GOVT OF A P Vs. UNITED CONSTRUCTION COMPANY

JUDGEMENT

(1.) [Judgment of the Bench delivered by Honourable Sri Justice M.Jagannadha Rao] This appeal has been preferred by the State against the order of the First Adduional Judge City Civil Court, Hyderabad in O.P. No. 387 of 1988 dated 26-6-1989, by which the said O P. filed by the respondent-company under Section 8 of the ARBITRATION ACT, 1940, 1940 was allowed.

(2.) THERE was an agreement entered into between the respondent and the appellants in respect of certain works. That agreement contained an arbitration clause also The respondent-company completed the work on 21-7-1987 and raised certain disputes before the Government for payment of additional amounts. The said request was rejected. THEREafter the respondent wrote a letter to the abovesaid court requesting that the court may act as an arbitrator. The absvesaid request was based upon a clause in the agreement Dt: 10-1-1984 by which the parties to the agreement had, between themselves, agreed that the abovesaid court should act as their arbitrator in the event of any dispute arising. On a consideration of the abovesaid letter addressed by the respondent-company to the court, the said court returned the said letttr on 1-8-1988 stating that the court was not in a position to act as an arbitrator as it had never agreed to be an arbitrator. Subsequently, the respondent- Cuinpany, invoking Section 8 of the Arbitration Act, issued a notice on 19-8-1988 to the Government requesting them to agree for filling up the vacancy caused by the refusal of the court to act as an arbitiator. After waiting for some time, the respondent filed an application under Section 8 of the ARBITRATION ACT, 1940 which was registered as OP No. 387 of 1988. The OP was allowed following the judgment of a Division Bench of this Court in Government of Andhra Pradesh and Two Others Vs Pulipati Narapa Naidu (1) AAO No. 1028 of 1985 dated 20-1-1988. In the abovesaid judgment, the Division Bench consisting of Amareswari and Bhaskara Rao, JJ referred to a similar arbitration clause entered into between a contractor and the Government. That clause which is similar to the Clause in the case before us states that if the amount claimed is more that Rs. 50,000/-, the court of competent jurisdiction would act as an arbitrator. That'clause, was to be read with G.O. Ms. No 430 dated 24-10-1983. In that case also the learned Subordinate Judge, Gudur had refused to act as an arbitrator stating that he had no time to arbitrate on the question. THEREupon, the contractor in that case filed an application under Section 8 of the Arbitration -Act for appointment of one of the three persons mentioned in his petition as the sole arbitrator. This application was opposed by the State contending that inasmuch as the claim was above Rs. 50,000/-, the same was not subject to arbitration and the only remedy was to file a suit in the civil court. The said contention of the State was rejected by the learned Subordinate Judge, Gudur holding that GO Ms No 430 dated 24-10 1983 and the clause in the agreement did not complate a civil suit being filed for claims above Rs. 50,000/- and that the claims should be decided in accordance with the provisions of the ARBITRATION ACT, 1940 The Subordinate Judge, Gudur, therefore, had appointed a panel of three arbitrators. On appeal preferred by the State, the Division Bench felt that it was not necessary to go into the meaning of the various clauses in GO Ms No 430 dated 24-10-83 inasumch as the Government had issued another GO namely GO Ms No 160 dated 1-6-1987. By this latter GO the Government stated that all claims above Rs. 50,000/- shall be decided by the court of competent jurisdiction by way of a civil suit. In other words, while the earlier GO treated the court of competent jurisdiction as an arbitrator, the latter G.O. stated that if the claims ate above Rs. 50,000/- the parties should have the dispute adjudicated by the civil court itself on the civil side rather than under the ARBITRATION ACT, 1940 The Division Bench pointed out that in respect of matters which have arisen prior to 1-6-1987, they were unable to say that the view taken by the trial court was wrong The Division Bench felt that the Subordinate Judge, Gudur was not erroneous in the view he had taken. In as much as the new GO had come into being and a panel of arbitrators had already been appointed in that case, the Division Bench thought that there was no need to interfere in the matter.

(3.) WE have heard the learned Government Pleader for the appellant and Sri Ramamijam for the respondent.