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2003 DIGILAW 1473 (ALL)

U. P. Power Corporation Ltd. v. Universal Insulator and Ceramic Ltd.

2003-07-08

N.K.MEHROTRA

body2003
JUDGMENT : N.K. Mehrotra, J. This is a revision u/s 115 of the Code of CPC against the order dated 18.3.1996, passed by the Civil Judge (Senior Division), Rae Bareilly in case No. 164 of 1993 by which the application of the opposite party under Sections 5, 11 and 33 of the Indian Arbitration Act, 1940, has been allowed and Shri R.D. Maheshwari has been removed from the post of Arbitrator and the parties were directed to submit three names each for appointment of one Arbitrator to resolve the dispute between the parties. 2. On 30.3.1996, the opposite party who was the applicant before the Civil Judge submitted the names of the three persons for appointment of the arbitrator. The revisionist sought time to file objection but no objection was filed. Therefore, the learned Civil Judge appointed Shri S.K. Rai, retired District Judge/Joint Secretary, Ministry of Law, Government of India as Arbitrator. On 8.8.1996, the revisionist, the U.P. State Electricity Board (hereinafter referred to as 'U.P.S.E.B.') filed this revision challenging the jurisdiction of the Court at Rae Bareilly. 3. It appears that the U.P.S.E.B. and the P.I.C.U.P. distributed brochure declaring that they are jointly sponsoring electrical complex where units would be established to manufacture various produce for making supplies to the U.P.S.E.B. The opposite party floated a tender for several crores of rupees. There was a package assistance scheme. After accepting the tender, the U.P.S.E.B. placed two orders to the opposite party No. 1. The contracts were "firm and firm" in all respects. The opposite party set out a unit for production only for U.P.S.E.B. supplies. There was an arbitration clause in the agreement between the parties. According to the opposite party No. 1, the U.P.S.E.B. committed a breach of the "firm and firm" contract and did not lift the committed quantity of the product of the opposite party as per terms of the contract and did not adhere to the terms of the payment. Subsequently, on 23.11.1981, there was a compromise but in total disregard to the mutual settlement in the meeting held on 23.11.1981, the U.P.S.E.B. changed the delivery clause and supplies were deferred. Subsequently, the rates were reduced by the U.P.S.E.B. by 40%. The opposite party kept on pursuing the matter for an amicable settlement. Since the dispute hand arisen, the opposite party wrote various letters for appointment of the arbitrator. Subsequently, the rates were reduced by the U.P.S.E.B. by 40%. The opposite party kept on pursuing the matter for an amicable settlement. Since the dispute hand arisen, the opposite party wrote various letters for appointment of the arbitrator. It was in October, 1991, Shri R.D. Maheshwari, the retired Chief Engineer was appointed as sole Arbitrator. On 20.11.1998, a claim petition on six counts claiming Rs.1,482.66 lacs was submitted. The U.P.S.E.B. contested the claim. The U.P.S.E.B. challenged the jurisdiction of the arbitrator. The arbitrator decided that only claim Nos. 1 and 2 of the claim petition would be entertained. On 4.7.1992, the opposite party moved an application for summoning certain documents. When the documents were not summoned the opposite party No. 1 moved the application for determining the scope of the reference and for change of the arbitrator on the ground of bias. The Civil Judge, Rae Bareilly allowed this application by the impugned order. 4. This Court stayed the proceedings before Shri S.K. Rai, the opposite party No. 3, the new arbitrator appointed by the impugned order. The order has been challenged mainly on the ground; that the Court had no jurisdiction to appoint the arbitrator as under the Arbitration agreement, it is the Chairman of the revisionist or his nominee who can alone act as Arbitrator; the learned Civil Judge has exceeded the jurisdiction by holding that the opposite party No. 2 has misconducted by reducing the jurisdiction and the court at Rae Bareilly had no jurisdiction. 5. A counter affidavit has been filed by the opposite party No. 1. It is contended that the new arbitrator appointed by the Civil Judge, Rae Bareilly had assumed the office and started the proceedings. The revisionist submitted to the jurisdiction and filed a written reply to the claim. Thereafter, the revisionist also requested the learned arbitrator to give him time to file a more detailed reply. The revisionist instead of filing a detailed reply had filed this revision. It is contended that the revisionist had acquiesced in the proceedings before the new arbitrator; therefore, the new arbitrator is precluded from pleading anything to the contrary. Further in the counter-affidavit, it has been contended that the court at Rae Bareilly had jurisdiction and justified that all the claims were within the scope of the reference. 6. It is contended that the revisionist had acquiesced in the proceedings before the new arbitrator; therefore, the new arbitrator is precluded from pleading anything to the contrary. Further in the counter-affidavit, it has been contended that the court at Rae Bareilly had jurisdiction and justified that all the claims were within the scope of the reference. 6. During the pendency of the revision, the opposite party No. 1 moved an application for vacation of the stay and it has been averred in the affidavit accompanied with this application that during the pendency of the civil revision, a five members committee was constituted by the revisionist itself to resolve the dispute vide its office order dated 21.9.2000, consisting of two technical experts, namely; Director (Distribution), Chief General Manager (Materials Management), two experts from the Finance and Audit Department namely; Director (Finance), the Chief General Manager (Accounts and Audit) and the Special Secretary (Energy) Government of U.P. It is further stated that the said committee examined the claims of the opposite party No. 1 and computed the minimum liability of the revisionist towards the payment of the claims of Respondent No. 1 to the extent of Rs. 979.8527 lacs alongwith interest thereon. It is further averred that after this decision, the matter was referred to the State Government. After seeking the opinion of the learned Advocate General, the State Government issued an order dated 9.12.2002 requiring the revisionist to pay the opposite party No. 1 the amount as admitted/computed by the five members committee within a period of 15 days. The copy of the order dated 9.12.2002, issued by the Government is enclosed with the affidavit. 7. It has been argued by the learned Counsel for the opposite party that the aforesaid order of the Government goes to show that the revisionist has itself admitted its liability to pay Rs. 979.8527 lacs alongwith interest as computed by the committee of the Directors of the Power Corporation Limited and this committee was constituted in place of the arbitrator by the revisionist itself. It has also been argued that the revisionist is deliberately engaging the Respondent No. 1 in litigation by protracting the instant proceedings. 979.8527 lacs alongwith interest as computed by the committee of the Directors of the Power Corporation Limited and this committee was constituted in place of the arbitrator by the revisionist itself. It has also been argued that the revisionist is deliberately engaging the Respondent No. 1 in litigation by protracting the instant proceedings. At the time of the hearing on this application, Shri Agendra Sinha, the brief-holder of Shri K.B. Sinha, senior advocate, admitted the appointment of the committee, issuance of the Government order and the fact that the revision appears to have become infructuous. On the subsequent dates, another counsel from the side of the revisionist appeared and U.P. Power Corporation Limited was substituted in place of U.P.S.E.B. Shri G.K. Mehrotra, the learned Counsel for the revisionist made submission that because of the time limit in the G.O. dated 9.12.2002, it ought to have been complied with and he also sought time to take decision for compliance of the Government order dated 9.12.2002. On 2.5.2003, the learned Counsel for the revisionist made statement that the U.P. Power Corporation Limited has taken the decision of the G.O. dated 9.12.2002 and has referred the matter to the Government and argued the revision on merit. 8. The learned Counsel for the opposite parties has moved an Application No.579 of 2003 accompanied by a number of documents giving the entire history of the protracted dispute between the parties. 9. This affidavit accompanied with an Application No.579 of 2003 contains the following facts: (1) The U.P.S.E.B. has illegally committed the breach of firm and firm contract since the very first supply of the opposite parties' company in April, 1991. (2) The U.P.P.C.L. constituted a five members committee as a replacement of the Arbitration proceedings to resolve the dispute of the payment/claims of the opposite party company. (3) The committee invited the opposite party-company for preliminary negotiations. (4) The committee computed and adjudicated the claims of the opposite party's company. (5) The U.P.P.C.L. sought the approval of the State Government on the calculation of the committee. (6) The State Government after taking the policy decision issued as G.O. on 9.12.2002, directing the payment of certain amount. (7) No dispute remains after the decision of the committee of the revisionist. (8) Arbitration has become infructuous because the decision calculating the amount of the claim payable to opposite party has already been taken. 10. (6) The State Government after taking the policy decision issued as G.O. on 9.12.2002, directing the payment of certain amount. (7) No dispute remains after the decision of the committee of the revisionist. (8) Arbitration has become infructuous because the decision calculating the amount of the claim payable to opposite party has already been taken. 10. Certain facts as stated in the counter-affidavit of the Respondents are not denied. Those facts as stated in the counter-affidavit are as follows: (1) The U.P.S.E.B. committed breach of the contract dated 23.4.1980 since the very first supply of the insulator with the Respondent's company in the year 1981. (Annexure-13) (2) Agenda and minutes of the Udyog Bandhu meeting held on 30.11.1981. (Annexure-17). (3) Minutes of the Board's meeting of U.P.S.E.B. dated 4.1.1982 (Annexure-21) which gives the reference that the order for supply of six lac numbers insulators had been placed on M/s. U.I.C.L. out of which 80,000 insulators in number had already been accepted and the balance quantity of 5.20 lacs had been deferred till March, 1982. (Annexure-21). On the strength of these facts, the learned Counsel for the Respondents has made an attempt to show that there was a breach of contract on the part of the U.P.S.E.B. but these facts are not relevant for the purpose of this revision. 11. A perusal of the record of this revision goes to show that there was no order staying the proceedings before the old Arbitrator Shri R.D. Maheshwari but even then the arbitration proceedings were not conducted by the old arbitrator. 12. It is apparent from the record that after the appointment of Shri S.K. Rai as Arbitrator by the impugned order, the revisionist participated in the proceedings. The learned Counsel for the opposite parties has referred Prasun Roy Vs. Calcutta Metropolitan Development Authority and Another, AIR 1988 SC 205 , in which it was held that where the parties participated in the proceedings before the new arbitrator without any objection for long, a subsequent challenge to the validity of the Court's order of appointment of the arbitrator is not open in view of acquiescence. 13. After filing of the revision, certain developments took place to settle the dispute between the parties to this revision. 13. After filing of the revision, certain developments took place to settle the dispute between the parties to this revision. As is evident from the record and which is not denied by the revisionist that a committee was appointed by the revisionist at the instance of the opposite party No. 1 to resolve the dispute. That committee calculated the amount due to the opposite party No. 1 and referred the matter to the Government and the Government issued an order on 9.12.2002, which has been filed in this revision and on the strength of this order, it has been argued before me by the learned Counsel for the opposite party No. 1 that this Government order dated 9.12.2002 has created a right in favour of the opposite party M/s. Universal Insulators and Ceramics Ltd. and when this order was filed in this Court the U.P.P.C.L. again referred the matter to the Government. It has also been argued before me that u/s 12 of the U.P. Electricity Reforms Act, 1999, the State Government is authorised to issue direction on policy matter and in view of the decision of this Court in Tara Prasad Mishra v. State of U.P. (1990) 2 UPLBEC 905, a mandamus can be issued for enforcement of that direction of the Government. 14. After hearing all the submissions of the learned Counsel for the opposite party No. 1, I am of the opinion that in the instant case, this Court is hearing the civil revision against the order dated 18.3.1996, passed by the Civil Judge, Rae Bareilly on a petition under Sections 5, 11 and 33 of Indian Arbitration Act, 1940, and the scope of the revision is limited to the provisions of Section 115 of the Code of Civil Procedure. So, all these arguments are not relevant for the purpose of deciding this civil revision. The only relevant fact is that during the pendency of the revision at the instance of the opposite party No. 1, a committee was appointed consisting of highly placed officers of the corporation and this committee admitted the liability to make the payment according to its own calculation and the matter was referred to the Government and the Government issued a G.O. on 9.12.2002, for making payment. So, now there remains no dispute between the parties and the revision appears to have become infructuous because of the appointment of the committee and the report of the committee has not been rejected either by the Government or by the U.P.P.C.L. 15. In Laxmi and Co. Vs. Dr. Anant R. Deshpande and Another, AIR 1973 SC 171 , it has been held by the Supreme Court that the Court can take notice of subsequent events to shorten litigation, to preserve rights of both the parties and to subserve the ends of justice. Since in the instant case, the dispute is pending since 1981 and two times arbitrators have been appointed and since 1996 onwards, there has been no proceeding of arbitration without any reason and the earlier Arbitrator Sri R.D. Maheshwari appointed by the U.P.S.E.B. had not proceeded in the matter so far and the U.P.P.C.L., the successor company of the U.P.S.E.B. has already made an attempt to resolve the dispute by appointing a committee at the instance of the opposite party No. 1 and that committee has calculated the liability to the extent of certain amount and that report of the committee has been submitted to the Government and after taking into consideration, the Government has issued a G.O. These facts are sufficient to hold that now this revision has become infructuous. The submission for issuing a mandamus to enforce the alleged vested right of the opposite party can be considered in writ only. Since this is not a writ petition by the opposite party No. 1, no further direction can be issued in this revision either to the revisionist or to the opposite party because the scope of Section 115 of the Code of CPC is very limited. 16. In view of the above, this revision being infructuous is dismissed.