Chanda Engineers (India) Ltd., Re Arbn vs State of West Bengal

Deb, J.—This application has been made u/s 41(b) read with item 4 of the Second Schedule of the Indian Arbitration Act for the following reliefs:

(a) For a temporary injunction restraining the Respondent State of West Bengal, its servants and agents from terminating the said agreement, without first obtaining an award or from terminating the said agreement, without giving a reasonable and adequate extension of time for completion of the order under the said agreement pending the said arbitration;

(b) And further an order restraining the Respondent its servants and agents from imposing and/or levying any penalty on the Petitioner pending the said arbitration proceeding;

(c) For ad-interim orders in terms of prayers (a) and (b) until disposal of the present application;

(d) For such further and other order or orders and directions as may deem meet and just.

By an agreement in writing dated February 11, 1966, the Petitioner agreed to do various works relating to Kangsabati Project for the State at an estimated cost of about Rs. 70 lakhs. By another agreement dated July 14, 1966, the Petitioner was exempted from carrying out a part of the said works and consequently the estimated cost was reduced to Rs. 45 lakhs.

It was admitted by both parties that the Petitioner was to complete the entire works within February 11, 1968 and that the, said time was made the essence of the said contract by Clause 2 of the said agreement dated February 11, 1966, with a provision for extension of such time as provided in Clause 5 which is set out below:

If the contractor shall desire an extension of the time for completion of the works on the grounds of his having been unavoidably hindered in its execution, the contractor shall give an immediate report of such hindrance to the Divisional Officer in writing and if he shall desire an extension of time for completion of the work on the ground thereof he shall apply in writing to the. Divisional Officer within 7 days of the date of cessation of such hindrance on account of which he desires such extension as aforesaid and the Divisional Officer shall, if in his opinion (which shall be final) reasonable grounds be shown therefore, authorise such extension of time, if any, as may, in his opinion, be necessary or proper.

Now it is necessary to set out below the arbitration clause:

Except where otherwise provided in the contract all questions and disputes relating to the meeting of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to--the contract, designs, drawings, specifications, estimates, instructions, orders or those conditions or otherwise concerning the works, or the execution, or failure to execute the same, whether arising during the progress of the work, or after the completion or abandonment thereof shall be referred to the sole arbitration of the Chief Engineer of the Department. Should the Chief Engineer be for any reason unwilling or unable to act as such arbitrator, such questions and disputes shall be referred to as arbitrator to be appointed by the Chief Engineer. The award of the arbitrator shall be final, conclusive and binding on all parties to this contract.

It was admitted by both the parties that at the request of the Petitioner time to complete the said works was extended from time to time by the State and the last of such extensions was granted upto December 31, 1969, by a letter dated July 1, 1969, annexed to the affidavit of Nagendra Nath Roy affirmed on January 7, 1970.

By a letter dated January 27, 1969 (annEx. D to the petition) the Petitioner claimed to be paid at enhanced rates and reiterating various disputes threatened to stop all further works unless those claims and disputes were settled. In this letter it was alleged that the Petitioner would "stick to the arbitration proceedings for which we have already taken steps until its conclusion and before we can take up the balance of work." It is to be noted here that the parties admitted before me that there was no such arbitration proceeding as alleged in this letter. Thereafter, several letters followed which were, however, not annexed to the petition and in reply to one of those letters the Chief Engineer of the State by his letter of March 12, 1969, wrote to the Petitioner as follows:

With reference to your above letter I am to request you to take up the matter first with the Executive Engineer concerned (if not already done) who is the Engineer-in-Charge of the work according to the terms of the contract in B.E. 2911 or 2908 If you are not satisfied with the replies or action of the Executive Engineer you may contact the Superintending Engineer concerned. If you feel there is a dispute you may request for an arbitration. For this purpose the request is to be made to the undersigned with data furnished as per enclosed pro forma.

By a letter dated October 25, 1969, (annEx. E to the petition) the Petitioner wrote to the Executive Engineer that the Petitioner was unable to work till the Petitioner was given adequate extension of time. It was further stated in this letter that unless those disputes were settled and the Petitioner was paid as claimed the Petitioner would stop all further works.

It is now to be noted here that although the Chief Engineer in his letter of March 12, 1969, wrote, "If you feel there is a dispute you may request for an arbitration", the Petitioner did nothing in this matter and waited till October 27, 1969 and then on that date wrote to the Chief Engineer, inter alia, as follows:

As there has been a dispute between the parties concerned, we, therefore, in pursuance of Clause 25 of the Printed Form No. BF. 291 of the Agreement, refer the disputes and claims stated herewith to your Sole Arbitration and request you to proceed with the Arbitration at your earliest convenience.

The claim of the Petitioner was also set out in this letter but at this stage it is not necessary to go into those claims.

On December 2, 1969, the present petition was affirmed and the notice of Motion was taken out which was served on December 3, 1969. The said notice of Motion appeared before Masud J. on December 8 and directions for filing affidavits were given and the hearing of this application was adjourned. During the pendency of this application on December 15, 1969, the Chief Engineer in his letter dated December 15, 1969, written to the Petitioner, inter alia, said that:

You should first represent the case to Project Engineer, Kangsabati Circle and if his decision fails to satisfy you then you may come up with the prayer for arbitration.

It is necessary to say here that the said agreement dated February 11, 1969, inter, alia, provides for realisation of compensation from the Petitioner under some circumstances and those compensations are to be realised by the State from the security deposits made by the Petitioner. A large number of letters were written by the State to the Petitioner complaining about the most unsatisfactory progress of works in 1967 and 1968 and apart from writing letters the State also sent repeated telegrams to the Petitioner complaining about the most unsatisfactory progress of the works in 1969. As said before, at the request of the Petitioner the time to complete the said, work were extended from time to time. By a letter dated June 21, 1969, the Petitioner again asked for extension of time till June 36, 1970; to complete the said works, but the Stately its letter dated July 19, 1969, extended the time upto December 31, 1969, expressly stating that no further extension would be granted in future. It is further to be noted here that all those extensions were granted subject to the rights of the State to recover compensations in terms of the said agreement and the Petitioner, without raising any objection as to those rights of the State, continued to act in terms of the letters granting those extensions.

Coming now to the petition in paras. 8 and 9 it is, inter, alia, alleged that as the claims made by the Petitioner were disputed by the State including the Petitioner''s right to complete the unfinished works the said disputes were referred to the sole arbitration of the Chief Engineer by the aforesaid letter dated October 27, 1969. It is further alleged that the question of extension of further time for completion of the said works under the said agreement and also the question of penalties, if any, to be paid by the Petitioner under the said agreement are the questions to be decided by the said Arbitrator and those disputes are pending before the Arbitrator.

In para. 10 it is alleged that in spite of the said pending arbitration proceedings the State wrongfully and illegally threatened not to extend the time for completion of the said works and had also threatened to impose penalty on the Petitioner.

In para. 11 it is further alleged that the Petitioner, as of a right, is entitled to the extension of time needed for completion of the said works and the adjudication of the said right of the Petitioner has been referred to the said Arbitrator.

In para. 14 it is alleged that if the State is allowed to terminate the said agreement at this stage of the construction and entrust the incomplete works to some other persons, all evidence relating to the works already done by the Petitioner including the establishments run by the Petitioner would be destroyed and the Petitioner would be unable to prove the actual damages that might be suffered by the Petitioner and under those circumstances the Petitioner will not get adequate pecuniary compensation from the State. It is not necessary to refer to the affidavit-in-opposition filed on behalf of the State nor to the affidavit-in-reply of the Petitioner.

Mr. Bhattacharjee, appearing in support of this application, frankly conceded that the prayers of the petition set out at the very beginning cannot be granted but he said that I should pass such orders as I might think fit to give his client complete relief in this application. I shall decide later on whether I should at all give any relief to the Petitioner in the facts and circumstances disclosed in the petition.

Mr. Chatterjee, appearing for the State, took a preliminary objection as to the maintainability of this application on the ground that no arbitration proceeding is pending and so this application is not maintainable. In support of his above contention, he relied on the judgment of Mullick J. in Ranjit Chandra Mitter Vs. Union of India (UOI), . Mr. Bhattacharjee in refuting the said contention relied on the judgment of S.R. Das J. (as his Lordship then was) in Chhedilal Hariniwas Vs. Brit-over Limited and another judgment of Madhya Pradesh High Court in Daulat Ram Phoolchand Vs. Shriram and Others, .

Das J. in Chedilal''s case (2) said as follows:

Mr. Chaudhuri refers me to Section 41 of the Arbitration Act and contends that the Court cannot under that section make any order for interim injunction unless there is an arbitration proceeding actually pending. That section provides inter alia that, subject to the provisions of the Act and of the rules thereunder, the Court shall have, for the purpose of and in relation to arbitration proceedings the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of or in relation to any proceeding before the Court. The fourth item in the Second Schedule comprises ''interim injunction or the appointment of a receiver''. This power is conferred on the Court ''for the purpose of or in relation to arbitration proceedings''. It is not in terms limited to ''pending arbitration proceedings'' and I do not see why the word ''pending'' should be added to the section. Further, the application for injunction has been made in a suit which is pending and which has not yet been stayed and this Court has power, apart from Section 41 of the Indian Arbitration Act, to make in order for interim injunction in a pending suit under the CPC as well as in exercise of its inherent powers.

In Ranjit Chandra v. Union of India Supra, p.597, after quoting the above observation of Das J., Mallick J. said as follows:

It seems to me that, having regard to the pendency of the suit, the point raised by Mr. Chaudhuri lost its importance according to the learned Judge and the learned Judge issued injunction in the pending suit. There is no doubt a criticism of Mr. Chaudhuri''s argument in that he was attempting to import the word ''pending'' in Section 41 which was not warranted. But the learned Judge did not feel called upon in the view taken by him to give a meaning to the expression ''arbitration proceeding'' in Section 41. I am, therefore, unable to hold that the above passage is an authority for the proposition that the Court can issue an injunction, even in the absence of any arbitration proceeding provided there is a dispute which can become the subject-matter of an arbitration proceeding under an arbitration agreement subsisting between the parties. An interim relief u/s 41 can only be asked for and granted by the Court in some proceeding or in a pending suit. In the absence of such a proceeding, in my judgment an application u/s 41 is not maintainable....Mr. Bhabhra and Mr. Roy Chaudhuri submitted that this construction will lead to very great hardship. When there is a dispute which is covered by an arbitration agreement, there is always a time lag between the dispute and the reference. A good deal of mischief would be done in between if it is construed that the Court is debarred from entertaining an application for interim relief provided for in Section 41 of the Arbitration Act. I do not however find any hardship because of the so-called time lag. It is true that if the party proceeds under Chapter II of the Arbitration Act, there may be a time lag between the dispute and the arbitration proceeding. But the parties may well proceed u/s 20 of Chapter III of the Arbitration Act and such an application can be filed forthwith. Once an application is filed u/s 20, there is a proceeding--a pending suit and an application for interim relief can be asked for in that proceeding. For reasons given above, I hold that in the absence of any arbitration proceedings in the instant case, the present application for injunction u/s 41 is not maintainable in law.

In Sha Vaktavarmal Seshmull Vs. Shah Nainmull Umaji and Co. and Others, , (not cited from the Bar), after quoting Section 41 of the Act, Ramchandra Iyer C.J. observed as follows:

It will be apparent from a reading of the section that it provides both for the case where arbitration proceedings are pending a Court as well as for one where such proceedings ate not pending before the Court but before the Arbitrator. Clause (a) refers to proceedings, which are before the Court. That indicates that the provisions of the CPC will generally apply to all such proceedings. Clause (b), on the other hand, relates to proceedings, which are not before the Court, but which are only pending before an Arbitrator....In Subramaniam v. Vasudevan AIR 1950 Mad. 448, Krishnaswami Naydu J. observes that Clause (b) of Section 41 makes certain provisions of the CPC covered under the Second Schedule of the Act applicable generally to arbitration proceedings, i.e. not to the proceedings before the Court, but to the proceedings before the Arbitrator. I agree with that view with respect.

(Underlines are mine)

Now coming to the judgment of the High Court of Madhya Pradesh in Daulatram Phoolchand''s case Supra, p.220 the learned Judge said:

Section 41(b) read with the Second Schedule to the Act was intended to empower the Court to pass interim orders for the preservation or safety of the subject-matter of the dispute during the pendency of arbitration proceedings. In a case where an application is filed before the Court u/s 20(1) of the Act, or where the reference to arbitration is made through the intervention of the Court, the Court has seisin of the case and can undoubtedly pass interim orders. But there is no reason to suppose that the Court has no power u/s 41(b) of the Act read with the Second Schedule to prevent the properties in dispute from being wasted during the pendency of the proceedings before the Arbitrator. Such an interpretation would have the effect of depriving the successful party of the fruits of the decree which is eventually obtained by him on the basis of an award.... The expression ''arbitration proceedings'' was substituted in Section 41(b) in the Indian Arbitration Act for the words ''a reference'' in order to cover the various kinds of proceedings which the Act contemplates. Surely enough the intention of the Legislature by effecting this amendment was to include within the scope of Clause (b) of Section 41 all those proceedings which are held in pursuance of an arbitration agreement whether with or without the intervention of the Court. To hold otherwise would have the result of rendering superfluous the words "as it has for the purpose of and in relation to any proceedings before the Court" which occur in Section 41(b) of the Act.

I am for the reasons stated above of the opinion that the effect of the provisions of Section 41(b) of the Act is to clothe the Court with the same powers in relation to arbitration proceedings to issue interim orders for the preservation and safety of the subject-matter of the dispute as it would have in relation to proceedings pending before itself.

(Underlines are mine)

After referring to the observations of Das J. in Chedilal''s case Supra where it was held that the power conferred on the Court, u/s 41(b) of the Act, was not in terms limited to the pending arbitration proceedings the learned Judge, however, said:

The present case stands on a much stronger footing, inasmuch as the arbitration proceedings are actually pending in this case. The Arbitrators have not been vested by the Act with any powers to grant interim orders for the protection and safety of the subject-matter of the dispute. Such powers had, therefore, to be vested in Court u/s 41(b) of the Act read with Second Schedule. I do not find anything in that section, or in the Second Schedule to justify the view that the power to grant interim orders for the protection and safety of the properties. In dispute cannot be exercised until proceedings, under some other section of the Act are started. To import such a limitation into the provisions of Section 41(b) of the Act and the Second Schedule would have the effect of introducing therein words which do not find place in the said provisions. Such a limitation cannot, in my opinion, be placed upon the powers vested in the Court u/s 41(b) of the Act read with the Second Schedule.

(Underlines are mine)

In Chedilal''s case Supra there was a pending suit and in that suit two applications were made, one was for stay u/s 34 of the Act and another one was for interim injunction u/s 41(b) of the Act. The said application u/s 34 was also pending and the learned Judge passed the interim injunction in the second application in the pending suit. Observation of Das, J. to the effect that even if there was no arbitration proceeding still the Court has power to pass interim injunction u/s 41(b) of the Act is an obiter dictum. In Daulatram Phoolchand''s case Supra the learned Judge himself said that the arbitration proceedings were actually pending and so he had the power u/s 41(b). Moreover, the learned Judge himself had said Supra that an application u/s 41(b) can be made in a pending suit or in a pending arbitration proceeding. The learned Judge having held so, further said that the Court had also the power to pass interim orders u/s 41(b) even when "proceedings under some other section of the Act are not started". This observation of the learned Judge is an obiter dictum. But by saying so if the learned Judge intended to convey the idea as was contended that the Court had power to pass interim orders although no proceeding was at all instituted under the Act, I am unable to accept it as good law. But I do not read the said observation in that light. If, there is a proceeding in the Court, Section 41(a) will come into play and if there is an arbitration proceeding'' as contemplated by the Act, Section 41(b) will be applicable. Unless there is a proceeding either in the Court or an arbitration proceeding as contemplated by the Act the Court has no power to pass any interim order.

In Daulatram Phoolchand''s case Supra the learned Judge, however, did not expressly hold that interim orders can be passed even when there is no arbitration proceedings. Relevant provisions of the Act were not placed before Das J. as the point was not directly involved there and his Lordship did not get the full opportunity to consider the matter. Point was, however, directly involved before Mallick J. and his Lordship took a different view and differed from the obiter of Das J. There are observations of our Appeal Court and also of the Supreme Court to the effect that a judgment of a single Judge, but not his obiters, is binding on another single Judge of the same Court and there are also decisions of our Appeal Court that obiter dicta of the Supreme Court are binding on this Court. Judgment of Mallick J. is binding on me as the point was directly involved there and the same point is directly involved before me. It was then said that if I do not agree with Mallick J. I should report to the learned Chief Justice for forming a larger Bench to decide this interesting point of law, but I do not find any such necessity.

Coming now to the facts of the case the very first thing to be remembered is that the letter of March 12, 1969, was not written by the Chief Engineer as Arbitrator. The Petitioner did not act in terms of this letter for a long time and thereafter by its letter dated October 27, 1969, referred those disputes to the arbitration of the Chief Engineer and requested him to proceed with the arbitration at his earliest convenience.

The Chief Engineer as an Arbitrator, however, did not write any letter to the parties and thereafter the present application was made by the Petitioner. During the pendency of this application the said letter dated December. 15, 1969, was written by the Chief Engineer asking the Petitioner to represent his case to the Project Engineer, Kangsabati Circle and if unsatisfied with his decision to come with a prayer for arbitration. There is nothing on record to show that, before the present application was made to the Court, the Chief Engineer accepted the post or entered on the reference or did anything in relation to the reference. No proceedings were commenced by the Chief Engineer qua Arbitrator and there can be no arbitration proceedings before him unless of course it can be said that the arbitration proceeding was commenced by the letter of October 27, by the Petitioner written to the Chief Engineer.

Section 9 of the Arbitration Act provides the circumstances under which an Arbitrator can be appointed in place of another Arbitrator and those conditions are that when the appointed Arbitrator neglects or refuses to act or is incapable of acting or dies, the parties may appoint a new Arbitrator or a sole Arbitrator as the case may be. Explanation to Section 9 has also some bearing and it is set out below:

Explanation--The fact that an arbitrator or umpire, after a request by either party to enter on and proceed with the reference, does not within one month comply with the request may constitute a neglect or refusal to act within the meaning of Section 8 and this section.

Explanation to Section 9 clearly contemplates two things and they are--entering on reference by the Arbitrator and proceedings with the reference by the Arbitrator. Similarly in Section 11 a distinction is between entering on reference and the proceeding with the reference as will appear from Sub-section (1) of that section which is set out below:

(1) The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable despatch in entering on and proceeding with the reference and making an award.

Rule 3 of the First Schedule to the Arbitration Act is also set out below:

The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow.

This rule clearly distinguishes ''entering on the reference by the arbitrator'' with the calling upon the Arbitrator ''to act''. Rule 6 of the First Schedule, inter alia, enjoins the parties to produce documents, if called upon by the Arbitrators ''during the proceedings on the reference''. From the perusal of the various other provisions of the Act it is abundantly clear that the proceedings before the Arbitrator cannot commence unless he agrees to arbitrate. In other words, unless the Arbitrator is willing to act as Arbitrator and communicates his said willingness to the parties no proceeding can be said to have commenced before him. Moreover, unless the Arbitrator in his capacity as Arbitrator actually does some overt act in relation to the reference he does not enter on the reference and unless he enters on the reference question of starting any arbitration proceedings by him cannot arise.

Now it is necessary to set out Section 41(b) of the Act.

Subject to the provisions of this Act and of rules made thereunder---

(b) the Court shall have, for the purpose of and in relation to, arbitration proceedings the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of and in relation to, any proceedings before the Court:

Provided that nothing in Clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters.

The opening words of this section are ''subject to the provisions of this Act'' and so the powers of the Court to make any order in terms of Second Schedule ''for the purpose of and in relation to arbitration proceedings'' are controlled by the other provisions of the Act.

Section 41(b), in my opinion, shall be read in conformity with the other provisions of the Act as it is subject to the other provisions of the Act. Power of the Court to make orders u/s 41(b) is solely confined to the arbitration proceedings. In other Words Section 41(b) is attracted when there is an arbitration proceeding and unless there is an arbitration proceeding the Court cannot invoke the powers u/s 41(b). Jurisdiction conferred on the Court by Section 41(b) is of a limited character and it can only be exercised if there is an arbitration proceeding.

The term ''proceeding'' in common acceptance means a transaction. What happens in a Court of law is commonly called as judicial proceedings. What happens in Parliament is called the parliamentary proceeding.

The Arbitration Act does not define what is an arbitration proceeding. u/s 2(e) of the Arbitration Act "''reference'' means reference to arbitration". When a dispute is referred to an Arbitrator there is no law which compels the Arbitrator to accept his post or to enter on the reference. Reference to the named Arbitrator may be wholly infructuous by the non-acceptance of the office or inaction of the Arbitrator. If the Arbitrator does not act at all in spite of a notice in writing being served upon him as contemplated by Rule 3 of the First Schedule and allows four months to lapse no reference can be taken up by him. If the Arbitrator within the extended time u/s 28 does hot enter on the reference at all and no application is made by any of the parties to Court for further extension of time the Arbitrator cannot enter on the reference after the expiry of four months from the date he is called upon to act by a notice in writing.

Expression used in Section 41 is "for the purpose of and in relation to arbitration proceedings" and it does not speak of ''future'' or ''contemplated'' or ''pending'' arbitration proceedings. If it can be said that there will be an arbitration proceeding the moment a party refers the matter to the named Arbitrator then of course the powers of the Court will be attracted, but in that event the term ''reference'' in Section 2(e) of the Act would mean an ''arbitration proceeding'' instead of ''a reference to arbitration''. In place of ''a reference'' the expression ''arbitration proceedings'' was substituted in the Act of 1940. This significant change clearly shows that law was altered by the Legislature and this change has to be borne in mind as the Supreme Court has said:

The Arbitration Act which is a consolidating and amending Act, being substantially in the form of a code relating to arbitration must be construed without any assumption that it was not intended to alter the law relating to appeals. The words of the statute are plain and explicit and they must be given their full effect and must be interpreted in their natural meaning, uninfluenced by any assumptions derived from the previous state of the law and without any assumption that the Legislature must have intended to leave the existing law unaltered. In our view the Legislature has made a deliberate departure from the law prevailing before the enactment of Act X of 1940 by codifying the law relating to appeals in Section 39 Union of India (UOI) Vs. Mohindra Supply Company, , not cited from Bar.

Although the above law was laid down by the Supreme Court in relation to Section 39 of the Arbitration Act but in my opinion it is equally applicable to Section 41 of the Act in view of the alterations mentioned before.

Section 32 of the Arbitration Act read with Section 43 of the Specific Relief Act, 1963, is a complete bar to the institution of a suit for enforcement of any arbitration agreement. If a party to an arbitration agreement wants to enforce the arbitration agreement against the other party he must take recourse under the relevant sections of the Arbitration Act. The Court exercises such jurisdiction in the arbitration matters as are expressly conferred on it by the Arbitration Act and apart from this limited jurisdiction the Court has no other jurisdiction in relation to the arbitration matters as it has in other proceedings. A meaning has to be given to the term ''arbitration proceedings'' and to ascertain it one must look into the Act itself. The Act clearly makes a distinction between the acceptance of the office by the Arbitrator and the arbitration proceedings and unless the Arbitrator accepts his post there cannot be any arbitration proceedings outside the Court. There is nothing to show that the Chief Engineer has accepted the post of the Arbitrator after the letter of October 27 was written and before the present application was moved. Moreover, the Chief Engineer did not do any act in relation to the said arbitration as Arbitrator before the present application was taken out from which it can be inferred that he had accepted the reference. It is further to be noted that not a single document was produced before me to show that the Chief Engineer as an Arbitrator did anything in relation to the submission made to him before the present application was taken out. For all these reasons I hold that the present application is not maintainable as there was no arbitration proceedings at the time this application was taken out.

Mr. Bhattacherjee has relied on the judgment of Farwell J in Foster and Dieksee v. Mayor, Aldermen and Burgesses of the Borough of Hastings 89 Law times where a suit was filed and an application was moved for an injunction restraining the Defendant to terminate a contract to do some works for water supply which the Plaintiff undertook to do. The said works were to be performed by the Plaintiff to the satisfaction of the Defendant''s engineers. Many disputes arose between the parties and under the arbitration clause those disputes were to be decided by an. Arbitrator. It further appears that due to those disputes the Defendant purported to terminate the said contract and the Plaintiff immediately came to Court and filed that suit. It is to be noted here that from the judgment it does not appear that those disputes were referred to the Arbitrator. On the construction of the various clauses of the agreement Farwell J. came to the conclusion that there was a negative covenant under which the Defendant was not entitled to terminate the said agreement until those disputes were decided by the Arbitrator. There the arbitration agreement and the other clauses of the agreement were so rolled up together, as appears from the view taken by Farwell J., that they could not be separated and under those circumstances an injunction was issued restraining the Defendant to act on the purported termination of the said agreement and the Defendant was directed to preserve the status, quo until the trial of the suit or an award was made. Mallick J., however, in Ranjit Chandra''s case Supra took a different view and was not inclined to follow it.

I do not find any negative clause in the agreement in this case and alone on this ground the principles laid down by Farwell J. has no application and the Court cannot issue any injunction in view of the provisions of our Specific Relief Act. In that case the injunction Was issued in the suit but no such suit was filed in this Court and even if such a suit was filed it would have been incompetent in view of the express provision of the Arbitration Act.

Whether the State is not entitled to realise compensation which is described as penalty is a question to be decided by the Arbitrator and the Court having a limited jurisdiction under the Arbitration Act cannot go into that question in this application. If the State realises the compensation out of the security deposits and the Arbitrator finds that the State is not entitled to do so suitable direction can be given by him and the State will be liable to refund those monies to the Petitioner. Moreover, the Petitioner has already deposited monies as security with the State and those monies are lying with the State and I fail to appreciate how the Petitioner will at all suffer any prejudice even if the State appropriates those very sums that are lying with the State subject to the decision of the Arbitrator.

It was further contended by Mr. Chatterjee that as the power of extension of time was conferred by Clause 5 of the agreement to the Divisional Officer only and as the authority of the Arbitrator is controlled by the words ''except where otherwise provided in the contract'' the Arbitrator has no jurisdiction to go into question of extension of time. But it is not necessary to express any opinion on this point.

Next contention was that the Court cannot extend the time to complete the said works as such an extension can only be made by the parties u/s 63 of Indian Contract Act and there must be an agreement for extension of such time between the parties as laid down by the Supreme Court in Keshavlal Lallubhai Patel and Others Vs. Lalbhai Trikumlal Mills Ltd., . There is much force in the contention that if I allow prayer (a) restraining the State from terminating the said contract without giving reasonable and adequate extension of time I will be usurping the powers of the parties and thereby compel the State to grant an extension. Moreover, I will also in that case usurp the power of the Divisional Officer and also of the Arbitrator, assuming that the Arbitrator has such a power. In any event such an extension will amount to a prejudging of an issue and the power of the Arbitrator will not only be fettered but the State will also be seriously prejudiced. But it is not necessary to express any final opinion on these points. It is further to be noted that during the pendency of this application the extended date has expired and so there is some force in the contention of Mr. Chatterjee that the agreement is no longer subsisting but it is not necessary to express any final opinion on it too.

Apart from what are said before, I shall not exercise my discretion in favour of the Petitioner for the reasons now being given. By its letter dated January 27, 1969, the Petitioner threatened to stop all works unless the State met all the demands of the Petitioner. By its letter dated October 25, 1969, the Petitioner repeated the said threats and I was told during argument that the Petitioner had stopped the works within the period of the extended date.

These threats including the stoppages of works, in my opinion, were wholly unjustified and without going into the question whether the Petitioner had thereby committed the breach of the said agreement I will not pass any order on this application as the Petitioner has not come to Court with clean hands.

I do not further find any reason why I should not agree with the judgment of Mallick J. in Ranjit Chandra''s case Supra with reference to what his Lordship had said about the judgment of Farwell J. and the reasons given by Mallick J. strengthen the views that I have taken before, although the said judgment was delivered prior to the passing of the Specific Relief Act, 1963. It is true that some changes have been made in the new Act but they do not substantially alter the law as it stood relating to injunction and specific performance.

For all the reasons given above, the application fails and is dismissed. Interim order is vacated and each party will pay and bear its own costs.

Whatever I have said relating to provisions of the contract and the disputes must not be taken into consideration by the Arbitrator whoever he may be in deciding the disputes between the parties.

Mr. Bhattacherjee told me that his client wants to prefer an appeal to the Supreme Court from this judgment and for that purpose wants seven days'' time. Expressly for the purpose of making an application to the Supreme Court for special leave to appeal I direct that the status quo should be maintained for seven days from today. I direct the department to draw up the order without any loss of time and to place before me this judgment for my signature as soon as possible. I further direct the department to supply the certified copies of the order and of the judgment to the Petitioner as soon as possible.