TaxTMI 
TaxTMI 
2012 (1) TMI 431
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....Appellant-Madhya Pradesh Rural Road Development Authority and Anr., impugning the judgment of the High Court dated 8.9.2010 in this appeal, entered into a 'Works Contract' with the Respondent for construction and maintenance of Rural Road Package No. 1958, District Jhabua. 5. Clause 24 of the Contract contains the 'Dispute Redress Mechanism' and Clause 24.1 of the same provides as under: 24.1 If any dispute or difference of any kind what-so-ever shall arise in connection with or arising out of this Contract or the execution of work of maintenance of the Works thereunder, whether before its commencement or during the progress of Works or after the termination, abandonment or breach of the Contract, it shall, in the first instance, be referred for settlement to competent authority, described along with their powers in the Contract Data, above the rank of the Engineer. The competent authority shall, within a period of forty five days after being requested in writing by the Contractor to do so, convey his decision to the Contractor. Such decision in respect of every matter so referred shall, subject to review as hereinafter provided, be final and binding upo....
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....ture of the dispute between the parties in the instant case is covered by the definition under Section 2(d) read with Section 2(1). As such under Section 7 such a dispute has to be statutorily referred to Tribunal set up under the M.P. Act. 10. The case of the Appellant is that in view of several breaches in Works Contract by the Respondent, the Appellant terminated the Works Contract and encashed the bank guarantee furnished by the Respondent on 25.6.2008. 11. Thereafter, on 29.8.2008, the Respondent submitted a representation to the Appellant against the encashment of bank guarantee. Prior to that on 5.8.2008, Respondent filed a Writ Petition No. 4491/2008 challenging the encashment of bank guarantee and the writ petition was disposed of with a direction that the bank guarantee may not be encashed till the disposal of the representation. Thereafter, on 4.6.2009 the representation of the Respondent was rejected after giving the Appellant a personal hearing. 12. In the pending dispute, the Respondent submitted additional claim on 24.2.2010 and requested the Appellant to appoint an Arbitrator for adjudicating the dispute between the parties. On 24.4.2010, the Appellant repl....
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....t Anr. Division Bench of this Court in a case in which the Presiding Judge was common with the Bench which rendered the Va Tech (supra) ruling almost in a situation identical with Va Tech issued notice and stayed the arbitration proceedings. 20. In Anr. case a Division Bench of this Court presided over by the same learned Judge who gave the Va Tech ruling passed the following order: This petition has been filed against the judgment and order dated 11th March, 2011 passed by the High Court of Madhya Pradesh at Gwalior Bench in Arbitration Case No. 4 of 2010. Learned counsel for the Petitioner has relied on a decision of this Court in Civil Appeal No. 3746 of 2005 decided on 14th January, 2010. We are of the opinion that the aforesaid decision is distinguishable because in the present case the arbitration clause itself mentions that the arbitration will be by the Madhya Pradesh Arbitration Tribunal. Hence, in this case arbitration has to be done by the Tribunal. The Special leave petition is dismissed. 21. Relying on these two subsequent orders in the instant case and in Ravikant Bansal v. M.P. Rural Road Development Authority and Anr. - SLP(C) No. 18....
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....ng title that the M.P. Act provides for the establishment of a tribunal to arbitrate in disputes to which the State Government or a public undertaking (wholly or substantially owned or controlled by the State Government), is a party, and for matters incidental thereto or connected therewith. The structure of the tribunal under the M.P. Act is also different from the structure of a tribunal under the A.C. Act 1996. It is clear from Section 4 of the M.P. Act that the composition of tribunal and their qualification is statutorily provided which is set out below: 4. Chairman and Members of Tribunal and their qualifications.-(1) Subject to sub- section (2) and (3), the State Government may appoint a chairman and as many members to the Tribunal as it may consider necessary. (1-a) The State Government may, in consultation with the Chairman, designate one of the Judicial Members as the Vice-Chairman who in the event of occurrence of any vacancy in the office of the Chairman by reason of his death, resignation, leave or otherwise, shall during such vacancy, discharge the functions of the Chairman. (2) No person shall be appointed as Chairman of the Tribunal, unles....
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....urt while referring to the M.P. Act and dealing with the nature of the arbitral tribunal constituted under the said Act held that the said Act is a special Act and provides for compulsory arbitration. It provides for a reference and the tribunal has been given the power of rejecting the reference at the threshold. It also held that the M.P. Act provides for a special limitation and fixes a time limit for passing an award. It has also been held that Section 14 of the M.P. Act provides that the award can be challenged under special circumstances and Section 17 provides for finality of the award, notwithstanding anything to the contrary contained in any other law relating to arbitration. All these features of the Act were pointed by this Court in Anshuman Shukla (supra) to show that there is inconsistency between the provisions of A.C. Act 1996 and those of the M.P. Act. In para 28 of the judgment, this Court while referring to the provisions of M.P. Act held: The provisions of the Act referred to hereinbefore clearly postulate that the State of Madhya Pradesh has created a separate forum for the purpose of determination of disputes arising inter alia out of the works contrac....
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.... bound to follow a decision of its own given when that provision was not present to its mind. Cases of this description are examples of decisions given per incuriam. (Page 729) 34. The decision in Young (supra) was subsequently approved by the House of Lords in Young v. Bristol Aeroplane Company, Ltd. reported in 1946 AC 163 at page 169 of the report. 35. Lord Viscount Simon in the House of Lords expressed His Lordship's agreement with the views expressed by the Lord Greene, the Master of Rolls in the Court of Appeal on the principle of per incuriam (see the speech of Lord Viscount Simon at page 169 of the report). 36. Those principles have been followed by the Constitution Bench of this Court in The Bengal Immunity Company Ltd. v. The State of Bihar and Ors. reported in 1955 (2) SCR 603 (See the discussion in pages 622 and 623 of the report). 37. The same principle has been reiterated by Lord Evershed, Master of Rolls, in Morelle Ld. v. Wakeling and Anr. (1955) 2 QB 379 at page 406. The principle has been stated as followed: ...As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ig....
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....ands impliedly repealed. 43. The said argument cannot be accepted. The provision for repeal under Section 85 of A.C. Act 1996 does not show that there is any express repeal of the M.P. Act. Apart from that the provision of Section 2(4) of A.C. Act clearly militates against the aforesaid submissions. 44. The argument of repugnancy is also not tenable. Entry 13 of the Concurrent List in the VIIth Schedule of the Constitution runs as follows: 13. Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration. 45. In view of the aforesaid Entry, the State Government is competent to enact laws in relation to arbitration. The M.P. Act of 1983 was made when the previous Arbitration Act of 1940 was in the field. That Act of 1940 was a Central Law. Both the Acts operated in view of Section 46 of 1940 Act. 46. The M.P. Act 1983 was reserved for the assent of the President and admittedly received the same on 17.10.1983 which was published in the Madhya Pradesh Gazette Extraordinary dated 12.10.1983. Therefore, the requirement of Article 254(2) of the Constitution was satisfied. Thus, M.P.....
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....dent by the High Court which appointed an arbitrator under the Arbitration and Conciliation Act, 1996 for adjudication of the dispute in regard to cancellation of the works contract between the contesting parties therein. 52. In this context, Section 7 of the Madhya Pradesh Madhyasthan Adhikaran Adhiniyam, 1983 (hereinafter referred to as the 'M.P. Arbitration Tribunal Act, 1983') needs to be reiterated which itself lays down as follows: Reference to Tribunal" - (1) either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal. 53. On perusal of the aforesaid provision enumerated under Section 7, it is explicitly clear that the matter in the event of existence of a dispute between the parties in certain categories of cases where the State of Madhya Pradesh is a contracting party, the dispute shall be referred in writing to the tribunal irrespective of the fact whether the agreement contains an arbitration clause or not. From this provision it is clearly apparent that reference of any dispute to the tribunal postulates an existence of a works contract an....
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.... factory, workshop, power house, transformers or such other works of the State Government or Public Undertaking including an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works, the same would fall within the ambit of the definition of 'works contract' and hence all disputes pertaining or arising out of execution of the works contract will have to be referred to the M.P. State Arbitration Tribunal as envisaged under Section 7 of the Act of 1983. Hence, in addition to the reasons assigned in the judgment and order of learned Brother Justice Ganguly, disputes arising out of execution of works contract has to be referred to the M.P. State Arbitration Tribunal and not under the Arbitration and Conciliation Act, 1996. 55. But in so far as the instant matter is concerned, the facts disclose that the Appellant M.P. Rural Road Development Authority cancelled the works contract itself which was executed in favour of the Respondent. In that event, the works contract between the parties was not in existence at all which would operate as a statutory mandate for reference of the dispute to the M.P. State Arbitration T....
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....repudiation of 'works contract'. In order to clarify the point further, what needs to be emphasized is that if the nature of dispute referred to the Arbitrator like the instant matter, related to a dispute pertaining to construction, repair, maintenance of any building super-structure, dam or for the reasons stated within the definition of 'works contract', the matter may be referred to the M.P. Tribunal in view of the fact that if there is a dispute in relation to execution of a works contract, then irrespective of the fact whether the agreement contains an arbitration clause or not, the dispute is required to be referred to the M.P. State Arbitration Tribunal for adjudication. But when the contract itself has been terminated, cancelled or repudiated as it has happened in the instant case, then the nature of dispute does not fall within the definition of 'works contract' for the sole reason that it does not include any dispute pertaining to cancellation of a works contract implying that when the works contract itself is not in existence by virtue of its cancellation, the dispute cannot be referred to the M.P. State Arbitration Tribunal but may have to be de....