1. This is an appeal from the order of the Subordinate Judge, 1st Class, Hissar, staying the proceedings of a suit on an application made under Section 34 of the Indian Arbitration Act 1940. It appears that the appellant entered into a contract with the Government (Public Works Department) for the excavation of earth in connection with the Bhakra-Main Branch in Tohana Division, District Hissar. Later on disputes arose between the parties regarding the payment of the bills and the plaintiff filed a suit on 16-12-1957 for the recovery of Rs. 95,655/- on the allegation that his full dues had not been paid by the Government. This suit was filed after the required notice under Section 80 of the CPC, was given on 19-9-1955.
2. On receiving the notice of the suit, the Punjab State filed an application under Section 34 of the Indian Arbitration Act, praying that the suit should be stayed as there was an arbitration clause in the contract which mentioned that in matters of dispute the case shall be referred to the Superintending Engineer of the Circle, whose order shall be final.
3. This application was opposed by the plaintiff, inter alia, on the grounds that there was no valid and binding contract between the parties to refer the subject-matter of the suit to arbitration; that the plaintiff was illiterate and the terms of the work order were never read over and explained to him; that the Superintending Engineer of the Circle was not a proper and fit person to act as am arbitrator between the parties because he was an employee of the defendant and under these circumstances, could not be an impartial person; and that the arbitration clause in the work order was vague and it was not clear as to which Superintending Engineer the matter had to be referred for arbitration.
4. On the pleadings of the parties, the following issues were framed:
1. Is the suit liable to be stayed under Section 34 of the Arbitration Act?
2. Was there a valid agreement between the parties to refer the matter to arbitration?
3. Relief.
5. The trial Judge held that there was a valid agreement between the parties to refer the matter to arbitration and the suit was liable to be stayed under section 34 of the Indian Arbitration Act. He, consequently, stayed the suit and ordered that the dispute be referred to the arbitration of the Superintending Engineer as stated in the work orders. The plaintiff has come here in appeal.
6. Learned counsel for the appellant has challenged the order of the Court below on the following three grounds:
1. The terms of the work order, which admittedly contained the arbitration clause No. 5, were never read over and explained to the plaintiff, who was illiterate and, consequently, he was not bound by this clause;
2. The arbitration clause in the work order was vague and the dispute could not be referred to She present Superintending Engineer, namely, Shri Mahdi Ratta, because he was not the Superintending Engineer of the Circle at the time when the dispute between the parties arose; and
3. In any case, in the circumstances of the present case, the dispute should not be referred to She Superintending Engineer of the Circle because the Department concerned had already dealt with this matter and had expressed a definite opinion against the claim of the plaintiff and in view of Shat the Superintending Engineer could not act as an arbitrator with an unbiased mind.”
7. With regard to the first ground, after hearing the counsel for the parties, I am of the opinion that there is no merit in the same. In his application dated 16-12-1957 for permission to file the suit in forma pauperis, the plaintiff had stated that he was an approved Government contractor of longstanding, and considerable experience, having executed works involving lacs of rupees. It is difficult to believe that a person of such experience would sign the work orders without knowing that there was an arbitration clause in the same. Besides, there is the evidence of Shri Karam Singh, Sub-Divisional Officer, who definitely stated that the terms of the work orders were read over to the plaintiff and he thereupon signed them in his presence. There is no reason to disbelieve Shri Karam Singh and I would, therefore, hold that the plaintiff knew about the arbitration clause in the work orders.
8. As regards the second ground, the learned counsel referred to clause (5) of the work order, which runs as follows:
“In matters of dispute, the case shall be referred to the Superintending Engineer of the Circle, whose order shall be final.”
9. and submitted that this clause was vague and, in any case, the dispute could only be referred to that Superintending Engineer of the Circle, during whose tenure the dispute between the parties actually arose. In the present case, that Superintending Engineer having been transferred, the present reference could not have been made to his successor. Reliance was placed by him on two authorities, namely, Governor-General in Council v. Simla Banking and Industrial Co., Ltd., AIR 1947 Lah 215 and Daulat Ram Rala Ram v. State of Punjab, AIR 1958 Punj 19. In AIR 1947 Lah 215, the arbitration clause was couched in a different language, namely,—
“…… the decision of the Superintending Engineer of the Circle for the time being shall be final ………. as to any question, claim etc., arising between the parties.”,
10. and is, therefore, not applicable to the facts of the present case. Besides, this authority was dissented from in Basantlal Jagatramka v. Dominion of India, AIR 1952 Cal 340. In Daulat Ram Ralla Ram's case, AIR 1958 Punj 19, the arbitration clause was almost in similar words as in the present case and, while interpreting this clause, Chopra, J. held as under:
“A clause in an arbitration agreement which says that ‘in matter of dispute, the case shall be referred to the Superintending Engineer of the Circle’ clearly means the gentleman holding the office when the dispute arises. If and when any dispute arises, the case is to be referred to the officer holding the post at the time.”
11. But in the same case, the learned Judge has observed as under:
“Moreover, nomination of the arbitrator is not by name, but by virtue of his office. On the transfer or retirement of the Superintending Engineer entitled to act, his successor is to take his place as the arbitrator. There is thus no uncertainty or ambiguity as regards the identity of the arbitrator.”
12. In my opinion, the dispute in the present case could be referred to the Superintending Engineer of the Circle at the time of the reference of the dispute. Thus there is no merit in this ground of the learned counsel as well.
13. As regards the third ground, learned counsel for the appellant relied upon three documents. The first, Exhibit P. 1, is a letter dated 16-7-1959 from the Superintending Engineer, 2nd Bhakra Main Line Circle, Hissar, addressed to the Chief Engineer, Irrigation Works, Punjab, Chandigarh, which was written in connection with the civil suit filed by the plaintiff. In this letter, it was stated as under:
“Most, of the items of his (plaintiff's) claim appear to have been greatly exaggerated, still the case has to be defended in the Court of Sub Judge, 1st Class, Hissar. The Executive Engineer, Arrears Division, is preparing the Jawab Dawah. As the items claimed by the contractor have not been specified explicitly and are more or less vague in character the preparation of Jawab Dawah would, take some time.”
14. The second document, Exhibit P-7, is a letter dated 7-11-1959, written by the Sub Divisional Officer, Tohana, to the Senior Subordinate Judge, Hissar, in connection with the execution of the decree of firm Ganga Ram-Bhagwan Dass, situated at Tohana, against the plaintiff and in which the Sub-Divisional Officer wrote to the Senior Subordinate Judge as under:
“The accounts of Shri Bachna Ram Aggarwal of Delhi were overhauled and nothing is due to him. A recovery of Rs. 2,805/- also stands against him.”
15. The third document, Exhibit P. 3, is a draft reply to the notice dated 19-9-1955 of the suit filed by the plaintiff, in which the claim of the contractor was considered to be baseless. This draft reply was signed by the Executive Engineer, Tohana Division.
16. On the basis of these documents, the learned counsel submitted that the Department, including the predecessor of the present Superintending Engineer of the Circle, has expressed its opinion with regard to the claim of the plaintiff and, therefore, the present Superintending Engineer would be placed in a very embarrassing position and he would not be able to deal with the dispute in an independent and impartial manner.
17. It is conceded by the learned counsel that the present Superintending Engineer of the Circle, who joined this post on 26-7-1959, had not written any of the abovementioned three documents and had not expressed any opinion with regard to the plaintiff's claim. It is also significant to mention that no officer or authority, who was in a higher position than the present Superintending Engineer of the Circle, had expressed any final opinion with regard to the plaintiff's claim because if that had been the case, then perhaps the present Superintending Engineer of the Circle would have been placed in an embarrassing position and it would have been difficult for him to express a different opinion than the one expressed by his senior officers. Learned counsel for the appellant also relied upon Union of India v. Narayan Cold Storage Ltd., AIR 1958 Punj 24, State of Punjab v. Jawahar Mal and Sons, Delhi, AIR 1959 Punj 424, Tolaram Nathmull v. Birla Jute Manufacturing Co., Ltd., ILR (1948) 2 Cal 171, Abdul Latiff v. Dost Mohd. and Co. Ltd., ILR 1949 All 647 : (AIR 1949 All 804) and Bristol Corporation v. John Aird and Co., 1913 AC 241, in support of his contention. But all these authorities are distinguishable on facts.
18. In this connection, learned counsel for the respondent relied on a decision of Grover, J. in the State of Punjab v. Karam Chand, F.A.O No. 114 of 1958, D/- 16-2-1959 (Punj), in which it was laid down that there was no reason to hold that the present Superintending Engineer was likely to be affected by the opinion of his predecessor and that no mala fides or departmental partiality could be attributed to the present officer, who could be expected to act in an impartial and unbiased manner. Therefore, there is no force in this ground of the learned counsel for the appellant as well.
19. It is beyond dispute that, ordinarily, it is the duty of the Courts to hold the parties to their agreement and they should be made to submit their disputes to the forum of their choice. Moreover, Section 34 of the Arbitration Act gives a discretion to the trial Court and where this discretion has been exercised in an arbitrary manner, as in the present case, the appellate Court should not interfere with the same. In view of what I have said above, I would dismiss this appeal. In the circumstances of this case, however, I would leave the parties to bear their own costs in this Court.
JE/J./D.H.Z
20. Appeal dismissed.