K C CHATTERJEE Vs. DURGAPUR PROJECTS LTD

JUDGEMENT

(1.) THIS appeal is under Section 39 (1) (iv) of the Arbitration Act from an order refusing to file an arbitration agreement. The appellant, a firm of building contractors, submitted tender for the construction of an Auto Exchange at Durgapur which was accepted by the respondent, Durgapur Projects Ltd., and a formal contract was executed on the 11th March, 1964. The contract contained an arbitration clause namely Clause 25, the relevant part of which is as follows:

(2.) THE appellant alleges that the respondent subsequently revised the design and the drawings for the building introducing radical changes. Admittedly in terms of Clause 12 of the contract the appellant was entitled to payment at revised rates for the changes. Under Clause 12 the Engineer-incharge has the "power to make any alterations in, omissions from, additions to and substitutions for the original specification, drawings, designs and instructions that may appear to him to be necessary or advisable." Clause 12 states inter alia that in such a case the Engineer-incharge shall revise the rates at which payment was to be made by "determining the rates on analysis worked out from (a) the basic rates of materials and labour provided in the current schedule of rates or (b) the current market rates of materials and labour when even basic rates for the work are not available in the schedule." Clause 12 further provides that

(3.) BEFORE us it was also contended on behalf of the respondent that in view of the revised rates fixed by the Chief Engineer in his letter dated 12th of July, 1965, there was no further scope for reference to arbitration. We do not find this contention acceptable. The letter dated 12th July, 1965 was addressed by the Chief Engineer to the appellant in reply to their letter dated 28th May, 1965, Ext. A (11). We have reproduced above the substance of the letter, Ext. A (11); it cannot be maintained that this letter, Ext. A (11), was a reference to the Chief Engineer for arbitration as provided in Clause 25. We also find it difficult to agree with the learned Judge that on the facts of this case Clause 12 would apply. Clause 12 applies when rates are determined on analysis by the Engineer-in-charge for any altered, additional or substituted work and a dispute arises regarding rates so determined; it is only in such a case that the decision of the Superintending Engineer of the Circle becomes final under this clause. Admittedly in this case no rates had been determined as contemplated in Clause 12. In our opinion, therefore, Clause 12 has no application. In our view the dispute that has arisen between the parties in this case is covered by the terms of Clause 25, the relevant portion of which I have already set out. We are also inclined to accept the appellant's contention that the Chief Engineer having suggested certain rates in his letter dated 12th July, 1965 which were found unacceptable by the appellant, had rendered himself incapable of acting as an arbitrator in this matter. Further, it was submitted on behalf of the appellant that there was no officer now functioning as Chief Engineer. Seeking clarification on the point, we asked the respondent to file an affidavit stating the correct position. The affidavit filed by the respondent pursuant to our direction, though somewhat vague, states that the post of Chief Engineer is now lying vacant, though it is not clear from the affidavit whether the post has been abolished or not. The question now is, what should be done in such circumstances. The arbitration agreement does not indicate that the parties intended that in such circumstance the agreement would come to an end; it was also not argued before us that the agreement would stand cancelled in such a case. On the contrary, it seems clear from the contract between them that the parties wanted their disputes and differences to be settled through arbitration. It seems established on the authorities that there is no bar to the Court appointing an arbitrator in such a case (see 52 Cal WN 288 = (AIR 1948 Cal 230); Governor General in Council v. Associated Livestock Firm (India) Ltd., Hindustan Steel Ltd. v. Ingeniurs and Contractors).