SHANKARANARAYANA CONSTRUCTION COMPANY Vs. STATE OF M P

JUDGEMENT

(1.) THE petitioner entered into a works contract with the respondents for construction of a central spillway of Rajeev Sagar Tank Project in Guna district of Madhya Pradesh on 19-2-1999. Clause 4. 3. 29. 2 of the Conditions of Contract provides that any claim valued at Rs. 50,000/- or more will be considered by the superintending Engineer (for short 'the S. E. ')of the Circle and any party dissatisfied with the final decision of the S. E. may refer the dispute to the Tribunal constituted under the Madhya Pradesh Madhyastham adhikaran Adhiniyam, 1983 (for short 'the 1983 Adhiniyam' ). The petitioner made a claim of Rs. 21. 81 crores against the State of Madhya Pradesh in its letter dated 7-1-2002. The S. E. rejected the claim and this was communicated to the petitioner by the executive Engineer by letter dated 6-6-2002. Instead of referring the dispute to the Tribunal constituted under the 1983 adhiniyam, the petitioner filed the M. C. C. under Section 11 (6) of the Arbitration and conciliation Act, 1996 (fpr short 'the 1996 act') contending that the 1983 Adhiniyam being repugnant to the provisions of the Act of 1996 is void by operation of Art. 254 of the Constitution and making a prayer to the chief Justice of the High Court under Section 11 (6)of the Act of 1996 to appoint an arbitral tribunal comprising of three members to decide the disputes between the petitioner and the respondents arising under the works contract. The petitioner also filed the writ petition under Article 226 of the constitution making a prayer to the Court to declare that the provisions of the 1983 adhiniyam were impliedly repealed by the 1996 Act and to declare the provisions of the 1983 Adhiniyam to the extent irreconcilable with the provisions of the 1996 Act as void and unenforceable and to further declare that the parties to the works contract are governed by the provisions of the 1996 Act.

(2.) THE respondents filed an Interlocutory Application (LA. No. 609 of 2003) in the mcc contending that the High Court had no jurisdiction to entertain a dispute arising under the works contract because under the provisions of the 1983 Adhiniyam, the dispute has to be referred to the Arbitration Tribunal constituted thereunder and hence the application under Section 11 (6)of the 1996 Act was not maintainable before the High Court. The M. C. C. was heard by a Division Bench of the High Court at gwalior. The counsel for the petitioner contended before the Division Bench that the 1996 Act made by Parliament will prevail over the 1983 Adhiniyam made by the State legislature by virtue of the provisions of article 254 of the Constitution. The respondents, on the other hand, relied upon the unreported judgment in M/s Bhanu Kumar jain and Associates v. State of M. P. (W. P. No. 3138 of 1997) delivered on 21-11-1997 at jabalpur in which a Division Bench of this court has held that the 1983 Adhiniyam was saved by the provisions of sub-section (4) of section 2 of the 1996 Act and, therefore, the 1983 Adhiniyam survives even after the coming into force of the 1996 Act.

(3.) THE Division Bench, in its order dated 19-12-2003, took note of the provisions of art. 254 of the Constitution as well as the decision of this Court in M/s. Spedra Engineering Corporation, engineers and Contractors v. State of M. P. , AIR 1988 MP 111, in which it was held that the 1983 adhiniyam being a later special Act would prevail over the Arbitration Act 1940, as provided in Art. 254 (2) of the Constitution. The Division Bench however was of the prima facie view that the 1996 Act being a later Act made by Parliament would prevail over the 1983 Adhiniyam made by the State legislature to the extent of repugnancy as provided in Article 254 of the Constitution. Accordingly, the Division Bench held that the judgment delivered in the case of Bhanu kumar Jain and Associates (supra) required reconsideration by a larger Bench vis-a-vis a matter where there is an arbitration agreement between the parties. This is how this matter has been placed before this Bench.