Madhya Pradesh Madhya Kshetra Vidyut vs M/s. Ess Ess Engineers

This appeal u/s 2(1) of M.P. Uchcha Nyayalaya (Khand Nyayapeeth Ko Appeal) Adhiniyam, 2005 has been filed challenging the order dated 25/08/2008, passed by the writ Court in W.P. No. 3031/2008. Respondent M/s. ESS ESS Engineers was a registered class ''A'' contractor and certain contract for renovation of Distribution Transformer under O & M Circle and city Circle Gwalior were granted to them. The contract was valued at Rs. 5,02,35,535/- for the execution of the work. After the work was completed, as certain disputes arose with regard to settlement of bills, the writ petition was filed by the respondent and on 25/08/2013, after hearing all concerned, learned writ Court came to the conclusion that clause 26 of the Agreement in question contemplates a arbitration clause and after taking note of the law laid down by the Supreme Court in the case of Tata Finance Limited Vs. Ajaya Kumar Biswal and others, (2000) 9 SCC 238 even though held that an arbitration agreement is existing between the parties, the following directions:-

Hence, the petition is disposed of with the following directions:-

That, the respondents are directed to complete all the formalities with regard to appointment of arbitrators on the application submitted by the petitioner, Annexure-R/1 within a period of one month from the date of receipt of copy of the order. The petitioner is at liberty to place all the materials before the arbitrators and can also request the arbitrators for appropriate order.

It is pointed out by Shri Vivek Jain, learned counsel for the appellants that the aforesaid direction issued by the learned writ Court was not warranted. It is submitted by him that the aforesaid direction is in the nature of power exercised by the writ Court u/s 11(6) of the Arbitration and Conciliation Act, 1996, which is not permissible. That apart, it is submitted by learned counsel for the appellants that contract in question is a "works contract" as provided in the M.P. Madhyastham Adhikaran Adhiniyam, 1983 and therefore, the petitioner should have resorted tot he remedy available by approaching the Madhya Pradesh State Arbitration Tribunal in the matter and if the order passed by writ Court as reproduced herein is permitted to stand, it may create complications in the matter and the jurisdiction available to M.P. State Arbitration Tribunal would be taken away.

Even though, Shri Raju Sharma, tried to refute the aforesaid, but we are of the considered view that once the writ Court come to the conclusion that there is arbitration clause in the agreement between the parties, it should not have issued any direction as indicated hereinabove instead should have permitted the parties to avail the remedy as per the agreement.

Accordingly, without observing anything on the merits of the case, we allow this appeal in part. Even though the direction issued by the writ Court directing the petitioner therein to take recourse of arbitration is maintained, but the directions issued and reproduced hereinabove is quashed and parties are left to take recourse of the remedy available to them in accordance with law and agreement entered into between the parties. The parties are also given liberty to choose the forum for arbitration as may be available. The question of jurisdiction in the matter is kept open to be decided by the Arbitrator or the Arbitration Tribunal. With the aforesaid clarification and modification to the order passed by the writ Court, the writ appeal stands partly allowed and disposed of.