# M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT BOARD & ANR v. K.P. DWIVEDI

- **Citation:** [2021] 11 S.C.R. 1083
- **Court:** Supreme Court of India
- **Decided:** 2021-12-03
- **Case number:** Civil Appeal No. 6768 of 2021
- **Bench:** M. R. Shah, B.V. Nagarathna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-p-housing-and-infrastructure-development-board-anr-v-k-p-dwivedi-34740
- **Pages:** 23

## Headnote

Madhya Pradesh Madhyastham Adhikaran, 1983 - ss. 7 and
19 - Reference Petition and Revision Petition - Contract for
construction of houses was executed between appellants and
respondents - Dispute arose between the parties as regard to
extension of time for completion of work - Appellant rescinded the
contract - Respondent filed writ petition before the High Court -
The High Court by order dated with consensus of both the parties
appointed an arbitrator i.e. Housing Commissioner - The Arbitrator
passed an award dated 07.11.2008 rejecting the claim of the
respondent and granted relief to the appellant - Instead of
challenging the said award u/s. 34 of the Arbitration and
Conciliation Act, 1996, the respondent filed fresh reference petition
before M.P. Arbitration Tribunal u/s. 7 of the 1983 Act - M.P.
Arbitration Tribunal by order dated 27.02.2017 dismissed the claim
of the respondent as not maintainable since the claim was already
decided by the Arbitrator and the award had achieved finality -
Respondent then filed Arbitration Revision Petition before the High
Court u/s. 19 of the 1983 Act, which was allowed by the High Court
and Tribunal was directed to decide the reference/claim in
accordance with law - On appeal, held: The order passed by the
High Court referring dispute to the Arbitrator was a consent order
- The respondent-contractor participated in the arbitration
proceedings by submitting claim is binding on the parties by 'issue
estoppel' - The award passed by the Arbitrator was not challenged
and it has attained finality - As per s.19 of the 1983 Act, revision
application is maintainable only against the award passed by the
Arbitral Tribunal - In the instant case, the Arbitral Tribunal had
not passed any award - Even the High Court had not set aside the
award passed by the arbitrator - Technically, award passed by the
arbitrator stands - It is binding between the parties - Thus, the
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
impugned judgment and order passed by the High Court in the
Arbitration Revision petition is quashed and order passed by the
Arbitral Tribunal dated 27.02.2017 is restored.
Allowing the appeals, the Court
HELD: 1. The case of the respondent - contractor that the
earlier order passed by the High Court dated 20.08.2008 passed
in Writ Petition No.9131 of 2008, referring the dispute between
the parties for adjudication to the Arbitrator - Housing
Commissioner and thereafter the award declared by the Arbitrator
- Housing Commissioner dated 07.11.2008 are non-est and void
and therefore, it was open for the contractor to file a fresh
reference petition before the Arbitral Tribunal under Section 7
of the 1983 Act, cannot be accepted for the following reasons: (i)
It was the respondent - contractor who approached the High
Court by filing Writ Petition No.9131 of 2008 submitting that he
has invoked the arbitration clause; (ii) The order passed by the
High Court dated 20.08.2008 passed in Writ Petition No.9131 of
2008 referring the dispute between the parties to the Arbitrator
- Housing Commissioner was a consent order; (iii) Thereafter
the respondent - contractor submitted the claims before the
learned Arbitrator - Housing Commissioner; (iv) The learned
Arbitrator - Housing Commissioner passed an award which has
attained the finality; (v) That the review petition filed by the
contractor for clarification of the order dated 20.08.2008 passed
in Writ Petition No.9131 of 2008 to clarify the aforesaid order to
the extent that it did not take away the right of the contractor to
file the reference petition before the Arbitral Tribunal under the
1983 Act came to be rejected and the same also attained finality;
(vi) The claims submitted before the Arbitrator - Housing
Commissioner; before the High Court in Writ Petition No.9131
of 2008; and the claim submitted in Reference Petition before
the Arbitral Tribunal under the 1983 Act are the same without
any change; (vii) In the subsequent reference pe

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[2021] 11 S.C.R. 1083
1083
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
BOARD & ANR.
v.
K.P. DWIVEDI
(Civil Appeal No. 6768 of 2021)
DECEMBER 03, 2021
[M. R. SHAH AND B.V. NAGARATHNA, JJ.]
Madhya Pradesh Madhyastham Adhikaran, 1983 - ss. 7 and
19 - Reference Petition and Revision Petition - Contract for
construction of houses was executed between appellants and
respondents - Dispute arose between the parties as regard to
extension of time for completion of work - Appellant rescinded the
contract - Respondent filed writ petition before the High Court -
The High Court by order dated with consensus of both the parties
appointed an arbitrator i.e. Housing Commissioner - The Arbitrator
passed an award dated 07.11.2008 rejecting the claim of the
respondent and granted relief to the appellant - Instead of
challenging the said award u/s. 34 of the Arbitration and
Conciliation Act, 1996, the respondent filed fresh reference petition
before M.P. Arbitration Tribunal u/s. 7 of the 1983 Act - M.P.
Arbitration Tribunal by order dated 27.02.2017 dismissed the claim
of the respondent as not maintainable since the claim was already
decided by the Arbitrator and the award had achieved finality -
Respondent then filed Arbitration Revision Petition before the High
Court u/s. 19 of the 1983 Act, which was allowed by the High Court
and Tribunal was directed to decide the reference/claim in
accordance with law - On appeal, held: The order passed by the
High Court referring dispute to the Arbitrator was a consent order
- The respondent-contractor participated in the arbitration
proceedings by submitting claim is binding on the parties by 'issue
estoppel' - The award passed by the Arbitrator was not challenged
and it has attained finality - As per s.19 of the 1983 Act, revision
application is maintainable only against the award passed by the
Arbitral Tribunal - In the instant case, the Arbitral Tribunal had
not passed any award - Even the High Court had not set aside the
award passed by the arbitrator - Technically, award passed by the
arbitrator stands - It is binding between the parties - Thus, the
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
impugned judgment and order passed by the High Court in the
Arbitration Revision petition is quashed and order passed by the
Arbitral Tribunal dated 27.02.2017 is restored.
Allowing the appeals, the Court
HELD: 1. The case of the respondent - contractor that the
earlier order passed by the High Court dated 20.08.2008 passed
in Writ Petition No.9131 of 2008, referring the dispute between
the parties for adjudication to the Arbitrator - Housing
Commissioner and thereafter the award declared by the Arbitrator
- Housing Commissioner dated 07.11.2008 are non-est and void
and therefore, it was open for the contractor to file a fresh
reference petition before the Arbitral Tribunal under Section 7
of the 1983 Act, cannot be accepted for the following reasons: (i)
It was the respondent - contractor who approached the High
Court by filing Writ Petition No.9131 of 2008 submitting that he
has invoked the arbitration clause; (ii) The order passed by the
High Court dated 20.08.2008 passed in Writ Petition No.9131 of
2008 referring the dispute between the parties to the Arbitrator
- Housing Commissioner was a consent order; (iii) Thereafter
the respondent - contractor submitted the claims before the
learned Arbitrator - Housing Commissioner; (iv) The learned
Arbitrator - Housing Commissioner passed an award which has
attained the finality; (v) That the review petition filed by the
contractor for clarification of the order dated 20.08.2008 passed
in Writ Petition No.9131 of 2008 to clarify the aforesaid order to
the extent that it did not take away the right of the contractor to
file the reference petition before the Arbitral Tribunal under the
1983 Act came to be rejected and the same also attained finality;
(vi) The claims submitted before the Arbitrator - Housing
Commissioner; before the High Court in Writ Petition No.9131
of 2008; and the claim submitted in Reference Petition before
the Arbitral Tribunal under the 1983 Act are the same without
any change; (vii) In the subsequent reference petition before the
Arbitral Tribunal under the 1983 Act there was no reference to
the earlier order passed by the High Court in Writ Petition
No.9131 of 2008 referring the dispute between the parties for
adjudication to Arbitrator - Housing Commissioner and the award
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passed by the Arbitrator - Housing Commissioner. Thus, there
was a suppression on the part of the respondent - contractor;
(viii) The order passed by the High Court dated 20.08.2008 passed
in Writ Petition No.9131 of 2008 referring the dispute between
the parties for adjudication to the Arbitrator - Housing
Commissioner as such was a consent order and thereafter the
contractor participated in the arbitration proceedings before the
Arbitrator - Housing Commissioner by submitting the claim is
binding between the parties on the ground of 'issue estoppel'.
[Para 14][1101-G-H; 1102-A-H; 1103-A]
2. Apart from the fact that the award declared by the
Arbitrator - Housing Commissioner was not challenged by the
respondent - contractor, even, so long as the said award is not
challenged before the higher forum the same is binding between
the parties. Even the award or a nullity order has to be challenged
before the appropriate forum/higher forum. In the present case
it cannot be said that there was a total lack of jurisdiction of the
Arbitrator - Housing Commissioner in passing the award as it
was the High Court who passed the order with consent referring
the dispute between the parties for the adjudication to the
Arbitrator - Housing Commissioner. Therefore, unless and until
it was challenged by the contractor before the higher forum, the
respondent - contractor cannot be permitted to ignore and/or to
avoid the award passed by the Arbitrator - Housing
Commissioner dated 07.11.2008. [Para 16][1103-C-E]
3. Even otherwise, it is required to be noted that what was
filed before the High Court was the revision application filed by
the contractor under Section 19 of the 1983 Act rejecting the
reference petition as not maintainable. Therefore, as per Section
19 of the 1983 Act, Revision Application to the High Court shall
be maintainable only against the award passed by the Arbitral
Tribunal. Therefore, prima facie it appears that as such the order
passed by the Arbitral Tribunal rejecting the reference petition
was not maintainable as by order dated 27.02.2017, no award was
passed by the Tribunal. However, as no such objection was raised
before the High Court and no submission has been made by the
parties, we rest the matter there. [Para 17][1103-E-F; 1104-E-G]
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
BOARD v. K.P. DWIVEDI
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4. Even otherwise it is required to be noted that while
passing the impugned judgment and order, the High Court has
not set aside the award passed by the Arbitrator - Housing
Commissioner dated 07.11.2008. Therefore, technically speaking
the award passed by the Arbitrator - Housing Commissioner dated
07.11.2008 stands even today. It is binding between the parties.
So long as the award passed by the Arbitrator - Housing
Commissioner dated 07.11.2008 stands, there cannot be any
subsequent fresh proceeding with respect to the same claims
which were considered and adjudicated by the Arbitrator -
Housing Commissioner while passing the award dated 07.11.2008.
So long as the said award stands it is binding between the parties.
[Para 18][1104-G-H; 1105-A-B]
5. Even otherwise it is required to be noted that no
objection was raised by the respondent - contractor before the
Arbitrator - Housing Commissioner on the jurisdiction of the
Housing Commissioner to act as an Arbitrator. On the contrary,
the order passed by the High Court referring the dispute between
the parties for adjudication to the Arbitrator - Housing
Commissioner was a consent order and the respondent contractor
conceded to and accepted the said order and submitted his claim
before the Arbitrator - Housing Commissioner. The Arbitrator -
Housing Commissioner also passed an award on the said claim.
Therefore, as no objections were raised by the respondent -
contractor at the appropriate stage, the award cannot be annulled
subsequently. At the cost of repetition, it is observed that at no
point of time the respondent - contractor had challenged the award
passed by the Arbitrator - Housing Commissioner and even no
court has set aside the award declared by the Arbitrator - Housing
Commissioner dated 07.11.2008 and the same has attained finality.
Therefore, the same is binding between the parties. Hence, the
subsequent fresh reference petition before the Arbitral Tribunal
under the 1983 Act for the very same claims which were raised
before the Arbitrator - Housing Commissioner would not be
maintainable at all. This Court agrees with the view taken by the
Arbitral Tribunal. [Para 19][1105-B-F]
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Madhya Pradesh Rural Road Development Authority
and Another vs. L.G. Chaudhary Engineers and
Contractors, (2018) 10 SCC 826 : 2018 (5) SCALE
103; Hope Plantations Ltd. vs Taluk Land Board,
Peermade and Another, (1999) 5 SCC 590 : [1998] 2
Suppl. SCR 514; Bhanu Kumar Jain vs Archana Kumar
and Another, (2005)1 SCC 787 : [2004] 6 Suppl. SCR
1104; Pushpa Devi Bhagat (D) Th. LR. Sadhna Rai
(Smt.) vs. Rajinder Singh & Ors., (2006) 5 SCC 566 :
[2006] 3 Suppl. SCR 370; Rafique Bibi (Dead) By Lrs.
vs. Sayed Waliuddin (Dead) by LRs and others, (2004)
1 SCC 287 : [2003] 3 Suppl. SCR 100; M.P.Road
Development Authority and Anr. vs. L.G. Chaudhary
Engineers & Contractors reported in (2012) 3 SCC 495
: [ 2012] 2 SCR 162; M.P. Rural Road Development
Authority and Anr. vs. L.G. Chaudhary Engineers &
Contractors reported in (2018) 10 SCC 826: 2018 (5 )
SCALE 103; Viva Highways Ltd. vs. MP Rural Road
Development Corporation Ltd. I.A.No.14 of 2017
decided by the Full Bench of Madhya Pradesh High
Court; M/s Essel Infra Projects Ltd. vs. The State of
MP in Civil Appeal No.4250 of 2018 decided by the
Supreme Court of India; Hindustan Zinc Ltd. vs. Ajmer
Vidyut Vitran Nigam Ltd., (2019) 17 SCC 82: [2019]
15 SCR 113 - referred to.
Case Law Reference
[1998] 2 Suppl. SCR 514
referred to
Para 6.6
[2004] 6 Suppl. SCR 1104
referred to
Para 6.6
[2006] 3 Suppl. SCR 370
referred to
Para 6.7
[2003] 3 Suppl. SCR 100
referred to
Para 6.7
[2012] 2 SCR 162
referred to
Para 8.2
[2019] 15 SCR 113
referred to
Para 8.6
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
BOARD v. K.P. DWIVEDI
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.6768 of
2021.
From the Judgment and Order dated 08.05.2018 of the High Court
of Madhya Pradesh, Main Seat Jabalpur in Arbitration Revision No.13
of 2017.
With
Civil Appeal Nos. 6769 and 6770 of 2021.
Bharat Singh, AAG, Arjun Garg, Ms. Sagun Srivastava, Advs. for
the Appellants.
Kavin Gulati, Sr. Adv., Anuj Tyagi, Ms. Maitry Kakade, Advs. for
the Respondent.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 08.05.2018 passed by the High Court of Madhya Pradesh
in Arbitration Revision Nos.11, 12 & 13 of 2017 by which the High
Court has quashed and set aside the orders passed by the Madhya
Pradesh Arbitration Tribunal, Bhopal and has directed the said Tribunal
to decide the respective references on merits, Madhya Pradesh Housing
and Infrastructure Development Board and another have preferred the
present appeals.
2. As common question of law and facts arise in these group of
appeals, all these appeals are decided and disposed of together by this
common judgment and order.
For the sake of convenience Civil Appeal No.6768 of 2021 arising
out of Special Leave Petition No.32557 of 2018 arising out of the impugned
judgment and order passed by the High Court of Madhya Pradesh in
Arbitration Revision No.13 of 2017 is treated and considered as the lead
matter and the facts in the said appeal are narrated which in nutshell are
as under:
2.1 Appellants floated a tender for construction of houses at Riviera
Town, Near MANIT Square, Bhopal. Contract was awarded to the
respondent herein. An agreement dated 15.07.2005 was executed
between the appellants and the respondent. In the year 2008, the disputes
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arose between the parties. According to the appellants, the respondent
was supposed to complete the work within 18 months. However, despite
granting repeated extensions, the contractor failed to complete the work,
on account of which, appellants rescinded the contract by invoking clause
3 of the contract agreement. Aggrieved by the order dated 30.06.2008,
rescinding the contract, the respondent - contractor by invoking clause
29 of the contract agreement filed a claim petition along with granting
extension of time upto 31.03.2009 before the Deputy Housing
Commissioner, Bhopal. The respondent - contractor also filed a writ
petition before the High Court seeking direction to permit him to complete
the work. High Court vide Order dated 20.08.2008 disposed of the said
petition on a joint consensus of the parties that the dispute shall be decided
by the arbitrator i.e., Housing Commissioner, M.P. Housing Board within
the stipulated period. The respondent - contractor thereafter filed a
modified claim before the Office of the Housing Commissioner along
with prayer for grant of extension of time. Thus, the respondent -
contractor participated in the arbitration proceedings before the Housing
Commissioner, M.P. Housing Board. That the learned Arbitrator passed
an award on 07.11.2008 rejecting the claim of the respondent - contractor
and granting some relief in favour of the appellants. Instead of challenging
the said award by way of an application under Section 34 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as 'Arbitration Act,
1996'), the respondent filed a fresh Reference Petition before the Madhya
Pradesh Arbitration Tribunal under Section 7 of the Madhya Pradesh
Madhyastham Adhikaran, Vindhyachal, Bhopal, (hereinafter referred to
as 'the 1983 Act'). The appellants filed their written statements on various
grounds along with preliminary objections including that the dispute has
already been decided by the Arbitrator vide award dated 07.11.2008
which was duly constituted by the High Court and therefore, the fresh
claim petition for the same claim before the M.P. Arbitration Tribunal,
Bhopal was not maintainable. It was also submitted that the award passed
by the Arbitrator had already achieved finality and therefore, the dispute
for the said claim cannot be entertained by the Tribunal subsequently.
Vide order dated 27.02.2017 the learned M.P. Arbitration Tribunal, Bhopal
dismissed the said claim/reference as not maintainable since claim made
by the respondent had already been decided by the Arbitrator appointed
by the High Court and the award passed by the learned Arbitrator had
achieved finality and so the dispute for the said claim could not be
entertained by the learned Tribunal subsequently.
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
BOARD v. K.P. DWIVEDI [M. R. SHAH, J.]
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[2021] 11 S.C.R.
3. Having realized that the earlier order dated 20.08.2008 passed
in W.P. No.9131 of 2008 by which the dispute was referred for arbitration
to the Housing Commissioner would come in his way, as an afterthought,
the respondent - contractor filed a review petition in the month of May,
2017 seeking clarification of the order dated 20.08.2008 passed in W.P.
No.9131 of 2008 to the extent that by directing the adjudication of the
dispute by the Housing Commissioner, it did not take away the jurisdiction
of learned Arbitral Tribunal constituted under the 1983 Act. It appears
that in the mean time the full Bench of the High Court of Madhya Pradesh
vide judgment and order dated 05.05.2017 held that if an agreement falls
within the definition of 'works contract' then the dispute arising from
such an agreement shall be adjudicated by the Tribunal under the 1983
Act. The review application was opposed by the appellants. Vide order
dated 07.09.2017, the High Court dismissed the review petition by
observing that the case did not fall within the review jurisdiction of the
Court under Order 47 Rule 1, CPC.
3.1 That after the dismissal of the review petition, the respondent
- contractor filed the present Arbitration Revision Petition before the
High Court under Section 19 of the 1983 Act challenging the order passed
by the learned Tribunal dated 27.02.2017 dismissing the claim/reference
as not maintainable. By the impugned judgment and order the High Court
has allowed the said revision and has quashed and set aside the order
passed by the learned Tribunal dated 27.02.2017 and has directed the
learned Arbitral Tribunal constituted under the 1983 Act to decide the
reference/claim on merits and in accordance with law.
4. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court, M.P. Housing and Infrastructure
Development Board has preferred the present appeal.
5. Shri Bharat Singh, learned AAG has appeared for the appellants
and Shri Kavin Gulati, learned Senior Advocate has appeared for the
respondent - contractor in the respective appeals.
6. Shri Bharat Singh, learned counsel appearing on behalf of the
appellants has vehemently submitted that the impugned judgment and
order passed by the High Court quashing and setting aside the order
passed by the learned Arbitral Tribunal dated 27.02.2017 by which the
learned Arbitral Tribunal dismissed the reference/claim petition filed by
the respondent - contractor as not maintainable, in view of the earlier
award passed by the learned Arbitrator and directing the learned Arbitral
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Tribunal to entertain the claim reference and to decide the same on
merits is unsustainable in law as well as on facts.
6.1 It is urged by learned counsel appearing on behalf of the
appellants that the High Court while passing the impugned judgment and
order has not at all appreciated and considered the fact that earlier the
dispute between the parties was referred to the Arbitrator- Housing
Commissioner by the High Court and that too in the petition filed by the
respondent - contractor himself. It is submitted that the High Court has
not at all appreciated the fact that as such the learned Arbitrator appointed
pursuant to the order passed by the High Court had passed an award
which had attained finality inasmuch as the said award had not been
challenged by the respondent - contractor by way of appeal under Section
34 of the Arbitration Act, 1996.
6.2 It is contended that the learned Arbitrator had passed an award
and the only remedy available to the respondent - contractor was to
challenge the same by way of an appeal under Section 34 of the Arbitration
Act, 1996, which remedy the respondent - contractor had failed to avail.
It is submitted that instead he filed a fresh claim petition before the
learned Arbitral Tribunal constituted under the 1983 Act which as such
and as rightly observed by the Arbitral Tribunal was not maintainable.
6.3 It is further submitted that the order passed by the High Court
referring the dispute between the parties to the Arbitrator - Housing
Commissioner was a consent order and the same was as per the relevant
arbitration clause in the agreement entered into between the parties.
6.4 It is further urged that even subsequent to the order passed by
the Arbitral Tribunal dated 27.02.2017, with a mala fide intention as an
afterthought, the respondent - contractor filed a review application before
the High Court challenging the consent order dated 20.08.2008 i.e., after
a period of 9 years of the order and the said review petition had also
came to be dismissed by the High Court. It is submitted that even
dismissal of the review petition had also attained the finality and the
same was not carried further. It is urged that therefore, it was not open
for the respondent - contractor to file a fresh claim petition for the same
claim which was made before the learned Arbitrator - Housing
Commissioner constituted pursuant the order passed by the High Court.
6.5 It is submitted that in the case of Madhya Pradesh Rural
Road Development Authority and Another vs. L.G. Chaudhary
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
BOARD v. K.P. DWIVEDI [M. R. SHAH, J.]
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Engineers and Contractors, (2018) 10 SCC 826, relating to the issue
of jurisdiction of the M.P. Tribunal, this Hon'ble Court has categorically
held that if no objection to the jurisdiction of the arbitration was taken at
the relevant stage, that award cannot be annulled only on that ground. It
is urged that in the present case no such objection was raised by the
respondent - contractor at the relevant stage. It is urged that in fact, the
entire proceedings before the Arbitrator - Housing Commissioner was
at the behest of the respondent - contractor, as it was he who filed the
writ petition culminating in the consent order appointing an arbitrator,
and then filed a claim.
6.6 It is contended that even a fresh reference petition by the
respondent - contractor is also not maintainable in view of the principle
of Issue Estoppel. Reliance is placed on the decisions of this Court in
Hope Plantations Ltd. vs Taluk Land Board, Peermade and
Another, (1999) 5 SCC 590 and Bhanu Kumar Jain vs Archana
Kumar and Another, (2005) 1 SCC 787.
6.7 It is further contended that the claim of the respondent -
contractor that the judgment passed by the High Court in the year 2008
was contrary to law and cannot confer jurisdiction on the arbitrator is
misconceived and erroneous for the reason that the order was passed
with consent and even if the order is wrong, it will continue to bind the
parties until and unless it is set aside by a competent court. Reliance is
placed on the decisions of this Court in the case of Pushpa Devi Bhagat
(D) Th. LR. Sadhna Rai (Smt.) vs. Rajinder Singh & Ors., (2006)
5 SCC 566 (para 17) and Rafique Bibi (Dead) By Lrs. vs. Sayed
Waliuddin (Dead) by LRs and others, (2004) 1 SCC 287 (paras 7
and 8).
7. Making the above submissions and relying upon the above
decisions, it is prayed to allow the present appeals and set aside the
impugned judgment and orders passed by the High Court.
8. Present appeals are vehemently opposed by Shri Kavin Gulati,
learned Senior Advocate appearing on behalf of respondent - contractor.
It is submitted that the 1983 Act is a Special Act providing for statutory
and compulsory arbitration under the said Act for disputes pertaining to
'works contract'. It is submitted that Section 7 of the Act provides that
either party to a 'works contract'.... shall irrespective of the fact whether
the agreement contains an arbitration clause or not, refer in writing the
dispute to the Tribunal. It is contended that the term 'dispute' is defined
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in Section 2(d) to mean a claim having a value of Rs.50,000/- or more. It
is contended that therefore the claims above Rs.50,000/- are to be
compulsorily brought before the Tribunal constituted under Section 3 of
the 1983 Act.
8.1 It is urged that even as per Section 7B of the 1983 Act no
dispute can be referred to the Arbitration Tribunal unless the dispute is
first referred for decision of the final authority under the scope of the
term 'works contract'. It is only once a decision is made or if the authority
fails to make a decision can a claim be preferred before the Tribunal.
8.2 It is submitted that the 1983 Act is a Special Act insofar as the
State of M.P. is concerned, and therefore it will prevail over the provisions
of the Arbitration Act, 1996. Reliance is placed on the decision of this
Court in the case of M.P. Rural Road Development Authority and
Anr. vs. L.G. Chaudhary Engineers & Contractors reported in (2012)
3 SCC 495 and the subsequent decision in M.P. Rural Road
Development Authority and Anr. vs. L.G. Chaudhary Engineers
& Contractors reported in (2018) 10 SCC 826.
8.3 It is submitted that the full Bench of the Madhya Pradesh
High Court has also taken the same view in the case of Viva Highways
Ltd. vs. MP Rural Road Development Corporation Ltd. in AA
No. 14 of 2017 and connected matters. It is submitted that the said
judgment has been approved by this Hon'ble Court in the case of M/s
Essel Infra Projects Ltd. vs. The State of MP in Civil Appeal No.4250
of 2018.
8.4 It is submitted that in the present case, arbitration clause
contained in Clause 29 of the Agreement contemplates a two-stage
adjudication. At the first stage a reference has to be made to the Deputy
Housing Commissioner for his decision. If the amount is above Rs.25,000/
- then the papers have to be placed before the Housing Commissioner.
This constitutes the first stage. The second stage then contemplates
that, if the parties are aggrieved by the decision of the Deputy Housing
Commissioner, then the dispute will be referred to the Additional Housing
Commissioner subject to the jurisdiction and limitations in accordance
with the provisions of the 1983 Act. It is submitted that even the Additional
Commissioner can only deal with the disputes which are only below
Rs.50,000/- as disputes above that amount are statutorily referable to
the arbitration by the learned Tribunal as is clear from Sections 3, 7, 2(d)
and 7B of the 1983 Act.
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
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8.5 It is submitted that in the present case, the contract in question
was terminated on 30.06.2008 and a claim was preferred before the
Deputy Housing Commissioner on 11.07.2008. Since the contract was
terminated and the appellants herein were inviting fresh tenders and
also seizing the machinery and material of the respondent - contractor, a
Writ Petition was filed bearing no.9131 of 2008 before the High Court to
expedite the conclusion of the first stage of adjudication, under the threat
of imminent monetary losses. It is submitted that the Hon'ble High Court
by its order dated 20.08.2008 after recording the submissions of the
respondent - contractor directed the Housing Commissioner to decide
the dispute within the period stipulated in the agreement. It is submitted
that as there was delay by the Deputy Housing Commissioner in taking
the decision, a direction was to the Housing Commissioner to decide the
issue, as the amount in dispute was more than Rs.25,000/- and it is only
the Housing Commissioner who could take a decision as per Clause 29
of the Contract. Liberty was also granted by the High Court to both
parties to seek a redressal of their grievances against the final outcome
by approaching the court of law. It is submitted that thus it can be seen
that the direction of the Hon'ble High Court was consistent with Clause
29 as this represented a decision which would be the first stage of
resolution of dispute as per Clause 29. It is submitted that the Housing
Commissioner by an order dated 07.11.2008 by an ex-parte order
dismissed the claims of the respondent - contractor. Immediately
thereafter, in line with Clause 29 of the Agreement and Sections 7 and
7B of the 1983 Act, a reference was preferred by the respondent -
contractor herein under the 1983 Act. It is contended that the decision
of the Housing Commissioner dated 07.11.2008 cannot be said to be a
decision under the Arbitration Act, 1996. It is therefore urged that the
respondent was not required to file the objections under Section 34 of
the Arbitration Act, 1996 as contended on behalf of the appellants.
It is submitted that a reference filed by the respondent - contractor
after the order of the Housing Commissioner was maintainable only
after the order of the Housing Commissioner dated 07.11.2008 and not
before that. It is therefore submitted that the respondent - contractor
has acted strictly in accordance with Sections 7 and 7B of the 1983 Act
read with Clause 29 of the Contract.
8.6 Alternatively, it is submitted assuming that even if the order of
the Housing Commissioner dated 07.11.2008 is considered to be under
the Arbitration Act, 1996, the same would be non-est as any arbitration
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relating to 'works contract' in M.P. could only be under the 1983 Act.
The fact of the respondent - contractor having consented to appear
before the Housing Commissioner would be immaterial as the proceedings
under the Arbitration Act, 1996 were without jurisdiction and void abinitio. Reliance is placed on the decision of this Court in Hindustan
Zinc Ltd. vs. Ajmer Vidyut Vitran Nigam Ltd., (2019) 17 SCC 82.
Relying upon the above decisions it is prayed to dismiss the present
appeals.
9. Heard learned counsel for the respective parties at length.
10. The short question which is posed before this Court for
consideration is, whether, in view of the award declared by the Housing
Commissioner, M.P. Housing Board, who was appointed as an arbitrator
pursuant to the order passed by the High Court in Writ Petition No.9131
of 2008, was it open for the respondent - contractor thereafter to file a
reference before M.P. Arbitration Tribunal with respect to the very claim/
claims which were the subject matter of arbitration before the Arbitrator
- Housing Commissioner.
It is the case on behalf of the respondent - contractor that as the
contract was a 'works contract' and therefore, the dispute between the
appellants and the respondent - contractor could only be decided by the
learned Arbitral Tribunal constituted under the 1983 Act, therefore, the
Housing Commissioner had no authority to act as an arbitrator and decide
the dispute between the parties and the award passed by the Arbitrator
- Housing Commissioner can be said to be non-est and wholly without
jurisdiction.
11. While considering the aforesaid issue and the submissions made
by the learned counsel of the respective parties, first of all the reliefs
which were prayed by the respondent - contractor in Writ Petition
No.9131 of 2008 and the respective claims made by the respondent -
contractor before the High Court in Writ Petition No. 9131 of 2008,
before the Arbitrator - Housing Commissioner and before the learned
Arbitral Tribunal are required to be referred to and considered.
11.1 In the Writ Petition No.9131 of 2008 the respondent -
contractor prayed for the following reliefs:
(a)
"To direct the Respondents to complete the arbitration
proceedings.
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
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(b)
To direct the Respondents not to cancel the agreement and
be permitted the Petitioner to complete the work and quash
the order of tender dated 20.07.2008 (Annexure P/22) and
dated 27.07.2008 Annexure P/23).
(c)
Set aside the order dated 30.06.2007 (Annexure P/19)
passed by the Executive Engineer.
(d)
To direct the Respondents to pay the amount of outstanding
dues of Rs. 17835925.00 with interest and compensation
of ten crores.
(e)
To direct the Respondents not to award the contract to any
other person and also direct the Respondents to decide the
arbitration, after affording the proper opportunity to the
Petitioner.
(f)
To call the relevant records
(g)
Any other order/ orders, directions which this Hon'ble Court
deems fit and proper may kindly be also granted."
11.2 That thereafter the High Court passed the following order
dated 20.08.2008:
"Shri Sameer Seth, Counsel for the Petitioner.
Shri T.S. Ruprah, Sr. Counsel with Shri Harmeet Singh, Counsel
for Respondents/ M.P. Housing Board.
Learned counsel for the Petitioner fairly stated that the arbitration
clause in the agreement has been invoked by submitting reference
vide Annexure P20. He drew attention of this Court to the prayer
for interim relief regarding restraining from inviting tender for the
remaining work. He stated at Bar that no order has been passed
on the prayer for interim relief.
This being so, this petition is disposed of with a joint consensus of
the learned Counsel for the parties in the following manner:-
(i) The arbitrator i.e. Housing Commissioner, M.P. Housing Board
would decide the dispute in arbitration within the period stipulated
in the agreement.
(ii) A decision on the interim prayer made on the interim page-25
of the reference (Annexure P20) would be taken within a period
of one week from today.
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(iii) Till then no work order be issued pursuant to the fresh tender.
(iv) Petitioner would also be at liberty to move a separate
application within three days with regard to the relief granted vide
interim order dated 07.08.2008. A decision on such application, if
filed, would be taken in an expeditious manner preferably within a
week. Interim order dated 07.08.2008 shall continue to operate
till a decision on such interim application is taken.
Petition, accordingly stands disposed of with an observation
that the aggrieved party, in case of grievance against the final
outcome, shall have a right to approach the Court of law."
11.3 Thereafter it was the respondent - contractor who himself
submitted the claim before the Arbitrator - Housing Commissioner. The
Arbitrator - Housing Commissioner issued notice upon the respondent -
contractor. However, after submitting the claims, the respondent -
contractor did not appear before the learned Arbitrator - Housing
Commissioner and consequently on appreciation of evidence and
considering the submissions made on behalf of the appellant, the learned
Arbitrator - Housing Commissioner passed an award dated 07.11.2008.
Subsequently, respondent - contractor filed a reference before the learned
Arbitral Tribunal constituted under the provisions of 1983 Act making
the very claims which were made before the High Court in Writ Petition
No.9131 of 2008 as well as made before the learned Arbitrator - Housing
Commissioner.
At this stage, it is required to be noted that in the Reference Petition
there was no reference to the order passed by the High Court in Writ
Petition No.9131 of 2008 referring the disputes between the parties to
the Arbitrator - Housing Commissioner and thereafter submitting the
claims before the Housing Commissioner and the award passed by the
learned Arbitrator - Housing Commissioner dated 07.11.2008. A detailed
written statement was filed. The relevant extracts of the written
statement are as under:
1.
"The claim was also filed by the petitioner to the Housing
Commissioner of Respondents which was duly decided
complying with the directions of the Hon'ble High Court of
M.P.
2.
The Hon'ble High Court by Order dated 20.08.2008 in Writ
Petition No. 9131/2008 directed the Commissioner of M.P.
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
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Housing Board to decide the application of interim stay filed
by the Contractor before re-tendering of the works. The
Directions were also issued for final hearing under clause
29 of the agreement with in the provision of agreement.
The Hon'ble Commissioner had fully complied with the
directions of the Hon'ble High Court and the Contractor
was duly notice but even than the Contractor did not take
any pains even to see the order of Commissioner dt.
07.11.08, which was passed by him in compliance with the
directions of the Hon'ble High Court.
3.
The petitioner is not entitled to claim any relief as he has
not come before this Hon'ble M.P. Arbitration Tribunal with
clean hands and the facts of paramount importance have
been deliberately suppressed by the petitioner in the said
petition.
4.
That as per the directions order by Hon. High Court, the
matter has already been decided and award has already
been passed and duly acknowledged by the petitioner hence
the petition filed before the Hon'ble MP Arbitration Tribunal
deserved to be dismissed, no relief can be claimed.
5.
That the petitioner has duly accepted the award as it evident
from his action that he has accepted the payment so ordered
by the Arbitrator the Housing Commissioner in the said
award. In compliance with the award dated 07.11.2008
passed by the Commissioner the petitioner has already
received the payment as per award as is evident from the
letter dated 02.11.2009 the award so received is Rs.
3,57,000/- in total through cheque dated 02.01.2009.
6.
That from the action and reactions of petitioner it is evident
that the petitioner has accepted the award without
challenging it before the appropriate court prior to accepting
the payments awarded by the Arbitrator in the light of orders
of Hon'ble High Court has been accepted and agreed by
the Petitioner. Keeping in view of this legal proceedings,
this petition of the Petitioner does not even deserves for
admission as the final adjudication was complete by the
Order of the Commissioner, M.P. Housing Board, issued
under the directions of the Hon'ble High Court."
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11.4 That the appellants filed I.A. No.1 raising preliminary issues
with respect to maintainability of the reference before the learned
Tribunal. The learned Arbitral Tribunal framed the following preliminary
issues:
"(i) Whether the Petitioner has complied with provisions of clause
29 before approaching this Tribunal?
(ii) Whether the Petitioner has no locus standi to file the petition
when the appointed arbitrator by the Hon'ble High Court with
consent passed the award dated 07.11.2008 and acted upon?"
11.5 That by a detailed order and considering the order passed by
the High Court dated 20.08.2008 referring the disputes between the
parties to the Arbitrator - Housing Commissioner; the claims made before
the High Court as well as before the learned Tribunal dismissed the
reference by holding that the Reference Petition is not maintainable.
While dismissing the Reference Petition as not maintainable in para 18,
the learned Arbitral Tribunal observed as under:
"On perusal of the order dated 20.08.2008 (Ex. D/18) passed by
the Hon'ble High Court it seems that the said order was passed
with the consent of both the parties. The order indicates that the
Housing Commissioner was appointed as arbitrator to decide the
dispute between the parties. The contention of the learned Counsel
of the Petitioner that the Housing Commissioner was directed to
decide the Petitioner's quantified claim by invoking clause 29 as
competent authority does not appear to be acceptable because
the Housing Commissioner has been designated in the order as
the Arbitrator. Moreover, the Housing Commissioner was not
directed to decide the dispute as competent authority. Apart from
this, under clause 29 there are only two competent authorities,
first, is Dy. Housing Commissioner and if he fails to decide the
dispute within 60 days second is Additional Housing Commissioner.
There is no provision to decide the quantified claim by the 3rd
competent authority. Besides it, Hon'ble High Court has no power
to create/ appoint a third competent authority by invoking the power
clause 29 of the agreement, but Hon'ble High Court has the power
to appoint an arbitrator under Section 11 (6) of the Act, 1996.
Therefore, keeping in view the aforesaid facts, it can only be
inferred that the Hon'ble High Court exercising the power vested
in it under Article 227 of the Constitution of India appointed the
M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT
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Housing Commissioner as Arbitrator to decide the dispute.