Ar. Lakshmanan, J. 1. Heard Mr. S. Parameswaran for the appellant in W. A. No. 2505 of 1999 and the 1st respondent In W A. No. 2572 of 1999, and Mr. U. K. Ramakrishnan for the appellant in W. A. No. 2572 of 1999 and respondents 1 and 2 in W. A. No. 2505 of 1999.
2. Both the appeals arise out of the judgment dated 12-10-1999 in O. P. No. 6659 of 1998. The appellant in W. A. No. 2505 of 1999 (Koshy Varghese) filed the original petition O. P. No. 6659 of 1998 for the following reliefs :--
(A) A writ of mandamus or such other writ, direction or order directing the respondents to refer the dispute between the petitioner and the respondents referred to supra to arbitration to be arbitrated upon by any one among the panel of arbitrators submitted by the petitioner or by any other Retd. High Court Judge to be appointed by this Hon'ble Court as Arbitrator; or in the alternative.
(B) A writ of mandamus or such other writ, direction or order directing the respondents to order convening of an High Power Committee immediately and in any case within one month and to direct it to consider the claims of the petitioner and give him a personal hearing and thereafter to resolve the dispute within a reasonable period of four months; and (C) Such other writ, direction or order as is deemed fit, just, proper and necessary by this Hon'ble Court and as is prayed for pendente lite by the petitioner on the facts and in the circumstances of the case."
Though a detailed counter affidavit and a rejoinder has been filed by the respective parties; there is no need to refer to the facts mentioned in the respective affidavits.
3. The short facts are that the Hindustan Newsprint Ltd. invited tenders for doing the work of waste removal from its Soda Recovery Plant, Newsprint Nagar, Vellore, Kottayam District for a period of two years from 1-12-1990 under Ext. P1 tender notice. The appellant Koshy Varghese submitted quotation in response to the tender notice. His quotation was accepted by the Hindustan Newsprint Ltd. and a contract was entered into between the parties. The work order was also issued to him under Ext. P2. It is submitted by the appellant that though he had engaged and kept on the roll several workers trained and experienced in this type of work at considerable expense are secured and made available four heavy vehicles for the purpose by investing over Rs. 12 lakhs, the 2nd respondent, under some pretext or the other, failed to discharge its obligation and that the legitimate expectations of the appellant were betrayed and shattered by the respondents. The latter resorted to change on the mode of manufacture after entrusting the contract work to the appellant. Several other allegations have been made against the second respondent in the original petition. It is the grievance of the appellant that the appellant has made several representations commencing from 16-12-1991 onwards, but there was no proper response to the representations and the memorandum submitted. Several legal notices were also issued by the appellant through his advocates. In this context it is brought to our notice that though in all the contracts of the 2nd respondent Arbitration clause used to be inserted, in the present case this, however, was not done. The appellant on detecting it requested the 2nd respondent to adopt a uniform policy in this regard. Under such circumstances the appellant felt that it is beneficial and advisable for all parties concerned to resolve to arbitration for the resolution of disputes in order to minimise expenses and expenditure of time. It is also brought to our notice that the 3rd respondent In the original petition, Union of India, represented by the Secretary to the Ministry of Heavy Industries, has issued instructions in this direction to all the Public Sector Enterprises in the country and as a prelude to this the Bureau of Public Enterprises attached to the Ministry of Industry attached to the Government of India Issued an office memorandum mentioning about the decision of the Government to set up a permanent machinery of Arbitrators in the bureau of public enterprises to settle all current and future commercial disputes between public sector enterprises inter se. (Ext. P8). A lawyer's notice under Ext. P7 was also issued. A reply was also sent. In reply to Ext. P12 the appellant made a representation to the Chairman and Managing Director of M/s. Hindustan Paper Corporation Ltd., the 1st respondent in the original petition requesting for a reference in arbitration and for a personal intervention of the matter under Ext. P 13. There was no response. The appellant again caused a lawyer's notice to both the respondents giving all the details and pointing out the very harsh and discriminatory treatment meted out to the appellant by the 2nd respondent in the original petition. The suggestion of making a reference to arbitration by a retired High Court Judge was reiterated in the notice by the appellant (Ext. P14). Thereafter several representations reiterating the suggestion and request were made. There was no response. According to the appellant the contract was successfully completed by him on 14-2-1993 and in spite of the passage of a long period of time even the High Power Committee did not take any decision. Under such circumstances the appellant made a detailed representation to the Minister for Industries enclosing a panel of Arbitrators and requesting the concerned department to agree for arbitration by a retired High Court Judge from among the panel suggested by him earlier on 2-8-1985 to the Chairman and Managing Director. It is stated in paragraph 38 of the original petition that after repeated representations in person and through correspondence etc. made by the appellant, finally the Secretary in the Department of Heavy Industries, Ministry of Industries, Government of India, passed an order in March, 1996 directing the Chairman-cum-Managing Director of the Hindustan Paper Corporation Ltd. to appoint a committee consisting of senior officials of the Hindustan Newsprint Ltd. and the Hindustan Paper Corporation Ltd. This was done by virtue of an order No. 18(12)PE/VII dated 13-3-1996. Even after 24 months since the said order was passed the appellant had not been informed by the respondents whether the committee has been constituted nor has he been served with any notice of the sitting of the committees. According to the appellant, the matter is being unnecessarily and arbitrarily protracted by the respondents.
4. The petitioner along with the original petition, has produced and marked Exts. P1 to P29. According to the petitioner, he does not have any confidence or faith that the committee will even meet or even if it meets it will render injustice and that unless the Government Officials or an independent person also is Included in the committee. It may not serve any useful purpose at all. The matter has been hanging fire for the past ten years and ultimately the appellant made a representation on 23-2-1998 (Ext. P29) to the Managing Director, Hindustan Newsprint Ltd. for resolving the dispute through arbitration. The refusal and failure of the respondents to resolve the dispute and settle the claim of the appellant compelled the appellant to approach this Court for redressal of his grievances.
5. Mr. S. Parameswaran submitted that the refusal and failure of the respondents to convene the High Power Committee and take a decision with regard to the claims put forward by the appellant is totally arbitrary, highly illegal, unjust and deprecable. The respondents being instrumentalities of the State have a duty to act fairly. It is also submitted by the learned counsel that the appellant cannot move a civil Court under Sections 17. 18 or 20 of the Arbitration and Conciliation Act, 1996 for reference of the dispute to arbitration for the simple reason that in specific terms there is no provision for arbitration in the contract, though In relation to all contracts such a clause has been adopted by the respondents. According to the appellant, there is a dispute between the parties concerning the claim for damages. Therefore, the respondents cannot have any legal, valid or sustainable objection to get the dispute resolved through arbitration which is less cumbersome and time consuming.
6. The respondents filed a detailed counter affidavit to which a rejoinder affidavit has been filed by the appellant Koshy Varghese. The gist of the submission made by U. K. Ramakrishnan, learned counsel for the 2nd respondent in the original petition and the appellant in W. A. No. 2572 of 1999 (Hindustan Newsprint Ltd.) are as follows :
(a) The claims raised by the appellant were considered and rejected by the 2nd respondent in the original petition, Hindustan Newsprint Ltd.
(b) The claims raised by the appellant are stale and barred by limitation.
(c) The appellant's remedy was before appropriate civil Court for adjudicating the claims, if any, the appellant has against the second respondent in the O. P.
(d) The original petition is filed belatedly without any bona fides and as an experiment.
(e) The prayer for reference to arbitration is misconceived and unsustainable in law especially because there is no arbitration clause in the contract between the parties.
(f) The claim for constitution of a High Power Committee to resolve the dispute is without merit and is not supported by provisions of law.
(g) The terms and conditions are annexed to the tender notice. The appellant accepted the terms and conditions of the tender with open eyes and the appellant after accepting the terms and conditions of the tender and the work order and agreeing to fulfil the terms and conditions of the tender, cannot now turn round and say that the clauses in the tender are one sided and unlawful.
(h) The appellant was informed clearly that his claims are not acceptable as they are against the express terms and conditions in the contract between the parties and the matter cannot be referred to arbitration as there is no arbitration clause in the contract.
7. A rejoinder affidavit was filed by the appellant stating that there is no merit, substance or bona fides in any of the contentions taken in the counter affidavit. It is stated that the rejoinder affidavit has been filed for the purpose of putting the records straight.
8. Koshy, J. by his judgment dated 12th October, 1999 disposed of the original petition by observing in paragraph 3 as follows :--
"It is submitted by the learned counsel for the petitioner that in view of the decision reported in State of Karnataka v. Rameshwara Rice Mills, Thirthahalli, AIR 1987 SC 1359 interests of justice requires that the matter should be decided by a party other than contractual parties. But in view of the delay and the absence of arbitration agreement, I am unable to direct that it should be compulsorily made by a third party. The Committee appointed by the Company may consider the claims of the petitioner on merit and the result may be informed by writing as directed earlier. If the committee earlier appointed is already dissolved, the 2nd respondent may appoint a fresh committee to look into the matter. Whether any independent person also can be made as a member of the committee may be decided by the 2nd respondent itself."
9. As already seen both the petitioner and the second respondent in the original petition have filed Writ Appeals 2505/99 and 2572/99 respectively. Mr. S. Parameswaran submitted that the learned single Judge ought to have accepted and acted upon the decision of the Supreme Court of India reported in AIR 1987 SC 1359 and that the said decision provides that the interests of justice require that a matter under dispute between two parties should be decided by a party other than the contractual parties. The above decision of the Supreme Court was followed by a Full Bench of this Court in Abdul Rahiman v. Divisional Forest Officer (1988) 2 Ker LT 290 : (AIR 1989 Ker 1). It is submitted that the judgment of the learned single Judge leaving the question of including an independent person as a member of the Committee to the second respondent itself is erroneous and according to counsel for the petitioner/appellant such action on the part of the second respondent cannot be legitimately expected in the light of its conduct so far.
10. A fervent plea was made by counsel for the appellant that the appellant is the aggrieved party in the dispute and that he must have a say before the resolution on the dispute is arrived at by the concerned authority and that the principles of natural justice would be violated otherwise. He therefore requested this Court to suggest a panel of retired High Court Judges of this Court with a direction to the respondents to choose one among them as an Arbitrator and that the Arbitrator so appointed as suggested by this Court may seek the assistance of any technical expert familiar with the type of contract Involved in this case. In conclusion Mr. S. Parameswaran submitted that the appellant may be granted an opportunity for hearing before the dispute is resolved.
11. Mr. U.K. Ramakrishnan on the other hand, submitted that the learned Judge has not considered the objection of the second respondent in the original petition In the right perspective and that the learned Judge has failed to appreciate the fact that the claims raised by Koshy Varghese were considered and rejected in 1992 itself, and that the original petition is highly belated and not maintainable and that the claims raised are stale, against the specific provisions in the contract and are barred by limitation.
12. At the time of hearing this Court suggested the counsel appearing for the second respondent Hindustan Newsprint Ltd., the appellant in W. A. No. 2572 of 1999 to ascertain from their client as to whether an Independent person as a member of the Committee can be considered and accepted. The matter was adjourned in about four occasions and finally the learned counsel for the Hindustan Newsprint Ltd. informed this Court that the Managing Director of the Hindustan Newsprint Ltd. cannot accept the suggestion. Thereafter, at the request of both parties we reserve judgment in these two appeals.
13. It is not in dispute that there is a dispute between the parties namely the appellant Koshy Varghese and the Hindustan Newsprint Ltd. It is also not in dispute that the appellant's quotation was accepted by the 2nd respondent and that a contract was entered into between the parties and the work order was also issued to the appellant. It is also not in dispute that the appellant has made several representations, reminders and memorandum requesting the respondents to resolve the dispute between the parties. There was no proper response from the respondents. The respondents have only vaguely denied the claims and contentions of the appellant. It is true that there is no specific arbitration clause in the agreement entered into between the parties. In view of the recent principles adopted by the Governmental concerns in regard to resolution of disputes through arbitration and also having regard to the policy adopted by the Government of India that Alternative Dispute Resolution methods will have to be encouraged, we are of the view that it is in the fitness of things that the dispute is directed to be referred to arbitration. Learned counsel for the appellant has brought to our notice another important feature that the Union of India has issued instructions in this direction in order to minimise expenses and expenditure of time in regard to commercial disputes of public sector undertakings in India. It is reliably understood that as a prelude to this the Bureau of Public Enterprises attached to the Ministry of Industry issued an office memorandum mentioning about the decision of the Government to set up a permanent machinery of Arbitrators in the Bureau of Public Enterprises to settle all current and future commercial disputes between Public Sector Enterprises Inter se. The said memorandum dated 30-3-1989 has been marked as Ext. P8. The said memorandum reads thus :--
"Office Memorandum Dated 30-3-1989 Subject:-- Settlement of Commercial disputes between PSEs inter se and between PSEs and Government Departments :
In supersession of all previous O. Ms. Issued on this subject Government has now decided to set up a permanent machinery of Arbitrators in the Bureau of Public Enterprises to settle all current and future commercial disputes between PSEs inter se as well as between PSE and a Government Department Disputes concerning Income-tax, Customs and Excise will continue to be settled as hereto before.
2. Every effort should be made to settle all disputes mutually and reference by either party should be made to the machinery only as a measure of last resort. The machinery will entertain reference after satisfying prima facie existence of a dispute. Since the disputants are required to bear equally the cost of service rendered by the machinery, all effort need be made to avoid reference to the machinery.
3. The Administrative Ministries will be separately Issuing directives requiring insertion of an arbitration clause in all existing and future commercial contracts agreements etc. between the parties mentioned.
4. To ensure prompt disposal of existing disputes, both the PSEs and the Government Departments are requested to refer the existing disputes to the machinery at the earliest cancelling the appointment of arbitrators, if already done."
Mr. Ramakrishnan submitted that the claims raised by the appellant are stale, not maintainable in a writ petition and are barred by limitation. We are unable to agree.
14. The appellant had been corresponding with the respondents from 9-7-1990 onwards till 1998 without any proper response. The matter has been hanging fire for the past ten years. Finally, the appellant made a representation on 23-2-1998 to the Managing Director, for referring the dispute to arbitration under Ext. P29. Ext. P29 reads as follows :--
"Re : Work of collection, transportation dumping and levelling and sludge, gride etc. during the period from 1 -12-90 to 14-2-93 --
Work Order No. HNL/SR/=8(III) dated 12-9-90.
Ref: No. 18(I2)/96-PE/VII dated 13-3-96 from the Secretary, Heavy Industries in the Ministry of Industries to the Hindustan Paper Corporation Limited.
With reference to the above, I wish to bring to your notice the fact that in spite of exchange of correspondence over a period of time repeated representations made in writing and in person by me to the various authorities in your factory in the Hindustan Paper Corporation and also in the Government of India, unfortunately so far no action has been taken. The entire facts and circumstances relating to the transaction will be clear from the Memorandum submitted by me to the Hon'ble Cabinet Minister of Industries, Government of India, New Delhi on 5-2-1996, a copy of which is enclosed.
I would request you kindly to look into the matter at an early date and agree to refer the matter to Arbitration by a Retired High Court Judge to be agreed upon by us.
I shall also be grateful if you could kindly grant me an interview so that I can explain the matter in person.
Looking forward to your early favourable action in the matter.
Thanking you."
The appellant, under these circumstances, is left with no other efficacious alternative remedy, statutory or other, except approaching this Court seeking its intervention in the matter in exercise of its Jurisdiction under Article 226 of the Constitution of India.
15. We are of the opinion that where the matter is kept unduly pending without passing any orders by the respondents, this Court shall interfere under Article 226 of the Constitution. We therefore, hold that the writ petition is maintainable. In the office memorandum issued by the Ministry of Industry, Government of India, it has been made very clear that inter se Public Sector Enterprises must seek to resolve their dispute through arbitration. Avoidance of unnecessary expenditure and saving of time and energy are the reasons behind such a move. By parity of reasoning, the same principle can be extended to the case of contracts between Public Sector Enterprises and private individuals like the one in question. By agreeing to constitute a High Power Committee and convening its meeting, the respondents have acquiesced In the position that there is a valid and tenable claim for the petitioner for damages. Therefore, as pointed out by the learned counsel for the appellant, the respondents cannot now retrace their steps or recoil from what has been taken by them. In fact the respondents have resorted to resolution of disputes with private individuals or Institutions through the instrumentality of arbitration. Therefore, there is no reason why the same facility cannot be extended to the case of the appellant, who has been crying for justice from the year 1990 onwards at the hands of the respondents. The only request now made by the appellant is to include an independent person, a retired Judge also as a member of the Committee apart from the department officials. It is argued by the appellant's counsel that the appellant has suffered a heavy loss and has virtually become impecunious and that if his case is decided by the Arbitrators, he would be able to rehabilitate himself and earn a livelihood.
16. In our opinion, the respondents being instrumentalities of the State owe a duty to the appellant imposed on them under the Constitution and the law and therefore, we have no hesitation to issue a writ of mandamus to refer the dispute to arbitration. The appellant has a legal right in the present case and the respondents have a legal duty to settle the claim of the appellant. Therefore, the appellant can invoke this Court's jurisdiction under Article 226 to compel the performance of the duty cast on the respondents as the duty in the present case is a statutory one imposed by the Constitution by the statute and by the rule of common law. Even in cases where the discretionary power is conferred on the authority and the statutory provisions are made for such exercise of the said power, a writ of mandamus can be issued for the enforcement of that duty. In the light of the policy of the Public Sector Undertakings to resort to arbitration in Inter se disputes, we are of the firm opinion that the same should be adopted in the case of the appellant Koshy Varghese also.
Writ Appeal No. 2504 of 1999 is allowed and Writ Appeal No. 2572 of 1999 is dismissed. There will be no costs.