SETH KERORIMALL Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an application challenging the existence of an arbitration agreement in respect to the dispute raised by the respondent. There is an alternate prayer for revocation of submission.

(2.) The petitioner is a contractor who executed certain construction works for South Eastern Railway. The terras o contract are usual and are evidenced by an agreement numbered 129/Con/ S. E. Rule (sic)/56. The work was completed on July 31, 1958. As usual, in the case of such contracts, there were running bills followed by a Final Bill. The various items in the final bill of the contractor having been disputed, the contractor by his letter dated November 20, 1961, invoked the arbitration clause in the agreement and requested the General Manager to appoint an arbitrator to adjudicate the contractor's claim fully set out in the said letter. The total claim of the contractor amounts to Rs. 3,66,642/-. This consists of claim for works done, refund of deposit amounting to Rs. 24,000/- and liquidated loss for withholding payment for more than four years assessed at Rs. 2 lakhs. Pursuant to this request the General Manager appointed Shrj U. G. K. Rao, Chief Engineer, D. B. K. Railway as arbitrator on or about November 25, 1961. In the state of facts filed by the contractor before the arbitrator, the claims as made in the contractor's letter were stated with reasons therefor. In the counter state offsets filed by the respondent each and every claim 50 made was disputed. It appears that during the arbitration proceedings the respondent purported to make a counter claim against the contractor for Rs. 56,761/-, on the basis that the contractor was wrongly paid the said sum for "spreading work" to which, he was not entitled under the contract. This claim was admittedly not made in the counter state of facts filed by the respondent. The arbitrator did not allow the respondent to put forward this counter claim, on the ground that the General Manager did not refer this dispute to him. In consequence he was not competent to adjudicate this dispute. Ultimately the arbitrator gave an award in favour of the contractor for Rs. 105,257-55 nP.

(3.) On June 18, 1962, the Chief Engineer, South Eastern Railway requested the General Mana ger to appoint an arbitrator to adjudicate the claim of the Railway Administration for the said sum of Rs. 56,761/-. The letter concludes with the following observation :