therein and, thus, were required to be decided and such decisions are not only final and binding on the parties, but they are conclusive which clearly spells out the finality of such decisions as also their binding nature17. A clause which is inserted in a contract agreement for the purpose of prevention of dispute will not be an arbitration agreement. Such a provision has been made in the agreement itself by conferring power upon the Engineer-in-Charge to take a decision thereupon in relation to the matters envisaged under clauses 31 and 32 of the said agreement. Clauses 31 and 32 of the said agreement provide for a decision of the Engineer-in-Charge in relation to the matters specified therein. The jurisdiction of the Engineer-in-Charge in relation to such matters are limited and they cannot be equated with an arbitration agreement. Despite such clauses meant for prevention of dispute arising out of a contract, significantly, clause 30 has been inserted in the contract agreement by the parties18. The very fact that clause 30 has been inserted by the parties despite the clauses for prevention of dispute is itself a pointer to the fact that the parties to the contract were ad idem that the dispute and differences arising out of or under the contract should be determined by a domestic tribunal chosen by them18. Whenever two enactments are overlapping each other on the same area then the courts should be cautious in interpreting those provisions. It should not exceed the limit provided by the statute. The extent of exclusion is, however, really a question of construction of each particular statute and general principles applicable are subordinate to the actual words used by legislatureReferring to Popular Construction (supra) and National Aluminimum Co. Ltd. v. Pressteel & Fabrications (P) Ltd. [(2004 (1) SCC 540] , it was held:25. Therefore, in the present context also it is very clear to us that there are no two opinions in the matter that the Arbitration and Conciliation Act, 1996 does not expressly exclude the applicability of Section 14 of the Limitation Act. The prohibitory provision has to be construed strictly. It is true that the Arbitration and Conciliation Act, 1996 intended to expedite commercial issues expeditiously. It is also clear in the Statement of Objects and Reasons that in order to recognise economic reforms the settlement of both domestic and international commercial disputes should be disposed of quickly so that the countrys economic progress be expedited. The Statement of Objects and Reasons also nowhere indicates that Section 14 of the Limitation Act shall be excluded. But on the contrary, intendment of the legislature is apparent in the present case as Section 43 of the Arbitration and Conciliation Act, 1996 applies the Limitation Act, 1963 as a whole. It is only by virtue of sub-section (2) of Section 29 of the Limitation Act that its operation is excluded to that extent of the area which is covered under the Arbitration and Conciliation Act, 1996. Our attention was also invited to the various decisions of this Court interpreting sub-section (2) of Section 29 of the Limitation Act with reference to other Acts like the Representation of the People Act or the provisions of the Criminal Procedure Code where separate period of limitation has been prescribed. We need not overburden the judgment with reference to those cases because it is very clear to us by virtue of sub-section (2) of Section 29 of the Limitation Act that the provisions of the Limitation Act shall stand excluded in the Act of 1996 to the extent of area which is covered by the Act of 1996. In the present case under Section 34 by virtue of sub-section (3) only the application for filing and setting aside the award a period has been prescribed as 3 months and delay can be condoned to the extent of 30 days. To this extent the applicability of Section 5 of the Limitation Act will stand excluded but there is no provision in the Act of 1996, which excludes operation of Section 14 of the Limitation Act. If two Acts can be read harmoniously without doing violation to the words used therein, then there is no prohibition in doing soThe ratio laid down in the said decision has since been reiterated in Union of India & Anr. v. Bhavna Engineering Co. [2007 (5) RAJ 458], stating:This Court in a recent judgment rendered in State of Goa Vs. Western Builders, (2006) 6 SCC 239 , held that Section 14 of the Limitation Act, 1963 is applicable in the Arbitration and Conciliation proceedings. Having gone through the various facts, we are of the view that the mistake committed by the appellant in approaching the Madhya Pradesh High Court and the Bombay High Court is bona fide. We, therefore, condone the delay. In the facts of this case and in the interest of justice, we, however, think it proper that the Section 34 Application pending before the Additional District Judge, Gwalior be transferred to the Bombay High Court. The application will be decided on merits expeditiously. Parties are at liberty to urge all the contentions before that Court