Research › Search › Judgment

Bombay High Court · body

2013 DIGILAW 1103 (BOM)

K. K. John v. State of Goa

2013-06-18

F.M.REIS

body2013
JUDGMENT F.M. Reis. J.- Heard Mr. S.G. Desai, learned Senior Counsel appearing for the appellant and Mr. M. Salkar, learned Government Advocate appearing for the respondent. 2. The above appeal challenges the judgment dated 04.03.2005 passed by the learned ad-hoc Additional District Judge. South Goa. Margao, in Arbitration Suit No. 1/2004. 3. Briefly, the facts of the case are that the appellant was awarded the work of construction of pressure conduit from Ch. 3.100 kms. to 4.450 kms of Distributory D2 & D3 combined of Salaulim Irrigation Project at Desai Wada. Paroda, Quepem. Salcete Goa, for a sum of Rs. 2,67,61,134.05. The period of contract was 400 days which came to expire on or about 20.09.1990. After the said contract came to be awarded to the appellant, a Writ Petition came to be filed before this Court by M/s Pioneer Engineering Syndicate inter alia challenging the said tender awarded to the appellant. In the said petition, interim order was passed staying the execution of the work. Thereafter, the Writ Petition came to be dismissed by order dated 03.04.1991 as the said M/s Pioneer Engineering Syndicate were not interested in proceeding with the said work. Subsequently, the respondent called upon the appellant to proceed with the execution of the said work order in terms of the said agreement. It appears that the dispute was raised by the appellant inter alia that the appellant will not be in a position to proceed with the said work as according to them the delay caused to proceed with the work order was on account of the tremendous increase in the work rate and claimed for revision of the said rate. According to the appellant, the respondent have arbitrarily terminated the said agreement. Being dissatisfied with the said action on the part of the respondent, the proceedings were initiated by the appellant to appoint a arbitrator in connection with the said dispute under the Arbitration Act, 1940. Accordingly, the arbitrator came to be appointed to adjudicate the dispute raised by the appellant. By an award passed by the Arbitrator on 08.02.1996, the arbitrator inter alia accepted only one of the claims put forward by the appellant and consequently, directed the payn1ent of a sum of Rs. 26,76,113/- together with interest thereon to the appellant. Accordingly, the arbitrator came to be appointed to adjudicate the dispute raised by the appellant. By an award passed by the Arbitrator on 08.02.1996, the arbitrator inter alia accepted only one of the claims put forward by the appellant and consequently, directed the payn1ent of a sum of Rs. 26,76,113/- together with interest thereon to the appellant. The respondent raised objections to the said award under Section 30 of the Arbitration Act, 1940 before the Civil Judge Senior Division, Margao. The learned Civil Judge Senior Division, Margao closed the said proceedings in view of the judgment of the learned Single Judge of this Court passed in Civil Revision Application No. 165 of 1997 holding inter alia that the Arbitration and Conciliation Act, 1996 would be applicable in connection with the cases in which a similar arbitration clause was interpreted. Thereafter, the appellant filed an application under Section 34 of the Arbitration and Conciliation Act. 1996 before the learned District, Judge. It appears that the appellant thereafter filed an application inter alia contending a that the proceedings are to be governed in terms of the provisions of the Arbitration Act, 1940. On the basis of the said application, the matter came to be referred to the learned Civil Judge Senior Division, at Margao, but however, in view of the amendment to the Civil Procedure Code, the matter was again referred to the learned District Judge. South Goa. Margao. The learned District Judge while considering the objections raised by the appellant under Section 34 of Arbitration and Conciliation Act. 1996, considered the said application in terms of the provisions of Arbitration Act, 1940 and passed the impugned order upholding the objections raised by the respondent. Being aggrieved by the judgment passed by the learned District Judge, the appellant have preferred the present appeal. 4. Shri S.G. Desai, learned Senior Counsel appearing for the appellant has taken me through the impugned judgment and pointed out that the learned District, Judge has framed three points for determination with regard to the objections raised by the respondent under Section 34 of the Arbitration and Conciliation Act. 1996. The learned Senior Counsel has pointed out that the first two points for determination are irrelevant in view of the order passed earlier by the learned Civil Judge Senior Division. Margao. 1996. The learned Senior Counsel has pointed out that the first two points for determination are irrelevant in view of the order passed earlier by the learned Civil Judge Senior Division. Margao. relying upon the judgment-of the learned Single Judge of this Court to the effect that the Arbitration and Conciliation Act, 1996 was applicable by interpreting a similar clause which is found in the agreement executed between the parties. The learned Senior Counsel further pointed out that once it is held that the objections raised by the appellant are governed by the provisions of the Arbitration and Conciliation Act, 1996, the learned Judge was not justified to consider whether such objections were to be dealt with in terms of the provisions of 1996 Act. The learned Senior Counsel further points out that the judgment relied upon by the learned Single Judge was on the basis of the judgment of the Apex d Court which held in similar circumstance that the provisions of 1996 Act would be applicable. The learned Senior Counsel as such submits that the learned Judge was not justified to consider the objections filed by the respondent under 1940 Act when according to him the rights of the parties would be governed by 1996 Act. The learned Senior Counsel as such submits that on this ground alone the impugned judgment deserves to be quashed and set aside. The learned Senior Counsel dealing with the merits of the dispute raised by the parties points out that the respondent have unilaterally terminated the agreement executed between the parties when according to him such termination was not at all justified. The learned Senior Counsel further submits that the learned Judge has erroneously accepted the objections filed by the respondent on an erroneous consideration that there was no formal agreement executed between the parties with regard to the work order. The learned Senior Counsel further submits that once tender was accepted by the respondent, a legal contract was enforced and as such, merely because the formal contract was not executed by itself was not proper for the learned District Judge to uphold that the objections raised by the respondent. The learned Senior Counsel further submits that once tender was accepted by the respondent, a legal contract was enforced and as such, merely because the formal contract was not executed by itself was not proper for the learned District Judge to uphold that the objections raised by the respondent. The learned Senior counsel further submits that it is well settled that in case of breach of contract, the respondent would be liable to pay the damages/compensation to the appellant and relied upon the judgments of the Apex Court in (2009) 5 SCC 678 in the case of Madhya Pradesh Housing Board v. Progressive Writers and Publishers. (2011) 10 SCC 573 in the case of M.S.K. Projects India (JV) Limited v. State of Rajasthan and another and (1984) 4 SCC 59 in the case of M/s A. T. Brij Paul Singh and others v. State of Gujarat. The learned Senior counsel has pointed out that the damages in such circumstances can fix at 10% to 15% and according to the learned Senior Counsel, the Arbitrator was justified to award such damages at the rate of 10% on the value of the work. The learned Senior Counsel as such submits that the learned District Judge was not justified to uphold the objections raised by the respondent and as such the impugned judgment passed by the learned District Judge deserves to be quashed and set aside. 5. On the other hand, Shri M. Salkar, learned Government Advocate appearing for the respondent has supported the impugned c judgment. The learned Government Advocate has pointed out that the appellant themselves have raised the contention before the learned District Judge to the effect that 1940 Act would govern the objections raised by the respondent. The learned Counsel has pointed out that in fact in view of the order passed by the learned Civil Judge Senior Division, Margao, the respondent have invoked Section 34 of the Arbitration Act, 1996 to raise the objection to the award passed by the sole arbitrator. The learned Government Advocate further submitted that in view of the stand taken by the appellant, the proceedings were considered under 1940 Act. The learned Counsel as such submits that d the appellant is now estopped from raising such contention before this Court. With regard to the submissions advanced by the learned Senior Counsel appearing for the appellant on merits. Mr. The learned Counsel as such submits that d the appellant is now estopped from raising such contention before this Court. With regard to the submissions advanced by the learned Senior Counsel appearing for the appellant on merits. Mr. Salkar, learned Government Advocate has pointed out that the delay, if any, to proceed with the work order cannot be attributed to the respondent as according to him the work could not be started in view of the stay order granted by this Court. The learned Government Advocate further points out that as the delay in executing such work cannot be attributed to the respondent, the question of paying any compensation/damages to the appellant would not arise. The learned Counsel further points out that though it is sought to be contended by the learned Senior Counsel appearing for the appellant was intending to seek for revision of the rate nevertheless, the correspondence exchanged between the parties reveals that what the appellant wanted were fresh terms of the agreement which was not permissible. The learned counsel further pointed out that considering the said stand sought to be taken by the a appellant, the respondent were justified to terminate the agreement. The learned counsel further submits that in the facts and circumstances of the case, the respondent were entitled to terminate the agreement on account of the fact that the appellant were not proceeding to comply with the work contract which was awarded to the appellant herein. The learned counsel as such submits that the appeal deserves to be rejected. 6. I have considered the submissions of the learned counsel appearing for the respective parties and I have also gone through the records. It is not in dispute that the arbitration clause executed b between the parties is similar to the arbitration clause which was the subject matter of the judgment of the learned Single Judge of this Court reported in 1999(1) Mh LJ 462 in the case of M/s Reshma Constructions v. State of Goa. The learned Single, Judge of this Court on the basis of such agreement while interpreting the clause has come to the conclusion that in such circumstances the rights of the parties on tile objections to the award would be governed by the 1996 Act. The learned Single, Judge of this Court on the basis of such agreement while interpreting the clause has come to the conclusion that in such circumstances the rights of the parties on tile objections to the award would be governed by the 1996 Act. Once this Court has taken a particular view in the matter, the learned District Judge was not justified to come to the conclusion that 1940 Act would be applicable to decide the objections raised by the respondent. It is also not in dispute that in fact the respondent has raised objections under Section 34 of the Arbitration and Conciliation Act, 1996 which itself discloses that the respondent themselves have accepted their objections are to be considered in terms of the 1996 Act. Once the aforesaid facts are noted, I find that the learned Judge was not justified to consider the objections raised by the respondent in terms of the Arbitration Act, 1940. As such, on this ground alone the impugned judgment passed by the learned District Judge deserves to be quashed and set aside. The objections raised by the respondent are to be considered a fresh in terms of the provisions of Section 34 of the Arbitration and Conciliation Act, 1996. The view taken by me d is in consonance with the said judgment of the learned Single Judge passed in M/s Reshma Constructions (supra). 7. With regard to the contention raised by the learned Senior Counsel appearing for the appellant on merits which has been disputed by the learned Government Advocate appearing for the respondent, I find that taking into consideration the view which I propose to take in tile above appeal, such contention on merits would have to be considered a fresh by the learned District Judge after hearing the parties in accordance with law. Keeping all the contentions on merits of both the parties open. I find it appropriate in the interest of justice to set aside the judgment passed by the learned District Judge and remand the matter to the learned District Judge to decide the objections raised by the respondent in terms of Section 34 of the Arbitration and Conciliation Act, 1996 a fresh after hearing the parties in the light of the observations made herein above in accordance with law. 8. At this stage, Mr. 8. At this stage, Mr. Salkar, learned Government Advocate appearing a for the respondent has pointed out that the appellant should not be permitted to raise any point on limitation with regard to the objections raised by the respondent. Mr. Desai, learned Senior Counsel upon instructions points out that he will not press any such contention before the learned District Judge. Mr. Salkar. learned Government Advocate has raised the contention that during the pendency of the proceedings before the District Judge. the appellant have already withdrawn the amount deposited before the District Court. The learned Government Advocate as such submits that the appellant be directed to refund the said amount. Mr. Desai. learned Senior Counsel pointed b out that the amount were withdrawn even before the disposal of the objections raised by the respondent and passing of the impugned judgment and considering the view sought to be taken by this Court, the question of directing the appellant to refund the amount at this stag is not at all justified, though according to him, a substantial amount has already been refunded. No doubt, in case of objections raised by the respondent are upheld, the learned District Judge will pass appropriate orders with that regard at the time of the disposal of the objections raised by the respondents under Section 34 of the Act of 1996. This aspect would have to be dealt with by the learned District Judge while disposing of the said objections in accordance with law. 9. In view of the above. I pass the following: ORDER (i) The impugned judgment dated 04.03.2005 is quashed and set aside. (ii) The matter is remanded to the learned Principal District Judge, South Goa. Margao. to decide the objections raised by the respondent under Section 34 of the Act, 1996 a fresh in the light of the observations made herein above as expeditiously as possible preferably within three months from the date of the receipt of this order in accordance with law. (iii) The parties are directed to appear before the learned Principal District Judge. South Goa. Margao. on 05.08.2013 at 10.00 a.m. and abide by its further directions. (iv) The appeal stands disposed of accordingly.