Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
5~1..f~
CIVIL APPEAL NO ....... OF 2018
(Arising out of SLP (C) No(s). 18212 OF 2017
Appellant(s)
THE STATE OF BIHAR & ORS.
VERSUS
M/S. BRAHMAPUTRA INFRASTRUCTURE LIMITED Respondent(s)
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Digitally signed
by POORNIMA
VERMA
Date:
2020.02.27
12:58:52
+0530
POORNIMA
VERMA
WITH
20 8
CIVIL APPEAL NO ....... 33'15 OF 1
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(Arising out of SLP (C) No(s). 21434 OF 2017)
THE STATE OF BIHAR ORS.
& Appellant (s)
VERSUS
(JV)
M/S. SUPREME BRAHMAPUTRA Respondent(s)
ORDER
(1) Leave granted. We have heard learned counsel for the
parties .
(2) The State is aggrieved by the appointment of arbitrator
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under Section 11 (6) of the Arbitration and Conciliation Act,
1996 (the Central Act) on the ground that the said Act is
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excluded by the Bihar Public Works Contracts Arbitration
Tribunal Act, 2008 (Bihar Act 21 of 2008) (the State Act) .
(3) To appreciate the plea raised, it is necessary to refer
St~te
to the scheme of the Act as reflected in some of the key
Sections 8, 9 and 22 of the State Act are as
provisions.
£ollows:
"8, Act to be in addition to Arbitration &
Conciliation Act, 1996. Notwithstanding
anything contained in this Act, and of the
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provisions shall be in addition to and
supplemental to Arbitration Conciliation Act,
&
1996 and in case any of the provision contained
herein is construed to be in conflict with
Arbitration Act, then the latter Act shall
prevail to the extent of conflict.
9. Reference to Tribunal and making of award.--
(1) Where any dispute arises between the
parties to the contract, either party shall,
irrespective of whether such contract contains
an arbitration clause or not refer, within one
year from the date on which the dispute has
arisen, such dispute in writing to the Tribunal
for arbitration in such form and accompanied by
such documents or other evidence and by such
fees, as may be prescribed .
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(2) On receipt of a reference under
sub-section (10, the Tribunal may, if satisfied
after such inquiry as it may deem fit to make,
that the requirements under this Act in
relation to the reference are complied with,
admit such reference and where the Tribunal is
not so satisfied, it may reject the reference
summarily.
(3) Where the Tribunal admits the reference
under sub-section (2), it shall, after
recording evidence if necessary, and after
perusal of the material on record and on
affording and opportunity to the parties to
submit their argument, make an award or an
interim award, giving its reasons therefor .
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(4) The Tribunal shall use all reasonable
dispatch in entering on and proceeding with the
reference admitted by it and making the award,
and an endeavour shall be made to make an award
within four months from the date on which the
Tribunal had admitted the reference.
(5) The award including the interim award
made by the Tribunal shall, subject to an
order, if any made under Section - 12 or 13, be
final and binding on the parties to the
dispute.
(6) An award including an interim award as
confirmed or varied by an order, if any, made
under Section- 12 or 13 shall be deemed to be
a decree within the meaning of section-2 of the
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Code of Civil Procedure, 1908 of the principal
Court of original jurisdiction within the local
limits whereof the award or the interim award
has been made and shall be executed
accordingly.
Overriding effect of this Act.-
22.
Notwithstanding any thing contained in any
other Law, Rule, Order, Scheme, or Contract
Agreement entered into before or after
commencement of this Act, any dispute as
defined in Section 2 (e) of this Act shall be
regulated under the provisions· of this Act,
Rules and Regulations framed thereunder, and
absence of arbitration clause in any contract
agreement shall not have effect excluding any
dispute from the purview of this Act."
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1(4) It is not in dispute that the parties have executed
agreement dated 22nd June, 2012, providing for appointment of
an arbitrator as per provisions of the Central Act.
Relevant portion of Clause 25 of the said Agreement is as
follows:
"The arbitration shall be conducted in
• accordance with provisions of the Arbitration
and Conciliation Act, of or any
1996 (26 1996)
statutory modification or re-enactment thereof
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being in force shall apply to the arbitration
proceeding under the clause."
(5) The scheme of Sections 8, 9 and 22 of the State Act shows
that in the absence of an agreement stipulating the
applicability of the Central Act, the State Act applies to
works contracts. Since in the present cases, an arbitration
agreement exists and stipulates applicability of the Central
Act, the State Act will not apply. We, thus, do not find any
ground to interfere with the impugned order.
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(6) The appeals are dismissed. It will, however, be open
the appellant-State to move the High Court for change of
Arbitrator, if a case to this effect is made out on an
objection of neutrality, as submitted by learned counsel for
the State.
ider it
(7) Before parting with this order, We Cons
appropriate to deal W1 . th the submission raised by learned
~ counsel for the respondent(s) that Section 4(3) (b) of the
state Act is patently unconstitutional. The said section is
9as follows:
"Section 4. Terms and conditions of service of
the Chairman and other members of Tribunal.-
(3) (b) The Chairman and any other member shall
hold the office at the pleasure of the Government,
provided that; in case of premature termination;
they shall be entitled to three months pay &
allowances in lieu of compensation."
We are of the view that a provision that the tenure of
Chairman and other members of the Arbitration Tribunal at
the pleasure of the Government is inconsistent with the
constitutional scheme, particularly Article 14 of the
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Constitution of India. Section 4(1) of the State Act provides
for a three year tenure or till the age of 70 years whichever
is earlier. "Termination of the said tenure cannot be at
pleasure
within the term stipulated as the arbitration
tribunal has quasi judicial functions to perform. Any
termination of the service of such member by a party to the
dispute would interfere directly with the impartiality and
independence expected from such member. The said provision is,
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thus, manifestly arbitrary and contrary to the Rule of Law.
Accordingly, we
declare said provision
the
unconstitutional.
J.
. ........ k.,_,Q__ ......
(ADARSH KUMAR GOEL)
w__/
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. ......................... J.
'(ROHINTON FALI NARIMAN)
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. ........ .
(UDAY UME H LALIT)
New Delhi,
March 22, 2018 .
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