UNION OF INDIA Vs. PRAHALLAD MOHARANA

JUDGEMENT

(1.) Since common question of fact and law arises in the above appeals and revisions, they are disposed of by this common judgment. The question for examination is whether the order of the learned Subordinate Judge under S. 20 (4) of the Arbitration Act (for short, 'the Act') directing appointment of an arbitrator of his choice is legal and correct.

(2.) The plaintiff, a Special Class Contractor, pursuant to three agreements on different dates with the Union of India through its General Manager, South Eastern Railway, carried on the work of laying railway lines and also supplying certain quantity of hard broken stone ballast. On account of the enhanced labour charges and rise in prices of diesel etc. he claimed enhanced rate to carry on the rest part of the work. This being not accepted, he discontinued the work and so the defendants terminated the contract by their letter dtd. 7/11/1991 and imposed a penalty of Rs.20,000.00 for breach of the contract. On 7/9/1992 the plaintiff issued a notice for appointment of an arbitrator as per clause 64 (1) of the General Conditions of Contract which the defendant received on 14/9/1992 and since there was no response to such notice, the plaintiff filed the suit on 21/10/1992 after expiry of 15 days.

(3.) The defendant railway filed a written statement in which it admitted such termination of the contract and imposition of penalty, but it challenged the maintainability of the suit on various grounds including limitation, the suit being premature and the matter for arbitration being specifically 'excepted' in the agreement.