State Bank of India vs Union of India (UOI) and Others

The petitioner in this writ application challenges the legality of the award passed by the Arbitrator u/s 7(B) of the Indian Telegraph Act, 1985.

The case of the petitioner is that for communication of messages between the Sunabeda and Damanjodi, as no other convenient facilities were available, a request was made to the Chief General Manager, Telecom Orissa in April 1984 to provide a teleprinter circuit between the aforesaid two branches. Consequent upon such request, a point to point T.P. Circuit was allotted for direct working between the aforesaid two branches of the bank for 24 hours a day. In the sanction letter dated 27.5.1 986, the guarantee was for a period of six years and the said letter also contained certain other terms and conditions. The grievance of the petitioner is that the T.P. Circuit installed by the opposite parties did not function properly and several complaints were made and the facilities could not be utilized because of improper functioning of the T.P. Circuit. Since corrective measures were not taken, a request was made in February 1989 to disconnect the Teleprinter. A further request was also made to refund the unutilized rent from the date of disconnection. Even though disconnection took place, the unutilized rent was not refunded and accordingly dispute was raised by the petitioner. The said dispute was referred to the Arbitrator in terms of Section 7(B) of the Act. The Arbitrator in the impugned award, in Annexure-5, held that an amount of Rs.1,70,475/- as demanded by the present opposite parties for the entire period of six years is payable by the petitioner.

The learned counsel appearing for the petitioner challenges the award on the ground that there was no agreement between the petitioner and opposite parties and in absence of any agreement, the dispute could not be referred to Arbitrator u/s 7(B) of the Act. It was also contended by the learned counsel for the petitioner that the disconnection having taken place much before expiry of guarantee period, proportionate rent should have been collected from the petitioner and the balance already deposited as advanced should have been refunded. According to the learned counsel for the petitioner-bank the service having not been utilized for entire period of six years, it was not liable to pay the demanded amount for the entire period.

Shri Das, the learned counsel appearing for the opposite parties, on the other hand, contended that there was no STD or other facility available to the petitioner in the locality and on the request of the petitioner, the T.P. Circuit was made available for both the branches and the Department had to incur huge expenditure for the purpose. Only after STD facility was made available, the bank stopped T.P. Circuit facilities and requested for disconnection.

It was contended by the learned counsel for the opposite parties that the Department having spent a huge amount of money only for the purpose of extending the facility to the petitioner, the award is justified and should not be interfered with.

We have perused the impugned order in Annexure-5, in which the Arbitrator has taken a note of the argument advanced by both sides and came to the conclusion that the T.P. Circuit was installed only for the use of the petitioner at Sunabeda and Damanjodi and there is no complaint available on record regarding non-functioning of the T.P. Circuit after installation. Considering the case of the respective parties, the Arbitrator has passed a reasoned award. In this connection, reference may be made to the decision of the Apex Court in the case of M.L. Jaggi v. Mahanagar Telephone Nigam Ltd. and Ors. reported in 1996 Supreme Court 2476. In the said decision the Apex Court interpreting the Section 7(B) of the Act held that the High Court, though does not act in exercising judicial review as a Court of appeal but within narrow limits of judicial review, it would consider the correctness and legality of the award.

We have examined the reasons given by the Arbitrator in the impugned award and do not find any reason to differ with the reasons given by him. The facility having been extended only for use by the petitioner bank and the opposite parties having spent huge amount for the purpose, non-utilization by the petitioner for the entire period of six years cannot absolve it from the liability of payment of the dues. Though there is no agreement between the parties but on reading of the relevant Section i.e. 7(B) of the Act, it appears that execution of agreement is not a pre-condition for referring any dispute for adjudication by an arbitrator.

In view of the decision made above, we do not find any merit in this writ application. Accordingly, the same stands dismissed.