C T CHACKO Vs. KERALA STATE ELECTRICITY BOARD

JUDGEMENT

(1.) PLAINTIFF in a suit under Section 20 of the Arbitration Act is the appellant. He was awarded a contract by the Kerala State Electricity Board (hereinafter mentioned as the Board) for the work of "S.A.S.- Construction of a Masonary Dam across Kullar" and the contract for the above work Ext. B11 dated 13-1-1978 was entered into. It was 7% above the estimate rate. Though he made all arrangements for doing the work with all enthusiasm and sincerity, he was not able to do it on account of failure of the concerned authorities of the Board to duly perform their obligation under the contract. The plaintiff has alleged in detail the defaults committed by the Board which prevented him from completing the work in time (the details of which are not very relevant to resolve the controversy in this case). In spite of all this, the plaintiff completed a major portion of foundation excavation. In the meanwhile, the Board terminated the contract as per Ext. A3 dated 23-10-1980 at the risk and cost of the plaintiff. This is illegal, improper and unjustifiable and he is entitled to be relieved of and exonerated from executing the balance work. There are many claims pending settlement with the defendant. They were submitted before the authorities, but there was no response and disputes and differences have arisen. The plaintiff has enumerated the various disputes between the parties in paragraph 11 of the plaint, including the validity and legality of Ext. A3 order terminating the contract at his risk and cost. The plaintiff further alleged that all disputes and differences are to be resolved by arbitration as provided in the agreement. Terms of references have not been agreed to and so the plaintiff filed the suit under See. 20 to order the agreement to be filed in Court and to refer the disputes to an arbitrator to be appointed by Court.

(2.) DEFENDANT filed a preliminary objection dated 23-6-1981, contending that by virtue of clause 57(f) of Part III of Ext. B11 agreement, there shall not be any arbitration of any dispute or claim, once the work is completed or contract is terminated and in case work is stopped unilaterally or abandoned by the contractor. According to the Board the plaintiff stopped the work on 16-5-1980 unilaterally and as the plaintiff did not resume the work in spite of several notices and requests, the Board was forced to terminate the contract. According to them, the Arbitration agreement will cease to have effect once the contract is terminated or abandoned by the contractor and that having happened in this case, the plaintiff is not entitled to an order under Sec.20 of the Arbitration Act. The Board filed a written statement on 26-8-1981 reiterating the above objection and also putting forth their defence on the merits of the plaintiff's claim.

(3.) BEFORE this Court counsel for the appellant, apart from challenging the above findings, raised a further contention that the question as to whether a reference to arbitrator is barred by virtue of clause 57(f) of the agreement is also a matter to be determined by arbitration and not by the Court in a proceeding under Sec.20. In other words, according to counsel, when the legality and propriety of the tetmination order is challenged by the plaintiff or the stoppage of work by him was due to reasons beyond his control and due to the default of the Board in performing their obligation and not a unilateral abandonment, it is a matter to be decided by the arbitrator and not by the Court. It is his further contention that the arbitrator has jurisdiction to decide his own jurisdiction under the arbitration agreement. It will be advantageous to read the relevant provisions of the arbitration clause in Exhibit B11 agreement. Clause 57 of Part III of Ext. B11 provides for arbitration in case of disputes or conflicts if any arising regarding the application of the contract. Clause (a) provides that the contractor shall move the Chief Engineer first in respect of any matter and clause (b) provides that if he is dissatisfied with any decision he shall give notice requiring him to refer the matter in dispute to arbitration and the time limit for the above is also provided therein. Clause (c) provides that the arbitration shall be by two members, one selected by the Board and the other by the contractor. Clause (d) deals with the power of arbitrator to award costs. Clauses (e) and (f) are to the following effect:-