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2011 DIGILAW 879 (CAL)

S. S. K. Construction v. Rupa Ghosh

2011-07-05

SANJIB BANERJEE

body2011
JUDGMENT 1. THE respondents are not represented today but the respondents were represented when the matter was taken up earlier and the respondents had indicated their objection to the request under Section 11 of the Arbitration and Conciliation Act, 1996. According to the respondents, the unconditional withdrawal of a previous suit filed by the petitioners herein disentitled the petitioners from carrying the present request. It is a stand which is echoed in the respondents' affidavit. THE petitioners refer to the arbitration clause contained in an agreement of December 16, 2000 between the parties and/or their predecessors-in-interest. THE agreement envisaged that the petitioners would develop a property and the respondents or their predecessors as owners would make over possession thereof to the petitioners to enable the petitioners to complete the project within two years. It is the petitioners' case that the agreement was entered into on the representation of the respondents that they were in physical possession of the property and the property was free from lis pendens. THE petitioners claim that upon the petitioners making a demand on the respondents for making over possession of the land it transpired that a local club claimed to be in possession of a substantial part thereof and there were other proceedings pending relating to the land, which the respondents had apparently not revealed to the petitioners. 2. IN 2003, the petitioners herein instituted Title Suit No.57 of 2003 before the Alipore Court claiming the following reliefs: a. A decree for diclaration (sic. declaration) that the suit is maintainable declaring the agreement dated 16.12.2000 is validated by extending the time for completion of the terms and conditions of the agreement in respect of the property as schedule below; b. To pass and (sic. an) order of injunction restraining the defendants for interferring with the peaceful possession of the plaintiff; c. To pass appropriate order/direction upon the defendants not to transfer, Sale and/or encumber the property to any other person; d. To pass order for recovery of damages amount in (sic. amounting) to Rs.75 Lakhs. e. And to pass such other further order/orders as to this learned court may deem fit and proper." It is necessary that the basis for the reliefs claimed, as made out in that plaint, is noticed. amounting) to Rs.75 Lakhs. e. And to pass such other further order/orders as to this learned court may deem fit and proper." It is necessary that the basis for the reliefs claimed, as made out in that plaint, is noticed. At paragraph 8 of the plaint it was asserted that the plaintiffs therein had paid Rs.20 lakh to the defendants therein in terms of the agreement of December 16, 2000. The plaintiffs therein complained that the defendants had failed to deliver vacant possession of the land and there were serious disputes between the defendants therein and third parties relating to the possession of the land. Paragraph 17 of the plaint asserted that the plaintiffs were not at fault for failing to complete the work within the time stipulated by the agreement since it was the defendants therein who had failed to make over possession of the land. The succeeding paragraph referred to a notice received by the plaintiffs from the defendants to the effect that the time for completion of the project would not be extended. The plaintiffs therein apparently sought a resolution of the disputes through arbitration but since the defendants therein did not respond to the plaintiffs' offer the said suit was filed. Paragraph 21 of the plaint has to be specifically noticed: "21. That the plaintiffs have suffered heavy loss and damages since January 2001 to 15th December, 2002 amounts to more than 70 lakhs (Rupees seventy lakhs) and the plaintiffs claim for a decree from this learned court and to take appropriate order from this learned court in which the agreement dated 16.12.2000 be validated after extending the time of the agreement and to allow the plaintiffs to complete the work in appropriate time and manner." 3. THE petitioners herein withdrew Title Suit No.57 of 2003. THE same will be evident from an order dated May 6, 2003 passed by the Civil Judge (Sr Div.) at Alipore. It was recorded in such order that the plaintiffs had sought permission for withdrawal of the suit and that the first defendant therein had indicated that he had no objection to the suit being withdrawn without the plaintiffs being afforded any leave to institute fresh proceedings. It was recorded in such order that the plaintiffs had sought permission for withdrawal of the suit and that the first defendant therein had indicated that he had no objection to the suit being withdrawn without the plaintiffs being afforded any leave to institute fresh proceedings. THE Alipore Court ordered that the plaintiffs were permitted to withdraw the suit "but without any leave for filing the suit afresh." Notwithstanding such order, a second, almost identical suit was instituted by the petitioners herein against the same defendants by way of Title Suit No.100 of 2003. THE plaint relating to that suit described it to be a suit for declaration, permanent injunction and damages, though no claim for damages was made in the plaint relating to Title Suit No.100 of 2003. THE primary reliefs in the subsequent suit were almost identical to the principal reliefs canvassed in the previous suit. THE defendants applied under Order VII Rule 11 of the Code for rejection of the plaint relating to the second suit. THE defendants succeeded on July 15, 2003 when that plaint stood rejected. 4. ON behalf of the petitioners, a request was subsequently made on or about June 12, 2006 for resolution of the disputes between the parties but the petitioners do not rely on such request. The petitioners rely on a notice dated December 3, 2007 issued on their behalf requesting a reference of the disputes between the parties to arbitration. The letter of December 3, 2007 claimed that a sum of Rs.20 lakh had been paid by the petitioners herein in terms of the agreement of December 16, 2000. The arbitration clause contained in clause 20.1 of the agreement was quoted in the notice and a claim was made that since "disputes and differences have arisen relating to the said agreement dated 16th December 2000, we under specific instructions from and on behalf of our said client hereby invoke the Clause 20 of the said agreement ... " The petitioners herein also purported to appoint their nominee on the arbitral tribunal. The notice signed off by requiring the respondents to respond within thirty days of the receipt of such notice. The respondents did not. The petition relating to the present request under Section 11 of the 1996 Act has, rather unusually, attempted to set out the disputes that the petitioners seek a reference on. The notice signed off by requiring the respondents to respond within thirty days of the receipt of such notice. The respondents did not. The petition relating to the present request under Section 11 of the 1996 Act has, rather unusually, attempted to set out the disputes that the petitioners seek a reference on. Paragraph 20 of the petition narrates the following disputes: "20. Inter alia, the following disputes have arisen between the parties:- a. Are the petitioners entitled to specific performance of the said first agreement? b. Whether the respondents not having delivered vacant possession of the said property to your petitioners were not obliged to extend the period for completion of the said building by 24 months from the date of delivery of possession? c. Whether the respondents falsely represented that there was no lispendens with regard to the said property? d. (i) Is the said first agreement not valid and subsisting? (ii) If not, are the respondents not obliged to refund the said sum of Rs.20,00,000/- paid by the petitioners to the respondents with interest? e. Are the respondents not holding the said sum of Rs.20,00,000/- as trustees for the petitioners? f. To what relief, if any, the petitioners are entitled to?" The petitioners say that notwithstanding the withdrawal of Title Suit No.57 of 2003 without liberty to file a fresh suit and despite the plaint relating to Title Suit No.100 of 2003 having been rejected, the present request under Section 11 of the 1996 Act is maintainable and the disputes between the parties are liable to be adjudicated in the reference. The petitioners suggest that of the disputes that have been enumerated at paragraph 20 of the petition, the only one that the petitioners press is for refund of the sum of Rs.20 lakh that was paid to the respondents in terms of the agreement of December 16, 2000. The petitioners rely on the receipt apparently issued by the respondents in acknowledgement of such payment. The petitioners say that the scope of the two suits filed by them earlier was quite different from the reference that is now sought. The petitioners rely on the receipt apparently issued by the respondents in acknowledgement of such payment. The petitioners say that the scope of the two suits filed by them earlier was quite different from the reference that is now sought. The petitioners contend that they have now resigned to the fact that the agreement of December 16, 2000 cannot be carried forward, that the time for completing the work thereunder can no longer be extended; and, the petitioners now desire that they should be refunded the money that they had paid in terms of the agreement together with interest, if any, thereon. It does not appear that there is any live dispute that can go to arbitration. It also appears that by reason of the petitioners' previous attempts having, effectively, been scuttled, there is no further scope for the petitioners to seek refund of the sum of Rs.20 lakh that they allegedly paid under the agreement of December 16, 2000. The reliefs claimed in the Title Suit No.57 of 2003 were not limited to the extension of the time for performance under the agreement of December 16, 2000. The reliefs ranged from a declaration of the validity of the agreement to a claim in damages. Paragraph 21 of the plaint relating to the petitioners' first suit has to be read in the context of the statements that preceded it. Though it is now argued on behalf of the petitioners that the claim for damages was not worth the paper it was printed on, as such claim was not substantiated by any particulars nor fortified with the usual pleadings under Sections 73 or 74 of the Contract Act, it is evident that a claim in damages was carried in an appropriate action after an assertion that the consideration under the agreement that was the subject matter of the suit had been paid by the plaintiffs therein. It, therefore, implies that the entirety of the present claim that the petitioners seek to canvass was the subject matter of Title Suit No.57 of 2003 which, upon the plaintiffs' voluntary abandonment thereof, resulted in the plaintiffs being precluded from asserting such claim in future. The underlying principle of Order 23 Rule 1(4) of the Code may be profitably referred to in such context. 5. The underlying principle of Order 23 Rule 1(4) of the Code may be profitably referred to in such context. 5. IT is evident from paragraph 20 of the petition relating to the present request, that the disputes that have been enumerated therein are, really, the reliefs which had been claimed in Title Suit No.57 of 2003. Ordinarily, and since the 1996 statute is quite a departure from its previous avatar, the disputes that have arisen between the parties are no longer required to be enumerated in a petition for request for a reference. However, in some cases it is indispensable that the disputes are enumerated, particularly if there is a doubt whether a part of the disputes cannot be carried forward any further. IT appears that the petitioners were alive to such issue and it is in such context that the disputes have been enumerated at paragraph 20 of the petition relating to the present proceedings. But it is evident from the plaint relating to Title Suit No.57 of 2003 that all the disputes that have now been enumerated at paragraph 20 of the present petition formed the subject matter of the suit which the plaintiffs had abandoned without any liberty to file a fresh suit. The plaintiffs' cause of action merged in the order of withdrawal. The order dated May 6, 2003 specified that no liberty was granted to the plaintiffs therein to file any fresh action. The petitioners herein remain bound by such order and the consequence of their unconditional withdrawal of the suit. 6. ARBITRATION, by definition, has to be consensual. There is no law that commands that upon a party acting in derogation of an arbitration agreement, the other party is obliged to seek enforcement thereof. It is a matter of choice and a party can waive the arbitration agreement or accept the breach without a grievance. It then cannot be said that a cause of action asserted by way of a suit in derogation of an arbitration agreement can subsequently be pursued by way of arbitration upon the suit failing. The unconditional withdrawal of a suit has the same effect as its dismissal. It is true that in an unconditional withdrawal, the issues would not have been decided; but the cause of action qua the claim would have merged in the withdrawal, which has the same effect as the dismissal of the claim. The unconditional withdrawal of a suit has the same effect as its dismissal. It is true that in an unconditional withdrawal, the issues would not have been decided; but the cause of action qua the claim would have merged in the withdrawal, which has the same effect as the dismissal of the claim. Even otherwise, the claim for refund is today barred by limitation. The plaint in Title Suit No.57 of 2003 referred to the veritable termination of the agreement. The petitioners' right to claim refund arose upon receipt of such notice. The suit was withdrawn on May 6, 2003 and the first subsequent demand was made by a letter of June 12, 2006, which the petitioners have chosen not to rely on. The right to enforce the claim for refund is today barred by limitation and it was barred prior to the filing of the present request under Section 11 of the 1996 Act. Accordingly, AP No.30 of 2008 is found to be without any basis and the same is dismissed without any order as to costs. Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.