TMI Blog1989 (3) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of standing marked trees in compartment No. 59, Marwah" was beyond the competence of the Court. In this respect we agree with High Court. - Civil Appeal No. 2121 of 1989 - - - Dated:- 31-3-1989 - SHARMA, L.M, PATHAK, R.S. (CJ), MUKHARJI, SABYASACHI, JJ. For the Appellant :Altar Ahmed and S.K. Bhattacharya For the Respondent : S.N. Kacker, E.C. Agarwala and Ms. Purnima Bhat JUDGEMENT SHARMA, J. The present respondent who is an approved contractor of the Jammu Kashmir State Forest Corporation (appellant before us) filed an application under ss. 8, 11 and 20 of the Jammu Kashmir Arbitration Act, 2002 (Smvt.), on the original side of the High Court of Jammu Kashmir praying for a direction to the Corporation defendant to file an agreement between them fully described therein, and to refer the dispute mentioned in the application to an arbitrator. Jammu Kashmir Arbitration Act is similar to the Arbitration Act, 1940, enacted in identical language. The Corporation objected, pleading inter alia that the entire work allotted to the plaintiff contractor under the agreement had been completed by him without any dispute, and the present claim of the plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal work in question on the intervention of the Chief Minister. It was further stated by the Corporation that a large amount of extracted timber was lying in the area and had to be removed. Admittedly the timber had to be transported to a distant place through difficult terrain (as has been specifically mentioned by the contractor himself) and was, therefore, likely to take a considerable time. The Corporation said that a decision had been taken not to work the Compartment further till the entire timber already extracted was removed to its destination, and there was, therefore, no question of entrusting the remaining work to anybody for the present. A decision as to how and when the additional trees will be felled and the timber removed is for the Corporation to make and it is under no obligation to the contractor in this regard. So far as the work allotted to the contractor under the agreement is concerned, it is already complete without giving rise to any difference between the parties. 3. Reliance has been placed on behalf of the plaintiff before us on paragraph 41 of the agreement under which the work contract in respect to 6 lac cft. was obtained by him, and which says that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stification for the Court to have commented as above when it was leaving the matter to be decided by the arbitrator. A court, while considering the question whether an alleged dispute between the parties has to be referred for arbitration or not should refrain from expressing its opinion on the merits of the dispute which may embarrass the arbitrator. However, the main issue before us is whether the dispute mentioned in the contractor's application could have been referred to arbitration at all. 4. If the foundation of the claim of the respondent be any alleged assurance or custom or practice, it cannot be said that such claim arises out of the written agreement between the parties; and so the prayer for reference has to be rejected. If the case pleaded is true, the appropriate forum for the respondent will be a court of law directly granting the relief in an appropriate legal proceeding. It was, however, argued on behalf of the respondent before us that in view of paragraph 15 of the tender notice, quoted earlier, which must be treated as a part of the agreement, the respondent has a right to be considered for allottment of the additional work since his past performance has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fresh stock of unburnt bricks in the kilns. Consequently the stock pile of kateha bricks kept on mounting up when the rains set in, destroying 88 lacs of katcha bricks. The contractor claimed the loss arising out of the neglect of the Government department in performing its duty in time. The Government denied the claim and a reference of the dispute was made to the arbitrator designated in the agreement who made an award and filed it in court. On the Constitution coming into force the Dominion of India was replaced by the Union of India as the defendant in the case and it was contended on its behalf that the katcha bricks did not form part of the contract and that the loss that was occasioned by the damage to them was too remote to be covered by the arbitration clause. The second ground of defence was based on Clause 6 of the agreement which absolved the Government from any liability for a damage to unburnt bricks. The stand of the contractor was that the chief reason of the destruction of the katcha bricks was the failure of the department to lift the monthly quota of the bricks in accordance with the written agreement; and, Clause 6 of the agreement referred only to such cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tender notice. We, therefore, do not agree with the observations of the High Court that the conduct of the Corporation in not taking up immediate deforestation of a part of Compartment No. 59Marwa is reprehensible, simply for the reason that the trees in the area concerned are "to be extracted one day or the other" or that the plaintiff has the right to claim the additional work on the ground that his achievement in the past has been more than 100%. We also hold that the claim raised by the plaintiff in his application before the High Court is not covered by the arbitration clause and cannot be referred for a decision of the arbitrator. The order of reference passed by the High Court, therefore, has to be set aside. 5. By the interim order the High Court permitted the plaintiff to execute the additional work claimed by him without waiting for the award. On the quashing of the main order of reference, the interim order automatically disappears, but we would, however, like to briefly indicate the scope of Court's power to issue interim orders at the time of reference of a dispute to arbitration, and point out how in the present case the High Court was in grave error in granting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o something which he could have been entitled to, only after a final decision on the merits of the case in his favour, committed a serious error. Paragraph 1 of the Second Schedule speaks of the preservation of subject matter of the reference and paragraph 3 also highlights that aspect. The 4th paragraph which mentions--"interim injunction or the appointment of a receiver"--has also to be interpreted in that light specially because of the language of clause (b) of s. 41 and the Proviso thereto. The second part of the judgment under appeal is also, therefore, set aside. 6. It has been averred before us on behalf of the plaintiffrespondent that all the trees in question were cut down, and so the plaintiff must be permitted to complete the remaining work including their transportation to the destination. The learned counsel for the Corporation placed reliance on the statements in several affidavits and contended that if the entire circumstances including the period which could have been available to the respondent for the purpose of felling the trees, are examined, there is no escape .from the conclusion that the respondent had felled the trees or majority of them after service of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n compartment No. 59 Marwah, on the same rates, terms and conditions as contained in the original contract. The sanction appears at pages 26 28 of the present appeal papers before us. It appears that the total marking carried out in compartment No, 59 was 10,08,000 cft. standing out of which only 6 lac cft. was sanctioned in favour of the respondent. The compartment in question is at a distance of Over 70 kms. from the nearest road point and the timber extracted from the compartment had to travel by pathroo, paccinali and mahan through Chenab river for a total distance of 80 kms. before it is collected at loading point of Dedpeth. 1t is, further, the case of the respondent that "as per the procedure, practice, custom and assurances extended to the respondent by the appellant Corporation through its functionaries, from time to time," the entire marking conducted in a particular compartment for extraction was required (emphasis supplied) to be handed over to the respondent in compartment No. 59. As regards sale, it is suggested that as the compartment is situated in one of the remotest area of Jammu province where making arrangements for extraction of timber including cartage/car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d aspect emerging is that out of this volume only 6 lac eft. standing timber had been sanctioned in favour of the contractor on two different occasions, and such timber had been extracted, removed and taken to the loading point. The only dispute subsisting was about the rest of the standing trees i.e., 4,80,000 cft. It is not disputed that the said remaining cfts. have been marked. These remained as marked timber which required to be extracted. The respondent claims preference for grant of contract of extraction by way under the clause in the relevant sanction. The only contention of the appellant was that they had no intention to extract the said timber till other extracted timber was taken to the depot. The case of the appellant as noted by the learned Judge in his judgment, was that the remaining timber to be extracted presently for 'unknown reasons' was not to be then extracted and, as such, the Corporation could not be compelled to grant or sanction extraction of remaining marked timber. The learned Judge by his impugned judgment and order deprecated the conduct of the authorities concerned. He proceeded on the basis that inasmuch as the remaining timber had to be extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion, it is not the correct way to look at the facts of this case. It appears from the first agreement, which is at page 142 onwards of the present paper-book that it contained, inter alia, the following clauses. "The quantum of work under each activity/subactivity is estimated and as such cannot be guaranteed and can be increased or decreased upto 25% by the General Manager Ext. East Jammu East on the contract rates subject to prior approval of the Managing Director. Any subsequently marking carried out in a section/unit under work with the contractor shall be included in this increase of 25%." It also contained clause 15 which was to the following extent: "Extension for the additional volume available in the coupe will not be claimed as matter of right. But may be considered by the Management where the achievement is 100%." Clause 17 of the said agreement which provided for reference to arbitration was the following: "Any dispute, difference, question which may at any time arise between the parties in respect of the works to be executed by the contractor(s) shall be referred for arbitration to the Managing Director J K SFC whose decision shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the contractor claimed that he was entitled to the grant of additional volume of work. In my opinion, there was a dispute whether the contractor was entitled to the grant of additional volume of the work. Such dispute was a dispute between the parties in respect of the "works to be executed by the contractor." I am clearly of the opinion that the dispute in this case was a dispute between the parties in respect of the "works to be executed by the. contractor". In that view of the matter and in the light of clause 15 read with clause 17, the dispute in this case was clearly referable to arbitration of the Managing Director, Jammu Kashmir State Forest Corpn. An arbitration agreement is one which is defined in Section 2(a) of the Arbitration Act, 1940 as a written agreement to submit present or future differences to arbitration. There was, in this case, an arbitration agreement, that is to say, the parties had been ad idem. The agreement was in writing. It was not a contingent or a future contract. It was a contract at present time to refer the dispute arising out of the present contract entered into by the parties as a result of which the contractor got a right or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract and further similarly placed persons had been so given. That right had not been duly considered. That is the dispute in the present case and that dispute is clearly referable to the arbitration clause as mentioned hereinbefore. I am, therefore, unable to accept the position that the order of reference passed by the High Court is bad. The second challenge to the order of the High Court was that the order so far as it directed under Section 20 of the Arbitration Act that the petitioner be allowed to do the remaining work of extraction of timber of standing market trees in compartment No. 59 Marwah, was wholly without jurisdiction. For this reference may be made to Section 41 of the Arbitration Act which provides that for the purpose of and in relation to arbitration proceedings, the Court has such powers to pass interim orders for detention, preservation, interim custody and sale of any property--the subject matter of the reference for preservation or inspection of any property or thing--the subject-matter of the reference or as to which any question may arise therein for taking of samples and making observations and experiments; for securing the amount in difference in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been done pursuant to an order of the Court of law and the party who has done the work must be paid its remuneration. How would that remuneration be settled, would it be by a decree in the suit or would it be by adjudication of an award? In the view I have taken that there was a valid reference on the contention of the respondent, this question which was incidental thereto must be decided along with that contention. In any view of the matter, however, for determining the work done pursuant to the liberty or right given by the Court which was not stayed by this Court arbitration undoubtedly is a better method of finding out the dues in respect of that work done. I would not, therefore, in any event alter this direction of the High Court. In the aforesaid view of the matter, in my opinion, it would be inappropriate to interfere with the interim direction of the High Court though the direction was beyond jurisdiction. In the premises I would have disposed of the appeal by directing the arbitrator to determine the rates in respect of the extraction of the remaining timber of standing marked trees in compartment No. 59 Marwah. In the aforesaid view of the matter, I would have made n ..... 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