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2009 DIGILAW 980 (ORI)

State of Orissa v. Durga Charan Routray

2009-12-23

I.MAHANTY

body2009
JUDGMENT I. MAHANTY, J. — An arbitration award was passed by Hon’ble Mr. Justice P.C. Mishra, Retired Judge of Orissa High Court awarding a sum of Rs. 17,08,631/- as escalation charges and after computing interest thereon the award comes to a sum of Rs. 32,93,445/- as well as memo of costs amounting to Rs. 1,88,517/-. Therefore, the total award amount to Rs. 34,81,962/- vide an award dated 7th March, 2003. 2. The State of Orissa on 23.6.2003 filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”) before the District Judge, Khurda at Bhubaneswar and the same was registered as Arbitration Petition No. 227 of 2003. On the self-same date, i.e. on 23.6.2003 the claimant (respondent herein) Sri Durga Charana Routray filed an Execution Case No. 65 of 2003 before the Dis¬trict Judge, Puri seeking for execution of the arbitration award. In the aforesaid execution petition the respondent also filed a further application under Section 9 of the 1996 Act praying for deposit/release of the awarded amount and the same came to be allowed vide order dated 3.4.2004, with a direction to the State-appellant herein, to make the deposit of the decretal amount within a month and the respondent (decree holder) was allowed to withdraw the said amount by either furnishing a bank guarantee or furnishing security, in favour of the State of Oris¬sa. The State of Orissa-appellant herein has sought to challenge the aforesaid order dated 3.4.2004 of the District Judge, Puri in Arbitration Appeal No. 7 of 2004. 3. The State of Orissa application filed under Section 34 of the 1996 Act, for setting aside the award, and was registered as Arbitration petition No. 227 of 2003 before the District Judge, Khurda at Bhubaneswar, came to be rejected on 21.6.2004 and being aggrieved by the same, the State has filed Arbitration Appeal No. 21 of 2004. 4. Therefore, both the appeals arise in connection with the award passed by Hon’ble Mr. Justice P.C.Mishra, Retired Judge as Arbitrator on 7.3.2003 and the same were taken up together for disposal through a common judgment. Arbitration Appeal No. 21 of 2004 5. 4. Therefore, both the appeals arise in connection with the award passed by Hon’ble Mr. Justice P.C.Mishra, Retired Judge as Arbitrator on 7.3.2003 and the same were taken up together for disposal through a common judgment. Arbitration Appeal No. 21 of 2004 5. The learned District Judge, Khurda at Bhubaneswar disposed of Arbitration petition No. 227 of 2003 vide order dated 21.6.2004 holding that the said court did not have the “territo¬rial jurisdiction” to decide the petition under Section 34 of the 1996 Act and issued direction to return the application/petition¬ to the petitioner (Appellant herein) for presentation before the proper Court at Puri. 6. The respondent/claimant had been entrusted with a work of “construction of an Earth Dam of Kurian Irrigation Project” and upon completion of the work, since the respondent-claimant had not received the escalation charges, it raised certain dis¬putes before the Arbitrator, Hon’ble Mr. Justice P.C. Mishra, Retired Judge, Orissa High Court. The Arbitrator vide his order dated 7.3.2003 awarded a total sum of Rs. 34,81,962/- in favour of the respondent. Being aggrieved by the said award, the State of Orissa filed an application under Section 34 of the 1996 Act, before the learned District Judge Khurda at Bhubaneswar, which was registered as Arbitration Petition No. 227 of 2003 for set¬ting aside the award. It is the disposal of this petition on the ground of lack of territorial jurisdiction, which is the subject matter of the present appeal. In the order dated 21.6.2004 passed by the learned District Judge, Khurda at Bhubaneswar in Arb.P. No. 227 of 2003 came to the following findings:- “12. This court having held that it does not have territori¬al jurisdiction to decide the petitioner u/s. 34 of the Act, direct the petition to be returned to the petitioner for presen¬tation in proper court at Puri.” 7. The aforesaid order has been challenged by the State, inter alia, on the ground that the provisions of the Code of Civil Procedure ought to have been made applicable to the pro¬ceeding under Section 34 of the 1996 Act and further, the learned District Judge ought not to have rejected the same on the ground of “lack of territorial jurisdiction”, since no prejudice was likely to be caused to the respondent, if the matter had been adjudicated by the learned District Judge, Khurda at Bhubaneswar. It is contended by the learned counsel for the State that the District Judge Court at Bhubaneswar was not denuded of territori¬al jurisdiction to decide the matter, since in view of Section 16 of the C.P.C., which permits filing of the suit, within the local limits of the Court under whose jurisdiction the property was situated and further because a suit can also be filed in a Court within whose jurisdiction the defendant actually voluntarily resides or carries on business or personally works for gain. It is therefore, submitted that filing of the application under Section 34 of the 1996 Act before the District Judge, Bhubaneswar, comes within the scope and ambit of Section 20 of the Code of Civil Procedure and in the instant case, since both the parties reside within the territorial jurisdiction of Bhuba¬neswar Court, the District Judge Court at Bhubaneswar had the necessary territorial jurisdiction to deal with the matter. 8. The respondent on the other hand, supported the im¬pugned order of the District Judge and placed reliance upon the judgment of the Hon’ble Supreme Court in the case of A.B.C. Laminart Private Limited & another Vrs. A.P. Agencies, SALEM reported in (1989) 2 SCC 163 , reads as under: “The jurisdiction of the court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors. A cause of action is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must in¬clude some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not com¬prise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give defendant a right to right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. Everything which if not proved would give defendant a right to right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. In a suit for damaging for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the con¬tract was made or at the place where it should have been per¬formed and the breach occurred. The determination of the place where the contract was made is part of the law of contract. Ordi¬narily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears.” 9. While relying upon the above judgment of the Supreme Court, it is stated by the learned counsel for the respondent that in the instant case, the reasons as to why the Puri District Court would only have jurisdiction for the following reasons:- (i) The Contract was executed at Daspalla, within the undi¬vided district of Puri (which is presently “Nayagarh”). While relying upon the above judgment of the Supreme Court, it is stated by the learned counsel for the respondent that in the instant case, the reasons as to why the Puri District Court would only have jurisdiction for the following reasons:- (i) The Contract was executed at Daspalla, within the undi¬vided district of Puri (which is presently “Nayagarh”). (ii) The breach occurred at Daspalla, since the District Headquarter had raised the disputes specifically with regard to price escalation at Daspalla within the undivided district, Puri. (iii) The contract in question was performed under Kuanria Irrigation Division, Daspalla. (iv) All the payments pertaining to this contract was paid by the concerned Kuanria Irrigation Division at Daspalla. 10. It was thus, submitted that, it was conclusively shown that the subject matter of dispute arising out of the contract in question was situated at Daspalla, which has been even accepted by the appellants and therefore the Court of the District Judge, Puri alone possesses the necessary jurisdiction. The Principal Civil Court of Original Jurisdiction is the Court having jurisdiction over Daspalla is the court of the District Judge at Puri. 11. The Respondent having performed the work at Daspalla in respect to Kuanria Irrigation Division, Daspalla and the breach having arisen from the said contract which was executed at Das¬palla, gives rise to the jurisdiction of the District Court Puri, which is the Principal Civil Court of the District having origi¬nal Civil Jurisdiction in order to adjudicate and to decide the question forming the subject matter of Arbitration. 12. The elements to confer the jurisdiction on the Court, firstly is based on breach of contract, and secondly, the damages resulting from the breach. The combination of these facts gives rise to a right to sue. The Respondent/Claimant having sustained the breach of contract, at the instance of the J.Dr. from the contract executed at Daspalla, where notably the Re¬spondent had performed work, the District Court of Puri alone has the jurisdiction for enforcement or with regard to place of suing. Such being the position, the recrimination made at the instance of the J.Dr./Appellant, that the District Court, Khurda at Bhubaneswar also has jurisdiction, as a part of cause of action having been arisen is thoroughly mis-conceived. Such being the position, the recrimination made at the instance of the J.Dr./Appellant, that the District Court, Khurda at Bhubaneswar also has jurisdiction, as a part of cause of action having been arisen is thoroughly mis-conceived. The most vital aspect is that, the Executive Engineer, Khurda Irrigation Division was only entrusted with work for maintenance of the Kuanria Irrigation Division, Daspalla, that too, only after the abolition of the Kuanria Irrigation Division much after the work was completed. 13. The correspondence said to have been made by the Re¬spondent with the Executive Engineer, Khurda irrigation Division, itself conclusively shows that, the State never denied their liability in respect of the contract, which is the subject matter of dispute. On the contrary, the said Executive Engineer has referred, in all the correspondence referred/related to the contract executed at “Daspalla”. 14. In the light of the aforesaid submissions made by the learned counsel for the parties, it is by now well settled in law that the concerned Court, gets its jurisdiction to deal with only those disputes which arise within its territorial jurisdic¬tion. The work in question was admittedly executed at Daspalla, within undivided district of Puri, which is presently “Nayagarh Revenue District”. The alleged breach therefore, occurred in Das¬palla, since the respondent had raised the dispute with regard to price escalation at Daspalla and the contract in question was performed under the Kuanria Irrigation Division, Daspalla and all payments pertaining to the contract was paid by concerned Kuanria Irrigation Division at Daspalla. Therefore, in the light of principles laid down in the judgment referred herein above the mere existence of an office of the Respondent within the juris¬diction of the Court at Bhubaneswar, which has been called upon to exercise the jurisdiction, by it-self, would not be sufficient to permit the Court to exercise the jurisdiction over the subject matter of the litigation. Therefore, I am of the considered view that the appeal does not merit any further consideration and is hereby dismissed and the order passed by the learned District Judge, Khurda at Bhuba¬neswar in Arbitration Petition No. 227 of 2003 is affirmed. Arbitration Appeal No. 7 of 2004 15. Therefore, I am of the considered view that the appeal does not merit any further consideration and is hereby dismissed and the order passed by the learned District Judge, Khurda at Bhuba¬neswar in Arbitration Petition No. 227 of 2003 is affirmed. Arbitration Appeal No. 7 of 2004 15. This appeal has been filed by the State of Orissa, seeking to challenge an order dated 3.4.2004 passed, on a peti¬tion filed by the Respondent under Section 9 of the 1996 Act by the District Judge, Puri in Execution Case No. 65 of 2003. The State of Orissa-appellant herein essentially raised the conten¬tion that the execution proceeding filed before the learned Dis¬trict Judge, Puri under Section 36 of the 1996 Act, was impermis¬sible in law, in view of the fact that, the appellant had chal¬lenged the award by filing a petition under Section 34 of the 1996 Act and the same was pending consideration before the learned District Judge, Khurda at Bhubaneswar at the time when the impugned order was passed. It is strenuously argued that since the Arbitration petition No. 227 of 2003 was pending considera¬tion before the District Judge, Khurda at Bhubaneswar, no execu¬tion petition under Section 36 of the 1996 Act, nor any petition under Section 9 seeking any interim relief could have been enter¬tained by the learned District Judge, Puri. 16. Learned counsel appearing for the respondent on the other hand, submitted that the State of Orissa while being fully aware that the District Judge, Khurda at Bhubaneswar had no terri¬torial jurisdiction over the matter, yet, with intent to frus¬trate and delay the execution of the award, purposefully filed an application under Section 34 of the 1996 Act before a wrong forum, which did not possess the necessary territorial jurisdic¬tion. While the award in the present case was pronounced on 7.3.2003, no challenge to the same was made within the time pre¬scribed under Section 34(3) and the same was filed only on 23rd June, 2003 and that too, before a wrong forum, i.e., the District Judge, Khurda at Bhubaneswar. It is further submitted on behalf of the respondent that mere filing of an application under Sec¬tion 34 of the 1996 Act that to before a wrong forum does not take away the jurisdiction a court of competent jurisdiction from enforcing the award. It is further submitted on behalf of the respondent that mere filing of an application under Sec¬tion 34 of the 1996 Act that to before a wrong forum does not take away the jurisdiction a court of competent jurisdiction from enforcing the award. In any event, the learned District Judge, Puri has not finally disposed of the execution petition i.e. Execution Case No. 65 of 2003 and has only disposed of the prayer for interim relief in an application under Section 9 of the 1996 Act. It is the stated that the directions have been issued to the State to deposit the decretal amount and the respondent (claimant) has also been permitted to withdraw the said amount against bank guarantee or adequate security in favour of the State. It is submitted that, since the only ground of challenge in the appeal, i.e., pendency of the State’s petition before the District Judge, Khurda at Bhubaneswar, no more subsists, in view of the rejection of the appellant’s petition filed before the District Judge, Khurda at Bhubaneswar, directing return of the petition vide order dated 21.6.2004 in Arbitration Petition No. 227 of 2003, the present appeal has no legs to stand on. 17. On a consideration of the submission made by the learned counsel appearing for both the parties, it appears that the appellant instead of proceeding to file a petition under Section 34 of the 1996 Act, before the District Judge, Puri as directed by the District Judge, Khurda at Bhubaneswar, has pre¬ferred the present Arbitration appeal, challenging the said order before this Court. 18. There can be no doubt that the scope for enforcing an arbitral award is contained in Section 36 of the 1996 Act, and an application to enforce the arbitral award can only be filed under Section 34 of the 1996 Act, after the period to file an applica¬tion under Section 34 has expired. Admittedly in the present case Execution Case No. 65 of 2003 was filed on 23.6.2003, whereas the award was passed on 7.3.2003, i.e., after the time prescribed for filing on petition under Section 34 of the Arbitration and Con¬ciliation Act. Therefore, no objection can be raised against the filing of the execution petition itself. Admittedly in the present case Execution Case No. 65 of 2003 was filed on 23.6.2003, whereas the award was passed on 7.3.2003, i.e., after the time prescribed for filing on petition under Section 34 of the Arbitration and Con¬ciliation Act. Therefore, no objection can be raised against the filing of the execution petition itself. Apart from the above, even though the State filed a petition under Section 34 before the District Judge, Khurda, the same has come to be dismissed on the ground of lack of territorial jurisdiction and the petition has been returned to the appellant for being placed before the proper forum, i.e., the District Judge, Puri for consideration. Therefore, as on date of passing of order dated 3.4.2004 by the District Judge, Puri there was no legal impediment either from proceeding with the execution case or from passing any order under Section 9 of the 1996 Act and accordingly this appeal stands dismissed and the order of the District Judge, Puri dated 3.4.2004 passed in Execution Case No. 65 of 2003 stands affirmed. 19. Therefore, on a reading of the facts of the aforemen¬tioned two cases and the law on the subject, I am of the consid¬ered view that since the learned District Judge, Khurda at Bhuba¬neswar, rejecting the appellant’s petition under Section 34 of the 1996 Act, is wholly justified in law, I, affirm the said order and dismiss the appeal. However, it remains open for the State to make an applica¬tion under Section 34 of the 1996 Act, before the learned District Judge, Puri who shall deal with the same in accordance with law. 20. In view of disposal of the two appeals filed by the State, the appellants are required to comply with the directions issued by the learned District Judge, Puri vide its order dated 3.4.2004 passed in Execution Case No. 65 of 2003 and the respondents are at liberty to seek withdrawal of the same, by complying with the directions contained in the said order. 21. With the aforesaid directions both the appeals stand dismissed. Appeals dismissed.