Continental Construction Ltd vs National Hydroelectric Power Corporation Ltd. and Another

Pertaining to two similar contracts disputes between the contractor-Continental Construction Limited and National Hydroelectric Power

Corporation Limited came to be referred to the sole arbitration of Mr. P.P. Dharwadker. Disputes between other contractors and NHEPCL on

same point of dispute were also referred to him. The dispute between the parties was on the ''labour mark-up''.

NHEPCL took the stand that in view of Clause 53 of the General Conditions of Contract, such matters which fell within Clauses 7, 8, 10, 13,

17, 18, 21, 23, 24, 29, 32, 34, 37, 38, 40, 41 and 44 had to be treated as excepted matters in view of the fact that Clause 53 of the General

Conditions of Contract clearly stated that the decision of the Engineer-in-charge on said subject matter shall be final and binding on the contractor.

With reference to Clause 55, i.e. the arbitration clause, it was highlighted that the clause commences with a turn obstante clause evidenced by the

expression ''Except as otherwise provided in Clause 53 hereinabove, all questions........''. The claim was also disputed on merits.

Thus, the arbitrator appointed was required to firstly decide the jurisdictional issue, i.e. whether in view of Clauses 53 and 55 of the General

Conditions of Contract, whether at all, the dispute referred to him was arbitrable. Only if he held that the dispute was arbitrable, was the learned

arbitrator clothed with the jurisdiction to decide the dispute on merits.

The learned arbitrator noted certain correspondence between the parties impinging upon the merits of the claim pertaining to labour mark-up

having or having not attained finality with reference to the decision taken by the Engineer-in-charge. Simply noting the correspondence, and without

adjudicating the preliminary jurisdictional issue, the learned arbitrator decided the matter on merits, in favour of the contractor.

NHEPCL filed objections to the award. The objections were filed pursuant to a suit u/s 14 read with Section 17 of the Arbitration Act, 1940

being registered.

Vide impugned judgment and order dated 08.10.2010, the learned Single Judge has taken the view that without deciding the preliminary

jurisdictional issue, the award on merits could not be sustained as made by the learned arbitrator.

Thereafter, the learned Single Judge had neither superseded the reference, nor remitted the matter to the same arbitrator for fresh adjudication,

nor referred the matter to any other arbitrator for adjudication.

The grievance of the contractor is that the matter ought to have been either remitted to the same arbitrator or reference made to another

arbitrator for the reason the learned Single Judge did not supersede the reference.

We may note that as per the impugned decision, the learned Single Judge has left the parties free to take recourse to such remedies as are

available to them in regard to the matter at hand.

Since the reference has not been superseded, learned counsel for the appellant and the respondent state that in matters pertaining to other

contracts where same or similar issues were raised, highlighting that the award in question relates to claims of other contractors as well, parties

have consented that the dispute be now referred to Shri S.N. Phunkan, the erstwhile Chairman-cum-Managing Director of NEEPCO. Counsel

state that since the issue is the same i.e. entitlement of the contractor to labour mark-up the dispute between the parties be also referred to the sole

arbitration of Sh. S.N. Phunkan, the erstwhile Chairman-cum-Managing Director of NEEPCO, and it be specifically recorded that in harmony with

the consent in other cases, it be recorded that Sh. S.N. Phunkan need not decide the jurisdictional issue of arbitrability of the claim relating to

labour mark-up since NHEPCL gives up said issue. It be also recorded that NHEPCL would be permitted to raise a counter-claim.

The appeals accordingly stand disposed of modifying the impugned order dated 08.10.2010 and referring the contractor''s claim for labour

mark-up as also the counter-claim which may be raised by NHEPCL to the sole arbitration of Sh. S.N. Phunkan, the erstwhile Chairman-cum-

Managing Director of NEEPCO. No costs.