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2012 DIGILAW 715 (KAR)

Government of Karnataka, Water Resources (Minor Irrigation) Department v. V. Harish Babu

2012-08-25

N.K.PATIL, S.N.SATYANARAYANA

body2012
Judgment S.N. SATYANARAYANA J. 1. The plaintiff -Government of Karnataka in A.S.No.1/2008 on the file of District and Sessions Court, Ramanagara, has come up in this first appeal impugning the order dated 01.10.2008, which was passed on preliminary issue and rejection of plaint under Order 7 Rule 11(d) of CPC. 2. Brief facts leading to this first appeal are as under: The admitted facts are that the appellant herein entrusted the work of construction of canal and CD works from Ch. 0.00 to 8.00 K.M. at Ravathanahalli Tank Irrigation Project in Kanakapura, to the first respondent on 4.5.1987. The tendered cost of project was Rs.4,22,023-00 and time stipulated for completion of project was 04.02.1988. Though the work was not completed even as on 29.12.1990, first respondent initiated proceedings for arbitration in respect of payment of bills to the extent of work alleged to have completed, which was allowed and award was passed to the tune of Rs.1,65,90,172/-towards partial work completed. It is seen that subsequently the work was completed on 28.02.1994 and final bill was paid to first respondent on 06.03.1995. 3. After the final bill was settled, second claim was initiated by first respondent on 02.11.1996 in Arbitration proceedings initiated in respect of a portion of work which was said to have not considered. The second claim of first respondent in the Arbitration proceedings was allowed to the tune of Rs.1,39,36,430/-and promptly paid by the appellant -Government. It is further seen that thereafter third claim was made by initiating Arbitration proceedings on 16.09.2000 in respect of partial work, which was said to have not been considered and the claim in the said arbitration was to the tune of Rs.3,23,19,938/-which was also allowed by award dated 18.05.2001 and the same was paid. In effect as against the original contract of Rs.4,22,023/-which was entrusted on 04.05.1987, was completed on 28.02.1994 at revised total cost of Rs.31,16,631/-and settled on 06.03.1995, aforesaid three arbitration proceedings were initiated seeking additional payment to the tune of nearly Rs.6.3 Crores, which are allowed under three awards passed at different period in the aforesaid three proceedings. 4. This appeal pertains to 4th arbitration proceedings initiated by first respondent on 15.10.2001 claiming additional sum of Rs.3,00,00,000/-, in respect of part of original contract which according to him was not considered. 4. This appeal pertains to 4th arbitration proceedings initiated by first respondent on 15.10.2001 claiming additional sum of Rs.3,00,00,000/-, in respect of part of original contract which according to him was not considered. When the said claim was referred to arbitration on 15.10.2001, appellant has written a letter to second respondent, an arbitrator nominated by first respondent and expressed its dissent on his appointment as arbitrator. Despite the said dissent, the respondents have proceeded with the same an award was passed by second respondent herein on 27.09.2007, awarding a sum of Rs.3,00,00,000/-as further amount said to be due from the appellant herein to first respondent. With this the total amount awarded to 1st respondent in all the proceedings comes to about Rs.9,00,00,000/-as against the original contract of Rs.4,22,023/-in 1987. The appellant being aggrieved by the award dated 27.09.2007, preferred A.S.No.5/2008 on the file of City Civil Court at Bangalore. 5. In the said proceedings, first respondent herein filed an application under Order VII, Rule 10 of CPC contending that the Court below has no territorial jurisdiction to entertain the said arbitration suit. Hence sought for return of plaint to be presented before the District Court, Ramanagara, for which objections was filed by appellant herein. The said application was allowed with a direction to appellant to file necessary application to seek return of the plaint and to re-present the same before the Ramanagara Court. Hence an application was filed the appellant here seeking return of plaint and also fixing date for presentation of the suit before the District Court, Ramanagara. The said application came to be allowed on 08.04.2008 fixing the date for appearance of parties before the Ramanagara Court as 18.06.2008. It is seen that subsequently on 05.06.2008 the City Civil Court returned the plaint, which is represented by the appellant herein on 06.06.2008, within 24 hours and thereafter the said suit was re-numbered as A.S. No.1/2008. 6. Thereafter an application under Order 7, Rule 11(d) of CPC is filed by first respondent herein seeking rejection of plaint. In the said suit, an application was also filed by appellant under Section 14 of the Limitation Act seeking condonation of delay, caused in refiling of the plaint on the ground that the delay is bonafide and was caused in prosecuting the proceedings before the City Civil Court, Bangalore. To the said application, objections were filed by the respondents. In the said suit, an application was also filed by appellant under Section 14 of the Limitation Act seeking condonation of delay, caused in refiling of the plaint on the ground that the delay is bonafide and was caused in prosecuting the proceedings before the City Civil Court, Bangalore. To the said application, objections were filed by the respondents. On appreciating the aforesaid two applications, the Court below, i.e., District and Sessions Court, Ramanagara, has proceeded to pass an order on 01.10.2008 rejecting the plaint, which is impugned in this proceeding. 7. This appeal is filed on the ground that originally arbitration suit was filed in A.S.No.5/2008 and the same was filed within the period of limitation. In the said proceeding, an order was passed on 25.03.2008 for return of the plaint to the appellant herein, plaintiff in the said proceeding, for presentation of the same before proper Court. The said order was passed while considering the application filed by respondent No.1 under Order 7, Rule 10 of CPC, wherein respondent No.1 had contended that the Court at Ramanagara alone would have jurisdiction to try the suit. It is seen that there is delay between the date of order passed by the Court below ordering return of plaint and the date of representation at Ramanagara, for which an application under Section 14 of the Limitation Act read with Section 151 of CPC is filed, which is not considered, though it was explained in the said application that the said delay is for bonafide reasons and beyond the control of plaintiff in the said suit. Further when the plaint was taken back from the City Civil Court, it is re-presented in Ramanagara Court within 24 hours, the same is not looked into. 8. It is stated that the Court below while considering the application filed under Order 7, Rule 11(d) of CPC, for rejection of plaint, has not considered the I.A., filed by the appellant herein under Section 14 of the Limitation Act and no order has been passed on the said application. Though there is reference to the said application, the same is not properly considered. Therefore, sofaras that application is concerned, no reason being assigned for its rejection, which is as good as the said application is not considered. Though there is reference to the said application, the same is not properly considered. Therefore, sofaras that application is concerned, no reason being assigned for its rejection, which is as good as the said application is not considered. Further it is urged that there is misrepresentation of Section 34 of the Arbitration and Conciliation Act, and Section 14 of the Limitation Act by taking hyper technical approach and consequently self restricting and limiting its jurisdiction against the cause of justice. The Court below also has committed illegality in not following the law laid down by the Apex Court while deciding the effect of Section 34 of the Arbitration and Conciliation Act and Section 14 of the Limitation Act, when it is unequivocally laid down by the Apex Court that there is no prohibition incorporated in the statute curtailing the power of the Court, the same is ignored. 9. There is also error on the part of the Court below in not interpreting the relevant provisions of Section 14 in the manner required to advance the cause of justice, when there is no specific bar for invoking the same. It is also contended that while trying to concentrate on the technical aspect, the Court below has not looked into the fact that the impugned award passed by the Arbitrator is without basis and without there being any agreement empowering the respondent to seek arbitration and further the arbitration proceedings has taken place without the concurrence of the appellant, thereby the award passed is unilateral, illegal and against which fourth arbitration proceedings in respect of a contract, which has concluded long ago. The technical approach adopted by the Court below has resulted in serious fiscal loss to the exchequer, which is not taken into consideration. 10. Heard the counsel for appellant and respondent No.1. On going through the order impugned and the grounds urged, it is seen that the subject matter of this appeal is an order of rejection of plaint filed challenging fourth arbitration award in a contract which arose in the year 1987. Admittedly the original contract was of the year 1987 and the total cost of the project as admitted by appellant was Rs.4,22,023/-which was required to be completed within one year. Admittedly the original contract was of the year 1987 and the total cost of the project as admitted by appellant was Rs.4,22,023/-which was required to be completed within one year. It is further seen that the said contract was completed on 28.02.1994 at revised total cost of Rs.31,16,631/-and admittedly the entire revised cost was paid on 06.03.1995 itself. It is seen that thereafter time and again the first respondent herein has initiated three arbitration proceedings at different time seeking enhancement of cost of the project in respect of a portion of work and collected an amount of Rs.6.3 Crores under three different awards and this 6.3 Crores is as against the original contract of Rs.4,22,023/-under contract dated 04.05.1987 and also against the revised total cost of the project, which was pegged at Rs.31,16,631/-and settled as on 06.03.1995. 11. The manner in which the earlier three arbitration proceedings were accepted and amount paid by the Government does not stand to reason and it also does not stand to reason as to how as against the contract of Rs.4,22,023/-, though the same is settled at Rs.31,16,631/-, and further compensation of Rs.6.3 Crores could be paid on such contract, can be explained only by first respondent -Contractor and the Arbitrators, who passed the award at various dates. The first respondent not being content with this, has initiated fourth arbitration proceedings, which has resulted in this appeal being filed challenging the rejection of plaint, which was filed by appellant challenging the exparte award passed by second respondent -Arbitrator. 12. It is seen that the Arbitrator is appointed by first respondent without consent of appellant herein. It is also seen that there is serious objection to appointment of second respondent as Arbitrator by the appellant herein. Inspite of that, Arbitrator has proceeded with the proceedings after hearing only the first respondent and has proceeded to pass award allowing the claim for another Rs.3,00,00,000/-taking the total to Rs.9,00,00,000/-for the project with its original cost of Rs.4,22,023/-as on 1987. It is seen that the said award is challenged by filing arbitration suit before the City Civil Court, Bangalore, contending that the office of appellant being situated in Bangalore, the said Court has jurisdiction to entertain the suit. It is seen that the said award is challenged by filing arbitration suit before the City Civil Court, Bangalore, contending that the office of appellant being situated in Bangalore, the said Court has jurisdiction to entertain the suit. The first respondent objected to the said suit filed in City Civil Court on the ground that in several other proceedings arising out of the same contract between the same parties, arbitration award and also execution proceedings were challenged in the Court at Ramanagara. The respondent No.1 citing above grounds filed an application seeking direction to appellant herein to re-present the said suit. Based on that, the Court below has passed necessary orders. It is also seen that pursuant to the order of the Court below, an application is filed by plaintiff seeking return of plaint for re-presentation to proper Court. 13. Subsequent to passing of orders, there appears to be some delay on the part of the Court below in returning the plaint, which cannot be attributed to plaintiff, the appellant herein. As could be seen, after the plaint was returned, it was re-presented in the Court having jurisdiction without 24 hours thereof. Therefore, the Court at Ramanagara, which has passed the impugned order, should have taken overall consideration of all these aspects. The manner in which the entire proceeding is handled by the Court below is akin to a proverb in English "in search of a tree, we miss the wood." The conduct of the Court below is akin to the same. When illegality appears to be patently glaring on the face, the Court below in its haste has not appreciated the same and while interpreting the law and it has interpreted the same provision in casual manner without considering filing of the arbitration suit before the City Civil Court at Bangalore, is a bonafide mistake or not, has jumped into conclusion that the suit is not maintainable. While doing so, the application filed by appellant herein under Section 14 of the Limitation Act, which entitle the parties to seek exclusion of time spent bonafide in a proceeding in Court without jurisdiction, is not considered. The Court below has also not considered that though Section 34 of the Arbitration and Conciliation Act, specifically prohibit application under Section 5 of the Act, so far as application under Section 14 of the Act is concerned, is silent. The Court below has also not considered that though Section 34 of the Arbitration and Conciliation Act, specifically prohibit application under Section 5 of the Act, so far as application under Section 14 of the Act is concerned, is silent. Therefore rejecting the said application without giving proper reason for that is serious error on the part of the Court below, which is required to be set aside. 14. The court below has considered the objections raised by the 1st respondent regarding the maintainability of the suit in the light of the following judgments cited in support of their case: 1. Union of India Versus M/s. Popular Construction Co., reported in Air 2001 SC 4010 . 2. Karnataka Slum Clearance Board, Bangalore versus H.T. Annaji &Anr., reported in Air 2006 KAR 241 . 3. The Hatti Gold Mines Limited, versus M/s. Vinay Heavy Equipments, reported in ILR 2005 KAR 1777. 4. Allahabad Bank versus Shank's (Steel Fab Pvt. Ltd & Ors.), reported in Air 2008 Calcutta 96. 5. Firm Jiwan Ram Ramchandra versus Jagernath Sahu &Anr., reported in AIR 1937 495. 6. M/s. Videocon International Ltd., versus M/s. Logos Traders & Ors., reported in AIR 2008 (NOC) 355 (KER.) 7. Executive Engineer Irrigation &Floor Control Dept. versus M/s. Shree Ram Const. Co. &Anr., reported in AIR 2008 (NOC) 33 (DEL.) 8. Sri Amar Chand Inani versus The Union of India (UOI), reported in AIR 1973 SC 313 . 9. Harshad Chiman Lal Modi versus D.L.F. Universal Ltd. &Anr., reported in AIR 2006 SC 646 . 10. State Bank of India versus Indian Utility Products, reported in AIR 2001 Delhi 30 11. Satyanarayanamurthy & Ors., versus Surya Rao, reported in AIR 1939 Madras 724. 12. Puttanswami versus Amirtha Jothi, reported in AIR 1997 Madras 308. 13. State of West Bengal versus AFCONS Infrastructure Ltd., reported in AIR 2008 (NOC) 588 (CAL). 15. Infact the ratio laid down by the Apex Court in all these judgments is not in dispute and it is accepted that plaintiff is not entitled to seek condonation of delay in filing the suit by filing an application under Section 5 of the Limitation Act, as the applicability of the said Act is expressly prohibited under Section 34 of the Arbitration and Conciliation Act (26/1996). However, the very same judgments on which 1st respondent has relied upon have in unequivocal terms stated that the same would not apply to the representation of suit provided the plaintiff explains to the satisfaction of the Court that the mistake in pursuing the suit in wrong forum, is for bonafide reasons. In such circumstances, the aforesaid judgments clearly state that the Courts can take into consideration the said aspect and give benefit of condoning the delay, if any, caused in pursuing the suit in the wrong forum. 16. In this appeal also the Counsel for 1st respondent tried to substantiate that the impugned order passed is just and proper and the reason given therein is sustainable in the light of the aforesaid judgments. Therefore, the impugned order does not call for interference at the hands of this Court. However, on going through the facts of the case and as well as the ratio laid down by the Apex Court in the aforesaid judgments, the same has to be interpreted in a manner in which it requires in propagating the cause of justice and not to restrict or limit the same. In that view of matter, the possibility of there being genuine misunderstanding on the part of the Officers of plaintiff in presuming that the City Civil Court, Bangalore, is the only Court which had jurisdiction to challenge the arbitration award passed by 2nd respondent cannot be disbelieved. This possibility is there for the reason that between 1987 and to this date though three arbitration proceedings had taken place, earlier different Officers who were dealing with the same at that time might have changed and the present Officer either with genuine ignorance or being influenced by 1st respondent for extraneous reasons could have filed the suit in the City Civil Court, Bangalore, with bonafide mistake which cannot be discounted at this stage. In any event, viewing this aspect in too technical manner is not in the interest of meeting the ends of justice in the instant case. 17. In any event, viewing this aspect in too technical manner is not in the interest of meeting the ends of justice in the instant case. 17. Therefore, in the instant case, it is just and necessary that the impugned order passed by the Court below rejecting the suit is required to be set aside to challenge the said suit on merits to secure considered finding by the court below regarding the rights of parties to seek arbitration and also the correctness or otherwise of 2nd respondent in passing the arbitration award in the light of appellant herein rejecting his appointment as Arbitrator at very first instance. 18. In the result, appeal filed by the appellant is allowed. The Judgment and Award dated 01.10.2008 passed by the District and Sessions Judge at Ramanagara, on preliminary issue regarding maintainability and rejection of plaint, is set aside. 19. The District and Sessions Judge, Ramanagara, is directed to take up the arbitration suit, A.S. No.1/2008 on its file and to dispose of the same on its merits, at the earliest.