# M/s Ganga Plumbering Works v. Kanpur Development Authority and others

- **Citation:** (2008) 1 ILRA 365
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2008-01-11
- **Case number:** Civil Misc. Arbitration Application No. 32 of 2004
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ganga-plumbering-works-v-kanpur-development-authority-and-others-41139
- **Pages:** 4

## Headnote

Arbitration Act- Agreement clause 24provides the decision of Chief Engineer
to be final to all-No reference of
arbitration-application for appointment
of arbitrator-held not maintainable.

Held: Para 9 & 10

The situation as obtaining in the case of
Damodar Das (Supra) has thus been
clearly excluded from the category of
cases which were covered in Jagdish
Chander (Supra). The clause in the
present case does not state that the
decision of the Superintending Engineer
on the dispute will be final and binding.
His role is principally with respect to
designs, specifications and execution of
the work.

This being so, the present agreement
clause
cannot
be
held
to
be
an
arbitration clause. The application is
dismissed.
Case law discussed:
AIR 1980 Supreme Court 1522, 1996 2
SCC 216, JT 1990(10) SC 555, JT
2005(3) SC 558, (2007) 5 Supreme Court
Cases 28, JT 2007 (6) SC 375.

## Text

1 All] M/s Ganga Plumbering Works V. Kanpur Development Authority and others
365

17. With the above observations,
the writ petition is allowed to the extent
indicated above. No order is passed as
to costs.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.01.2008

BEFORE
THE HON'BLE H.L. GOKHALE, C.J.

Civil Misc. Arbitration Application No. 32
of 2004

M/s Ganga Plumbering Works, Kanpur

...Applicant
Versus

The Kanpur Development Authority and
others

...Respondents

Counsel for the Applicant:
Sri. Shubham Agrawal

Counsel for the Respondents:
Sri. Ajit Kumar Singh

Arbitration Act- Agreement clause 24provides the decision of Chief Engineer
to be final to all-No reference of
arbitration-application for appointment
of arbitrator-held not maintainable.

Held: Para 9 & 10

The situation as obtaining in the case of
Damodar Das (Supra) has thus been
clearly excluded from the category of
cases which were covered in Jagdish
Chander (Supra). The clause in the
present case does not state that the
decision of the Superintending Engineer
on the dispute will be final and binding.
His role is principally with respect to
designs, specifications and execution of
the work.

This being so, the present agreement
clause
cannot
be
held
to
be
an
arbitration clause. The application is
dismissed.
Case law discussed:
AIR 1980 Supreme Court 1522, 1996 2
SCC 216, JT 1990(10) SC 555, JT
2005(3) SC 558, (2007) 5 Supreme Court
Cases 28, JT 2007 (6) SC 375.

(Delivered by Hon'ble H.L. Gokhale, C.J.)

1. Heard Mr. Shubham Agrawal in
support of this application.

2. The applicant herein claims to
have constructed some 125 houses for
the
respondent-Kanpur
Development
Authority. The agreement amount for
the construction of the houses has been
paid over to the applicant but the
security deposit has been forfeited. It is
to claim this security amount that the
applicant wants the dispute to be
referred for arbitration. The applicant is
relying
upon
Clause-24
of
the
agreement between the parties, which
Clause reads as follows:

"Clause
24.
Except
where
otherwise specified in the contract the
decision of the Chief Engineer for the
time being shall be final, conclusive and
binding on all parties to the contract
upon all question relating to the
meaning of the specifications, designs,
drawings and instructions herein before
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 these conditions, or otherwise
concerning the works, or the execution
or failure to execute the same, whether
arising during the progress of the work
366 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
or after the completion or abandonment
thereof the contract by the contractor,
shall be final, conclusive and binding on
the contractor."

3. It is material to note that an
identical clause having this matter first
came up for consideration before Apex
Court in the State of U.P. Vs Tipper
Chand reported in AIR 1980 Supreme
Court, 1522 where the clause provided
as follows:

"2. The suit out of which this
appeal has arisen was filed by the
respondent before us for recovery of
Rs.2,000 on acc6unt of dues recoverable
from the Irrigation Department of the
petitioner State for work done by the
plaintiff in pursuance of an agreement,
clause 22 of which runs thus:

"Except where otherwise specified
in the contract the decision of the
Superintending Engineer for the time
being shall be final, conclusive and
binding on all parties to the contract
upon all questions, relating to the
meaning of the specifications, design,
drawing and instructions herein before
mentioned.
The
decision
of
such
Engineer
as
to
the
quality
of
workmanship, or materials used on the
work, or as to any other question, claim,
light, matter or things whatsoever, in
any way arising out of or relating to the
contract,
designs,
drawing
specifications, estimates, instructions,
orders, or these 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
of the contract by the contractor, shall
also be final, conclusive and binding on
the contractor."

The Apex Court (a Bench of three
Judges) in the case of The State of U.P.
(supra) observed on this clause as
follows:

"After perusing the contents of the
said clause and hearing learned counsel
for the parties we find ourselves in
complete agreement with the view taken
by the High Court. Admittedly the
clause does not contain any express
arbitration agreement. Nor can such an
agreement be spelled out from its terms
by implications, there being no mention
in it of any dispute, much less of a
reference thereof. On the other hand, the
purpose of the clause clearly appears to
be to vest the Superintending Engineer
with supervision of the execution of the
work and administrative control over it
from time to time."

The Court therefore held that it was not
an arbitration clause.

4. A similar question came before
the Apex Court in State of Orissa vs.
Damodar Das (1996) 2 SCC 216. An
identical clause was there where also the
wording was with respect to the
meaning of the specifications designs,
drawings, etc. and the question with
respect to quality of workmanship or
any other question or rights were to be
decided by the concerned Engineer. The
Apex Court held that the same not to be
an arbitration clause.

5. This was followed in Executive
Engineer, REO vs. Suresh Chandra
Panda (Dead) Through Lrs. reported
at JT 1999 (1O) SC 555 where also the
1 All] M/s Ganga Plumbering Works V. Kanpur Development Authority and others
367
supervising authority was given to the
Superintending
Engineer
concerned
under
the
relevant
clause
of
the
agreement and a view was taken that it
did not come to Arbitration clause.

6. This was followed again in
State of Rajasthan vs. M/s Nav
Bharat Construction Co. reported in
JT 2005(3) SC 558 by a Bench of three
Judges on the consideration of a similar
clause and the Apex Court has again
held that the concerned Clause -23 in
that agreement will not be an arbitration
clause.

7. As far as the judgment in
Damodar Das (Supra) is concerned, it
came to be commented by the Apex
Court recently in Punjab State and
others vs. Dina Nath, reported in
(2007) 5 Supreme Court Cases 28. In
para 17, the Apex Court observed as
follows:

"17. From a plain reading of this
clause in Damodar Das it is evident that
the powers of the Public Health
Engineer were essentially to supervise
and inspect. His powers were limited to
the questions relating to the meaning of
the
specifications,
drawings
and
instructions, quality of workmanship or
materials used on the work, or as to any
other question, claim, right, matter,
drawings,
specifications,
estimates,
instructions, orders or these conditions,
or otherwise concerning the works or
the execution or failure to execute the
same. However, in the case before us,
the Superintending Engineer was given
full power to resolve any dispute arising
between the parties which power in our
view is wide enough to cover any nature
of dispute raised by the parties. The
clause in the instant case categorically
mentions the word "dispute" which
would be referred to him and states "his
decision
would
be
final
and
acceptable/binding on both the parties."

8. Mr. Agrawal, learned counsel
for the applicant submits that in the
present case, same kind of finality has
been given to the decision of the Chief
Engineer, therefore, it should be treated
as a Clause of Arbitration. He has relied
upon the judgment of the Apex Court in
the case of Jagdish Chander vs.
Ramesh Chander, reported in JT 2007
(6) SC 375. In para 8 of this judgment,
the Court has laid down the principles in
which the agreement will constitute an
arbitration
agreement.
They
are
principally four. (i) The intention of the
parties to enter into an arbitration
agreement is to be gathered. No specific
form of an arbitration agreement is
required.
(ii)
The
use
of
words
'arbitration' and 'arbitral tribunal' are not
required. The agreement has to be in
writing and there should be a provision
and that the decision on the dispute will
be binding on that. (iii) However, the
Court has added where the clause
relating
to
settlement
of
disputes,
contains
words
which
specifically
excluded any of the attributes of an
arbitration
agreement
or
contains
anything
that
detracts
from
an
arbitration agreement, it will not be an
arbitration agreement, and (iv) Again
the use of the words used is not very
material. In para 8 of this judgment the
Court referred to the judgment in the
case of State of Orissa vs. Damodar
Das (Supra) which stated only if an
agreement
to
refer
disputes
or
differences to arbitration is expressly or
368 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
impliedly spelt out from the clause,
there should be an arbitration clause.

9. The situation as obtaining in the
case of Damodar Das (Supra) has thus
been clearly excluded from the category
of cases which were covered in Jagdish
Chander (Supra). The clause in the
present case does not state that the
decision of the Superintending Engineer
on the dispute will be final and binding.
His role is principally with respect to
designs, specifications and execution of
the work.

10. This being so, the present
agreement clause cannot be held to be
an arbitration clause. The application is
dismissed.
---------