Bombay High Court
Economic Development Corporation Of ... vs Sunivas Builders And Others on 21 June, 1996
Equivalent citations: 1997(3)BOMCR299, 1997 A I H C 151, (1996) 29 ARBILR 152 (1997) 3 BOM CR 299, (1997) 3 BOM CR 299
Author: R.K. Batta
Bench: R.K. Batta
ORDER R.K. Batta, J.
1. The work of construction of office building complex was entrusted by the petitioners to respondent No. 1 vide agreement dated 20th January, 1986. Dispute under the said agreement arose between the parties and arbitration clause was invoked. There was no agreement between the two Arbitrators and they referred the matter to the umpire. Before the Arbitrators question of jurisdiction was raised, but the Arbitrators came to the conclusion that they had jurisdiction to proceed with the matter. The matter twice came up before this court on accounts of orders passed by Civil Judge S. D. Panaji on application filed by respondent No. 1 under Section 33 of the Indian Arbitration Act, 1940. In the said application the petitioner had sought declaration that reference of the disputes between the parties to arbitration was without jurisdiction, null and void. The petitioner also prayed for declaration that the Arbitrators had no jurisdiction to arbitrate on the disputes. The petitioner also sought permanent injunction restraining the said Arbitrators from proceeding with the arbitration. This application was ultimately disposed of by Civil Judge S. D. Panaji by impugned order dated 18th April, 1994 which is subject matter of challenge in this revision.
2. The controversy in this revision lies in a narrow compass and the Advocates for the parties have addressed this court on two points namely, (1) Whether clause (6) of Agreement dated 20th January, 1986 overrides Condition Order 42, of the contract included in the said Agreement pursuant to clause (4) thereof, resulting in the Arbitrator having no jurisdiction to deal with the matter; and (2) Whether before invoking the arbitration clause, the Architect had rejected the claim put forward by respondent No. 1.
3. On the first question learned Advocate Shri G. Tamba has argued before me that clause (6) in Agreement dated 20th January, 1986 clearly overrides Condition Order 42 of the contract since it was clearly stipulated in clause (6) that in cases of all disputes arising out of the Agreement only Courts in Goa will have jurisdiction to determine the same. According to Shri Tamba, the conditions of the contract were materially altered prior to execution of the said Agreement dated 20th January, 1986 by excluding Condition Order 42 but inadvertently the said condition still remained as part of Agreement dated 20th January, 1986. On the question of material alteration of contract, he relied upon ruling of the Apex Court in U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. .
4. On this aspect learned senior Advocate Shri V. B. Nadkarni emphasised that Clause (4) and Clause (6) are both parts of Agreement dated 20th January, 1986 and they have to be read harmoniously. According to him, one way of supporting the harmonious construction is as has been adopted by the lower Court after placing reliance on Shree Bhowani Cotton Mills v. Union Textile Traders . However, the harmonious construction could also be looked into from another angle and in this respect my attention has been drawn to Section 2(c) of the said Act which defines the expression "Court". According to him, the question relating to existence or validity of arbitration agreement can be decided by a court alone and not the Arbitrator and in order to make award rule of the court, award has necessarily to be filed in the court.
5. There is no dispute on the proposition of law that existence or validity of agreement can be decided by the Court alone and not Arbitrator and rulings of the Apex Court in U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd., and Union of India v. G. S. Atwal & Co. (Asansole) , upon which reliance has been placed by Shri G. Tamba are crystal clear on the subject. In order to answer the first point, it is necessary to enumerate Condition Order 42, of the contract, clauses (4) and (6) of Agreement dated 20th January, 1986 of the said Agreement :
"Settlement of Disputes :
Order 42. If any dispute or difference of any kind whatsoever shall arise between the Employer of the Architect and the contractor in connection with or arising out of the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract, it shall be referred to and settled by the Architect who shall state his decision in writing and give notice of the same of the Employer and the contractor. Such decision in respect of every matter so referred shall be final and binding upon the Employer and the contractor until the completion of the work and shall forthwith be given effect to by the contractor who shall proceed with the works all due diligence whether notice of dissatisfaction is given by him or by the employer as hereinafter provided or not. If the Architect shall fail to give such decision for a period of 30 days after being requested to do so or if either the Employer or the contractor be dissatisfied with any such decision of the Architect then and in any such decision or within 30 days (as the case may be) required that the matter shall be referred to the Arbitration and final decision of a single Arbitrator being a Fellow of the Indian Institute of Architects or the Indian Institute of Engg. to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single Arbitrator, to the Arbitration of two Arbitrators both being Fellows of Indian Institute of Architects or Indian Institute of Engineers, one to be appointed by each party, which Arbitrators shall before taking upon the themselves burden of reference appoint an Umpire.
The Arbitrator, the Arbitrators or the Umpire shall have power to open up, review and review any certificate, opinion, decision requisition or notice, save in regard to the excepted matters referred to in the proceeding clause, and to determine all matters in dispute which shall be submitted to him or these and of which shall notice have been given as aforesaid.
Upon every or any such reference the cost of and incidental of the reference and Award respectively shall be in the direction of the Arbitrator or Arbitrators or the Umpire who may determine the amount thereof, or direct the same to be taxed as between attorneys and client or as between part and party and shall direct by whom and to whom and in what manner the same shall be some and paid. This submission shall be deemed to be submission to Arbitration Act, 1899 or any statutory modification thereof. The award of the Arbitrator or Arbitrators or the Umpire shall be final and binding on the parties. Such reference except as to the withholding by the Architect of any certificate under Clause 0.41 to which the contractor claims to be entitled shall not be opened or entered upon until after the completion or alleged completion of the works or until after the practical cession of the works arising from any cause unless with the written consent of the Employer and the contractor. Provided always that the Employer shall not withhold the payment of an interim Certificate nor the contractor except with the consent in writing of the Architect in any way delay the carrying out of the works by reason of any such matter, question of dispute being referred to Arbitration but shall until the decision of the Arbitrator or Arbitrators or the Umpire to be given abide by the decision of the Architect and no Award of the Arbitrator or Arbitrators or the Umpire shall relieve the contractor of his obligations to adhere strictly to the Architect's instructions with regard to the actual carrying out of the works. The employer and the contractor hereby works and also agrees that Employer under this clause shall be a condition precedent to any right of action under the contract."
"4. The said contract drawings, the specifications and the said price schedule of quantities and the said terms and conditions and the Appendices thereto along with the work order dated 22-5-1985 issued by the Employer with the additional conditions therein and covering letter No. SB/335/84-85 dated 14.1.1985 submitted with the tender, letter No. SB/405/84-85 dated 2.3.1985 and letter No. SB/64/85-86 dated 20.5.1985 by the contractor collectively annexed hereto as Annexure C and list of drawings collectively attached hereto as Annexure A shall be read and construed as forming part of this agreement and the parties hereto will respectively abide by and submit themselves to the conditions and stipulations and perform the agreement on their parts respectively in such conditions contained."
"6. All disputes arising out or in any way connected with this agreement shall be deemed to have arisen in Goa and only Courts in Goa shall have jurisdiction to determine the same."
The contract drawings referred to in Clause 4 are Annexure C to Agreement dated 20th January, 1986; the specifications and the price schedule of quantities referred to in Clause 4 is found in the "Tender document": the terms and conditions referred to in Clause 4 are incorporated in the Tender Document in which condition 0.42 figures. Appendices to the Tender Document, Work Order and additional conditions referred to in various letters in Clause 4 are to be read and construed as forming part of the agreement in terms of Clause 4 of the said agreement. Thereafter, Clause 6 follows which states that all disputes arising out of or in any way connected with this agreement shall be deemed to have arisen in Goa and only Courts in Goa shall have jurisdiction to determine the same. This clause has been provided in order to meet situation which may arise after the matter is referred to the Arbitrator, but this clause can by no stretch of imagination be said to have overriding effect on condition 0.42 of the Tender Document which has been clearly incorporated in Clause 4 of the said agreement. In fact I do not see any conflict whatsoever between Clause 4 and Clause 6 and the question of harmonious construction would arise only if there is some conflict between the two clauses. Even if a situation arises where there may appear to be some conflict between Clauses 4 and 6, the harmonious construction would, of course, be that Clause 6 cannot be said to have effect of overriding, condition 0.42 has to be read and construed as forming part of the agreement in terms of Clause 4 of the said agreement. There is no force in the contention of Advocate Shri Tamba that there has been material alteration of the terms and conditions of contract in the said agreement dated 20th January, 1986 and the ruling of the Apex Court quoted by him does not in any manner help the cause of the petitioner. The lower Court had dealt with this matter from a different angle but had come to the same conclusion. I do not find any error whatsoever in the impugned order which would call for exercise of revisional jurisdiction by this Court in so far as the first point of dispute which has been raised before me is concerned.
6. Coming to the second point which has been raised in this petition, there is no dispute that the matter had to be referred to the Architect before invoking the arbitration clause. The bone of contention between the parties is that according to learned Advocate Shri Tamba no reference had been made to the Architect, but on the contrary learned Senior Advocate Shri V. B. Nadkarni, states that a reference was made and the claim put forward by respondent No. 1 is deemed to have been rejected by the Architect. In this connection it was also argued by learned Advocate Shri Tamba that no evidence has been recorded in the application under Section 33 of the said Act and he has also tried to make distinction between certifying of the bill by Architect and rejection of the claim. On this aspect he has relied upon a judgment of Division Benth of this court in Shree Construction Company v. The Mumbai Postal Karmachari Co-operative Housing Society Ltd. .
7. Insofar as the question of leading evidence is concerned the petitioner never sought before the trial Court that he wanted to lead evidence. The ruling upon which reliance has been placed by learned Advocate Shri Tamba in order to make the said distinction does not in any manner help the petitioner since in the case before the Division Bench the Architect who had to certify the final bill was also Arbitrator and it is in this context that observations were made by the Division Bench that final certificate given by the Architect could not be considered an award.
7A. Learned Advocates for the parties referred to various documents on record in order to substantiate their contentions on this issue. In fact, this aspect has been duly and properly considered by the trial Judge. According to learned Advocate Shri Tamba respondent No. 1 had enclosed final bill for settlement vide letter dated 29.3.1989, but according to learned Senior Advocate Shri Nadkarni, the final bill which was submitted by respondent No. 1 was enclosed along with letter dated 1.11.1989. If one reads the correspondence to which reference has been made, it is crystal clear that the bill which was submitted along with letter dated 27.3.1989 cannot be said to be final bill and the final bill was in fact submitted by respondent No. 1 only along with letter dated 1.11.1989. That letter dated 29.3.1989 the petitioner had enclosed bill No. 14 and in the said letter it was further stated that final bill will include besides the value of work done including extra items compensation for loss suffered on several accounts, which are being assessed and as soon as the losses are assessed the final bill will be submitted. Respondent No. 1 submitted the final bill vide letter dated 1.11.1989 claimed a total sum of Rs. 2,28,38,230.36. Letter dated 24th November, 1989 of the General Manager to the petitioner which refers to letter dated 1.11.1989 by respondent No. 1 shows that the said final bill enclosed with letter dated 1.11.1989 was referred to the Architect. In the said letter the respondent No. 1 was informed that the respondent had already forwarded his final bill including the extra items approved in TAC meeting to the Architect. This clearly has reference to the final bill submitted by respondent No. 1 along with letter dated 1.11.1989. The respondent No. 1 had also forwarded the final bill enclosed with letter dated 1.11.1989 as well as the said letter to the Architect. The Architect vide letter dated 7th December, 1989 issued certificate No. 16 and certified the work done upto date to the tune of Rs. 1,62,66,881/- as against the claim of Rs. 2,28,38,230.36. It is pertinent to note that the Architect had certified the certificate No. 16 as final bill which means that the Architect had not accepted the claim of respondent No. 1 to the tune of Rs. 2,28,38,230.36 and as against the said claim had certified the work done at Rs. 1,62,66,881/-. Thus, it is clear that the Architect had rejected the balance claim of respondent No. 1 to the tune of Rs. 65,51,349.36. In view of the above, I do not find any force in the contentions advanced by learned Advocate Shri Tamba on the second point for consideration in this revision.
8. In view of the above, the revision fails. Rule discharged accordingly. Costs shall be borne by the petitioners.
9. Revision dismissed.