Punjab-Haryana High Court
Bank Bandhu Co-Operative Group Society vs Manasvi Construction Engineers And ... on 31 August, 1999
Equivalent citations: (1999)123PLR850
Author: R.L. Anand
Bench: R.L. Anand
JUDGMENT R.L. Anand, J.
1. This is a civil revision and has been directed against the order dated 15.6.1999 passed by District Judge, Chandigarh, who allowed the application of the respondent M/s Manasvi Construction Engineers and Contractors under Section 14(1)(a) and (2) read with Section 15(2) of the Arbitration and Reconciliation Act, 1996 for terminating the mandate of the arbitrator, i.e. respondent No. 2 Shri S.D. Jain, and for appointment of another independent impartial arbitrator by way of substitution.
2. The case set up by M/s Manasvi Construction Engineers and Contractors was that it had entered into an agreement with the petitioner Bank Bandu Cooperative Group Housing Society Limited (Regd.) on 24.10.1995 for the performance of construction work and the said agreement contained an arbitration clause which runs as follows:-
"In the event of any dispute the same shall be referred for arbitration to Mr. S.D. Jain son of Shri Chhotu Ram Jain, who will act as sole arbitrator and his decision in the matter shall be final and binding on the parties."
A dispute arose between the contractor and the society with regard to the execution of the work as a result of that the matter was liable to be referred to Mr. S.D. Jain. As the society did not admit the arbitration clause or any arbitration agreement between the parties, therefore, the petitioner in the trial Court filed the said petition.
The petition was vehemently contested by the society on the plea that there was no agreement as alleged by the petitioner with regard to the execution of the work and moreover if there is any agreement that does not contain any arbitration clause. It was also pleaded by the society that the document which has been relied upon by the opposite party does not amount to an agreement. It is not legally proved and is not admissible in evidence.
The parties were given chance to contest their respective cases before the trial Court and for the reasons given in paras Nos. 7 to 14, which are re-produced as under, of the order dated 15.6.1999 the application of M/s Manasvi Construction Engineers and Contractors was allowed:-
"7. The first submission of the learned counsel for the respondent is that there was no valid agreement executed between the parties and so there was no arbitration clause and hence the dispute could not be referred to the Arbitrator. However, the petitioner has placed on record photostat copy of the agreement/contract between the parties dated 24.10.1995. On 9.4.1999, Shri R.K. Mittal, learned counsel for the petitioner, made a statement that the original agreement was given to the respondent No. 1 and that it is in its possession. He further stated that the copy of the agreement produced by the petitioner in the present application is photostat copy of the original and is a very much legal and valid agreement and it is prayed that direction may be given to the respondent No. 1 to produce the original. It is further stated that out of the work done under this agreement, the respondent No. 1 has already paid Rs. 20.07 lacs to the petitioner. On the request of the learned counsel for the petitioner, a direction was given to the respondent No. 1 to produce the original agreement in the Court. So, on 13.5.1999, Shri S.K. Garg, the present President of the respondent No. 1, the Bank Bandhu Co-operative Group Housing Society Limited (Regd.) Office GH-29, Mansa Devi Complex, Sector 5, Panchkula appeared. He stated that the Society, respondent No. 1 was not in possession of the original agreement executed between the both the parties for construction of the flats of respondent No. 1. Then he has stated that they (respondent No. 1) gave the photostat copy of the original agreement to the opposite party. In a supplementary statement recorded on the same day, he stated that he has seen the photostat copy of the original agreement Ex.PA. It is not signed by him. Obviously that has to be so, because when this agreement was executed S.K. Garg was not President of respondent No. 1, Society. But at the same time, it is admitted that it is the previous President of the Society, whose signatures on it he had identified. Therefore, in a way the genuineness of the photostat copy of the affidavit Ex-A placed on record by the petitioner stands admitted by the respondent No. 1.
8. It appears that in the present case, the respondent No. 1 is playing hide and seek. In such like transactions, it is natural to expect that the original document would be in possession of the respondent No. 1. This is especially more so when in his statement, recorded on 13.5.1999 S.K. Garg, President of the Society, respondent No. 1 admitted that the original agreement was executed between both the parties for construction of flats of respondent No. 1, liable if the Society-respondent No. 1 was not its possession on 13.5.1999. In other words, he admitted the execution of the original agreement but he has failed to produce it. Therefore, a reasonable presumption may be drawn against him. He has also recognised (identified) the signatures of the previous President on this agreement. Therefore, for all intents and purpose the agreement Ex.A stands admitted by respondent No. 1.
9. It may also be stated in this context that the petitioner has stated that he has already received Rs. 20.07 lacs from the respondent for the work done by him for the respondent No. 1, under this agreement. This fact is not controverted by the learned counsel for respondent No. 1. Money does not grow on trees. Rs. 20.07 lacs is a huge amount. The respondent No. 1 is a Society of well educated and wordly-wise persons well-versed in the ways of the world. Many of them are professionals and bank officers. It is highly improbable that they would have parted with a huge sum of Rs. 20.07 lacs to the petitioner even without an agreement. This material circumstance further strengthens the conclusion arrived at above.
10. The matter does not end here. It is stated in para No. 3 of the petition that the petitioner had executed work worth Rs. 48.00 lacs for the respondent No. 1 when the latter without terminating its contract gave an advertisement in the newspaper inviting fresh quotations for executing the work, through a subsequent letter dated 29.7.1997 the respondent No. 1 terminated the contract. Here also the execution of the contract between the parties stands admitted because the society (respondent No. 1), who terminates the contract by written notice dated 29.7.1997, by clear implication, admits the execution and existence of the original contract.
11. Furthermore in para No. 3 of the petition, it is stated by the petitioner that since the respondent No. 1 was out to induct a new contractor at the site without measuring the work executed by the petitioner, therefore, it on 10.9.1997 filed a petition under Section 9 of the Act before my learned predecessor, who vide his order dated 30.9.1997 appointed one Shri Yogesh Gupta, SDO, as independent person for measuring the work already, constructed by the petitioner for respondent No. 1 under the contract. A report of Shri Yogesh Gupta the measurement was filed in that previous case and thus the previous application under Section 9 of the Arbitration and Conciliation Act was disposed of by my learned predecessor.
12. With the consent of the learned counsel for the parties the said petition under Section 9 of the Arbitration and Conciliation Act (Misc. Petition No. 75 dated 11.9.1997, Manasvi Construction v. The Bank Bandhu Cooperative Group Housing Limited disposed of by my learned predecessor on 15.10.1997) has been summoned from the record room and perused with the able assistance of the learned counsel for the parties. Para No. 1 of this petition inter alia reads as under:-
"1. That the petitioner is a sole proprietorship firm. Shri J. Mumgai is its sole proprietor and thus the present petition is being filed through him. On 24.10.1995 the petitioner was allotted the work by the respondent for the construction of 40 No. Dwelling Units at Plot No. GH-29, Sector 5, Mansa Devi Complex, Panchkula. The agreement was executed by then President and Vice President of the Society at Chandigarh who were duly authorised to do so."
12-A. In the main body of the petition, allegations have been made by the petitioner against respondent No. 1 that it has breached the contract etc. etc. In the prayer clause of this application, it was prayed by the petitioner as follows:-
"It is, therefore, respectfully prayed that the respondent be restrained from getting the work executed at site No. GH-29, Mansa Devi Complex, Sector 5, Panchkula from any other person/contractors till date is jointly measured up and taken on record along with the loose material/T&P articles lying at site. Any other relief to which the petitioner is found entitled to be also granted in his favour in the interest of justice."
12-B. In that petition, on 16.9.1997, Shri Ashok Sharma, Advocate, learned counsel for the respondent No. 1 appeared. The same learned counsel is defending the present petition for the respondent (No. 1). It is significant to note that in that petition the respondent did not file the written statement controverting the allegation of the petitioner that an agreement had been executed between the parties for construction of the flats (houses) by the petitioner for respondent No. 1. Therefore, by clear implication the existence of the written agreement/contract to this effect between the parties was admitted by the respondent No. 1. Not only this, on 20.9.1997 the learned counsel for the parties in the previous petition volunteered their following statement in the petition under Section 9 of the Arbitration and Conciliation Act, 1996:-
"Statement of Shri Dinesh Gupta, counsel for the petitioner/applicant and Shri Ashok Sharma, counsel for respondent without oath:
It is requested that some independent person worsed with carrying out measurements of construction work at the site may be appointed for reporting to the Court as to what work has been done by the applicant at the site till today.
RO&AC. Sd/-
D.J. 20.9.1997
13. On the above statement of the learned counsel for the parties, one Shri Yogesh Gupta, S.D.O. was appointed as Local Commissioner, who inspected the spot and took the measurements of the work constructed/completed by the respondent No. 1. His report was filed in the Court of my learned predecessor on 15.10.1997 and with this, my learned predecessor disposed of the petition. So, keeping in view the proceedings between the parties under Section 9 of the Arbitration and Conciliation Act, referred to above along with all the facts and circumstances marshalled above, no manner of doubt is left that the respondent No. 1 had admitted the execution of the contract/agreement between the parties. Despite grant of opportunity, the respondent No. 1 had not been able to place on record the original of the said agreement/contract, nor any secondary evidence thereof to rebut the agreement relied upon by the petitioner. Therefore, it is held that Mark 'A' is the photostat copy of the agreement, which was executed between the parties and that the original has not been produced by the respondent No. 1 for the reasons best known to them.
13-A. Faced with this situation, the learned counsel for the respondent No. 1 has submitted that this Court has got no territorial jurisdiction. However, in para No. 13 of the present petition, it is stated that the agreement was entered upon between the parties at Chandigarh and so this Court has got the territorial jurisdiction. Of course, in para No. 13 of the written statement, the respondent No. 1 denied the jurisdiction of this Court, but it was not specifically denied by it that the agreement has been entered upon between the parties at Chandigarh. Therefore, it shall be deemed to have been admitted by respondent No. 1 that the agreement between the parties was entered upon at Chandigarh. Therefore, at least a part of the cause of action had accrued to the petitioner at Chandigarh, within the jurisdiction of this Court. So, this Court has got the jurisdiction. In addition to this, it may also be stated that in the previous petition under Section 9 of the Arbitration and Conciliation Act, 1996 filed by the petitioner against the respondent No. 1, the latter submitted to the jurisdiction of this Court without demur. Sop, it is too late for it in the day to deny the territorial jurisdiction of this Court.
13-B. Other objection of the respondent is that this court has got no jurisdiction because no valid and legal agreement was executed between the parties. However, this aspect of the case has already been dealt with and the execution of the agreement between the parties stands proved, rather admitted by clear implication by respondent No. 1. Therefore, this contention of the respondent No. 1 must be repelled.
13-C. Faced with this situation, it is submitted by the learned counsel for the respondent No. 1 that no dispute had arisen between the parties and so there was nothing to be referred to the arbitrator for arbitration. However, I may hasten to add that this petition is under Section 14(1)(1) and (2) read with Section 15 of the Arbitration and Conciliation Act, 1996 for terminating mandate of the arbitrator i.e. respondent No. 2 and for appointment of another independent and impartial arbitrator in his place. In his written statement, respondent No. 2 has stated that the claim was filed with him by the claimant. He served notice on the respondent No. 1 but there was no response from it. In any ease, on going through the pleadings of the parties, reproduced above, which need not be reiterated for economy of time and space, one finds that a dispute concerning the agreement has arisen between the parties. To cap it all, respondent No. 1 has already terminated the agreement by service of a notice on the petitioner. Even in the written statement, the respondent has made various allegations against the petitioner that it lacked experience and resources and was having incapability to handle such projects due to which it could not undertake the construction work and thereby it suffered cost escalation and other consequences, which ultimately caused loss to the respondent No. 1. In these circumstances, it would be naive to contend that no dispute has arisen between the parties or that there is no dispute worth referring to the arbitrator for adjudication. Even then in order to put the matter in bold relief, a direction was given to the petitioner to deliver its claim against respondent No. 1 through its counsel Shri Ashok Sharma, learned counsel for the petitioner delivered the claim of the petitioner to the learned counsel for respondent No. 1 and it was received by him. Despite lapse of about 7 months after that, the respondent has not admitted its claim. On every hearing, the learned counsel for respondent No. 1 has been lighting and disputing this claim tooth and nail. So, it would be naive to contend that no dispute has arisen between the parties.
13-D. Now it is admitted that sole Arbitrator Shri S.D. Jain, respondent No. 1 has resigned. Therefore, under Section 14(1)(b) and 15(1)(a), the mandate of the arbitrator stands terminated.
14. As demonstrated above, the dispute between the parties is proved to exist. The mandate of Shri S.D. Jain, Sole Arbitrator stands terminated. Therefore, it is a fit case for appointment of another independent and impartial arbitrator. I have asked the learned counsel for the parties to name any individual, which may be mutually acceptable to them as Arbitrator but they have not been able to name any one. Therefore, in the nature and circumstances of this case. Shri H.L. Randev, District Sessions Judge (Retired), is appointed as Sole Arbitrator in place of Shri S.D. Jain, Arbitrator since retired, and the dispute/disputes between the parties are referred to him for arbitration in accordance with law. Keeping in view the nature and circumstances of this case, his fee is tentatively fixed as Rs. 30,000/- to be paid by the petitioner in the first instance. If so, advised, the Sole Arbitrator shall be at liberty to face the assistance/help of a technical man for properly conducting the arbitration proceedings. Fee of technical expert/technical man, if any, needed/required by the sole Arbitrator shall also be paid the petitioner at the first instance. It shall be within the discretion of the sole Arbitrator to apportion the fee among the contesting parties in accordance with the law. This petition stands disposed of accordingly."
3. Aggrieved by the order of the learned trial Court, the present revision which I am disposing of with the assistance rendered by Mr. Sail Sagar, Advocate, who appeared on behalf of the petitioner.
4. The principal contention which was raised by the learned counsel for the petitioner is that the agreement which has been relied upon by the trial Court is not proved according to law being a photo copy of the alleged original and in the absence of the original agreement the matter could not be referred to the arbitrator. I am not in a position to subscribe to the argument raised by the learned counsel in this case for the valid reasons. This Court after going through the impugned judgment is of the opinion that the petitioner is playing hide and seek as has rightly been observed by the trial Court. It is not believable that the petitioner-society gave the contract running into lacs to the contractor without any written agreement with regard to the terms of the contract. The petitioner has not placed any other document which may belie the claim of the contractor. It is further evident that before the trial court Mr. R.K. Mittal, learned counsel for the contractor made a statement that the original document was given to the respondent No. 1 and that it is in its possession. He further stated before the trial Court that the copy of the agreement produced by the petitioner in the application is photostat copy of the original and is very much legal and valid agreement and, therefore, direction may be given to the respondent-Society to produce the original. In spite of this the Society did not appear nor dared to produce the original agreement. In these circumstances, the trial Court rightly held that the document which had been supplied by the contractor was the agreement dated 24.10.1995 and it contained an arbitration clause.
5. Faced with the difficulty, the learned counsel for the petitioner relies upon Government of Andhra Pradesh and Ors. v. Karri Chinna Venkata Reddy and Ors., A.I.R. 1994 Supreme Court 591 and submitted that admission by way of photostat copies is not permissible according to law and that the genuineness of the document was a fundamental question and in this view of the matter the copies of the documents which are disputed should have been accepted in evidence, after examining the original record. The counsel relied upon yet another judgment of the Hon'ble Supreme Court Kripa Shankar Chatterji v. Gurudas Chatterjee and Ors., A.I.R. 1995 Supreme Court 2152, in which it was held as follows:-
".....The ex parte affidavit without affording opportunity to the Respondent No. 1 to test the veracity of the statements made in the affidavit by cross-examining him cannot be held to be sufficient proof of the correct age of Shri Chunmun Singh ...."
6. Both the citations, in my opinion, are out of context. Here the dispute was as to whether there was any written agreement containing the arbitration clause between the parties or not. Right from the very beginning the contractor was relying upon the agreement. The photostat copy of the agreement was placed on the record. The contractor had made the statement to the effect that this was the agreement which was entered into between the parties. There is no satisfactory rebuttal to that document. Moreover, the document was not taken ex parte against the present petitioner. Both the parties were given full opportunity to affirm and rebut the agreement. In this case the petitioner has not produced the best evidence if it was in its possession. This Court has formulated an impression that petitioner in order to deprive the claim of the contractor has intentionally withheld the agreement which must be containing the same arbitration clause which has been relied upon by the contractor. In these circumstances once the existence of the arbitration agreement is proved between the parties, the parties are bound by that arbitration clause. Acting upon the agreement the trial Court has rightly referred the matter to an independent arbitrator Mr. H.L. Randev, who was previously District and Sessions Judge, Chandigarh. No merit. Dismissed.