Gyan Sudha Misra, J.
Leave granted.
2. While concurring and endorsing the reasonings assigned in the judgement of learned Justice Ganguly, I propose to add and thus partly dissent on certain aspects involved in the instant appeal which would have a bearing on the relief granted to the respondent by the High Court which appointed an arbitrator under the Arbitration and Conciliation Act, 1996 for adjudication of the dispute in regard to cancellation of the works contract between the contesting parties therein.
3. In this context, Section 7 of the Madhya Pradesh Madhyasthan Adhikaran Adhiniyam, 1983 (hereinafter referred to as the ‘M.P. Arbitration Tribunal Act, 1983’) needs to be reiterated which itself lays down as follows:
“Reference to Tribunal” - (1) either party to a works contract shall irrespective of the fact whether the agreement contains an arbitration clause or not, refer in writing the dispute to the Tribunal.”
4. On perusal of the aforesaid provision enumerated under Section 7, it is explicitly clear that the matter in the event of existence of a dispute between the parties in certain categories of cases where the State of Madhya Pradesh is a contracting party, the dispute shall be referred in writing to the tribunal irrespective of the fact whether the agreement contains an arbitration clause or not. From this provision it is clearly apparent that reference of any dispute to the tribunal postulates an existence of a works contract and the definition of ‘works contract’ under Section 2 (i) of the M.P. Arbitration Tribunal Act, 1983, it has clearly and unequivocally been specified as to what is a ‘works contract’ in relation to which the dispute is required to be referred in writing to the tribunal. We may therefore meticulously recollect the definition of ‘works contract’ which lays down as follows:-
“works contract” means an agreement in writing for the execution of any work relating to construction, repair or
maintenance of any building or superstructure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory workshop, powerhouse, transformers or such other works of the State Government or Public Undertaking as the State Government may, by notification, specify in this behalf at any of its stages, entered into by the State Government or by an official of the State Government or Public Undertaking or its official for and on behalf of such Public Undertaking and includes an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works.”
5. Thus on a perusal of the definition of ‘works contract’, it is manifestly clear that while the ‘works contract’ means an agreement pertaining to matters relating to the execution of any of the work enumerated in the definition of ‘works contract’, the same does not include the dispute pertaining to termination, cancellation or repudiation of works contract and the entire nature of transaction laid down therein relates to disputes which arise out of execution of the nature of work specified in the ‘works contract’. However, the question whether the ‘works contract’ has been legally repudiated and rightly cancelled or not is the question or dispute pertaining to termination of works contract has not been incorporated even remotely within the definition of ‘works contract’. In view of this, the legal and logical consequence which can be reasonably drawn from the definition of ‘works contract’ would be, that if there is a dispute between the contracting parties for any reason relating to works contract which include execution of any work, relating to construction, repair or maintenance of any building or super-structure, dam, weir, canal, reservoir, tank, lake, road, well, bridge, culvert, factory, workshop, power house, transformers or such other works of the State Government or Public Undertaking including an agreement for the supply of goods or material and all other matters relating to the execution of any of the said works, the same would fall within the ambit of the definition of ‘works contract’ and hence all disputes pertaining or arising out of execution of the works contract will have to be referred to the M.P. State Arbitration Tribunal as envisaged under Section 7 of the Act of 1983. Hence, in addition to the reasons assigned in the judgment and order of learned Brother Justice Ganguly, disputes arising out of execution of works contract has to be referred to the M.P. State Arbitration Tribunal and not under the Arbitration and Conciliation Act, 1996.
6. But in so far as the instant matter is concerned, the facts disclose that the appellant M.P. Rural Road Development Authority cancelled the works contract itself which was executed in favour of the respondent. In that event, the works contract between the parties was not in existence at all which would operate as a statutory mandate for reference of the dispute to the M.P. State Arbitration Tribunal.
7. It is no doubt true that if the matter were before an Arbitrator appointed under the Arbitration and Conciliation Act, 1996 for adjudication of any dispute including the question regarding the justification and legality as to whether the cancellation of works contract was legal or illegal, then the said Arbitrator in view of the ratio of the judgment of the Supreme Court in Maharshi Dayanand University & Anr. Vs. Anand Co-op L(C) Society, 2007 (5) SCC 295, as also in view of the persuasive reasoning assigned in the judgment and order reported in Heyman & Anr. Vs. Darwins, Limited, 1942 (1) All E.R. 337 would have had the jurisdiction to adjudicate the dispute regarding the justification and legality of cancellation of works contract also. But the same cannot be allowed to be raised under the M.P. Act of 1983 since the definition of ‘works contract’ unambiguously lays down in explicit terms as to what is the nature and scope of ‘works contract’ and further enumerates the specific nature of disputes arising out of the execution of works contract which would come within the definition of a ‘works contract’.
8. However, the same does not even vaguely include the issue or dispute arising out of cancellation and termination of contract due to which this question, in my considered opinion, would not fall within the jurisdiction of M.P. State Arbitration Tribunal so as to be referred for adjudication arising out of its termination. As already stated, fall out certainly would be otherwise if the matter were to be adjudicated by an Arbitrator appointed under the Arbitration and Conciliation Act, 1996 and that would be in view of the ratio of the decisions of the Supreme Court referred to hereinbefore which has held it permissible for the Arbitrator to adjudicate even the dispute arising out of cancellation or termination of an agreement or contract. This however, cannot be allowed to broaden or expand the ambit and scope of the M.P. Act of 1983 where the State Legislature has passed a specific legislation in respect of certain specified types of arbitration determining as to what are the nature of disputes to be referred to the M.P. State Arbitration Tribunal and that specifically permits the reference of dispute arising out of execution of contract but clearly leaves out any dispute arising out of termination, cancellation or repudiation of ‘works contract’. In order to clarify the point further, what needs to be emphasized is that if the nature of dispute referred to the Arbitrator like the instant matter, related to a dispute pertaining to construction, repair, maintenance of any building super- structure, dam or for the reasons stated within the definition of ‘works contract’, the matter may be referred to the M.P. Tribunal in view of the fact that if there is a dispute in relation to execution of a works contract, then irrespective of the fact whether the agreement contains an arbitration clause or not, the dispute is required to be referred to the M.P. State Arbitration Tribunal for adjudication. But when the contract itself has been terminated, cancelled or repudiated as it has happened in the instant case, then the nature of dispute does not fall within the definition of ‘works contract’ for the sole reason that it does not include any dispute pertaining to cancellation of a works contract implying that when the works contract itself is not in existence by virtue of its cancellation, the dispute cannot be referred to the M.P. State Arbitration Tribunal but may have to be decided by an Arbitrator appointed under the Arbitration and Conciliation Act, 1996.
9. Hence, the nature of the dispute which falls within the definition of ‘works contract’ under Section 2(i) of the M.P. Act, 1983 and one of the contracting parties to the agreement is the State of M.P., then irrespective of an arbitration agreement the dispute will have to be referred to the Tribunal in terms of Section 7 of the Act of 1983. But if the works contract itself has been repudiated and hence not in existence at all by virtue of its cancellation/termination, then in my considered view, the dispute will have to be referred to an independent arbitrator to be appointed under the Arbitration and Conciliation Act, 1996 since the M.P. Act 1983 envisages reference of a dispute to the State Tribunal only in respect of certain specified types of arbitration enumerated under Section 2 (i) of the M.P. Act, 1983.
10. As a consequence and fall out of the aforesaid discussion, the impugned order of the High Court by which the dispute relating to termination of works contract by the M.P. Rural Road Development Authority itself was referred to an independent arbitrator appointed by the High Court under the Arbitration and Conciliation Act, 1996 needs to be sustained and there is no need for a de novo reference of the dispute to the M.P. State Arbitration Tribunal. In the alternative, the consequence would have been otherwise and the matter could have been referred to the State Arbitration Tribunal if the dispute between the parties related to any dispute emerging out of execution of works contract which could fall within the definition of ‘works contract’ given out within the definition of ‘works contract’ under Section 2(i) of the M.P. Act of 1983. In order to avoid any ambiguity, it is reiterated that in view of cancellation of the works contract itself which is the position in the instant case, the proceedings before the Arbitrator appointed by the High Court cannot be treated as non-est so as to refer the same once again to the tribunal for adjudication as the dispute does not emerge or pertain to execution of works contract but relates to non-existence of works contract by virtue of its cancellation.
11. Thus the sum and substance of what I wish to emphasize is that the question as to whether the dispute would be referred to the M.P. Tribunal in terms of Section 7 of the M.P. Act of 1983 or to an independent arbitrator under the Arbitration and Conciliation Act, 1996 will depend upon the factum whether the works contract is existing between the parties or not out of which the dispute has arisen. In case, the works contract itself has been repudiated/cancelled, then, in view of its non- existence, Section 7 of the M.P. Act pertaining to reference of dispute to tribunal would not come into play at all by virtue of the fact that the dispute relating to execution of works contract alone can be referred to the tribunal in view of the specific nature of works contract enumerated within the definition of works contract under the Act of 1983. However, when the works contract itself becomes non-existent as a consequence of its cancellation, the matter will have to be referred to an independent arbitrator under the Arbitration and Conciliation Act, 1996 and not to M.P. State Arbitration Tribunal.
12. Thus, while holding that the M.P. Act 1983 should operate in the State of M.P. in respect of certain specified types of arbitration, the appointment of an independent arbitrator by the High Court under the Arbitration and Conciliation Act, 1996 needs to be sustained since the works contract itself is not in existence by virtue of its cancellation and hence this part of the dispute could not have been referred to the M.P. State Tribunal.
13. Consequently, the instant appeal stands partly allowed. There will be no order as to costs.
… J.
(Gyan Sudha Misra) New Delhi, January 24, 2012.
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 974 OF 2012 (Arising out of SLP(C) No.907/2011) M.P.Rural Road Development Authority & Anr.
...Appellant(s) - Versus -
M/s. L.G. Chaudhary Engineers & Cont.
...Respondent(s) ORDER In view of some divergence of views expressed in the two judgments delivered today by us, the matter may be placed before Hon'ble the Chief Justice of India for constituting a larger Bench to resolve the divergence.
. J.
(ASOK KUMAR GANGULY) . J.
(GYAN SUDHA MISRA) NEW DELHI, 24-01-2012