TARAPORE AND COMPANY Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) The appellant impugns the judgment of the High court of Madhya Pradesh by which it has upheld the order of the District Judge, Jabalpur, setting aside the award of the arbitrators in exercise of power conferred by Section 30 (a) of the Arbitration Act, 1940, hereinafter the Act.

(2.) The award to be set aside was one which had come to be passed following the order of the District Judge dated 6/05/1987 in Civil Suit No. 1-A/87 by which an earlier award had come to be remitted to the arbitrator for reconsideration keeping in view the legal arguments advanced. The first award owes its origin to the following question referred for determination by the two arbitrators named in the order of the District Judge passed on 12/04/1985:

(3.) The reference was made on an application made by the appellant under Section 20 (1 of the Act. That application was based on the terms of the agreement entered into by the appellant with the State of Madhya Pradesh relating to construction of Bargi Masonry Dam. One of the terms of the agreement as incorporated in clause 4.3.29 (2 provided for settlement of dispute arising out of contract by arbitration. The appellant's averment was that after the contract was entered into, minimum wages were raised by the State and the appellant was required to pay wages accordingly. The rates quoted by the appellant, however, related to wages as were prevalent at the time when the tender was invited. The revision of the wages upset all the calculations as extra amount had to be paid on this count. The Superintending Engineer rejected the claim of reimbursement on the ground of no escalation clause in the contract, whereupon the appellant called upon the Superintending Engineer to appoint an arbitrator on behalf of the State. This not having been done and the appellant having appointed one Brigadier D. R. Kathuria as arbitrator, it approached the court to direct the State to file the arbitration agreement and to make an order of reference. The non-applicant did not oppose; indeed it filed no reply. Not only this, it evennamed one Shri V. M. Chitale as arbitrator while filing the arbitration agreement.