RAJAM ENGINEERING CONTRACTORS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE original petitions filed under Sec. 11 (4) of the arbitration and Conciliation Act, 1996 (hereinafter referred to as'the Act')raise a common question on the interpretation of a certain Government Order issued by the State of Tamil Nadu, the terms of which supposedly constitute an arbitration agreement. There is, however, apparent conflict between the decisions rendered by the single Judges of this Court on the interpretation of the said Government Order.

(2.) WE take the facts in O. P. No. 58 of 2003 to understand the issue involved in these petitions. The petitioner was awarded a contract for the work of formation of Inner Ring Road in Hosur including construction of minor bridges and culverts by the respondents. It is the case of the petitioner that the work could not be completed due to the indifferent attitude of the respondents, and the petitioner is no way responsible for the delay. Further, the amount due to the petitioner was not paid by the respondents for the reasons best known to them. All these factors compelled the petitioner to abandon the work halfway and request the respondents to refer the matter for arbitration as contemplated under special conditions for arbitration. The request of the petitioner for reference to the arbitration as refused by the 3rd respondent vide his letter dated 3. 5. 2002 stating that as per G. O. Ms. No. 1545, dated 26. 7. 1990 the arbitrator, is empowered to settle the claims up to Rs. 2 lakhs only, and since; the claim of the petitioner was for Rs. 2,69,13,200, it could not be referred to arbitration. The petitioner vide Advocate's notice dated 29. 11. 2002 requested the respondents to appoint an arbitrator within a period of 30 days to resolve the dispute between the parties, but there was no response from the respondents, and therefore, the petitioner has preferred the present petit‑ion seeking appointment of an arbitrator under Sec. 11 (4) of the act.

(3.) LEARNED counsel appearing for the petitioners strenuously submitted that the Governmental Order clearly suggests that in cases where the claim is above the value of Rs. 2 lakhs, it has to be necessarily referred to the Court under Sec. 20 of the Arbitration Act, 1940 in order to enable the Court to nominate an arbitrator to enter into the reference in respect of the dispute between the parties and the same does not contemplate that civil suit alone has to be filed in cases where the claim is above Rs. 2 lakhs. It is submitted that Clause (v) read with Clauses (ii) and (iii) of the said governmental Order, should be interpreted to mean that the claims upto the value of Rs. 2 lakhs can only be referred to departmental arbitration and claims above the value of Rs. 2 lakhs have to be referred to the arbitrators nominated by the Court. It is also submitted that since the issue has already been determined against the respondents by two learned single judges of this Court viz. , C. V. Govardhan, J. and A. Ramamurthi, J. , an issue estoppel would apply in subsequent proceedings, and respondents are estopped from denying the existence of an arbitration agreement. It is also urged that pursuant to the orders passed by this Court, several matters involving‑the value of more than Rs. 2 lakhs were referred to arbitration and if at this juncture a contrary opinion is expressed, it will open up a series of conflicts and consequent litigation, thereby disturbing the settled position of law in the State. On this score a heavy reliance was placed on the doctrine of stare decisis.