Chairman-cum-Managing Director, Bihar Police Building Construction Corporation and Others vs State of Bihar and Others

Heard counsel for the appellants and also learned counsel for the contesting respondent. A grievance has been made by the appellant, Police Construction Corporation (hereinafter referred to as the Corporation) against the order dated 9.9.2005 passed in C.W.J.C. No. 10161 of 2003 whereby and whereunder the learned Single Judge of this court directed to make payment of simple interest of 7% for the security amount for the period it remained in deposit of the Corporation within the stipulated period.

It is submitted by Mr. Y.V. Giri, learned counsel for the appellants that the claim of the writ petitioner was part of the disputes and the same necessarily was referable to the Arbitrtaor in view of Clause 23 of the Contract. It is further submitted that the writ petitioner had filed two writ applications simultaneously, one for payment of his dues alongwith the interest for which he had completed the works of contract and another for payment of interest on the deposit made by him which remained pending with the Corporation.

The writ applications being C.W.J.C. No. 10489 of 2003 and C.W.J.C. No. 10161 of 2003 were disposed of on the same day. C.W.J.C. No. 10489 of 2003 was disposed of by the learned Single Judge of this court in view of Clause 23 of the contract with a liberty to the writ petitioner to resort to arbitration clause as referred in the contract whereas in C.W.J.C. No. 10161 this court directed for payment of simple interest at the rate of 7% for the security amount which remained pending before the Corporation. Mr. Giri, therefore, submitted that in view of the arbitration clause as stipulated in the contract, in both the writ applications, similar order could have been passed directing the writ petitioner to resort to the provisions of arbitration clause instead of passing an order for payment of interest as referred to above.

It is not in dispute that the writ applications were filed by the writ petitioner pertaining to his dues and interest and those claims were disputed by the present appellant. In view of the arbitration clause the dispute necessarily was referable to the Arbitrator in case the parties chose to take resort to that provision.

For one grievance of the writ petitioner since the matter was virtually disposed of directing him to resort to the provision of arbitration clause, for another part, the same order could have been passed invoking the arbitration clause.

Learned counsel for the respondents submitted that since it was a question of payment of interest on the admitted deposit made by the writ petitioner, there was no need to refer the matter to the Arbitrator.

In case any stipulation is made in the contract to refer a dispute to an Arbitrator, all disputes arising in between the parties should be decided by the arbitrator and at the face of the Arbitration clause as noticed above, extraordinary writ jurisdiction of this court under Article 226 of the Constitution could not have been invoke.

Regard being had to the facts and circumstances of this case and for the reasons aforementioned, this appeal is allowed and that part of the order impugned passed by the learned Single Judge is set aside whereby direction has been given to make payment of interest at the rate of 7% per annum on the deposit made. No costs.