Rai Sahab Mehta vs General Manager, Northern Railways and Others

V.M. Jain, J.—This revision petition has been filed against the order dated 9.1.2001 passed by the trial Court dismissing the application of

the present petitioner under Sections 152, 153 read with Section 151 CPC.

Facts, which are relevant for the decision of the present revision petition, are that petitioner being a contractor had undertaken various

construction works with the respondent-Railways. There was an arbitration clause in the contract agreement. Since railways had failed to make the

payment and to settle the dispute, present petitioner filed petition dated 20.3.1990 u/s 20 of the Arbitration Act, 1940, copy Annexure P1.

Respondents filed reply, copy Annexure P2. Learned trial court, vide order dated 29.1.1998, copy Annexure P3, referred the dispute between the

parties ""to the sole arbitration of General Manager, Northern Railways, or his nominee"". Thereupon, the General Manager, Northern Railways

appointed Chief Engineer as Sole Arbitrator, vide letter dated 16.6.1998, copy Annexure P4, with the stipulation that the total value of the claim

was restricted to 5 lacs only. Petitioner was also informed vide letter dated 24.8.1998, copy Annexure P5, that he should submit his claim valuing

below Rs. 5 lacs to the arbitrator, as a sole Arbitrator is appointed with claims valuing below Rs. 5 claim, as per the terms of the contract

agreement. Thereupon, present petitioner filed an application dated 17.9.1998 under Sections 152, 153, read with Section 151 CPC, copy

Annexure P6 for necessary correction in the order dated 29.1.1998 by striking words ""Sole Arbitrator"" and instead inserting the words ""Co-

Arbitrators"". Said application was contested by respondents by filing reply, copy Annexure P7. Thereafter, after hearing both sides learned trial

Court dismissed the aforesaid application of the petitioner, vide order dated 9.1.2001. Aggrieved against the same, petitioner has filed the present

revision petition in this Court.

I have heard the learned Counsel for the parties and have gone through the record carefully.

It has been submitted before me by the learned counsel for the petitioner that in the petition u/s 20 of the Arbitration Act, the petitioner had

made a reference that the value of his claim was approximately Rs. 65 lacs. It has been submitted that the learned trial Court had accepted the

claim of the petitioner and had referred the dispute to the Arbitrator, vide order dated 29.1.1998, copy Annexure P3. It has been submitted that at

that time, this question was never considered by the court nor pointed out by the respondent that if the dispute is of Rs. 5 lacs or more, the dispute

is to be referred to Co-Arbitrators instead of Sole Arbitrator. It has been submitted that since respondents have taken the objection that Sole

Arbitrator is empowered to entertain the claim of less than Rs. 5 lacs, the present petitioner filed application under Sections 152, 153 read with

section 151 CPC for correcting the error which was apparent on the face of record.

There is considerable force in these submissions of the learned Counsel for the petitioner. I have gone through the petition u/s 20 of the

Arbitration Act, copy Annexure P1. In para 10 of the said petition, there is a reference that the value of the petition for the purpose of jurisdiction

was Rs. 65 lacs approximately. In the written reply filed by respondents, it was nowhere alleged that the value of the petition for the purpose of

jurisdiction was less than Rs.5 lacs. On the other hand, it was only alleged that para 10 was legal. Even at the time when the trial Court had

accepted the petition u/s 20 of the Arbitration Act and had referred the dispute between parties to Arbitrator, it was not pointed out before the

learned trial Court that as per clause in the agreement, the dispute is to be referred to Sole Arbitrator where the claim is of less than Rs. 5 lacs and

to Co-respondents, where the claim is of Rs. 5 lacs and more. Under the general belief and without going into this question, learned trial Court vide

order dated 29.1.1998, had referred the dispute to the Sole Arbitration of General Manager, Northern Railways, or his nominee. It was thereupon

that Chief Engineer was appointed as Arbitrator as a nominee of the General Manager, and he was informed that the had to consider the claim for

less than Rs. 5 lacs and similarly, petitioner was also informed to submit his claim for less than Rs. 5 lacs, observing that Sole Arbitrator is

appointed only for claims valuing below Rs. 5 lacs as per the term of the contract agreement. This necessitated the petitioner to file an application

under Sections 152, 153 read with Section 151 CPC for correcting in the order dated 29.1.1998 so as to strike out the words ""Sole Arbitrator"",

and to insert the words ""Co-Arbitrators"". In my opinion, it was a fit case where the trial Court should have made necessary correction in the order

dated 29.1.1998. This is not a case where the court had applied its mind and had ordered appointment of Sole Arbitrator considering that the

claim was for less than Rs. 5 lacs. On the other hand, this point was not even considered by the trial Court, as to whether the case should be sent

to Sole Arbitrator or for Co-Arbitrator nor it was considered as to whether claim was for less than Rs. 5 lacs or was for Rs. 65 lacs

approximately. Under these circumstances, when the specific case of the respondents is that Sole Arbitrator is authorised to deal with the

arbitration where the claim is of less than Rs. 5 lacs, in my opinion, trial Court ought to have made necessary correction in the order dated,

29.1.1998 and should have referred the matter to Co-Arbitrators instead of Sole Arbitrator, keeping in view the claim of the petitioner being Rs.

65 lacs approximately. In my opinion, the learned trial Court erred in law in dismissing application of the petitioner, which has resulted in

miscarriage of justice. I am further of the opinion that it is a fit case where this Court should interfere in the exercise of its revisional powers, so as

to correct the illegality committed by the courts in dismissing the application of the petitioner u/s 152, 153 read with Section 151 CPC,

For the reasons recorded above, present revision petition is allowed, order dated 9.1.2001 passed by the trial Court is set aside and the

application under Sections 152, 153 read with section 151 IPC filed by the petitioner is allowed and it is directed that dispute-between the parties

shall be referred, to Co-Arbitrator, as per the terms of the agreement instead of sole arbitration of the General Manager or his nominee. Direction

in this regard contained in the order dated 29.1.1998 passed by the trial Court shall stand modified to the extent indicated above. No Costs.