MAHANADI COALFIELDS LTD Vs. RAWANI CONSTRUCTIONS

JUDGEMENT

(1.) THE appellant has filed this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (in short 'the 1996 Act') questioning the legality and validity of the judgment dated 29.08.2005 passed by the District Judge, Sambalpur, dismissing its application filed under Section 34 of the 1996 Act, registered as Arbitration Petition No. 3 of 2004, for setting aside the arbitral award dated 23.03.2004 passed by the arbitrator Shri O.S. Srivastava, respondent No. 2 herein, arising out of the contractual agreement entered into between the appellant and respondent No. 1 for construction of Kalyan Mandap at Talcher Coalfields.

(2.) THE brief facts giving rise to the present appeal are as follows: The appellant -Mahanadi Coalfields Ltd., which is a Government of India Undertaking (in short 'MCL') by tender notice dated 25.04.1996 invited tenders for construction of two Kalyan Mandaps, one at Talcher Coalfields and the other at IB Valley Coalfields. Respondent No. 1 -M/s. Rawani Constructions (hereinafter called 'Rawani') submitted its offer for construction of the Kalyan Mandap at Talcher Coalfields at a contract value of Rs. 1,95,70,400, upon acceptance of which, the MCL issued the work order dated 24.07.1996 (Annexure 1) awarding the contract work to Rawani. The tender notice and Clause 6 of the work order provided that any dispute or difference arising out of the tender, work order and subsequent contract agreement relating thereto would be subject to the jurisdiction of the District Court, Sambalpur only. The work order further provided that the work was to be completed within a period of fifteen months which would be reckoned from the 10th day of issuance of the work order or from the actual date of handing over the site, whichever was later, and all running on account bills would be paid at 95% of the work value and the balance 5% so accrued would be paid along with the final bill. The MCL agreed to make payment to Rawani at the unit rates, as stated in the Bill of Quantities (BOQ). The contract agreement for the work in question was entered into between the MCL and Rawani on 12.09.1996.

(3.) THE MCL challenged the aforesaid award before the learned District Judge, Sambalpur, in an application filed under Section 34 of the 1996 Act on several grounds. The learned District Judge while deciding the said application opined that the grounds taken by the MCL for setting aside the award were not cogent for the reasons, namely, (i) though the arbitration clause in the contract agreement was scored through, the MCL had initially appointed one Shri A.K. Tripathy, Chief General Manager (S&M;), MCL, as the arbitrator to adjudicate the dispute between the parties whether or not the contract agreement dated 12.09.1996 contained any arbitration clause and thereafter the Chairman -cum -Managing Director of the MCL appointed the present arbitrator -Shri O.S. Srivastava (OP No. 2) in place of Shri A.K. Tripathy, to adjudicate the reference inclusive of the dispute regarding existence or non -existence of any arbitration clause in the contract agreement entered into between the parties; (ii) it was also a fact that the petitioner -MCL had agitated the aforesaid question before the arbitrator -OP No. 2 and after hearing the parties the arbitrator passed a reasoned order on 05.07.2003 rejecting the objection raised by the petitioner, i.e. the present appellant; and (iii) thereafter the arbitration proceeding continued and both the parties participated in the said proceeding till its conclusion and in such circumstances, it could not be said that the arbitration tribunal was not properly constituted. The learned District Judge also found that there was no reason to set aside the award passed by the arbitrator on the grounds as indicated above.