LexTHE HINDUSTAN CONSTRUCTION CO. LTD. versus GOVERNOR OF ORISSA AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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THE HINDUSTAN CONSTRUCTION CO. LTD.
v.
GOVERNOR OF ORISSA AND ORS.
MARCH 2, 1995
(AM. AHMADI, CTI, N.P. SINGH AND
SUJATA V. MANOHAR, JJ.]
A
B
Arbitration Act, 1940: Section 41A(l) Proviso and 41A(7}-Proviso
Cont:-act-Dispute-State party to the dispute-Reference to Arbitration
Tribuna~As dispute involved was for more than rupees one crore Tribunal C
directed State to refer the dispute to Special Tribuna~State Notification con-
stituting special Tribunal and referertce of dispute-Held within the scope of
Proviso tu Section 41A(J).
Award-Objections to-Constitution of Special Tribunal by State-Sub-
mission to jurisdiction without objection-Subsequent objections by State D
cannot be raised merely because award was against it.
Award--Power of Court to enlarge time for making Schedule-Implied
conditions-Condition No. 3-Should be read with Section 28-Tnounal
entering reference--subsequent thereto time for award extended by consent of E
partie~Award given by Tribunal within extended time held valid. .
Section 30-Award-Setting as.itie of-Scope of Court's power.
The appellant-Company entered into an agreement with the Respon·
dent-State for construction of a dam. In terms of the agreement, the work F
was to be completed by 30.9.1982 and the escalation charges were to be
paid to the contractor. On appellant-Company's request, the respondents
granted extension of time for completion of project by December, 1985 and
in the supplementary agreement it was provided that extra arrangement
for completion of the work as per the agreed schedule ~hould be done by
the contractor without liability to the Government of Orissa or without G
liability to both contracting parties. A dispute having arisen between the
parties on payment of escalation charges and certain other amounts, a
reference was made to the Arbitration Tribunal constituted under section
41-A of the Arbitration Act, 1940 as introduced by Arbitration (Orissa)
Amendment Act, 1982. ·Since the disputed amount was more than rupee H
441
442
SUPREME COURT REPORTS
[1995} 2 S.C.R.
A one crore, the Arbitration Tribunal directed the State Government to
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exercise its power under Proviso to Section 41A(l) and to refer the dispute
to Special Tribunal. Consequently by a Notification dated 6.5.88 the State
Government referred the dispute before a Special Tribunal and the State
submitted to its jurisdiction without raising any objections. After the
B special Tribunal entered reference, both the parties i.e. State and appel-
lant-company submitted memorandum before it on two occasions on the
basis of which the Tribunal extended time for submission of award for four
months on both the occasions. But when the Special Tribunal gave its
award the respondent-State raised oJ>jections. The Trial· Court rejected the
objections and made the award a rule of the Court.
c
On appeal by the Respondent-State the High Court set aside the
award on the ground that (1) the Constitution of the Special Tribunal
under Section 41A of the Act and the reference of the dispute by the State
Government which was already pending before the Arbitration Tribunal
for adjudication was without jurisdiction; (2) the Special Tribunal had no
D jurisdiction to enlarge the time for making of the award; and (3) the Award
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was otherwise invalid due to non-consideration of relevant materials avail-
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able on the record in respect of a question which was at issue. The High
Court accepted the contention of the State that in view of the no liability
clauses in the supplementary agreement, State Government was not bound
E to pay any charges under the head 'escalation'. Against the order of the
High Court the appellant-Company preferred an appeal before this Court.
Allowing the appeal and setting asi~e the order of the High Court,
this Court
F
HELD: 1. The Notification dated 6.S.1988 constituting the Special
Tribunal and referring the dispute to such Special Tribunal cannot be held
to be one in exercise of power under proviso to sub-section (7) of Section
41-A of the Arbitration Act, 1940. The said notification of reference to
Special Tribunal is within the scope of proviso to sub-section (1) of Section
G 41· A. (448-EJ
2. The State Government itself by a statutory notification constituted
the Special Tribunal and referred the dispute to said Special Tribunal. It
had not at any stage questioned before the Special Tribunal the jurisdic-
tion thereof to adjudicaExcerpt shown. Read the full judgment & AI analysis in Lexace.