State Of Orissa & Another vs Dandasi Sahoo

Biswanath Rath, J

By filing the Arbitration Appeal, State as appellant has assailed the order dated 16.2.2004 passed in Misc. Case No.503/2001 and the decree dated

24.2.2004 in O.S. No.635/1998 and further to set aside the award dated 19.8.1998 passed in Arbitration Case No.56C of 1984.

Short background involving the case is that involving contract agreement no.928 F-2 of 1981-82 on 27.11.1981, the Contractor approached the Civil

Judge (Sr.Divn.), Bhubaneswar for appointment of Arbitrator and to refer the dispute for adjudication and decision thereon. On being satisfied, the

Civil Judge (Sr.Divn.), Bhubaneswar referred the matter at the instance of the Contractor for adjudication of the dispute between the parties by the

Arbitration Tribunal. The Tribunal entertaining the reference, vide ARBA No.56C/84 and upon considering the counter claim at the instance of the

State filed before the Arbitration Tribunal during pendency of the aforesaid arbitration proceeding, passed the award making the contractor entitling

Rs.3,89,356/- along with other directions contained therein at the same time objecting the counter claim for there being no reference of the same by

competent court of law. The Contractor, vide O.S.No.635/98 approached the Civil Judge (Sr.Divn.), Bhubaneswar to make the award as rule of the

Court. At the same time appearing therein present appellants being the miscellaneous petitioners therein filed application under Section 30 read with

Section 33 of the Arbitration Act, 1940 for setting aside of the award involved therein. The rule of the court proceeding as well as the application for

setting aside the award being considered, the Civil Judge (Sr.Divn.), Bhubaneswar by order dated 16.2.2004 while refusing to entertain Misc. Case

No.503/2001 intended for setting aside the award by further order made the decree involving the award.

Challenging the award as well as the orders indicated herein above and the decree as well, Sri Sahoo, learned Additional Standing Counsel for the

appellants contended that the Contractor in fact did not execute the work in time even and even his attempt for extending the time also failed. The

Contractor even did not respond to the call of the State for measurement of the work, which he has already undertaken. On the premises that there

involves callous attitude of the Contractor, the State had to entrust the work to another agency and the work was completed incurring loss of

Rs.24,35,954/-, which amount was recoverable from the Contractor. It is in the above background of the facts, learned Additional Standing Counsel

urged that there is no consideration of the material aspect by the Tribunal. Further the Civil Court also failed in appreciating the grounds raised therein.

Sri Sahoo, learned Additional Standing Counsel taking this Court to the grounds mentioned in the Appeal contended that the State has good grounds

requiring this Court to interfere with both the award as well as the order refusing to entertain the application under Sections 30 & 33 of the Arbitration

Act, 1940, the award passed by the Arbitration Tribunal and the decree made involving the award.

Learned counsel appearing for the contesting opposite party on the other hand, taking this Court to the observations and findings of the Civil Court

involving the award contended that there was right consideration of the issue involved therein by both the Arbitration Tribunal as well as the Civil

Court.

Further on the question of entertainability of the counter claim at the instance of the State, it is also contended by the learned counsel for the opposite

party that for limited scope with the Arbitration Tribunal to adjudicate only the matter involving the reference, there was no scope for entertaining the

counter claim at the instance of the appellants.

It is at this stage, considering the submissions made and the counter claim by Sri Sahoo, learned Additional Standing Counsel appearing for the

appellants, this Court takes here note of provisions at Sections-21, 22 & 23 of the Arbitration Act, 1940, which read as follows :-

“21. Parties to suit may apply for order of reference-Where in any suit all the parties interested agree that any matter in difference between them in the suit shall be

referred to arbitration, they may at any time before judgment is pronounced apply in writing to the Court for an order of reference.

Appointment of arbitrator- The arbitrator shall be appointed in such manner as may be agreed upon between the parties.

Order of reference-(1) The Court shall, by order, refer to the arbitrator the matter in difference which he is required to determine, and shall in the order specify such

time as it thinks reasonable for the making of the award.

(2) Where a matter is referred to arbitration, the Court shall not, save in the manner and to the extent provided in this Act, deal with such matter in the suit.â€​

The provisions referred to above make it clear that on being asked, a reference for arbitration purpose has to be made by the Court to the Arbitration

Tribunal. The case at hand establishes the award was passed undertaking a reference of the Court involving O.S.No.154/83-I.

Considering the submissions of both the parties, taking into account the provisions of law indicated herein above and after going through the finding

of both the Tribunal as well as the Civil Judge, particularly on the non-consideration of the counter claim of the State, this Court finds, the Arbitration

Tribunal exercised its power and decided a reference being made by the Civil Court in exercise of provisions contained in the old Act, the Arbitration

Act, 1940, as indicated herein above. For the provision for making reference seeking an arbitral award through the Arbitration Tribunal, this Court

observes, the Arbitration Tribunal had no scope to undertake an exercise involving a counter claim for the first time introduced in Tribunal. Further

looking to the discussion of the Civil Judge on the question of non-entertainability of the counter claim, this Court finds, the Civil Judge not only

considered the submission of both sides on the issue involved but taking into several decisions of the Hon’ble apex Court as well as this Court, has

arrived at his conclusion holding that there was no scope for consideration of the counter claim by the Tribunal for there being no reference of the

matter by the Court competent.

Now coming to other aspect involving the challenge to the award, the order and the decree involving the award, this Court considering the rival

contentions of the parties and entering into the discussions as well as the findings by both the Arbitration Tribunal and the Civil Court, observes, all the

grounds raised by the parties being considered by the Arbitration Tribunal, the Tribunal depending on the materials available on record and the plea of

the parties has given a finding based on reason. Further the Civil Court also having considered the submission of the respective parties has given its

finding with reasons. For the concurrent finding of facts by both the Tribunal and the Court and for there being no involvement of any act contrary to

public policy or legal position, this Court finds no scope to interfere with the award. Consequently, this Court has also no scope to interfere with the

decree involving the award.

Thus, the Arbitration Appeal fails and thus stands dismissed. Parties to bear their own cost.

…………………………