(1) This revision is directed against the order passed by the subordinate judge, nellore in o. P. No. 63/1992 whereby one sri p. Ramachandra raju, retired judge of the high court of andhra pradesh has been appointed as the sole arbitrator under section 8 of the arbitration act.
(2) Looking to the limited scope of the revision, it is not necessary to mention in detail the facts of the case. Suffice it to say that in answer to an invitation to submit tenders for the work of formation of earthern dam, the 1st respondent had submitted his tender which was accepted by the concerned department and in pursuance thereof, an agreement between the petitioners and the 1st respondent was executed. A dispute arose between the parties to the agreement, that is to say between the petitioners and the 1st respondent, and, therefore, as per clause 73 of the agreement read with additional condition no. 25 of the agreement, the 1 st respondent asked the 2nd petitioner to refer the matter to the arbitrator to decide the dispute and for grant of relief of rs. 1,54,87,609/ -. But the 2nd petitioner failed to take steps and, therefore, the 1st respondent moved the court to act as arbitrator. The court declined to act as arbitrator and, therefore, he filed an application under section 8 of the arbitration act for appointment of sole arbitrator. The petitioners, through their counter, denied the allegations made by the 1st respondent as also, the aforementioned claim. They denied that they had commitied breachof contract. They alleged that the 1 st respondent has to file a regular civil suit for the alleged reliefs claimed by him because there is no provision in the agreement in question for appointment of arbitrator for such claims which are beyond rs. 50,000/ - and, therefore, the petition for appointment of arbitrator is not maintainable.
(3) The lower court, in para 7 of its impugned order, relying on the case of government of andhra pradesh vs. The united constructions company (1990 (2) law summary page 32) , held that g. O. Ms. No. 430, dated 24 - 10 - 1983 has been clarified by g. O. Ms. No. 160, dated 1 - 6 - 1987 which is only prospective in nature and, therefore; in respect of agreement executed between the parties to it prior to 1 - 6 - 1987, the court is competent to appoint an arbitrator under section 8 of the arbitration act when it refuses to act as arbitrator. The lower court appointed sri p. Ramachandra raju, to act as sole arbitrator.
(4) Feeling aggrieved by the impugned order, the petitioners have preferred this revision.
(5) Relying on the case of visakhapatnam urban development authority vs. V. Narayana raju, it is contended on behalf of the petitioners that as per the terms of the contract and g. O. Msino. 430, dated 24 - 10 - 1983, arbitration in respect of claims only upto rs. 50,000/ - is provided and for claims above rs. 50,000/ - it is provided that such claims should be adjudicated by court of competent jurisdiction, but such claims cannot be adjudicated upon by arbitration in which the judge presiding over the court of competent jurisdiction is to act as the arbitrator because it appears to be a case of inartistic drafting of the g. O. Ms, and it would be absurd to make such a construction of that part of the g. O. Ms, which would oblige the judge to act as the arbitrator. It is further contended on behalf of the petitioners that g. O. Ms. No. 160, dated 1 - 6 - 1987, merely clarifies the earlier g. O. Ms, and, therefore, the order of the trial court should be reversed and application for appointment of arbitrator should be rejected.
(6) On the other hand, it is urged on behalf of the 1st respondent that g. O. Ms. No. 160, dated 1 - 6 - 1987, is prospective in operation and the contract between the petitioners on one hand and the 1st respondent on the other hand had been entered into much prior to the date of agreement. The 1st respondent isentitled to get the arbitrator fixed by thecourtbecause thecourthad refused to act as arbitrator as per the terms of the contract and g. O. Ms. No. 430, dated 24 - 10 - 1983 and, therefore, the lower court has rightly appointed the 2nd respondent as the sole arbitrator to decide the dispute which has arisen between the 1st respondent and the petitioners.
(7) In order to appreciate the rival contentions of the parties to the revision, it is beneficial to reproduce clause 25 of the agreement in question as also g. O. Ms. No. 430, dated 24 - 10 - 1983 and g. O. Ms. No. 160, dated 1 - 6 - 1987. "25. Arbitration : the arbitrator for fulfilling the duties set forth in the arbi tration clause of the standard preliminary specification shall consist of the following members in accordance with g. O. Ms. No. 456, dated 10 - 11 - 1983 and officer on special duty, telugu ganga project, cuddapah proceedings no. Osd/tgp/ob/2075/1 dated 23 - 11 - 83 and as per rules2. The question of the revising the above procedure has been receiving the attention of government for some time past. Thegovernment after careful consideration of various aspects of issues involved direct the procedure be revised as follows: - order: government after careful consideration of various aspects, issued orders in para (2) of the g. O. Read above prescribing the revised procedure for arbitration. 2. It has come to the notice of the government, that some of the contractors are approaching courts to decide the claims above rs. 50,000/ - under the provisions of the arbitration act taking ' advantage of para 2 (3) of the g. O. Read above. The intention of the government incorporating the above provision is to dispense with the arbitration proceedings in respect of claims above rs. 50,000/ - and leave the parties to have their remedy in civil court. As some of the contractors have misconstructed that the claims above rs. 50,000/ - have to be decided under the arbitration act and not under ordinary law in a regular civil court, the government direct that the following amendments to g. O. Ms. No. 430 irrigation (irrigation - v) department dt. 24 - 10 - 83) be issued by way of clarification, (i) item (3) of para (2) may be deleted, (ii) "all claims above rs. 50,000/ - shall be decided by the civil court of competent jurisdiction by way of a regular suit", (iii) para - 3 to 7 are renumbered as paras 4 to 8. 3. This order issues with the concurrence of finance and planning (projects wing) dept. Vide u. O. No. 288/1 fv. Iii (1) /87 - 1, dt. 7 - 5 - 87. (by order and in the name of the governor of andhra pradesh) ".
(8) At the outset it is to be remarked that g. O. Ms. No. 456, dated 10 - 11 - 1983 and proceedingsno. Osd/tgp/db/2075/l/dated 23 - 11 - 1983 are admittedly not at all relevant for the purposes of deciding the controversy between the 1st respondent and the petitioners and, therefore, it is not at all necessary either to reproduce or to refer to these two g. O. Ms.
(9) A bare perusal of clause 25 of the agreement in question shows that claims upto rs. 10,000/ - should be decided by the superintending engineer, claims above rs. 10,000/ - and upto rs. 50,000/ - should be decided by the engineer - in - chief while claims above rs. 50,000/ - should be decided by the court of competent jurisdiction. This agreement has been executed subsequent to the issuance of g. O. Ms. No. 430, dated 24 - 10 - 1983 and clause 1 of this g. O. M. S. Provides that claims upto rs. 10,000/ - and above are to be decided by the superintending engineer, claims above rs. 10,000/ - and upto rs. 50,000/ - are to be decided by the chief engineer and claims above rs. 50,000/ - are to be decided by the court of competent jurisdiction. Therefore, it establishes that clause 25 of the agreement in question has been incorporated in it in pursuance of g. O. Ms. No. 430, dated 24 - 10 - 1983 and it is verbatim et litteratim. Thereafter, g. O. Ms. No. L60,dated 1 - 6 - 1987 was issued which provides that all claims above rs. 50,000/ - shall be decided by the civil court of competent jurisdiction by way of a regular suit. E: listing clause 3 of para 2 of g. O. Ms. No. 430, dated 24 - 10 - 1983 was deleted and the aforementioned clause was substituted in g. O. Ms. No. 160, dated 1 - 6 - 1987.
(10) In the case of government of andhra pradesh and two others vs. Pulpipati narapu raidu, a division bench of this court has held that the g. O. Ms. No. 160, dated 01 - 06 - 1987 is prospective and it applies to such agreements which are executed subsequent to the issuance of the said g. O. Ms.
(11) In the case of state of andhra pradesh vs. I. Devender reddy (civil appeal no. 3578/1989) the apex court observed that the first notification dated 24 - 10 - 1983 is notprecise in terms as to the forum of adjudication of claims above rs. 50,000/ - but the second notification dated 1 - 6 - 1987 expressly provides that all claims above rs. 50,000/ - shall be decided by the civil court of competent jurisdiction by way of a regular suit. If the 1st notification was clear enough as to the jurisdiction of the civil court to decide all claims above rs. 50,000/ - it was unnecessary to issue the second notification substituting the uncertainty in para 3 of the first notification. It is also observed in this case that it is not in dispute that the 2nd notification is only prospective and apparently not applicable to the case on hand since the claim in question arises out of the contract dated 4 - 3 - 1986. Relying on the judgment of the apex court as also the judgment of the division bench of this court, it is held in the case of government of andhra pradesh vs. United construction company (1 supra) that the g. O. Ms. No. 160, dated 1 - 6 - 1987 is prospective in operation and, therefore, the application under section 8 of the arbitration act would be maintainable if the court of competent jurisdiction which is to be the arbitration under g. O. Ms. No. 430, dated 24 - 10 - 1983, refuses to arbitrate.
(12) The apex court in the case of viskhapatnam urban development authority's case (1 supra) , in para 4 of its judgment, has held :
"having perused g. O. Ms. No. 430 dated 24 - 10 - 1983 we have nodoubt that it clearly provides for arbitration in respect of claims only upto rs. 50,000/ - and not above that amount, making it clear in paragraph 2 that the claims above rs. 50,000/ - are to be adjudicated by the court of competent jurisdiction,. No doubt the expression "court of competent jurisdiction" is mentioned under the head "panel of arbitrators" since the same para deals with "claims upto rs. 10,000/ - " as well as "claims above rs. 10,000/ - and upto rs. 50,000/ - ". That is, however, in inartistic drafting of the g. O. Ms, but it cannot be construed to mean that claims above rs. 50,000/ - are to be adjudicated by arbitration in which the judge presiding over the court of competent jurisdiction is to act as the arbitrator. It would be absurd to make such a construction of that part of the g. O. Ms, which would oblige the judge to act as the arbitrator. The subsequent g. O. Ms. No. 160, dated 1 - 6 - 1987 merely clarified this fact on account of an attempt by some miscontractors to mis - construe the earlier g. O. Ms, as clearly stated in the subsequent g. O. Ms. The contention of the respondent is wholly untenable. "
(13) In the case of visakhapatnam urban development authority (1 supra) , the apex court has interpreted item no. 3 of para 2 of g. O. Ms. Np. 430, dated 24 - 10 - 1983 and has held that it is a case of inartistic drafting of g. O. Ms, but it cannot be construed to mean that the claims above rs. 50,000/ - are to be adjudicated upon by arbitration in which the judge presiding over the court of competent jurisdiction is to act as the arbitrator. It further held that it would be absurd to make such a construction on that part of the g. O. Ms, which would oblige the judge to act as an arbitrator. The subsequent g. O. Ms. No. 160, dated 1 - 6 - 1987 merely clarified this fact on account of an attempt by some contractors to mis - construe the earlier g. O. Ms as clearly stated in the subsequent g. O. Ms.
(14) Thus, it is seen that the apex court in the case of state of andhra pradesh vs. I. Devender reddy (civil appeal no. 3578 of 1989) has observed that the g. O. Ms. No. 430, dated 24 - 10 - 1983 is not in precise terms as to the forum of adjudication of claims above rs. 50,000/ -. On the other hand, in the case of visakhapatnam urban development authority's case (1 supra) , the apex court interpreting the same item no. 3 of para 2 of the g. O. Ms. No. 430, dated 24 - 10 - 1983 has held that it would be absurd to make such a construction which would oblige the judge to act as arbitrator because that g. O. Ms, has been inartistically drafted and it cannot be construed to mean that the claims above rs. 50,000/ - are to be adjudicated by arbitration in which the judge presiding over the court of competent jurisdiction is to act as the arbitrator.
(15) This decision is later in point of time. The sit tight position emerging from the decision of the apex court is that a judge presiding over the court, of competent jurisdiction cannot act as arbitrator to adjudicate the dispute between the concerned parties by arbitration.
(16) For the reasons aforesaid, the notification dated 1 - 6 - 1987, which is only prospective, is left out of consideration. Even so, as the position of law emerges from the case of visakhapatnam urban development authority (i supra) is that the presiding officer of the court of competent jurisdiction is incompetent to act as an arbitrator on the basis of item no. 3 of para 2 of g. O. Ms. No. 430, dated 24 - 10 - 1983 and clause 25 of the agreement in question, the impugned order passed by the learned lower court deserves to be set aside, because neither the civil court can be requested to act as an arbitrator nor it can appoint an arbitrator in the event of its refusal to act as an arbitrator.
(17) In result, the revision is allowed. The impugned order passed by the learned lower court is set aside and as a sequel to it, the 1st respondent's application made under section 8 of the arbitration act is rejected. However, in the circumstances of the case, i leave the parties to bear their own costs.
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