LexMP RURAL ROAD DEVELOPMENT AUTHORITY & ANR. versus M/S. L.G. CHAUDHARY ENGINEERS & CONT.
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[2012] 2 S.C.R. 162 A MP RURAL ROAD DEVELOPMENT AUTHORITY & ANR. v. B M/S. L.G. CHAUDHARY ENGINEERS & CONT. (Civil Appeal No. 974 of 2012) JANUARY 24, 2012 [ASOK KUMAR GANGULY AND GYAN SUDHA MISRA, JJ.] Arbitration: Whether the provision of Madhya Pradesh C Arbitration Tribunal Act, 1983 which statutorily provides for the parties to the Works Contract to refer all disputes to the Arbitration Tribunal constituted u/s. 7 of the 1983 Act will continue to operate in view of the provisions of Arbitration and Conciliation Act, 1996 which is a Central Act, subsequently D enacted - In view of difference of opinion, matter referred to larger bench - Madhya Pradesh Arbitration Tribunal Act, 1983 - Arbitration and Conciliation Act, 1996. The appellant had entered into a 'Works Contract' E with the respondent for construction and maintenance of Rural Road Package. Clause 24 of the Contract contained the 'Dispute Redress Mechanism'. The case of the appellant was .that in view of several breaches in Works Contract by the respondent, the appellant terminated the Works Contract and encashed the bank guarantee F furnished by the respondent. ·On 29.8.2008, the respondent submitted a representation to the appellant against the encashment of bank guarantee. Prior to that on 5.8.2008, respondent G filed a writ petition challenging the encashment of bank guarantee and the writ petition was disposed of with a direction that the bank guarantee may not be encashed till the disposal of the representation. Thereafter, on 4.6.2009, the representation of the respondent was H 162 M.P. RURAL ROAD DEV AUTHORITY v. L.G CHAUDHARY 163 ENGINEERS & CONT rejected. In the pending dispute, the respondent A submitted additional claim on 24.2.2010 and requested ' the appellant to appoint an Arbitrator for adjudicating the dispute between the parties. On 24.4.2010, the appellant replied that Clause 25 of the Works Contract specifically provided for adjudication of disputes by the Arbitral B Tribunal under the Madhya Pradesh Arbitration Tribunal Act, 1983 (M.P. Act). Then on 24.6.2010 respondent filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A.C. Act 1996) for appointment of an Arbitrator before the High Court. On 8.9.2010, the High c Court allowed the application of the respondent and appointed an arbitrator by placing reliance on a decision of the Supreme Court in *Va Tech Escher Wyass Flovel Ltd. Vs. MPSE Board. The question which arose for consideration in the D instant appeal was whether the provision of the Madhya Pradesh Arbitration Tribunal Act, 1983 which statutorily provides for the parties to the Works Contract to refer all disputes to the Arbitration Tribunal constituted under Section 7 of the Act will continue to operate in view of the E provisions of Arbitration and Conciliation Act, 1996 which is a Central Act, subsequently enacted. Referring the matter to larger bench, the Court HELD: F Per Ganguly, J: 1. Perusal of Section 7 of the Madhya Pradesh Arbitration Tribunal Act, 1983 (M.P. Act) showed that the nature of the dispute between the parties in the instant case was covered by the definition under Section G 2(d) read with Section 2(1 ). As such under Section 7 such a dispute has to be statutorily referred to Tribunal set up under the M.P. Act. Reading of Section 2(4) of A.C. Act 1996 would show that Part-I of A.C. Act 1996, which is from Section 2 to Section 43, shall, except sub-section 1 H 164 SUPREME COURT REPORTS [2012] 2 S.C.R. A of Sections 40, 41 and 43, apply to every arbitration under any other enactment for the time being in force where the arbitration was pursuant to an arbitration agreement except insofar as the provisions of this Part i.e. Part-I are inconsistent with the other enactment or with any other B rule made thereunder. Similar provision relating to statutory arbitration was also there in Section 46 of Arbitration Act, 1940. The provisions of M.P. Act are inconsistent with the provisions of A.C. Act 1996. The M.P. Act is a special law providing for statutory arbitration c in the State of Madhya Pradesh even in the absence of arbitration agreement. Under the provisions of A.C. Act 1996, in the absence of an arbitration agreement, arbitration is not possible. There is also difference in the formation of arbitration tribunal as is clear from Section 0 2(1)(d) of A.C. Act 1996. Again under
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