S K JAIN Vs. STATE OF HARYANA

JUDGEMENT

(1.) M. M. KUMAR, J. :- This petition filed under Article 226 of the Constitution prays for quashing Memo No. 428, dated 10-1-2007 (Annexure P-11), directing the petitioner to deposit an amount of Rs. 1,81,14. 845/-, which is 7% of the total amount claimed by the petitioner before the arbitral Tribunal (hereinafter referred to as 'the Tribunal' ).

(2.) THE petitioner is a contractor, who was allotted work of constructing Haryana Government office building in Sector 17, chandigarh. On 4-3-1992, an agreement was entered into between the parties, which incorporated sub-clause (7) of clause 25-A providing for arbitration in case of any dispute. Some differences between the parties regarding payment in respect of allotted work have arisen, which resulted in referring the dispute to the three members of arbitral Tribunal. The petitioner filed his claim before the Tribunal. The respondent state filed its objection to the claim by principally submitting that the contractor has to comply with the mandatory requirement of sub-clause (7) of clause 25-A of the agreement, dated 4-3-1992, which obliged the petitioner to deposit 7% of the total claim made. The amount so calculated comes to Rs. 1,81,14,845/- The Tribunal sustained the objection and after placing reliance on a judgment of Hon'ble the Supreme Court in the case of Municipal Corporation. Jabalpur v. M/s. Rajesh Construction Company, 2007 (5) JT (SC) 450 : (AIR 2007 SC 2069) has opined as follows :-

(3.) WE have heard Mr. Puneet Bali, learned counsel for the petitioner at a considerable length. He has argued that the arbitration and Conciliation Act, 1996 (for brevity, 'the Act') does not permit the parties to contract out of the provisions of that act and in that regard he has placed reliance on paragraphs 72, 73 and 74 of the judgment of Hon'ble the Supreme Court in the case of Centrotrade Minerals and Metals inc. v. Hindustan Copper Ltd. , 2006 (5) JT (SC) 507 : (2006 AIR SCW 3172 ). According to learned counsel, the arbitration agreement of the parties, therefore, has to be consistent with the provisions of the Act. In or -der to buttress his stand, learned counsel has argued that Section 31 (8) read with Section 38 of the Act postulates the cost which could be deposited by the petitioner and the same has to be reasonable. Learned counsel has submitted that the cost cannot be more than Rs. 20 lacs whereas the petitioner has been asked to deposit the amount of rs. 1,81,14,845/-, which is 7% of the total amount claimed. He has maintained that insertion of sub-clause (7) of clause 25-A would be wholly arbitrary, unreasonable and capricious and, therefore, it is liable to be declared violative of Section 31 (8) and Section 38 of the Act.