Special tribunal for works-contract disputes prevails over contractual arbitration when no proceeding was pending at commencement.

A special statute creating a tribunal for works-contract disputes with the State was treated as constitutionally valid because the classification was based on a distinct class of claims and the statutory scheme supplied safeguards against arbitrariness. The law was also treated as a valid arbitration-related enactment in the statutory sense. Arbitration is taken to commence when reference is made to an arbitrator, so only proceedings actually pending on the Act's commencement date are saved; a mere demand for appointment is insufficient. Where no arbitration was pending, prior contractual arbitration clauses cannot displace the statute-created forum, and the special Act prevails over inconsistent contractual or general arbitration arrangements.

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Issues: (i) Whether the M.P. Madhyastham Adhikaran Adhiniyam, 1983 was unconstitutional or discriminatory under Article 14, and whether it could validly operate as a law relating to arbitration under Entry 13 of List III; (ii) whether arbitration proceedings in the two matters were pending on the date the Act came into force so as to be saved by Section 20(2); (iii) whether the prior contractual arbitration clauses continued to govern the disputes notwithstanding the Act.

Issue (i): Whether the M.P. Madhyastham Adhikaran Adhiniyam, 1983 was unconstitutional or discriminatory under Article 14, and whether it could validly operate as a law relating to arbitration under Entry 13 of List III.

Analysis: The Act creates a special forum for disputes arising from works contracts with the State or its public undertakings and applies only to claims of the prescribed value. That classification was held to be based on an intelligible differentia, because works contracts form a distinct class and the object of the legislation is speedy and impartial adjudication by a statutory tribunal. The Act was also held to be a law relating to arbitration in the statutory sense, since arbitration can exist by force of a statute even without an agreement between the parties. The tribunal structure, tenure, qualifications, procedure, and revisional supervision were treated as sufficient safeguards against arbitrariness.

Conclusion: The challenge under Article 14 failed, and the Act was held to be constitutionally valid and within the legislative field relating to arbitration.

Issue (ii): Whether arbitration proceedings in the two matters were pending on the date the Act came into force so as to be saved by Section 20(2).

Analysis: The Court held that arbitration commences when the reference is made to the arbitrator, not merely when a party demands appointment. On the facts, the references to the arbitrators were made after the Act had already come into force. Since only proceedings actually pending at the commencement of the Act were saved, Section 20(2) did not protect these disputes. The earlier notices and contractual machinery did not amount to pending arbitration proceedings for this purpose.

Conclusion: The disputes were not saved by Section 20(2), and the matters fell within the Tribunal's jurisdiction.

Issue (iii): Whether the prior contractual arbitration clauses continued to govern the disputes notwithstanding the Act.

Analysis: The Act was treated as a special statutory enactment governing disputes arising from works contracts and, to the extent of inconsistency, it prevailed over the Arbitration Act and the contractual arrangement. As no arbitration was pending when the Act commenced, the contractual arbitration clause could not override the statutory mandate requiring reference to the Tribunal. The Act was also held to operate prospectively, but the existing contractual remedy ceased to be effective for disputes not already pending in arbitration at the relevant date.

Conclusion: The prior arbitration clauses did not survive to displace the statutory forum in these cases.

Final Conclusion: The statutory tribunal alone had jurisdiction over the disputes, the constitutional challenge failed, and the petitions were dismissed with costs.

Ratio Decidendi: A special statute creating a tribunal for a distinct class of disputes is valid if the classification is reasonable and the statute can provide for statutory arbitration; only arbitration proceedings actually pending at the commencement of the statute are saved, while contractual arbitration clauses yield to the statutory forum where no pending reference exists.

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