STATE OF ORISSA & ORS. versus BHAGYADHAR DASH

Citation: [2011] 8 S.C.R. 967 · Decided: 04-07-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2011) 8 S.C.R. 967 
STATE OF ORISSA & ORS. 
v. 
BHAGYADHAR DASH 
(Civil Appeal No. 4933 of 2011) 
. JULY 04, 2011 
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.] 
Arbitration and Conciliation Act, 1996 - s.11 - Clause 
A 
B 
10 of the conditions of contract (forming part of the 
agreements between the State and the contractors) related to 
C 
power of the Engineer-in-Chief to make adciitions and 
alterations in the drawings and specifications and execution 
of non-tendered additional items of work - The last sentence 
of the proviso to cfause 10 provided that where in regard to a 
non-tendered additional work executed by the contractor, if the 
D 
contractor was not satisfied with the unilateral determination. 
of the rate therefor by the Engineer-in-Charge the rate for such 
work will be finally determined by the Superintending Engineer 
-
Disputes raised by contractors against the State 
Government - Applications filed by contractors u/s. 11 - _Chief E 
Justice of High Court held that the last sentence of the proviso 
to the said clause 10 was an arbitration agreement and 
appointed arbitrators to decide the disputes - On appeal, 
held: The last sentence of the proviso to clause 10 did not 
make the decision of the Superintending Engineer binding on 
F 
either party - The decision of Superintending Engineer was· 
not a judicial determination, but decision of one party which 
was open to challenge by the other party in a court of law -
That clause 10 was never intended to be an arbitration 
agreement is evident from the contract itself - The Standard 
Conditions of Contract of the state government, as originally G 
formulated consisted of a provision (Clause 23) relating to 
settlement of disputes by arbitration- The.said clause was 
deleted by the State Government fr.om the Standard 
967 
H 
968 
SUPREME COURT REPORTS 
[2011] 8 S.C.R. 
A Conditions of Contract by official Memorandum dated 
24.12.1981 - Contracts entered by the State Government 
subsequent to 24.12.1981, as in the instant cases, did not 
have the saic! arbitration clause, though the other Conditions 
of Contract remained the same -
When the State 
B Government consciously and intentionally deleted the 
provision for arbitration from its contracts, it will be a travesty 
of justice to read another clause in the contract providing for 
execution of non-tendered items and the method of 
determination of the rates therefor, as a provision for 
c arbitration - Orders of the High Court appointing the arbitrator 
set aside and applications for appointment of arbitrator 
dismissed. 
Clause 10 of the conditions of contract (forming part 
of the agreements between the State and the contractors) 
D related to power of the Engineer-in-Chief to make 
additions and alterations in the drawings ~nd 
specifications and execution of non-tendered additional 
items of work. The last sentence oi the proviso to clause 
10 provided that where in regard to a non-tendered 
E additional work executed by the contractor, if the 
contractor was not satisfied with the unilateral 
determination of the rate therefor by the Engineer-in-
Charge the rate for such work will be finally determined 
by the Superintending Engineer. The Chief Justice of 
F Orissa High Court held that the last sentence of the 
proviso to clause 10 was an arbitration agreement and 
allowed the applications filed by the contractors under 
Section 11 of the Arbitration and Conciliation Act 1996 
and appointed arbitrators to decide the disputes raised 
G by them against the State Government. 
H 
The appellants challenged the said orders on the 
ground that there was no arbitration agreement and 
therefore the applications under section 11 of the Act filed 
by the contractors ought to have been dismissed. 
STATE OF ORISSA & ORS. v. BHAGYADHAR DASH 969 
The question· that therefore arose for consideration 
A 
in the present appeal was whether the said clause 10 of 
the conditions of contract was an arbitration agreement. 
Allowing the appeals, the Court 
HELD:1.1. The clause for consideration in the instant 
B 
case i.e. Clause 10 of the Conditions of Contract provides 
for the following: a) that the Engineer-in-charge could 
make additions and alterations in the drawings/ 
specifications; and that such alterations and additions 
will not invalidate the contract, but will entitle the C 
contractor to extension of time for completion of work 
proportionately; b) that if the additional work be executed 
is an item for wh

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