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Madhya Pradesh High Court · body

2008 DIGILAW 771 (MP)

Chandreshwar Jha (Engineers and Contractors) v. Northern Coalfields Ltd.

2008-06-26

K.K.LAHOTI

body2008
Judgment ( 1. ) THIS application is directed under Section 11 of the Arbitration and Conciliation act, 1996 for appointment of an arbitrator to decide the dispute between the parties. The facts of the case are that the petitioner being a works contractor was registered with the respondents since 8-12-1984. On 27-3-1997 an agreement for replacement of damaged doors and windows including Chawkhats of colony at Garbi project was entered in between the applicant and respondent No. 1 for a contract valued of Rs. 23,40,552. 14p to be completed within six months from the date of commencement of the work. The aforesaid agreement consist Clause 9, about settlement of the dispute and for referring the dispute to the Chief Managing Director, NCL for decision. ( 2. ) THAT the petitioner completed the work in the month of August, 1997 and running bills were paid by respondent No. 1 but the final bill of the applicant was kept pending for want of sanction of revised estimate as the contract value of the work was considerably enhanced above the award value. On 20-11-1998, the Chief Manager of the respondent no. 1 passed an order instructing all projects to withhold the payments of the applicant due to dispute of the quality of the shutters. No opportunity of hearing was extended to the applicant and the contract registration of the applicant was kept in abeyance. On 8-12-1998 the applicant made a representation before the respondents to re-consider the order dated 20-11-1998 on the ground that the defects as pointed out by the respondents were rectified. Thereafter the applicant challenged order dated 20-11-1988 before the High Court in W. P. 3645/ 98. The aforesaid writ petition was finally dismissed by order dated 16-8-1999 by which the High Court found that it was not a case of black-listing of the petitioner. The opportunity was required only when the person is black-listed for all time. Petitioner represented to the concerned authorities and the registration of the petitioner was kept in abeyance for which no opportunity of hearing was necessary. The High Court held that it was not necessary on the part of the respondents to give petitioner an opportunity of hearing before passing a final order and with the aforesaid discussion, petition was dismissed as per order Annexure a-7. The High Court held that it was not necessary on the part of the respondents to give petitioner an opportunity of hearing before passing a final order and with the aforesaid discussion, petition was dismissed as per order Annexure a-7. Against the order dated 16-8-1999 l. P. A. No. 438/99 was preferred, but by order annexure-A-8 dated 1-12-1999 it was dismissed as withdrawn. ( 3. ) THE applicant requested to the respondents under clause 9 of the Agreement for appointment of an Arbitrator to decide the dispute between the parties. The applicant raised its claim for Rs. 24. 2 lakhs and interest. The respondent No. 1 on 22-5-2000 refused to appoint an Arbitrator. Applicant filed an application under Section 11 of the arbitration and Conciliation Act, 1996 before the additional District Judge, Sidhi. The application was contested by the respondents and by a reasoned order Annexure A-10 dated 4-3-2003, the application was rejected on the ground that clause 9 of the agreement was cancelled and there was no agreement between the parties for the appointment of an Arbitrator. It is not in dispute that the order Annexure A-10 was not challenged by the applicant and has attained finality. ( 4. ) NOW this application has been filed on the ground that after passing of the order dated 4-3-2003 the applicant inspected the original document produced by respondent No. 1 and was surprised to know that clause 9 of the Agreement was cancelled without any signatures of the applicant but the certified copy supplied by the respondent was not with the deletion of Clause 9 of the Agreement. Then the applicant approached to the respondents headquarters for further action. During the discussion with the respondents it revealed to the applicant that though Clause 9 of the Agreement was deleted but there was a clause in tender notice dated 30-12-1996 to refer the dispute to CMD, NCI. The application got copy of the order dated 4-1-2002 and 5-2-2003. Under the clause of tender notice dated 30-12-1996 Annexure A/2 and A/13, the Applicant on 5-5-2003 again made a representation to respondent No. 2 for settlement of the dispute on the ground that the tender dated 30-12-1996 forming part of the agreement provided settlement of the dispute. Earlier demand notice dated 26-6-2000 was served 3 years back and the claim of the applicant was enhanced from 24. 2 lakh to 48. 49 lakhs. Earlier demand notice dated 26-6-2000 was served 3 years back and the claim of the applicant was enhanced from 24. 2 lakh to 48. 49 lakhs. Various representations were made to the respondents by the applicant but without any result so notice dated 31-7-2004 was served on respondent No. 2 to appoint as Arbitrator as per the provisions of the Agreement within a period of 30 days. Respondent No. 2 sent a reply dated 10-9-2004 annexure-A-17 stating that the agreement with the applicant was without any arbitration clause and the applicant was advised to contact the concerned project engineer for the ftnalization of the contract. The applicant met with the Project Engineer of respondent No. 1 and made a request to finalise the contract as per letter dated 10-9-2004 but without any result. The present application has been filed in view of the demand notice dated 5-5-2003 alleging a fresh cause of action. ( 5. ) RESPONDENT opposed the application stating that the application is highly belated, it was filed beyond a period of 3 years from the date of accrual of cause of action and is barred by limitation under Art. 137 of the limitation Act. The petitioners prayer made on 20-6-2000 was under alleged clause 9 of the Agreement, while there was no such clause in the Agreement. That the District Judge, Sidhi vide order dated 4-3-2003 rejected the similar prayer made by the petitioner which has attained finality and for similar relief second prayer cannot be made as it is barred by the principles of res judicata. The alleged arbitration Clause 9 along with other clauses was scored out. The applicant had entered into an agreement in which there was no arbitration clause. Clause of settlement of dispute only empowers the CMD to decide the difference between the parties and his decision was final and binding except the provisions made in clause 10 of the agreement. Clause 10 of the agreement is filed as Annexure R-1 along with the reply. That the petitioners 97% payments were already made, the petitioner had not completed the work, rectified the defects and put the answering respondents at a loss. ( 6. ) THE petitioner has also filed application on 11-12-2006 seeking condonation of delay and exclusion of time, spent in legal proceedings, LA. That the petitioners 97% payments were already made, the petitioner had not completed the work, rectified the defects and put the answering respondents at a loss. ( 6. ) THE petitioner has also filed application on 11-12-2006 seeking condonation of delay and exclusion of time, spent in legal proceedings, LA. No. 12663/06 stating that earlier application was filed before the District Judge, sidhi which was erroneously rejected by him, while there was an Arbitration clause between the parties for the settlement of the dispute which came into the knowledge of the petitioner on 4-3-2003 and such time may be excluded for computing the period of limitation. It is further submitted that earlier claim was for Rs. 25 lakh, now it has increased for Rs. 48. 25 lakh for which the District Judge was not having jurisdiction and the jurisdiction lies with this court, so this application may be entertained. ( 7. ) THE respondents opposed the application contending that at the relevant time the claim was below Rs. 25 lakh and the applicant rightly filed an application before the District Judge which was dismissed by him. As the aforesaid order has attained finality so this application is barred by limitation and res judicata, and may be dismissed. ( 8. ) TO appreciate the contentions of the parties, it will be pertinent to mention here that a preliminary point emerges for the consideration of this Court, that whether this application is barred by res judicata ? ( 9. ) IN this case it is not in dispute that earlier in respect of same contract, applicant raised his claim before the respondent and filed an application for constitution of an Arbitral Tribunal before the District judge, Sidhi. The aforesaid application was decided by District Judge, Sidhi vide order dated 4-3-2003 Annexure A-10. At the relevant time the application was not opposed by the respondents that the District Judge, sidhi was having no jurisdiction to decide the application. The Apex Court in SBP and co. v. Patel Engineering Ltd. (2005 Vol. The aforesaid application was decided by District Judge, Sidhi vide order dated 4-3-2003 Annexure A-10. At the relevant time the application was not opposed by the respondents that the District Judge, sidhi was having no jurisdiction to decide the application. The Apex Court in SBP and co. v. Patel Engineering Ltd. (2005 Vol. 8 scc 618) : AIR 2006 SC 450 held that under Section 11 (6)of the Arbitration and Conciliation Act, jurisdiction lies with the Chief justice of High Court or his nominee and the jurisdiction lies with the High Court but in para 47 of the judgment, the Apex Court held thus :- (x) (Para 47 (x) and (xii) corrected vide official Corrigendum No. F. 3/ed. B. J. /99/ 2005 dated 20-10-2005 ). Since all were guided by the decision of this Court in konkan Railway Corpn. Ltd. v. Rani Construction Pvt. Ltd. (2000) 8 SCC 159 : 2000 air SCW 3908 and orders under Section 11 (6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11 (6) of the Act. (xi) Where District Judges had been designated by the Chief Justice of the High court under Section 11 (6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the chief Justice of the concerned High Court or a Judge of that Court designated by the chief Justice. The aforesaid judgment specifically lay down that the earlier orders passed in view of the law laid down by the Apex Court in konkan Railway Corporation Ltd. v. Rani construction Ltd. , 2002 Vol. II SCC 388 : air 2002 SC 778 were saved though the aforesaid judgment was overruled by the apex Court. The Apex Court further held that the jurisdiction lies only with the Chief Justice of the High Court or his nominee to appoint an Arbitrator but earlier orders passed by the District Judge as delegate of the Chief justice were saved. The Apex Court further held that the jurisdiction lies only with the Chief Justice of the High Court or his nominee to appoint an Arbitrator but earlier orders passed by the District Judge as delegate of the Chief justice were saved. So the earlier orders which were passed by the District Judge remain unaffected and the orders which were passed by the District Judge earlier in the light of the judgment of the Apex Court in Konkan Railway (supra) were found with jurisdiction. ( 10. ) THE Apex Court in Jeevantha v. Hanumanta, AIR 1954 SC 9 held that competency of the Court must have existed at the date of former suit. In. order to determine whether a Court which decided the former suit had jurisdiction to the subsequent suit, regard must be had to the jurisdiction of that Court at the date of the former suit and not to its jurisdiction at the date of the subsequent suit. If at that time such a Court would have been competent to try the subsequent suit, and it been then brought, the decision of such Court would operate as res judicata although subsequently by a rise in the value of the property that court had ceased to be a proper court, so far as regards its pecuniary jurisdiction, to take cognizance of a suit relating to that very property. The Apex Court held in para 4 thus :- It seems to us that this rule of law was overlooked in all the Courts below. The property in dispute in the two suits is identical. At the date of the earlier suit it was assessed to land revenue in the sum of Rs. 84/- while at the date of the later suit it was assessed in the sum of Rs. 104/ -. The difference in the jurisdictional value has arisen by reason of the increase in the land revenue assessment. The circumstance, however, could not affect the plea of res judicata. The present suit, if brought in the year 1913, would have been within the competence of the Munsif who tried the first suit because the land revenue assessed on these survey members then was only Rs. 84/- and the valuation of the suit would have been Rs. 840/-within the Munsif s pecuniary jurisdiction. This was the only ground urged against the application of the rule of res judicata to his case. 84/- and the valuation of the suit would have been Rs. 840/-within the Munsif s pecuniary jurisdiction. This was the only ground urged against the application of the rule of res judicata to his case. In all other respects it was admitted that the case was within that rule. The result therefore is that the plaintiffs suit is barred by res judicata by reason of the decision of the former suit decided in the year 1921. ( 11. ) IN Takechand Kapurchand v. Mst. Birza Bai, (AIR 1942 Nagpur 119), a learned judge of this Court considering the question in reference to Section 11 of the Code interpreted expression "in a Court competent to try such subsequent suit" in Section 11 held that the expression refers to the jurisdiction of the Court at the time when the first suit was brought. In view of the settled law by the Apex Court and this Court in Tekchand (supra), there is no iota of doubt that in respect of subsequent proceedings, the principle of res judicata would apply if the earlier proceedings were heard and decided by a Court having jurisdiction at that point of time in this regard. In the light of this legal position, the facts of the present case may be looked into. The earlier application was decided by the 1st Additional judge to the Court of 1st Additional District judge, Sidhi in MJC No. 4/03 on 4-3-2003 (Annexure A-10) and the application filed by the applicant under Section 11 of the Arbitration and Conciliation Act, 1996 was dismissed on merits. At the relevant time such court was having jurisdiction to decide the matter and the aforesaid order ought to have been challenged by the applicant immediately before higher forum. Once the applicant invoked the jurisdiction of a competent Court and the application was heard and rejected, a subsequent application cannot be entertained merely on the ground that now the jurisdiction lies with the High Court and not with the District Judge. In the light of the judgment of the Apex Court in S. B. P. and Co. (supra) the previous judgment between the parties bars subsequent application on the principle of res judicata. ( 12. In the light of the judgment of the Apex Court in S. B. P. and Co. (supra) the previous judgment between the parties bars subsequent application on the principle of res judicata. ( 12. ) SO far as the contention raised by the applicant that by concealing the agreement between the parties earlier matter was decided or the applicant was having no knowledge in respect of the clause in tender notice dated 30-12-1996 and these facts came into notice of application after earlier decision is concerned, the applicant who got the knowledge on 5-5-2003, immediately either ought to have sought review of the order dated 4-3-2003 or ought to have challenged the order before the higher forum along with the aforesaid contention but the applicant remained silent for a considerable long period from 5-5-2003 to 21-2-2005 and permitted the order Annexure A-10 to attain finality. Now the applicant cannot take benefit of the aforesaid circumstances by filing same application on same set of facts. In the result this subsequent application filed under Section 11 (6) of the Act is barred in view of the order Annexure A-10 on the principle of res judicata and is accordingly dismissed with no order as to costs. Application dismissed.