Delhi High Court
Charanjit Kochhar vs Union Of India And Anr. on 17 September, 2001
JUDGMENT V.S. Aggarwal, J.
1. This is a petition filed by M/s Charanjit Kochhar a partnership concern (for short the plaintiff) under Section 14 of the Arbitration Act, 1940 for directing the arbitrator to file the award and for passing a decree in terms of the award. It has ben asserted that respondent no.1 (Union of India) had invited tenders for the work under the name and style of Design and Construction of two Permanent Bridges at Ishnu and Bundey on road confluence Dukey Dzong in Bhutan. Inn pursuance of the said invitation to the tender the plaintiff had submitted the offer/tender at New Delhi. The same were submitted in the Office of Directorate General, Border Roads, Kashmir House, New Delhi. The bids were opened in Delhi and all negotiations were also held in Delhi. There were negotiations and discussions in Delhi and ultimately the tenders were accepted. The letter of acceptance was issued by Director General, Boarder Roads, Kashmir House, New Delhi vide the telegram of 2nd April, 1984.
2. During the course of execution of the work, respondent No. 1 failed to fulfill their contractual obligation and even failed to make the payment to the petitioner. As a result thereto disputes arose between the parties i.e. the petitioner and the respondent No. 1. Petitioner invoked the arbitration and respondent No. 2 had been appointed as the sole arbitrator. The arbitrator entered into the reference on 21st December, 1990 and has since submitted his award. Hence the present petition.
3. In pursuance of the notice issued the Union of India has preferred objections to the award. As per Union of India the petitioner had obtained the contract of construction of two bridges and in terms of the contract he had to complete the construction within 36 months after commencement of the work by the petitioner. The petitioner/plaintiff failed to compete the work. He violated the terms of the contract and the matter was referred to the sole arbitrator i.e. respondent no.2 to resolve the disputes. The award of the arbitrator has been assailed alleging that the arbitrator has not given any reasons recording the rejection of the claim of Union of India and further that the civil courts at Delhi has no jurisdiction to entertain the present petition. Besides that plea has also been offered that the arbitrator has misconducted himself, because he failed to appreciate that it is the plaintiff who has failed to complete the work within stipulated time. He could not even complete the work after the extension was granted in this regard. The plaintiff was never serious to complete the work. He has wrongly allowed the claim of the plaintiff with respect to the expenditure of which Union of India has no responsibility. The plaintiff had failed to produce the original document like voucher on which the plaintiff had laid the claim and that it is the plaintiff who is the wrong doer and has violated the terms of the contract. The Union of India has cancelled the contract of the plaintiff after giving him full opportunity and the plaintiff, therefore, cannot take advantage of his own wrong.
4. The plaintiff/petitioner filed the reply to deny that the civil courts ad Delhi has no jurisdiction to entertain the petition. It was insisted that acceptance of the tender was conveyed to he petitioner by the respondent from Delhi and therefore the courts at civil courts at Delhi has the jurisdiction to entertain the present petition. The contention that reasons have not been given and therefore the award should be set aside, has also been repudiated. With respect to the merits of the mater firstly it has been asserted that this court will not go into this controversy and otherwise also it is denied that the arbitrator has gone astray or wrong in coming to the conclusion in favor of the petitioner.
5. The short question that comes up for consideration in the present case is as to whether award on basis of the assertions os made is liable to be set aside or not.
6.During the course of submissions the learned counsel appearing on behalf of the objector/Union of India only raised two pertinent arguments (a) the civil courts ate Delhi has no jurisdiction to try the present petition and (b) the award is liable to be set aside because the reasons in this regard has not been recorded by the arbitrator. Therefore, for disposal of the present objection, this court is basically concerned with the said two controversies.
7. With respect to the dispute as to if the civil courts at Delhi has the jurisdiction to try the present petition/suit or not the learned counsel for the objector/Union of India highlighted the f act that the agreement was entered into not in Delhi and the work was also being executed in Bhutan. Therefore no part of cause of action had arisen at Delhi, as a result civil courts at Delhi will have no jurisdiction and restrain itself from entertaining the present suit.
8. Under Section 20(c) of the Code of Civil Procedure indeed the court will only have the jurisdiction if cause of action, whole or in part, arises out of the jurisdiction of that court. It becomes unnecessary for this court to consider the question that Union of India or the heard office of the objector is in Delhi. This is for the reason that for certain sovereign functions it would be Delhi but when there are commercial activities of the State for those controversies the same has to be gone into at the appropriate place. It would not be appropriate for this court to go into this controversy in any further detail because this question has already been considered by the Supreme Court in the case of Bakhtawar Singh Bal Kishan v. Union of India and ors . In the cited case the contractor had entered into the construction contract with Military Engineering Service for making some additional construction in the Ordnance Factory at Muradnagar, UP. The contract was entered into at Bareilly in UP. A dispute arose in regard to the execution of the contract between the contractor and the Union of India. An arbitrator was appointed. The contractor instead of instituting the appropriate proceedings at Bareilly/Muradnagar, where the contract was, executed and work was carried out instituted proceedings on the Original Side of this court. The Union of India had raised a plea to the effect that the Delhi High Court has o jurisdiction inasmuch as the cause of action had arisen at a place in UP. A Division Bench of this court had accepted the said plea of the Union of India. The appeal filed by Bakhtawar Singh (supra) was dismissed by the Supreme Court. The Supreme Court held that:-
".....In the present case the contract pertained to construction of an ordnance factory of the Military Engineering Services of the Armed Forces (Modernisation and augmentation of the ordnance factory). Maintaining the armed forces is part of the sovereign activity of the State. It is an activity which is undertaken by the Central Government for ensuring the security of India which is a sovereign function of the State. It is specious to contend that it is a 'business activity' with an eye on profits.."
9. Consequently on this particular aspect that it would be sovereign functions of the State this particular plea must be rejected. On the contrary, the learned counsel for the plaintiff/petitioner referred to the decision of this court in the case of Gupta Textile Mills v. Union of India and anr 2000 VII Ad (Delhi 453. The cited decision indeed had referred to general conditions of the contract which provided that he courts or places where acceptance of tender shall be issued shall alone have jurisdiction to decide any dispute arising of or in respect of the contract. It is on the strength of this fact that it was held that the civil courts at Delhi has the territorial jurisdiction to entertain the suit. But in the present case no such general conditions of contract have been brought to the notice of the court and one has no hesitation in, therefore, coming to the conclusion that cited decision is distinguishable.
10. Confronted with that position, learned counsel for the plaintiff/petitioner referred to the fact that since the offer was accepted from Delhi, therefore, the Delhi court has the jurisdiction to entertain the objections or the present petition. Strong reliance was place on the decision of the Supreme Court in the case of ABC Laminart Pvt. Ltd. and anr v. A P Agencies, Salem . In the cited case ABC Laminart was noted to be a manufacturer and supplier of metallic yarn. It was having a registered office in Mohamadabad, Gujarat, district Kaira. The co-plaintiff was a registered partnership doing business at Salem. ABC Laminart had entered into an agreement with the respondent, A P Agencies, on 2nd October, 1974. It was mentioned that if any disputes arise the same shall be referred to the jurisdiction arise the same shall be referred to the jurisdiction of Kaira. The disputes had arisen and civil suit was filed at Salem district in Tamil Nadu. The question arose whether the court at Salem in the State of Tamil Nadu has the jurisdiction to entertain the suit or not. The Supreme Court after going into the various aspects held:-
"15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages 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 field either at the place where the contract was mae or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, 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..."
(emphasis added)
11. In the present case in hand as referred to above it is an admitted fact that the contract was not in Delhi and even it had to be executed at a place not in Delhi. But perusal of the record certainly shows to the effect that tenders were invited on 21st June, 1983 and correspondence had taken place with Charanjit Kochhar vide the later dated above i.e. 21st June, 1983 from Kashmir House, New Delhi. The other correspondence on the record also indicates that the entire correspondence took place with the petitioner by the objector from Kashmir House, New Delhi. The most important aspect of the matter is that the tenders were accepted and a telegram in this regard had been issued from Kashmir House to the petitioner/plaintiff by the Director General, Border Roads. It was not disputed that it had not been issued from New Delhi. Once the tenders were accepted and acceptance was communicated to the petitioner from New Delhi the rigours of the judgment of the Supreme Court ABC Laminart (supra) will apply and therefore it must be held that the civil courts at Delhi has the jurisdiction to entertain the suit.
12. Reverting back to the other aspect of the argument the plea offered has been that the arbitrator has not given his reasons in arriving at the conclusions. In the present case it is not in dispute and therefore the court deems it necessary to refer to the fact that the arbitrator has simply given his findings and no detailed reasons are forthcoming. The relevant arbitration clause pertaining to recording of the reasons reads:-
"The arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time, as the case my be on all matters referred to him and shall indicate his findings, along with the sums awarded, separately on each individual item of dispute."
13. It is obvious from the aforesaid that as per the contract it was not mandatory that detailed reasons have to be recorded. The Supreme Court's decision in the case of Raipur Development Authority and ors v. M/s Chokhamal Contractors and ors will not come to the rescue of the objectors. This is for the reason that herein there is no contract that reasons necessarily has to be recorded. In fact it has been recorded that findings have to be recorded. When such is the contract between the parties in that event to insist that reasons in the absence of reasons the award is liable to be set aside would not indeed be correct.
14. A clear distinction must be drawn between the findings and the reasons. One get support in this regard from Order 20 Rule 5 of the Code of Civil Procedure. It clearly provides that in suit in which issues have been framed the court shall state its findings and record reasons. In other words, findings and reasons are two different aspects. The finding would be the conclusion drawn and reasons are as to why such a conclusion is being arrived at.
15. The Supreme Court considered this aspect in the case of Income Tax Officer v. Murlidhare Bhagwan Das . The facts of the case are not materially relevant but it was held that finding is one which is necessary for disposal of the suit. The Supreme Court approved the earlier decision of the Allahabad High Court in the case of Pt. Hazari Lal v. Income Tax Officer and recorded:
"....That is to say, the finding shall be one which is necessary for the disposal of the suit, the scope of the meaning of the expression "finding" is considered by a Division Bench of the Allahabad High Court in Pt. Hazari Lal v. Income-tax Officer, Kanpur, there, the learned Judges pointed out:
"The words "finding", interpreted in the sense indicated by us above, will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing."
We agree with this definition of "finding"...."
16. Thereafter the Supreme Court concluded:
".....Therefore, the expression "finding" as well as the expression "direction" can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question....."
17. Identical was the finding from the Calcutta High Court in the case of Union of India v. D. Bose AIR 1981 Calcutta 91. It was held:
"11. The expression "finding" has been explained in Order XX, Rule 5 of the Code of Civil Procedure. It appears that the term "finding" is different form the term "reasons" "Finding" is the conclusion arrived at and "reasons" are the grounds for such conclusion. In the instant case, the arbitrator has come to his finding on each dispute referred to him for adjudication as will appear form the Award made and published by the Arbitrator. But then the Arbitrator has not given any reason for arriving at such finding. The Supreme Court in the case of Income-tax Officer, "A' Ward, Sitapur v. Murlidhar Bhagawandas has referred to the provisions of Order XX Rule 5 of the Code of Civil Procedure and pointed out the distinction between the expression "finding" and "reasons". The Arbitrator in he instant case, in our opinion, in terms of the contract has duly set out the finding."
18. In the present case in hand as referred to above though reasons are missing but findings as per the claim are recorded by he arbitrator. Once the findings have been so arrived at and the contract between the parties was that finding has to be recorded separately indeed the said argument so much thought of by the learned counsel must crumble and accordingly is rejected. It had been agreed that only findings had to be recorded and it is presumed that there had to be no reason. Therefore, once the findings have been arrived at this particular plea as referred to above is rejected.
19. For these reasons the objections fail and are dismissed. Award is made a rule of the court and decree in terms of the award is passed.