STATE OF ORISSA Vs. GOKUL CHANDRA KANUNGO

JUDGEMENT

(1.) THIS appeal is directed against the order dated 3.9.2004 passed by the learned District Judge, Keonjhar rejecting the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called as 'the Act').

(2.) THE claimant -respondent is a Special Class Contractor and had been entrusted with the work "Improvement to low grade Section reach -III (Part -II) form Keonjhar to Kanjipani on N.H.6 form 371/0 to 373/516 K.Ms." Agreement was entered into in the year 1971 -72 and the work commenced form 18.12.1971. The stipulated period for completion of the work was one year. Case of the claimant -respondent is that he commenced the work in time, but could not complete the same within the stipulated period of time because of the reasons mentioned in the award. Further case of the claimant -respondent is that the bills were not finalized and he was penalized by forfeiture of security deposit. It is the case of the claimant -respondent that though he moved the authorities several times for finalisation of bills and by letter dated 25.7.1989 demanded payment within a specified date, no payment was made. Having no other way he approached the learned Subordinate Judge, Bhubaneswar in an application under Section 20 of the Arbitration Act, 1940 and the same was registered as O.S. No.207 of 1989. The application under Section 20 of the Old Act was filed for reference of the disputes to arbitration in view of the Arbitration clause contained in the agreement. The said suit was decreed and the appellants were directed to file agreement in Court for reference of the disputes to arbitration. The appellants did not file agreement in Court and while the matter stood thus new Act came into force. The claimant -respondent filed another application before the learned Civil Judge (Senior Division), Bhubaneswar for reference of the matter to arbitration under the provisions of the new Act. However, the learned Civil Judge (Senior Division) having no jurisdiction under the new Act, by order dated 4.2.2000 directed the parties to approach the appropriate Court for appointment of arbitrator. Thereafter, claimant -respondent moved this Court in M.J.C. No.37 of 2000 for appointment of an arbitrator and by order dated 15.10.2001 this Court appointed Sri B.N. Dash, a retired Judge of this Court as Arbitrator to decide the dispute between the parties. Challenging such appointment, the appellants filed O.J.C. No.5325 of 2000 on the ground that the arbitral proceeding had already commenced before the new Act came into force and therefore this Court had no jurisdiction to appoint an Arbitrator under the new Act. This Court disposed of the writ application with observation that the appellants may raise the question of jurisdiction before the Arbitrator under Section 16 of the new Act. After disposal of the aforesaid writ application the arbitration proceeding continued and the learned Arbitrator passed an award in favour of the claimant -respondent. Challenging the award the appellants filed an application under Section 34 of the new Act before the learned District Judge, Keonjhar and the said petition having been rejected, this appeal has been preferred.

(3.) THE first question raised by the learned counsel for the State relates to the question of jurisdiction. Admittedly, the claimant -respondent had filed an application under Section 20 of the Arbitration Act, 1940 in the Court of the learned Subordinate Judge, Bhubaneswar and the said petition which registered as a suit was decreed. The appellants had been directed to produce a copy of the Agreement and while the matter stood thus the new Act came into force. It is, therefore, clear form the above that no reference had been made by the Court in the said suit due to non -filing of the agreement by the appellants. After the new Act came into force, the claimant -respondent initially approached the learned Civil Judge (Senior Division), Bhubaneswar for appointment of an Arbitrator, but the same was turned down on the ground that under the new Act learned Civil Judge has no jurisdiction to appoint an Arbitrator. Admittedly, the claimant -respondent thereafter approached this Court in M.J.C. No.37 of 2000 for appointment of an Arbitrator and by order dated 15.10.2001 Shri B. N. Dash, a retired Judge of this Court was appointed as the Arbitrator. The said order was again challenged by the appellants in O.J.C. No.5325 of 2000 but the Court did not interfere with or set aside the order dated 15.10.2001 and on the other hand, gave liberty to the appellants to raise the question of jurisdiction before the Arbitrator. In this connection, the order passed by this Court on 15.10.2001 is required to be seen. Form the records of M.J.C. No.37 of 2000 filed by the claimant -respondent for appointment of an Arbitrator under Section 11 of the Act, it appears that counter -affidavit was filed by the appellants. In para -5 of the counter -affidavit it appears that a specific stand was taken by the appellants regarding maintainability of the proceeding under Section 11 of the Act before this Court on the ground that the claimant -respondent had approached the Civil Court for appointment of an Arbitrator under Section 20 of the Old Act. On the face of such an objection raised on behalf of the appellants, this Court passed the following order on 15.10.2001: