UNION OF INDIA Vs. O NARAYANA

JUDGEMENT

(1.) THIS appeal under section 39 of the Arbitration Act 1940, is filed against the judgment and decree dated 31. 8. 1999 passed in OS No. 17 of 1998 by the learned Senior Civil Judge, Penukonda, ananthapur District.

(2.) THE facts giving rise to filing of this appeal briefly stated as under : The appellants/railways entered into a contract with the respondent/contractor for collection and supply of 50 mm size granite stone ballast from Kms 116/6 to 122/6 in PW1/ hindupur Section and the terms of the contract were reduced into writing in the form of agreement between the parties on 9. 11. 1989. As per the agreement and the general conditions of the contract, all the disputes and the differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the works or after their completion and whether before or after the determination of the contract, shall be referred by the contractor to the Railway and the Railway shall within a reasonable time notify its decision thereon in writing. Further the agreement provides that in the event of any dispute or difference between the parties as to the construction or operation of the contract, or the rights and liabilities of the parties on any matter or difference of any kind or as to withholding by the Railway of any certificate to which the contractor claims to be entitled or if the Railway fails to make a decision within a reasonable time, then and in any such case, except referred in Clause 62 of the conditions, the contractor after 90 days of his claim may demand in writing that the dispute or difference be referred to arbitration to a sole arbitrator who shall be the General manager or a person nominated by him if the claim does not exceed Rs. 3,00,000/-and the issues involved are not of a complicated nature and to two arbitrators who shall be Gazetted Railway Officers of equal status in case of the claim exceeds rs. 3,00,000/ -.

(3.) IT is stated that the respondent/ contractor made arrangements for completing the supply as agreed, in five months. However, it is stated, the appellants/railways changed the location for dumping the ballast and there was delay on the part of the railways in fixing up the location for the said purpose. In the meanwhile rate of ballast got increased. In that view of the matter, certain disputes and differences arose between the parties as to entitlement of the contractor to the enhanced cost of 75% per 10 cubic meters. When the contractor requested the appellants to re-enter into fresh agreement as there was loss by way of transportation, labour and time, the appellants/ railways gave notice dated 27. 4. 1991 terminating the agreement. As such, the contractor requested the appellants/railways to refer the dispute for arbitration as per the clause contained in the contract agreement. But, the appellants/railways did not refer the matter. Hence, the contractor filed suit in OS No. 19 of 1994 pointing out that he is entitled to a sum of Rs. 7,18,560/- from the appellants/railways and praying to refer the dispute to the arbitrator appointed by the court. In spite of service of suit summons and having appeared through advocate, the appellants/railways did not file written statements for more than two years and therefore, the Court below set the appellants/ railways ex parte. The Court below by order dated 11. 3. 1997 directed the appellants/ railways to file general conditions of contract agreement dated 9. 11. 1989. Despite the same, the appellants/railways did not file the same. Hence, the Court below passed order dated 3. 7. 1997 appointing one Sri S. Jayaram Reddy, a retired District Judge, as sole arbitrator. The arbitrator, who enquired into the matter, gave notices to the parties. In the said arbitration proceedings, the appellants/railways appeared before the arbitrator, led evidence and put-forth their arguments. The arbitrator, after hearing the contractor and appellants/ Railways, passed the award and communicated the same to the parties. Thereafter, the contractor filed ia Nos. 349 and 350 of 1998 in OS No. 19 of 1994, seeking to pass a decree for the amount for which he is entitled to, and, to record evidence in OS No. 17 of 1998, which was filed under Section 17 of the Arbitration act, 1940 seeking to direct the arbitrator to file award dated 22. 10. 1997 into Court and to make the same as a rule of the Court, and treat the same as evidence in the suit in os No. 19. of 1994. The Court below dismissed both the said applications as unnecessary. The contractor also filed IA no. 307 of 1998 in OS No. 17 of 1998 seeking to pass a decree making the award passed by the arbitrator as a rule of the court as much as the appellants/ Railways did not file written statement or application to set aside the same within the time prescribed by law. The said application was also dismissed by the Court below in view of the fact that both the suits stood finally disposed of.