Central Ware Housing Corporation v. Ram Awtar Joshi
2004-05-11
body2004
DigiLaw.ai
ORDER Heard Sri Sideshwari Pd. Singh, Sr. Advocate on behalf of the petitioners and Sri Rajendra Narain on behalf of opposite party. 2. This revision application is directed against the order dt.17.6.03 passed by the Subordinate Judge I Kishunganj in Title Suit no. 8/02 whereby the Court below has directed the sole arbitrator not to proceed with the arbitration proceedings and to maintain status quo till the question of maintainability of the Title Suit raised by the defendant-petitioner is decided. In support of the civil revision petition learned counsel for the petitioners submitted that opposite party no. 1 was appointed as handling the transport contractor of the Central. Warehousing Corporation for transporting grains from Kishunganj rail head t9 the Corporation godown at Kishunganj. The stipulated period of contract was from 3.8.96 to 2.8.98 which was extended by six months up to 2.2.99. When the bill of the contractor was not settled even after conclusion of the contract, he requested the Managing Director of the Corporation under letter dt.29.12.99 to settle the bills at an early date. The Managing Director instead of settling the bill appointed Sri A.N. Lallar, Former Secretary, Central Warehousing Corporation as the sole Arbitrator under letter dt.13/17.7.2000 to resolve the dispute between the contractor and the Corporation by a speaking award. The sole arbitrator thereafter issued notice dt.1.9.2000 to the parties to submit their claims/counter claims by 27.9.2000 and fixed 14.11.2000 as the date for hearing. The contractor in response to the said notice initially submitted his claim under letter dt.21.9.2000 for Rs.30.22 lacs which was subsequently revised to Rs.40 lacs, 61 lacs and thereafter 57 lacs. The Corporation also filed counter claim while the arbitral proceedings remained pending the contractor filed Request case no. 6/2001 before this court praying inter alia for termination of the appointment of the sale arbitrator Sri A.N. Lallar as also for appointment of new arbitrator and until the present arbitrator is replaced the arbitral proceeding before Sri Lallar should remain stayed. The aforesaid request case was, however, rejected under order dt.9.11.01 holding that the allegation in support of the prayer to replace the arbitrator is not supported by any material and as such there is no ground to change the arbitrator. It appears after the request of the contractor to replace the arbitrator was dismissed by the High Court under order dt.9.11.01. The contractor tiled Title suit no.
It appears after the request of the contractor to replace the arbitrator was dismissed by the High Court under order dt.9.11.01. The contractor tiled Title suit no. 8/02 before the Subordinate Judge I Kishunganj praying inter alia for a declaration that on account of malafide conduct of the Corporation and its officials the arbitration clause has been frustrated and for further declaration that the counter claim made by the corporation against contractor is wholly illegal and thereafter to pass decree for Rs.57,89,072 with interest. After receipt of the notice defendant-petitioners appeared in the title suit and filed application dt.25.3.03 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') praying inter alia to close the suit proceeding as the suit was not maintainable in view of the arbitration clause XIX of the tender notice which formed part of contract agreement signed between the parties and further for the reason that the arbitration clause has been invoked and the matter remained pending before sole Arbitrator Sri A.N. Lallar. The contractor-opposite party also invoked the aforesaid section of the Act in his petition dt.22.3.03 and prayed that arbitration proceeding itself be stayed. The court below under the impugned order has referred to aforesaid two petitions and thereafter has observed that from perusal of the case record, it appears that two proceedings between the same parties with respect to the same subject matter is pending one before the learned Arbitrator and the other before the court. Having observed as above the court below has posed the question as to which proceeding out of the two is maintainable and thereafter has stayed the proceeding pending before the arbitrator until the question of maintainability of the suit is decided. 3. Learned senior counsel appearing in support of the petitioners has raised a short question regarding maintainability of the suit in view of Sections 8 and 16 of the Act and submitted that the court below by entertaining the suit in the teeth of arbitration clause has exercised a jurisdiction which is not vested in it and has erroneously proceeded to stay the arbitral proceeding pending before the sole arbitrator which proceeding the court below was otherwise enjoined to facilitate by directing/referring the parties to appear and participate in the arbitral proceeding. In support of the aforesaid contention learned counsel has relied upon the case of Hindustan Petroleum Corporation Vs.
In support of the aforesaid contention learned counsel has relied upon the case of Hindustan Petroleum Corporation Vs. Pinkcity Midway Petroleums, AIR 2003 SC 2881 and has submitted that the impugned order staying the arbitral proceeding is vitiated and should be set aside with direction to the parties to appear before the arbitrator and contest their claim/counter claim before him so as to ensure early disposal of the adjudication pending before the arbitrator. 4. On the other hand learned counsel for the plaintiff-opposite party contractor with reference to the counter affidavit filed by him has submitted that in view of the counter claim submitted by the Corporation which is beyond the purview of arbitration clause the arbitral proceeding itself has been frustrated and no useful purpose will be served by relegating the parties to the arbitrator for adjudication of their• dispute. In this connection learned counsel has relied upon the averments made in paragraphs 9 and 12 of the counter affidavit to submit that by lodging the counter claim of Rs.43,86,388 which was inflated to Rs.1,71,04,819 in respect of rail transit loss which obviously cannot be adjudicated by the sole arbitrator in view of the exclusion contained in the arbitration clause itself learned counsel submitted that by lodging counter claim in regard to rail transit loss the Corporation is making all out attempt to frustrate the entire arbitral exercise which necessitated the filing of the instant suit. 5. Having submitted as above learned counsel stated that in the fact of this case the suit is not barred as according to him arbitrator is not entrusted with jurisdiction to adjudicate the counter claim regarding rail transit loss. In support of the aforesaid contention learned counsel has relied upon the case of Ramesh Chand Ardawatiya Vs. Anil Panjwani reported in (2003) 7 SCC 350, Rajasthan State Mines & Minerals Ltd. Vs. Eastern Engineering Enterprises & Am., (1999) 9 SCC 283 , Prakash Narain Sharma Vs. Burn ah Shell Cooperative Housing Society Ltd., AIR 2002 SC 3062 . The Executive Engineer Central Public Works Department & others Vs M/s R.L. Singh Civil Engineer, 1997 (1) PLJR 523 Continental Construction Co. Ltd. Vs State of Madhya Pradesh, (1998) 3 SCC 82. Besides the aforesaid cases he has also relied upon the case of Food Corporation of India Vs.
The Executive Engineer Central Public Works Department & others Vs M/s R.L. Singh Civil Engineer, 1997 (1) PLJR 523 Continental Construction Co. Ltd. Vs State of Madhya Pradesh, (1998) 3 SCC 82. Besides the aforesaid cases he has also relied upon the case of Food Corporation of India Vs. Surendra Devendra & Mahendra Transport Co., 2003 (1) SCALE 684 as annexed vide annexure 1 to the counter affidavit. 6. The materials which have been placed before me through the pleadings filed by the parties during the hearing of the instant civil revision application do not indicate that the learned Arbitrator has closed his mind in regard to the submission of the contractor that he has no jurisdiction to adjudicate the claim of the Corporation in regard to the rail transit loss. The apprehension expressed by the contractor in this regard in the counter affidavit also appears to be unfounded. 7. Now coming to the case law relied upon by the counsel for the contractor-opposite party with reference to the case of Ramesh Chanda Ardawatiya (supra), it was contended that where there is special tribunal conferred with jurisdiction to try a particular class of cases even then the jurisdiction of the Civil Court to entertain a civil suit to try a case of that class is not ousted as exclusion of the jurisdiction of the Civil Court is not to be readily inferred. The ratio decidendi of the said case, however will not apply to the facts of the present case for the reason that the said suit was filed by a member of a cooperative society against a non member seeking declaration of title as owner (and in the alternative his possessary title) and seeking restoration of possession as also issuance of mandatory and preventary injunction against recent encroachment. In that case dispute between the parties was not covered by the special tribunal constituted under Cooperative Society Act and in that view of the matter, the Supreme Court allowed the suit proceeding to continue. In the case in hand, however, the situation is absolutely different. The dispute between the contractor and the Corporation in terms of the contract signed between them is to be resolved and adjudicated by the arbitrator in terms of the arbitration clause.
In the case in hand, however, the situation is absolutely different. The dispute between the contractor and the Corporation in terms of the contract signed between them is to be resolved and adjudicated by the arbitrator in terms of the arbitration clause. The other decision on which learned counse1 for the opposite party placed reliance namely the case of Prakash Narain Sharma (supra) also has no application to the facts of the present case as in the said case Hon'ble Supreme Court held that until the restrain order of the Civil Court was operative the learned arbitrator ought not to have proceeded with the arbitration proceeding as he was duty bound to stay 'his hand from further proceeding and as the award was made during the time the stay order was in operation, the award is vitiated. In the case in hand, the fact is otherwise as after the stay order was passed by the Civil Court the learned arbitrator has completely restrained himself and is not proceeding with the arbitral proceeding. In this view of the matter the case of Prakash Narain Sharma (supra) has no application to the present case. The case of Rajasthan State Mines & Minerals Ltd (supra) has also no application to the fact of this case as in that case arbitral award was made by the arbitrator and the Hon'ble Supreme Court found the said award contrary to the clauses 17 and 18 of the agreement and having found as such held that the award ought not to have been confirmed by the High Court as it was violative of clauses 17 and 18 of the agreement. The case of the Executive Engineer Central Public Works Department & Ors. (supra) has also no application to the facts of the case in hand as the suit out of which said case arose was filed for making a reference of the dispute to the arbitrator. The defendant-petitioners raised the plea that the suit itself was not maintainable for the failure of the plaintiff to file certified copy of the agreement which objection was over ruled and it was held that the suit is maintainabla and the High Court in civil revision also dismissed the plea of the defendants and held that even in absence of the certified copy of the agreement the suit for making a reference to the arbitrator is maintainable.
It would appear from the above that the said decision has no application to the fact of the case. The case of Continental Construction Co. Ltd. (supra is also not applicable to the fact of the preset case as it appears from the said decision that in that case the Hon'ble Supreme Court discussed the circumstances in which the award given by the arbitrator is liable to be interferred with. In the case in hand the award has not yet been pronounced by the arbitrator, as such in my opinion the said case law has also no application to the fact of the present case. Similar is the position in regard to the case of Food Corporation of India as contained in annexure I to the counter affidavit. 8. Having considered rival submissions, I am of the view that in view of the arbitration clause and the legislative intent of sections 8, 16 of the Act the parties were obliged to refer their dispute to the learned Arbitrator who is competent to decide pending dispute between them including question of his own jurisdiction to decide the counter claim regarding the rail transit loss. 9. In view of the discussions above, the Civil Revision application is fit to be allowed and the impugned order dt.17.5.03 passed by the Subordinate Judge I.K. Kishunganj in Title Suit no. 8/02 is set aside with direction to the parties to appear before the learned Arbitrator who should proceed to adjudicate the dispute between them strictly in accordance with the arbitration clause and the exclusion provided therein. 10. At the fag end of the argument learned counsel for the opposite party produced before me copy of the order dt.3.3.03 passed by the learned arbitrator which was taken on records of the case and with reference to the said order learned counsel submitted that he has a genuine apprehension that learned arbitrator may not adjudicate the entire pending claim between the parties as under the aforesaid order dt.3.3.03, he has directed the claimant to submit details of the claim of Rs.25.23 lacs specifically mentioned in the appointment order of the arbitrator and on that basis, learned counsel submits that contractor has apprehension that the entire dispute amounting to Rs.40, Rs.61 and Rs.57 lacs may not be adjudicated.
I do not think the apprehension is justi-cated as the arbitrator has entered into arbitration to adjudicate entire dispute between the parties which is covered by the arbitration agreement and if the dispute amount has been revised from Rs.40, to Rs.57 lacs the learned Arbitrator is duly bound to dispose of the same in terms of the agreement. In that view of the matter, the apprehension expressed is fully unjustified.