Rajasthan High Court - Jaipur
Raj Rajya Path Parivahan Nigam vs Addi District Judge Ors on 29 January, 2013
Author: Mohammad Rafiq
Bench: Mohammad Rafiq
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR ORDER IN S.B. Civil Writ Petition No.568/2013 With Stay Application No.469/2013 Rajasthan Rajya Path Parivahan Nigam Vs. Additional District Judge No.5, Jaipur Mahanagar and Others Date of Order ::: 29.01.2013 Present Hon'ble Mr. Justice Mohammad Rafiq Shri S.K. Bhattacharya, senior counsel, with Shri Satish Chandra Mittal, for petitioner RSRTC Shri Ajeet Kumar Sharma, senior counsel, with Shri V.K. Sharma and Shri Rachit Sharma, for respondents #### //Reportable// By the Court:-
This writ petition has been filed by petitioner Rajasthan Rajya Path Parivahan Nigam assailing the order passed by Additional District Judge No.5, Jaipur Metropolitan, Jaipur dated 15.12.2012 by which the petitioner's application filed under Order 6 Rule 17 read with Section 151 of the Civil Procedure Code seeking to incorporate by way of amendment three new objections in the petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, has been dismissed.
Facts leading to present writ petition are that a notice-inviting-tender was issued by petitioner on 27.01.2005 for appointment of sole licensee for transportation of domestic articles/small commercial goods from one place to another through its fleet of 4000 buses. Respondent no.3 M/s. Bhagwati Enterprises submitted its tender in prescribed tender form along-with relevant documents. Petitioner sent a letter dated 31.01.2005 to the respondent no.3 to accept its offer requiring it to deposit a sum of Rs.6,66,786/- towards security amount and bank guarantee of Rs.40,00,716/-, in accordance with the conditions no.4 and 18 of the notice inviting tender so that the agreement can be executed. The respondent no.3 though deposited the security money and bank guarantee with the petitioner but vide its letter dated 19.03.2005 conveyed that they have yet not received agreement terms, enabling them to execute it and initiate energizing the centers by providing aforesaid services immediately on allotment of office premises to them at the bus stands. The respondent no.3 sent another letter dated 23.03.2005 requesting the Petitioner to delete condition nos.29 and 30 from the prescribed proforma of agreement. The respondent no.3 purchased non-judicial stamp of Rs.100/- at Indore and got the agreement in prescribed proforma typed on it and signed the same on 28.03.2005. According to petitioner, it was also signed by two persons of Indore at Indore. The agreement was sent to the petitioner for needful and same was signed by the Chairman of the petitioner-Corporation on 29.03.2005. It is alleged by the petitioner that when the file containing the agreement was received back in the office of the Chairman after his signatures by the Financial Adviser, who too was required to sign the same along-with the Executive Director (Administration) as witness, they noticed that a hand written note reading valid goods permit is prerequisite and clause nos.29 and 30 are not acceptable was interpolated on page no.7 of the agreement of the agreement by respondent no.3 surreptitiously, which note was not there when the Chairman-cum-Managing Director of the Corporation signed the agreement. The Financial Adviser convened a meeting on 31.03.2005 with the Executive Director (Administration) and Executive Manager (Advertisement). The Proprietor of the respondent no.3 firm also participated. He was confronted with the hand written note on page no.7 of the agreement and required to submit fresh agreement in the prescribed proforma as the note was in contradiction to clauses no.29 and 30 typed on page 6 of the agreement. However he was unwilling to withdraw it and wanted to execute the agreement only as per those terms and conditions. A letter dated 01.04.2005 was therefore sent by the petitioner to the respondent no.3 for submitting fresh agreement in the prescribed proforma within five days, followed by letters dated 05.04.2005 and 06.04.2005 to the same effect.
That it was thereafter that when the respondents failed to sent fresh agreement in the prescribed proforma, Petitioner, vide its letter dated 16.04.2005 cancelled the letter and later on forfeited the earnest money and security deposit by order dated 22.02.2005. Respondent requested the petitioner by his letter dated 03.05.2005 for appointment of an Arbitrator out of the panel suggested by them for adjudicating the dispute. The reply was sent by the Petitioner to respondent no.3 on 24.05.2005 contending that in clause 29 of the agreement the Chairman of the petitioner-Corporation was named as Arbitrator, which was not accepted by the respondent who filed an application under Section 11 of the Act of 1996 before this court. Petitioner contested the application on many grounds including on the ground that the contract was yet not concluded between the parties and therefore the application was not maintainable. The said objection was overruled by the Single Judge as nominee of the Chief Justice. Learned Single Bench of this court vide its order dated 16.04.2005 appointed respondent no.2, a retired Judge of this Court, as sole Arbitrator. Petitioner challenged the aforesaid order by filing Special Leave Petition before the Supreme Court, which, on grant of leave, was partly allowed vide order dated 10.12.2009. The Supreme Court, though upheld the appointment of respondent no.2 as sole Arbitrator, but directed that the question whether or not the contract was concluded between the parties, could be raised by the Petitioner before the Arbitrator. Learned Sole Arbitrator rendered the award on 18.09.2011 for Rs.653,20,86,367/- along-with interest thereon at the rate of 12% per annum with effect from 10.01.2011 till its realization. Petitioner-Corporation filed objections under Section 34 of the Act of 1996 on 13.12.2011 before the court of Additional District Judge No.5, Jaipur Metropolitan. The respondent no.3 submitted reply to the said objections to which the Petitioner submitted rejoinder on 15.10.2012. Application under Order 6 Rule 17 read with Section 151 CPC and Section 82 of the Act of 1996 was filed by the petitioner on 11.12.2012 seeking permission of the court to add three new paras in its objection petition. Learned Additional District Judge, by his order dated 15.12.2012, dismissed the aforesaid application. Feeling aggrieved thereby, petitioner has approached this court in the present writ petition.
Shri S.K. Bhattacharya, learned senior counsel appearing for Petitioner, has argued that learned court below has failed to appreciate that the petitioner by application under Order 6 Rule 17 CPC merely wanted to add three more objections in the originally filed petition under Section 34 of the Act of 1996. The first objection was that learned sole Arbitrator has misconducted herself by not framing a specific issue on the question whether or not there was concluded contract between the parties and non-framing of such issue despite specific direction by the Hon'ble Supreme Court in its order dated 10.12.2009 was a serious infirmity in the award. Another objection that the Petitioner wanted to incorporate by way of amendment was whether the award was not liable to be declared illegal and set aside for failure of the learned sole Arbitrator to decide the counter-claim on merits. Third and last objection which the Petitioner wanted to insert by way of amendment was whether adverse inference drawn by the learned sole Arbitrator against the Petitioner for not taking action against erring officials of the petitioner without the evidence of the concerned officers was not unjust and improper, because the Petitioner has taken disciplinary action against its employees and also made a complaint against concerned Advocate.
Shri S.K. Bhattacharya, learned senior counsel, argued that the facts on which aforesaid three objections were founded were fully known to the respondent-claimant especially the objection about there being no concluded contract between the parties, which was the bone of the contention between the parties even before the learned Single Judge of this Court in proceedings under Section 11 of the Act of 1996. Learned Single Judge dismissed the said objection raised by the petitioner, who thereupon challenged the order of the learned Single Judge before the Supreme Court. The Supreme Court, while allowing the Civil Appeal against the judgment of learned Single kept this issue open by observing the question whether or not there was a concluded contract between the parties, can be raised before the Arbitrator. Learned senior counsel submitted that no prejudice would be caused to respondent-claimant even if the amendment as prayed for is allowed to be incorporated now. The courts have been liberal in allowing the amendment wherever such amendment is necessary to decide the real controversy. No prejudice or injustice would be caused to the respondent if amendments are allowed. At the maximum, the respondents can be compensated by award of reasonable amount of money as costs, if at all it is shown that any inconvenience is caused to them due to delay.
Shri S.K. Bhattacharya, learned senior counsel for petitioner, in support of his arguments, has relied on judgment of the Supreme Court in Revajeetu Builders & Developers v. Narayanaswamy and Sons (2009) 10 SCC 84. It is submitted that although the outer limit for filing objections under Section 34(3) of the Act is 120 days but amendment in the pleadings of the objection petition cannot be declined merely because of delay as held by the Supreme Court in State of Maharashtra Vs. Hindustan Construction Company Limited (2010) 4 SCC 518. Learned senior counsel for petitioner further argued that if the amendments are not allowed to be incorporated, it is likely to cause grave and serious prejudice to the petitioner because the learned sole Arbitrator by the award in question has awarded huge amount of Rs.653,20,86,367/- with interest at the rate of 12% per annum, from 10.01.2011, which amount if interest is also added thereto, would have by now exceeded the amount of Rs.1000 crore whereas no work whatsoever was transacted by the respondent.
Per contra, Shri Ajeet Kumar Sharma, learned senior counsel for respondent-claimant, argued that the objections, which are sought to be incorporated by way of amendment now by the petitioner in their objection petition, were never raised by them either in the pleadings or orally before the learned sole Arbitrator. No objection was ever raised by the petitioner before the Arbitrator that there was no concluded contract between the parties. Referring to the provisions contained in Order 14 Rule 1 CPC, learned senior counsel argued that issues could be framed by learned Arbitrator only if a material proposition of fact and law is affirmed by the one party and denied by the other. In the present case, no such material question of fact was affirmed or pleaded by the Petitioner before the learned Arbitrator therefore there was no question of issue being framed. In this connection, learned senior counsel has referred to discussion made by the Supreme Court in Para 36 of the judgment of State of Maharashtra Vs. Hindustan Construction Company Limited, supra, and argued that the Supreme Court in that case declined to grant amendment because the grounds that were sought to be added in the memo of appeal were absolutely new for which there was no foundation in the application for setting aside the award. The amendment application was therefore rightly rejected. Learned senior counsel submitted that the present amendment application has been filed by the petitioner with the sole purpose of delaying the proceedings.
Shri Ajeet Kumar Sharma, learned senior counsel argued that even though the agreement between the parties was signed on 29.03.2005, acceptance of the tender submitted by the respondent was conveyed to them by the petitioner vide letter dated 22.02.2005 and certificate was issued to them by the petitioner on 07.03.2005 proving that they have been issued sole license for carrier vide order dated 22.02.2005 for career/parcel service on RSRTC buses for a period of three years, which clearly shows that work order was placed with the respondent by the petitioner much before the execution and actual signing of the contract. In the face of these facts, petitioner cannot be allowed to contend that there was no concluded contract between the parties.
Shri Ajeet Kumar Sharma, learned senior counsel appearing for respondents, made reference to earlier application filed by the petitioner seeking to produce three witnesses for recording of their statements in proceeding under Section 34, supra, which application was dismissed by the learned court below vide order dated 17.11.2012. Even when the aforesaid application was filed by the Petitioner, no such prayer for amendment was made for which the application was now filed much belatedly. This clearly shows that attempt has been made by the petitioner to remove the lacunae in their case. Learned senior counsel submitted that after insertion of proviso to Rule 17 of Order 6 of the C.P.C., amendment of the pleadings ought not to be lightly permitted. The proviso requires that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence the party could not have raised the matter before commencing of trial. In the present case, the trial can be taken to have commenced before the Arbitrator, consideration of objections under Section 34 of the Act, 1996 being continuation of the proceedings before the Arbitrator. Belated amendment cannot be permitted just at the askance of the parties unless it is shown to the satisfaction of the court that such pleas could not be inserted in the originally filed objections petition despite exercise of due diligence. So far as the first two objections sought to be inserted by amendment are concerned, they were fully known to the petitioners. Such objections were originally not raised either before the Arbitrator or even in the objection petition. Counter-claim was never pressed before the learned Tribunal. Third objection is clearly an afterthought, having been raised in response to the observations made by the learned Arbitrator. Such an amendment cannot be said to be bona-fide. Learned senior counsel, in support of his arguments, has relied on the judgment of the Supreme Court in Vidyabai and Others Vs. Padmalatha and Another (AIR 2009 SC 1433).
Shri S.K. Bhattacharya, learned senior counsel appearing for petitioner, has rejoined and submitted that the basic facts leading to the objection that there was no concluded contract between the parties was very much pleaded before the Arbitrator and has been taken note of by her in the award itself. Those facts were that the insertion of the words valid goods permit is prerequisite and clause nos.29 and 30 are not acceptable at page 7 was fraudulently made after signing of the agreement by the Chairman-cum-Managing Director and this was immediately objected to by the petitioner in the meeting convened by its Financial Adviser on 31.03.2005. The meeting was attended by the Proprietor of the respondent no.3 and he was confronted with the aforesaid interpolation made in the agreement and required to submit fresh agreement in the prescribed proforma, because the interpolation ran contrary to clauses 29 and 30 of the agreement. This condition was not accepted by the respondent no.3. To say that there was no pleading therefore is factually unfounded. Learned senior counsel denied the suggestion that amendments have been sought for only with a view to removing lacunae.
I have given my anxious consideration to rival submissions and perused the material on record.
The objection that there was no concluded contract between the parties was for the first time raised by the petitioner before this court in the proceedings under Section 11 of the Act of 1996 initiated by the respondent no.3. Those proceedings were initiated on the application filed by the respondent no.3 seeking appointment of sole Arbitrator. Learned Single Judge of this court, as nominee of the Chief Justice, while dealing with the said application, rejected this objection vide judgment dated 23.05.2006. The Supreme Court by grant of leave in the matter, decided Civil Appeal No.5137/2007 vide order dated 10.12.2009. In so far as this objection is concerned, it was observed by the Supreme Court as under:-
As regards the first point, we may mention that Section 16 of the Act states that the Arbitral Tribunal can rule on its own jurisdiction including on the question about the existence or validity of the arbitration agreement. Hence, this point as to whether there was a concluded contract between the parties can be raised before the arbitrator and we direct that the arbitrator will decide the same uninfluenced by any observations of the High Court.
The order of the Supreme Court has been noticed by learned Arbitrator at the outset in the award. Obviously, objection whether or not there was a concluded contract between the parties, could not be accepted just because such objection is raised. The objector would be required to lay the foundation and plead facts to substantiate such objection. Perusal of the award however indicates that those facts were very much noted by the learned Arbitrator, which are as follow:-
At Page 3 of the Award;
...However, respondents have subsequently said that claimants on internal page No.7 of Ex.C-9 have fraudulently inserted that valid goods permit is pre-requisite and clause 29 and 30 are not acceptable. The respondents vide their letter dated 1-4-2005 (Ex.C-11A) informed the claimants that the handwritten terms i.e. 'valid goods permit is pre-requisite and clause 29 & 30 are not acceptable' are not agreeable to them and asked the claimants that they should submit another agreement according to the agreement-format. ..
At page 6 and 7 of the Award;
...Thus it comes out that clauses 29 and 30 were later on incorporated in the agreement-format by the respondents by their own decision. The claimants vide their letter dated 23-3-2005 resisted and made a request to the respondents to reconsider clause No.29 and 30 of proposed agreement. Respondents' witness Shri J.J. Gupta during the cross-examination on 18-2-2011 has clearly admitted that conditions No.29 and 30 (Ex.C-9) were not incorporated in Exhibit C-2 (tender document) and Ex.C6 (work order). In the situation, the claimants were well within their rights to resist any attempt on the part of the respondents to introduce any new terms and conditions at the time of execution of formal contract document dated 28-3-2005.
The contention of respondents is that the claimants have signed the formal agreement Ex.C-9 on 28-3-2005 and thereafter the Chairman and Managing Director of respondents signed the said agreement on 29-3-2005. Then thereafter hand written lines 'Valid goods permit is pre-requisite & clause No.29 and 30 are not acceptable' on page 7 of Ex.C-9 were inserted in an illegal manner on the agreement by the claimants in connivance with some officials of respondents. Respondents then on 1-4-2005 (Ex.C-11) intimated to the claimants that handwritten condition and non-acceptance of conditions No.29 and 30 put by them are not agreeable by the respondents. Hence they asked the claimants to re-submit fresh agreement, according to proforma supplied. Claimants did not submit fresh typed agreement and the respondents then vide their order dated 16-4-2005 (Ex.C-14) cancelled the contract and forfeited the security amount and one month's license fee.
Excerpts extracted from the award clearly indicate that ample foundation was laid by the petitioner before the learned Arbitrator to contend that there was no concluded contract between the parties. Besides, the learned Arbitrator being cognizant of the order of the Supreme Court, whereby the Supreme Court directed that the Arbitrator will decide the same uninfluenced by any observations of the High Court, at-least makes out a prima facie case for raising objection that this question was required to be decided as an independent issue.
Coming now to third objection whether the Arbitrator was justified in drawing an adverse inference against the petitioners in not taking action against its officials for their alleged complicity with the respondent no.3 in the fraudulent insertion of the aforesaid condition, learned Arbitrator has indeed raised adverse inference against petitioner by observing that had it been a case of a fraudulent insertion of the aforesaid condition and forgery committed by claimants in connivance with staff of petitioner, it was obligatory on the part of petitioner to have initiated departmental enquiries against staff members and lodged first information report with the police against claimant. Disciplinary action against staff and complaint against concerned lawyer, though initiated subsequently, nevertheless would be relevant amendment because the court in the scope of Order 6 Rule 17 of the CPC can also allow the subsequent events to be incorporated by way of amendments at any stage of the proceedings and the desired amendment in the context of the alleged fraudulent insertion of the conditions ultimately having the effect of creating a huge liability of over Rs.1000 crore against the petitioner-Corporation, would have a bearing of the dispute and indeed be very much relevant. However, in so far as the second objection that the award of the Arbitrator is liable to be set aside for her failure to decide the counter-claim on its merits, this does not appear to have been raised before the Arbitrator. Neither sufficient foundation has been laid nor any such counter-claim appears to have been pressed before the Arbitrator. To that extent, the desired amendment does not deserve to be allowed.
The Supreme Court in Revajeetu Builders & Developers, supra, has held that the first condition which must be satisfied before the amendment can be allowed by the court is whether such amendment is necessary for determination of the real question in controversy. If that condition is not satisfied, the amendment cannot be allowed. This is the basic test, which should govern the courts' discretion in grant or refusal of the amendment. The other important condition, which should govern the discretion of the court is potentiality of prejudice or injustice which is likely to be caused to the other side. Ordinarily, if the other side is compensated by costs, then there is no injustice. The courts have very wide discretion in the matter of amendment of pleadings but court's power must be exercised judiciously and with great care. Applying those twin tests, I find that whether or not there was concluded contract between the parties, has been the bone of contention between the parties from inception, even from the stage the respondent filed application under Section 11 of the Act of 1996 before the designated Judge for appointment of Arbitrator, and the Supreme Court specifically directed the Arbitrator to decide that question. It was therefore the real question in controversy that was required to be determined wherefor the amendment has been applied.
Applying second test, this court finds that by allowing the amendment prayed for, no grave prejudice or injustice would be caused to respondents as this objection is known to them from the very beginning and commencement of lis between the parties. However, to the extent inconvenience has been caused to them, they deserve to be suitably compensated by award of costs.
The Supreme Court in State of Maharashtra Vs. Hindustan Construction Company Limited, supra, considered the question whether incorporation of additional ground by way of amendment in the application under Section 34 of the Act of 1996 tantamounts to filing a fresh application in all situations and circumstances, and held it would not. It was held that if that were to be treated so, it would follow that no amendment in the application for setting aside the award, howsoever material or relevant it may be, for consideration by the court, can be added nor existing ground amended after the prescribed period of limitation has expired, although the application for setting aside the arbitral award has been made in time. This is not and could not have been the intention of the legislature while enacting Section 34 of the Act of 1996, held the Supreme Court. While considering the scope of Section 34(2)(b), the Supreme Court held that this provision enables the court to set aside the arbitral award if it finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force. The words in clause (b) the court finds that do enable the court, where the application under Section 34 has been made within prescribed time, to grant leave to amend such application if the very peculiar circumstances of the case so warrant and it is so required in the interest of justice. Peculiar circumstances attached to the case and also the interest of justice requires that amendment prayed for in present matter at-least to the extent of objections first and third, sought to be inserted by way of amendment, are allowed.
Adverting now to the cited judgment of the Supreme Court in Vidyabai and Others, supra, it was held in that case that trial of a case commences on the date when the issues are framed. Amendment in the written statement at that stage was sought by the defendant after the plaintiff had filed affidavit by way of examination-in-chief. The trial court declined to allow the amendment but the High Court granted the same. The Supreme Court considering the scope of proviso to Order 6 Rule 17 of the CPC held that under the said proviso, application of amendment could be allowed after the trial commenced, only if it was shown that in spite of due diligence, the matter could not be raised before commencement of trial. True it is, the proviso has somewhat restricted the scope of amendment and placed certain limitations on that power of the court by insisting that amendment should be permitted only if the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before commencement of the trial. But that situation perhaps would not be obtainable in a proceeding under Section 34 of the Act of 1996, where objections are filed after passing of award and the court is thereafter required to decide those objections, therefore, it would be rather difficult to hold as to when the trial in such proceedings under Section 34 of the Act of 1996 would begin. Though, at the same time, it may be true that amendment application seeking to raise additional objections has been filed with delay of one year and the respondents have been put to inconvenience thereby and some delay would also be caused thereby but this inconvenience and the resultant delay in ultimate decision, deserves to be compensated by award of reasonable amount of costs, which, in the present case, is quantified at Rs.15,000/-.
In view of above, writ petition succeeds in part. The amendment prayed for in Paras (xiv) and (xvi) of the amendment application are allowed to be incorporated by way of objections in the application under Section 34 of the Act of 1996. Petitioner is permitted to file amended objection petition in conformity therewith before the learned court below subject to payment of costs of Rs.15,000/- to the respondent no.3. The writ petition is allowed in part with costs as indicated above. This also disposes of stay application.
(Mohammad Rafiq) J.
//Jaiman// All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
Giriraj Prasad Jaiman PS-cum-JW