STATE OF GUJARAT Vs. SHAH ENTERPRISE

JUDGEMENT

(1.) In this petition filed under Article 226/227 of the Constitution of India, the petitioners have prayed to quash and set aside the award dated 21.5.2000 made by the Sole Arbitrator under the provisions of the Arbitration and Conciliation Act, 1996 ("the Arbitration Act" for short) as well as the order dated 21.10.2005 passed by the learned Presiding Officer, FTC No.9, Bharuch in Arbitration Execution Petition No. 359/2000 ordering the petitioners to deposit Rs.1,84,35,046.00 with interest at the rate of 16% p.a. on the principal amount.

(2.) I have heard the learned advocates for the parties. Learned A.G.P. Mr. P.P. Banaji appearing for the petitioners submitted that the learned Sole Arbitrator appointed under the provisions of the Arbitration Act lacked jurisdiction to decide the dispute arose between the parties to the ''works contract'' as the provisions of the Arbitration Act ceased to apply to such dispute on coming into force of the Gujarat Public 'works contracts Disputes Arbitration Tribunal Act, 1992 ("the Tribunal Act" for short). Mr. Banaji submitted that section 21 of the Tribunal Act since provides for transfer of all proceedings in connection with the ''works contract'' to the Tribunal, continuous of arbitration proceedings and making of award under the Arbitration Act was without jurisdiction. Mr. Banaji submitted that since the contract given to the respondent for the work of providing and laying under-ground pipelines was the ''works contract'' within the meaning of section 2(1)(k) of the Tribunal Act, and any dispute arising out of 'works contract' could be decided only by the Tribunal under the Tribunal Act. The impugned award made by the Sole Arbitrator under the Arbitration Act is thus without jurisdiction and cannot be executed like a decree against the petitioners. Mr. Banaji submitted that the laying of pipelines is part of the canal work and since the works relating to the construction or maintenance of canal is included within the definition of ''works contract'', the contract given to the respondent for the work of laying the pipelines would thus fall within the ''works contract'' and, therefore, only the Tribunal under the Tribunal Act has jurisdiction to decide the dispute arising out of such ''works contract''. Mr. Banaji has relied on the definition of canal given in Section 3 of the Bombay Irrigation Act, 1879 so as to point out that the canal includes the pipes with other things mentioned therein. Mr. Banaji submitted that the sole arbitrator as also the executing Court have failed to properly construe the definition of ''works contract'' in the Tribunal Act and thereby have committed serious error of jurisdiction in holding that the contract of laying the pipelines given to the respondent was not the ''works contract''. Mr. Banaji submitted that since the award and the order impugned are without jurisdiction and cannot be implemented against the petitioners, it was not required of the petitioners to take recourse to section 34 or 37 of the Arbitration Act against the award made by the learned Sole Arbitrator under the Arbitration Act and the petitioners are entitled to invoke jurisdiction of this Court under Article 226/227 of the Constitution of India, especially when it was open to the petitioners to oppose the execution on the ground of lack of jurisdiction with the learned Sole Arbitrator in the present case. Mr. Banaji thus urged to allow the petition and to quash and set aside the impugned award and the order of the executing Court. Mr. Banaji has relied on following judgments:-

(3.) As against the above arguments, learned Advocate Mr. B.S. Patel appearing with learned Advocate Mr. Chirag B. Patel for the respondent submitted that the petition under Article 226/227 of the Constitution of India to challenge the award made by the Sole Arbitrator and the order made by the Court in Arbitration Execution Petition for execution of the award of such private arbitrator is not maintainable. Mr. Patel submitted that even by virtue of the specific statutory remedy provided under Section 34 of the Arbitration Act to challenge the award made by the sole arbitrator under the Arbitration Act, the petitioners are not entitled to invoke the jurisdiction of this Court under Article 226/227 of the Constitution of India. Mr. Patel submitted that the petitioners had filed Regular Civil Suit No.216 of 2000 for the relief that the sole arbitrator could not decide the disputes under the Arbitration Act as the contract given to the respondent was ''works contract''. In the said suit, at the instance of the respondent, the plaint was rejected against which no further proceedings are taken by the petitioners. The petitioners are thus estopped from challenging the award on the ground that the contract given to the respondent was "works contract" and, therefore, the learned sole arbitrator lacks the jurisdiction under the Arbitration Act.