This awesome power of certification or finality at the hands of a government officer for access to even a dispute resolving mechanism like arbitration has now been disciplined by the apex court in the case of MK Shah Engineers & Contractors vs State of Madhya Pradesh.

Madhya Pradesh government had entered into a contract with MK Shah and M/S Chabaldas & Sons for the construction of Barna main dam across river Barna, near Bhopal. For whatever reason both the contractors could not complete the work given to them. Disputes arose between them and the MP government.

Before they could go in for arbitration, they were requiredby the contract to refer the matter to the superintending engineer whose decision would be final. Only if they were dissatisfied with that decision they could within 28 days of having received notice of the decision approach with a written request to the superintending engineer for a reference to arbitration.

This Atlantic clause stated that the superintending engineer's decision would be final in respect of ``all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions, and as to the quality of workmanship or material used on the work or as to any other question, claim right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or those conditions or otherwise concerning the work of execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof.'' This comprehensive, certification or AtlanticShipping clause did not lay down any specified time within which the superintending engineer was bound to give his decision.

Accordingly, first the superintending engineer and then the MP government spun around the contractors. MK Shah Engineers referred their disputes to the superintending engineer in 1971. The superintending engineer simply formed a high level committee instead of deciding the disputes himself. When one year passed the contractor protested in writing to the MP irrigation officials. In 1974 the MP Governor through the irrigation department appointed an arbitrator stating specifically that this was being done under the Atlantic Shipping clause and in consultation with the contractor.

Even after this the government took an elusive stance before the arbitrator appointed by it. Its counsel raised the preliminary objection that since under the Atlantic Shipping clause the superintending engineer had not given his decision, there could be no arbitration. The arbitration was adjourned, thegovernment then used the death of the arbitrator to claim before the district court that it need not press its application since there was no arbitrator left. According to it the arbitration had become infructous. The district court dismissed the petition on that basis.

Since the MP government would not appoint an arbitrator to replace the one who had died, the contractor had to approach the district court for the same. After the MP government proposed a panel of three names, the court allowed the application of the contractor and appointed an arbitrator. The new arbitrator concluded his proceedings and announced the award without any reasons on September 26, 1978.

When the award under the Arbitration Act, 1940 was to be made into a rule of the court, the state turned around once again and sought to defeat the award on the ground that the Atlantic Shipping clause had not been complied with before the arbitration. The district court upheld the objection and the high court confirmed it.

The contractor hadno choice but to appeal to the apex court. However, even there its appeal has been pending since 1983 and has now been decided in its favour after 16 years. Justice RC Lahoti who has written the judgment, sitting with Justice V Sujata Manohar, held that the principal question was the effect of the absence of the decision by the superintending engineer preceding the demand for reference and commencement of arbitration proceedings. The judges relied on Hudson's Engineering Contracts and Russel on Arbitration to record their respectful agreement with these English authors about the Atlantic clause. They recorded the merry dance that the MP government had forced the two contractors into. They concluded that the state could not take advantage of its own wrong conduct in the matter and enforce the Atlantic Shipping clause written into the contract.

But surprisingly the judges did not award any costs against the MP government or the officials who had indulged in this conduct. The result is that even while the apexcourt has given a judgment against such use of the Atlantic Shipping clause there is no disincentive to officials indulging in that conduct since they remain unaccountable before the apex court too. What the apex court has given by one hand to citizens, it has negatived by the other hand by keeping silent on the accountability of officials and its own accountability in letting such a petition pending for 16 years.