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[Cites 9, Cited by 2]

Karnataka High Court

Krishna Bhagya Jala Nigam Ltd., vs Harishchandra Reddy G & Ors on 23 October, 2010

Bench: N.Kumar, Ajit J Gunjal

 

IN THE HIGH COURT OF KARNATAKA
CIRCUIT BENCH AT GULBARGA

DATED THIS THE) 2:-3rd DAY OF OC'I'()BER 201.6 ~

PRESENT

THE I-ION'BLE MR.JUS'1";:I'CE»  *    '



THE HODFBLE MR.JUs?t*z§§E AJ1T'J,GU§qJA;. 

MFA  411 39.3'/'1 9'39' 

B}3'I'WEIEN

Krishna Bhagya.;Jé_la Niga.4rfiTA.Liuiit:€d  

A G0ve1'r1n1.€:I1_f01_".KL'i;-:;f1ataka__U1'1de.17:aking

Regd. Officer PW;D_ Of':£Ii'Ct:  _
HIF100r,V1K.R.'Ci1'C1¢{*-..A*   ' '

BANGALORE1 V "  ._   

Rep. By its Cpnupaxiy Secx'efary. ...AppeHar1t

 ' "(By Sri.V"M_, E{.  Ravi & Sri Krupa Sagar Patii,
   " """  Advocates)

1. 'A Sn G. I~ié;_ri.:éiChand1'a Reddy
/0  VRamar1a Raddy
Age: Major

x T Engineering Contraciol'
~ 'R/a No. 201, RegencyHoL1se
" £80, Somajiguda
I-iYDERABA.D



Ix)

Ex)

Sri K1'ish1iacha1'y2i, BE. F.1'.£-3..
Chief Engiiieer (Retd.}

P.W.D. 8: Karnataka Housizig Board
E-1.I.G.~3, AD. I-'Ialli (Extension)
11 St'age, Basaveshwariiagar
BANGALOREWSESO 079

3. The State of Ka1'11at.a.ka V 4_
Rep. by Executive Engineer ' 
Upper Krishna Project  0
Dam Dvn. No.2   _    
Almattii Dam Site~fi-8620l._'V 0' _ V  -,_ , ";--..,Resp()11deI1ts

[By Sri. Jayakumar   S€E7i0i' '0C0__1i;nse1 for
M / s Jayakf.;i*niar S'."Péiti1'pAssQ:ei_at.es,.V.Adv. for R1,
Sri  'S. K._L1}:?€1mé111",=  ufQ_1_j.iR3}

This  "'i'i1fe;c1 Li/S' V3'9(i;r]____0f fthe Arbitrauon Act r/W
Section '36  3'e.ih's3t"the Qrdei' dated 30/10/98 passed
in AS. No.1/90 onweii1e__.:3r...pi~1.. Civil Judge (Sr.Dn.) Bijapur,
deereei1'1g"@the Ve1.ai;m"e«. eip.pIic_atior1 for compensation under
arbitration act. . '  V'  '

'.fi'1is_Misc.;-» §'i.'rs't Appeal coming on for Orders this day,

 i.KUM._?ii??.  delivered' the «iollowingz

JUDGMENT

* 'Thisv preferred by Krishna Bheigya Jala Nigam *Lin1iteri,.ai"Qoverriment of Karnataka Uiidertaking, ehalleiiging hthei' aw§11'dhsciz1t'ed 28.7.1990 passed by -the Arbit.rat'0r as well as j'tI(A'1AgI1'1€111 arld decree dated 30.10.1998 passed by the Prineipai Civii Judge (Sr.Dn.}. Bijapur, e1.f'£"i:'111tI1g__"-t,he~fl"setid award.

2. The appeiiant. was not a.<part.y& the"'};foeeedi.ng:s before the Arbitrator as wen a1s1'beI;o_te: t1i'e._:'Civ1?., Therefore, the appeliant flied ah .;tf;-p1ieatio11 Lzodexf »§.éC:'{i~Gl1: 15.1" 9 of the Code of Civil Procedure. VseeAkin'g.,_VEeav.e"o1f_thts§ Court to grant; ieave to prefer this éIpV:f)eai';.L by an order dated 17.6.1999 granted the 1ea*«'e"so:t'1g,ht.'I'orstgbjeetto any objection to be flied by resp9'o:_nde'1«1t ioh theitj ta9ph:eé1"ta11ee.

3. ffhethfiufst _» 4V'1'espof1'd_ent-9 Sri.G.Harisheh.an.dra Recldy [for short 9he1'einaft'.e1'" t.o as the 'Cont.raetor'} was entrusifieci with the_ Workot' eonstirlmtion of power dam across K'I"iShf1E| E.'.:i'»':A("3}"'I'i€,'.4'£tI' Afmatti by the State Governnlent. under an 1 1.1982. In terms of the agreement. and in the C0_L1r€=£"O-f.:'~th.e execution of the work, the contractor had 9.0%; of the vatue of the machinery 21mouI1tiI1g to jRsA.'19_.O.0,00O/~ from the Departme1'1t. as 11'1aChi1'1ery advance in h"--_t4e1't*f1s of Clause 8 of the a1g1'eeI11e11t. He executed 2:1. bond 9' ~ ...hypot.t'1ee2;1ting 29.11 the me;1ehineries in favou1' of the State Gover11m.ent.. The Goveriiriieni t.erminai:ed the 17'. 12.1986. The (::oni,ractor disputed the said requested the matter to be refei-red to' éiii"Arhi't;'£1'gorAiii ef the eor1t.r21ct.. Accordingiy. the arbitration. The Arbitrator zitiratrd' the' termination of the eoiitrfact is VAi-iiegéii. iéizid eoi1'se.quentiy, the contractor is entitled _ compensation.

Accordingly, he aii_o'wed the 7. 9. 12, 13, 14 and 15 and--._e1éiiII1s..W'lhe counter claim preferred F-VV"G'C«\2:':f:3_IV'VIH'1VI.'i1f311l'. was also rejected by its awarei_datj:e~d the passing of the said award. the Co11traeto'rAM Government to release the hypothecated"maehi11'eiy~,, so-"t:hat he could seii the same. The Goverxlimeni insisted on his refunding the amount paid towards p:t1=chVi1se "off sa"i=d_ machinery as advance. Therefore. they did V'i:r1e..ehi11ery, which was hypothecated. it is in this 'r;or1t4e>_§t,'i't3.Ti1e eiaiiiiant -- e()i1t.ract,or again preferred one _ 'more. ('IE3:iI11f_3DCI'()i'C the Governmeiat and requested for reIei'rii1g I the iii31iéi«t.t.er to zirbitraiion. Accordingly, the matter was referred 4, §:%L/// to arbit1'a1ti()11. The Ciaims put forth in the sai'd>"'seeond a;rbit1'2.ttio11 are:

(1) Payment of idle charges for; the' '.;71q_g;!1if1epy "itI1d.(;flI' hypothecation for the period ::.;fF(3ITI:7. V"-[to 3o.1_ 1.1988 @ Rs.8.2OO/F-per dag; "
(2) Payment" ofpast interest 'per C1ttrIt£ITt']'I'()t';f1 the date of occurrence Qf"t.'1_e"":--~.laim. it It t'ne_d_di1e of reference; (3) Payment of.' penderrtetfte i:1te':jest'V@a24% per annumfrom the date iiogtefere:i1ce€ t"ii'itxt:h2e (,}f..th€ award.' and (4) .PCt'_£]a"?16:éfi:1'I.'{éf':jf;L£t1tI"€% i--r1te«fes{:.4@"§24% per armumfrom the date: -- '7'd1.~.t2drd» "tt_lTlW.t_h:2 date of decree or payment".

whxici'1euer.Vis' meet, " " e After ;th"e_arbitr'at.o1* entered on reference. he issued notice to the Vt(}o\fei':'1n*1'ent', who, on sewiee of such notice entered 2i})pea.1fanV€§e.V n<';'1I"1AVC:_fi1€C1 their statement, of objections contest-trig the '~-a_t'ores21iVd¥elaim. They contended 1"i1'st}.y that the claim '*.__V"mAade itsvjfiit, by Order II Rule 2 of the Code of Civil Procedure. ' jV."Sc'.{:o1_i:d}.y, they contended that. in the earlier proceedings. which VV ciflminated in the aw-a1'd, the said claim was eoiisidered by the V' Arbitratoi' and it was rejeet.ed a-imt the said awarcl rejeet,1'1'1g the it 6 9 said ciaim has not been challenged by the eo11t1'a.etor_>la,_i1d therei'oI'e. it has 'c1ll,aiI1Cd finality. The said fi_Ii_'dlilI'1'gl_';'W§5t5s'ld' _ operate as res judicata and therefore. I1f.'5't"'=F7I§E}..iIl't'£1ilitiblfit. Thirdly, they contended that. as is Clem' .a;tVe'1'iiie-rits:. 5111' the claim petition and the other material on re¢:()i"d,it is l;e1ear_ that the II1E1Chi1'1€l'y was idle of 2tlOl1tIaCtOf could not utilize the €ll:id,1'1ot any work and therefore, the questioh compensation under the headi*n'g{'2of'id1i:ng arise, as in the earlier eontractor under the l1€adii'1g:Y__C)f.'lOSl$l"lt.iVf'x._};§I'0>l'fi:«.':ll;18._S'56611 upheld and amount is awarded, W.}jit*;h hits" by the Government. The presergtl elaim "udder different nomenciature is wholly arid therefore, they sought for dismissal of the s'aid«.ielztiimfv.Ir; st-:p'port of their respective Cor1t:ehtio11s, both the part,ie.s ac_id'u.ee'd evidence. The arbitrator after considering the evidentte -on record held. the Claim pertaining to idling Charges T reA123;tesl.-'t,o the period stibsequelit. to six months from the date of .Vt'.Veiff11ina~1tion of the Contract. which was not the stibjeciz. matter {of the earlier 'dI'l}il'.I'£1l,i(j)}'} p1"o<:eedi11gs. Uiider the earlier award N// it when cornpensation is awarded to the contractor. which has to be adjusted towards the ainount due by the (3()l1ll'&1.(',l.;O1f:'"l.QV'1.l'1€ Government. the Government' was not justified iij§_i11sist.in.g . payment' of machinery advance, a condit':io'r'i'precedent for"

releasing the hypotthecated nizichinery. 'l7heriet'o1fe,'.the idling charges is made out. lt;a.ls__o helelihat. R_l.11el has no application because the pi9e's_eht;_ claim claini, which is subsequent to six i1'io1}t:l_1"s. from e'.._at.e"o.lf the cancellation of the agreement. It also held the p_rinci;')'l-el oif;r.és judicafza is not applicable beca;L1se".;1.as is"._cleai""xI"i*om.V 'i;he.r.ecitals in the earlier award, was not considered by the arbit'.rator.i v._If'4or the»afercsaidreasons, he upheld the claim of the co;n1';i'actor.lthoiigh not to the full extent, but passed an award. Rggggislietred by the same. the Governinent prel'erred a lip-et.lit;_i-on' tj~h_e~~civil court under Sections 30 and 31 of the Arbit;--ratior1~ 1940 [liereinzllter referred to as 'the Act"). ll trliallengingi' the award on the g1'oi:1'1d of legal n'1isconduct. The .l'e_e1;*11_ec:t Civil Judge after hearing both the parties and going Vthriough the arbitration award heid that, when once the fAi'l:)iti'atoi* has ('.()l'}SiCl('.1'€('l the entire 1n'.1t.ei"ial on record, given 3%";/"

reasons for arrwing at its Conclusion, even if t\voN_VieWs'Vl.are possible and the court would not agree with._lhe=,llj";d111.g V' recorded by the Arbitrator, it has n:v:)"jlL1risdit:tio.1.1ft'ot_int.e.ri'ere& with the findings recorded by the A1"bitr21'tt)_i': It it:-as of that the scope of judicial 1'eview--..;gi'I3gler S'ee__t'aior1Vs of the Act was veiy limited and I1l()ll£il.l .1tilhiD the said paraineters and t.here'I'oi"e; "interfere with the award. On the passed by the Arbitrator. and the judgment and decree 4_ of the matter before the Civil Court, the l"G_oVevrni;'_1elrr.t; "Karnataka, established Krishna __Bhagya Nigamivljznitecl, a Company under the Indian 1956 and transle1"recI all the assets and liabilifies"'in7"_~:7esp:eet:. of Upper Krishna Project from the Upper _Krishli'=s--a Rrojeet authorities t.o the appellant. from the date of . 4'=.reg:st.}1-atio:=r of the Company. In those circumstances. as the " ,ap.pe'llant is the person. who has t.o satisfy the impugned 9 award, tiiey preferred this appeal. seekiiig leave of the croiirt, as they are the persons aggrieved by the said award. ' V _

5. Leained Counsel for the appellant £1.13~S§ifi§flgVfililc' impugned award and the judgment and decree eflthee (rial coijrt _& ' contended as under:

(£1) The entire claim ofjihe ee1_1tii='.'~tct0r illegal termination"»_ei7, the the it Governnieiit Qh ' Ndt tmly the contractor setight fieétrlier arbitration ._preeVeed«i.1igs»'atfli:leeEa15ation to the effect that the he also sought, for several T1'€IiE31'§ by way of damages and eenitaensvziltlileii, which included a claim for idling of because of such illegal ierminattiori 0f 'l'herefore._ the present claim emanates ii' from such illegal t,erminat.ion of contract. The elatim, which is now put" forth. ought. to have been put, forth in the earlier prc)(:eedi11gs and in fact, it \-Vi-3..'5 put l'0rt.h for 21 period of six 1'r1011t.l'1s from the (30) date of termination and t:11e1'ef0re. O1'de1*--?»IV "F?1:LiII.e '2 of CPC is a bar and the second claini c:ann'0t. entertained.
He also c:<)ntended_t1_1at the ti1't1est',iQ:1--".t,vtfhether contra(:t01' is entit.iedT:"»f':0 damiagesi the heading of idi'in.g Of."_WaS gnviieidinto in the earlier proceedings and the a finding that, as"heh'a's3L_ai10wevd*~the of the contractor for _1CSSVVC'i'Vpt't)fit'iI1VnB>§{:'CL'1t.i11g the contract because of i illegai tei*m_inati0ii, deeiined to grant any cornpensation or damages under the specific head. has attained finality. It is between ' fs:»:1.me parties. said finding operates as res ~~j_Li§iiiA(:aEa and the second arbitration proceedings 1' was not :'11ai1'1t.ai11ab1e.
lie i'u:°t1:1e1" contended that. as eiear t'1'<;>m the pleadings in this Case. it is not a case of the kw eont.raet.or that he had work at his hz11i:'d".oa11d because of the iliegal t'.e1'minatio11 and Craiieejtgtiexat. refusat to retease the 1I1aehi3:1ery " -. ~ frC)*v.r.?r_1' V. hypotheeatiorn he was prevented 1359.111"mak:i11.g use of the machinery, wh.ieh§\vas_At'die and tehe'1'efore:,w is entitied to idling eh.a1'ges~.__ The spee.vi_{_7ioea'3e 'of"the*, coht.1"act.or was that had no V\'\/'(J~I"K:3,I1C'1"._:h"t"3' has notw V used that r11aehi11e1*y,'Vt'w_h'j::h he haéo pjurehased out of maehi11er"j *adva'r1ee "or by the "G'ove1*r1ment, which is hypo'theeated;.Vt:vo the .,GoVerhmer1t and he .se'1!a_»th.o_se machinery. The hypothecation coming p_ir1«--._.t'he way and therefore, the entire Claim of tdlihg eharges .is ex faeie Without any basis and there--fo1'e. there is an error apparent on the A the record eommitteci by both the Arbitrator
-- as by the Civit Judge and therefore, on that . g1'jo:1nd also, he xvzmts the impugned award to be 2 Set aside. M K ..
" X3»L,//

6. Per contra, iearlied Senior Counsei z1[3}3e.a1r'iIiL:gs. for the eontraeto1' contended as under:

(211 The oontraetoi' entered 1'nii'o'an.'ag'reemei'it WitI.i;',the State Government. Whenkdisntite arose by $*f€ty "of. illegai termination "rai.s'ed dispute and reqLieste.dVV:for 'rei"er1'ii'1'g--the_dispute to arbitration, the Arbitrator has passedan awa;rd'.-- said award, the 31- to the Civil Court dsee}§i1'1g settiri'g&VVaside.'of' the said award. After the said Vp'e'1:;itAiono to be dismissed on merits. the f_c:or1trae.tor~ AV':--L_n'd_b"'LJI1e Goverrirnent entered into n"egot,iatior1s~, i'"e»r settiing the dispute among themselves, j-ghe contractor agreed to give up a p_o'rtior1 of the interest in the said meeting. The V7-,_apf);iIia1"1t. was aiso present when a tripartite 'agretetileiit. Came into existence under which the C.ove1'r11'nent. Liltimately agreed to pay the said " amount and accordingly, the amoimt: is paid. It is in these ei1*Ct1Inst'anees. t.he present appea--l»'i'il--ed by the appellant is wholly a'1ise(>11c7e--E..i}'ed,-as M appellant is a st.1*a1age.:'""t»o_the eo'1;t'.i*:-.1etvjand thereltore, the appeal filed llthilrti not rnaintainable an_d'"'~he wants i1ae,ap._p"e-at}. to be"
dismissed in ijniine. _ He further ecinbendetl tha-t__inl'o1fdei* to succeed in a plea under Order- ll Rli1Vle52 VClI§'VC3'_'.the requirement is th2ii_«._£_'l1e p]ea.d--ings«. inf_"th_e fearlier proceedings _shot'1l--cIg._bei produced in evidence before the luA4rbitra.t.o1';".AV' on looking into the said _ material'alleggatioris in the earlier pleadings. the ['{'n.dfiing vrelglarding the subsequent proceedings G'=.._ph'e:iri_g:}hit by Order 11 Rule 2 of epc Could be .c:£:jnside1~ed. In the instant. case, no such pleadings '3ai'e p1'od'u(:ed and therefore, such a plea was rightly rejected by these two E'.i.L1l.h0I'illi€S. In St,1ppO1'll of his eont'ent'ions. he relied on t.he E-iii/""

(C) juclgment of the Constitution Bench of Court, He also contended that the plea g'L1"dlcat'.a also without any basis because tvh'e-._eause loVf'va_cti.o1i for the present proceedings"istotally.~di£ferentll;fi'o111i'. the cause of action _earller taroeeedings and that: is preciszely wltat. ._A.1:bii..rator said and therelore, it cannot __vvitl1.

Ls=.slt{lj7'.h.e_» 'lc2n1i'ter1'ded that, the Arbitrator has given fldetail 1"eas'o'r.s.'to_V 'negative his contentions, though _ under lllavv, he was not under obligation to give reasons. Once he has given reasons, he has i' V,V..coi1sid.:ered the St£1l.Ell'.OI'y provisions. material on ~Iie§:'ord and recorded a finding after deducing the 1' principles from the said statutory provisions, even if he has comn1itt,ed any error. that cannot be the subject. mat.t.er of the judicial review by the courts much by this Court in appeal. In support of /''I vxv,/ ,g"&»

7. the said contentions, he reiied 01';f'.>Vse§-'e1"za,l judgments and therefore. it was eoi1fer3deeCir- 1.1131' u this appeal is n1iSc011ce»iv'ed---and re4qi1i.1*eSpt.Q',E§e dismissed.

In the Eight of the afi3resaid"n_1a'.eria3_ofi record; the rival contentiorls. the points tHa1.'a:*i_se for'-0&{1er'c0r1Vsideration in this appeal are as ur1c1'el_r:"'~..

{1} '{3} A the Code of Civil Procedure, 1908 and res Whether if1eA,..o.g:3.peaE the Krishna Bhagyaala 2'=\_Hgan:71'.s ia,ir_I;j-.Able? ' p ivrlezrlér-1'.":;:a¢'c».:;§§:--¢¥;;_. proceedings are hit by Order II "gram ,2 of czéc? C V_l_/.F1ei:fh1érvzhevinstaniproceedings are hit by Section C' V "~.__fiI:dicq.?.:ai?

{4} .

3 the record. 1uh1'ch.jusl_i/"fies inter/'er'er1ce by this Court Wiielfler' (here is any error apparent on thefctce of in the impugned award. as well as tlhejudgmentj and decree of the Civil Court?

L.'-"

E6 POINT NO. 1
8. It is not in dispute that the eont.ra(:te*r:.en¥;e.red1 an agreement with the Government o:n"'1"2-.--1 11. 1 the axgreenient was entered into.
existence at 2111. The agFe€'111(é11_tr39.1118'.V'1.9__ on"

17.12.1986, even on that ';3._ppe1]e;'r1=t:..,Was not in existence. After the Arbitrator, the Arbitrator has passed on which date also. the Therefore, the Governnient. 511011 an award, fiied its ob}eetiong_1)e1}3i'e1V1thefiivii» on 13.11.1990. it is during the pendeney of._t11e 'béi-'o13e"111e Civil Judge. by virtue of a Governnient oti-der_1"dated 61" May 1994, {he appeilant «M Com}"janyE);Corporation was decided to be formed for i1*;:np1e1r1e121.é-nioiif'o1T"the Upper Krishna Project under Indian Conn:-21_raie_s Accordingly, the appellant M Company regist.e1'ec1 on 12.8.1994 under the provisions of the Act. 1956, which the date of birth as far as 11*-._appe]]ar1t. is concerned. No steps were taken 21.I'ter the . 4:fCoI1'1pany eanie into existence to i.n1pIe,a.c1 the Company in the 1 11/ niatter. which was pending before the Civil Judge. "l'lt'm1fever. the Government e()nt'.est.ed the matter and the 21*-;vai-cl~t:anie.to K be passed on 30.10.1998. As the savidawai-daiiEeet{i11g_t:.he it interest of the Company. in terms of the7:1l'oresai-cl"C§overn:meh--t.. Order under which all the atssietlssandl"liabilities said'-it project stood transferred to tl1e:'*vappeEIarit;" --t.hellappelIant preferred an appeal on was not a party to the pFOCC€di1]g,§'~" an application seeking leave of It: is settled law that ':~t_llhev:§0rdei*. even the persons.

who the original parties, may prefer an appeal 'agarristi provided such a statutory right is _confe"rred.._"iEve'n the persons. who are aggrieved by sLicl3_"aI:1 order, are"ei1t._i_t=led to prefer an appeal with the leave of the eourtv,' it' they are able to demonstrate before the court that:

tlaeygare s'tieh an order. In the instant: case, not only' is aggrieved by the said award, the appellant. [by virtue oi: the aforesaid Govei'n11'ier1t Order the successor in iiiite1:e_st'.. and t.he1*el'ore. this Co1_n"t.. on an application being T t'l.}.eCi-._gr'e111t.e(1 leave to appeal subject, to the Co1'1dit.i0n. that. after E8 the service 01' notice, respondezits could iiie their objections. A perusal of the Order sheet. in this appeal shows t.hEtt4H.I1viZ)_E'StiECI"1 objections are filed. Even otherwise, from material, it is clear that when once all the assets '}.i:étb4i1ities.,x of this project are handed over to {ht:_?:."c1}"):}§:_¢i1ifc:'t1i'1"t_,> to be satisfied by the appe11ant;a_r'_1d t'.vh'eifeihre, not only the successor of the the assets and liabilities of p1*0je'et' tfanysfertiievd tev' them, as they are in law liable to fall within the term mggrieved'>.pers0h" :.ai.id't'iieVre{'e13e, the appeai is niaintaiiéable.21f1d'{a_eee1"din§iy, we do not find any merit in the first eonteiition raiseci:
POIN'l'--NO.2: 'V ..
- u it not Vifimdtisptite that after the termination of the 'vi:bV'7i.._1"2,.1986, the contractor put' forth his claim, reqtiested. 'in-ei'er1~ing the matter to arbitration and the 'vArbit.rat'.QV1'Awas a.pp0i.{1ted. Before the Arbitrator. the contraetoi' fdiftli sixteen eiaims, Claiming dariiages, Compensation and int}e1'est,. The award passed by the Arbit.rat:0r is produced by \%*x/ " 2 s_unde'1'f'«:.
19

the contractor himself in the present proceedings marked as Ex.C23. The said Ex.C23 clearly elaim. Claim No.8 in the said Claim petlliion re_adsa's:.pJ1Vtie1f:«.

"Claim No.8: Payment. towards idle:'el1.arges_;;foi'».idle V' plant: and machinery V_l"l1e "'.:laimaln.Vl "fir'ids altemaiive work or at leaslo' .mor1lli,s,.lliliiclleuer is earlier W Clain1_for as.2o;45.'ooiQ,/};l By a detailed reasoning. the 5AVrbivtrai§or_...1jejsexed the said claim. The material on'~i.'reeord also' eor1£ai.ns ajlhe claim 'petition prel'erredV"il:$jr c0'f3f1'iae'tQf' in lh'eV'p1~esent proceedings. In paragrapl}--43_ alter' lhe various correspondence, the claim as pul°for'LhVb3f {he daimant. is referred, which reads as ' _'Q.f idle charges for idle Inachinery under to Government. for the period from A 7._1~2.'_i986 to 30.11.1988 at. the rate qr Rs.8.200/- perujday. The Executive Engineer terminated. the " aeonllraei unilal'erall_u and illegally by his lelier dated. ..l.6.12.l986 (Annexure-1). As a direct result. the claima.nl's machinery under hyporzhecalion (",0 Government" was rendered. idlefor want" of work. As 210 the machinery was under hyporheeaiiion, if was nor_'__ possibtefor the claimant to seii the machinery. spite of several requests. the Executiive reftiseci to release the hypot'heCctt'1'on to er1e't:oiev claimant to sell the mc1chir1ery._As Cl restzii-;--.:Qf, the action of the Respondent in illegaligH4tei7r7iii1é1ti'rig"{--l1.e__"Vit contract and. further r'efusirig*.__ liowfi . hypoihecation, the cictiVfn_cV:7t"r'rV.fV_ had 'to machinery idle at Atmatii 4ioict:rn.usit'e htaflthottt 'any work. As the res_oor1der'it. j3..t_Zi;t.i"responsible for this, the clatrnant reottestedjor i:hev:h.pcty':?1ent of idle charges at tiieu raieof" for the period ./Iifli'/2. 3.9536 to 1.1988, and 3t).1 I ;{he..'_'daie--oVri which hypothecation wcts i'G].eVC1.S(3VCi'...V"".D€t:di'I$"JQI' the claim are given. in Annekitre No.'1_5'i';.. "

3. £II,t.l'1€ coiumn. it. was prayed as under:

. _ idle charges for the machinery under ' Vl1ypoi.h'eCCtiiort_for the period. 17.12.1986 to 30.11. ' .1985 cit the rare QfR5.8,200.00 per day. "
'I"'he"G'ove1'm1'1ent has 'filed its detailed objec1,i()n disputing the .. " ~s:;1id claim not only on merits, but also has taken :1 specific plea " that this piea is hit. by Order 11 Rule 2 of CPC. Both the parties '1¢._ 3/ uI1de1"Si.00d their respective cases. submitted their w_rii.ier1 I-l1'gL1l'1'l6I1tS and also pI'0ClL1(I€d C10{'.L1I"flf;'.1'1'{,d1'y e*v*idene'el.T ,ii1., support. of their e0nieni.1'0:r1. The Arbitrator E1I1(§l§21;"$l'VQO€'i:'vfllclll is _« l the point. in controversy and in the '11?ii15i1g11e;1Igixvardl; lhehals in detail referred to this Contention. 'f'lle i"e2is0nihg IS I'.()1L1I:_1"f;}..v.l?l1'i._ page N0s.37. 38 and 39 or lixelfawal-d'; Fle_e_bs'erifesllafterl
-V. referring to the aforesaigl. p1eadlii15is,_ti3_;1i. claiml_l\iH0E8 in the earlier Case as unclerz V 1 __ V_ "Th.e respondenil 'argued i.h.ai.AA_'.ivsir'nflar claim was rejected' in the Course' 'Qf-_ar1etl<;er arbitration prrjeeedinijs clai.riia'nl made a claim for idle, cF1arges":i1i,,L:~-- of'entire Machinery for a perm Q,-_si§c 'ni¢}§;;-,6 j=,»..g}n"'1 7.12.1986 and therefore, this preserli. 'elaini. ean.not' be raised. On deeper 'e.xa._z_rii:1Vaiion,l"'I a..r..n,of the view that the contention Qf wine' iC}0aer,nrneni' is devoid of substance. Under V eliiiin. the earlier case as the Claimant was i' laiuqtdeiflldaniages under the head Loss Qf Profit: ldzuejzol 'termination. qf the Contract. the issue as to V . pay'rr1.er1i Qf idle charges for six months subsequent the t'ermi.n.aiion was not considered. Here the elairnani pleads that non. release Q/" the machinery from hypofliecraliori affer t"er1'ninalion Q/' the contract. by the respondent": has resulted in idling Q)"

machinery causing him losses and hence he O entttiedfor relief. As the issue is entirely d{'[]_fc-"f'!3IlI'."fi1»:._:"" O"

the present case, there is no barfor cortsideztingi this i claim in the present' reference.
Ftmf.her what has been ciairnedin CitairLr2..I:Vo:8 in earlier reference is the darnage>s "tn-. it of termination of contract. Here;.tnf'rthe prese.n_i'cIctin1 the Claimant: pteadS---flir' aiivargi of~--cio_rnages because of failure of the res;joncier'ii the machinery _ from_ "eor1.seqtLeniiai idling oftiie ~.f"hOLigh ade:q1ii'ate"arnottnt.s under the_Iinai__bi--ii_"ioere' .,,0it~}>;§ gffie Governrneng to coiserithg the cause of action arid claims ,,ert»t,iVreI;i:j"di[fereni. the contention of the dent canr.1oi'--- accepted. "

The a.1"_gumen1.Vis.A'1.hat the cause of action for such claim is Odisiiincis Qt1€3:§'iEi.Qn of Order H Rule to this case does not: Clvli Judge has accepted this reason andihégis Lipl'1:e!ifldA:t.I1€ said finding. It is in the background of these L1ridi_s}pLii.ed facts, we have to find out, whether this pies by Order 11 Rate 2 of CPC. Order H Rule 2 of CPC Vireads as under:

to an "2. Suit to include the whole claimxtl.-}__ Every suit shall include the whole of the claim i1.3h.ich._ the plai:1ti[f'is entitled to make in respect of tt1e*'*c'aiise__' , A' Qfaction: but a plairitif/" may relinquish any p7o__rtion.of his claim in order to bring the _SltiI.."Lt)'l'fi"i':'.:rj» the juriscii.cI.ion of any Court.

(2) Relinquishmentoftparht ' of colaifin. §Where-3 a ptaintziff omits to sue in respect of. or---fr1At3er'it'ioriatly relinquishes. any po"r~tiion Qfmh'is:"ciai'n1, he shall not afterwards sue in respec*t- of portigniso omitted or relinquished.

{3} :.':p_sue* for one of several reliefs,-A Vpe'rsori'veri't'iti"e:i__ to.' more than one relief in respect' of the c'a;_is»e of action may sue for all or any of such relielsg but if he omits, except with the of UIQVHVCOQFII, to suefor all such reliefs, he shall it ' . V not cihitiriiaards suefor any reliefso omitted.

"'h.Expiariat.i01i'.'?For the purposes of this rule an 'Qbligat:~ior1}'ar1d a collateral security for its performance and successive claims arising under the same ' 'obligat.ion shall be deemed respectively to constitute V "i:--i.i t one cause of action.
'ii ;_I/ / x / .
I}. The aforesaicl provision is based on that the deIendant.s should not be twice vexed l'o:'.Lo11e. same cause. The rule is directed against -two slpli_tt.in'g& of claims and the splitting of reriiedies i.t;'_a omits any portion of the cla1iI11.la{h'ieh l1e"'is:*:i11ai;<e any of the remedies which he isAV_entitl_e'd.._Vto olaiiinv_in_i1espect. of the cause of action for .,thereai't'.er sue for the portion Claimed or for The rule does not a distinct; and Separate to invoke t;he rule, two Conditions that the previous suit and the present osiiit roast;~a1*ise---.out"of the same cause of action and secondly, t.hey~in1ttst.Vbelbetween the same parties. In fact, the a1'eqtii_1'e:rneunt: oi' {)lrder,Vl_l,_«rule 2 is that every suit should include the whole' th'e..elai.n1 which the plaintiff is ent':it:leci to make in respectof of action. Cause of action is a cause 01"

action whi<:h_gjives occasion for and forms the foundation of the 'st,1it.. If that cause of action enables a person to ask for a larger ,a..nti ' w_i'cle1' relief than that to which he lin'1it.s his claim. he §,;./ cannot afierwarcls seek to recovel' the balemce by i11ci'6?pen}:ie'11t pr()<:eedings.

12. The Supreme Court hadhlarlllloeceirsioin_ié«.cot1sidef. the said aspect. The Constitutional Be31cr1.oI't.he'A})e2: Co'Lt1*i~.in~.x the case of GURBUX SINGH wvs;../1§f.iOORi4LAL'v.r€fpoVriVed'"ia AIR"

1964 SC 1810 at para Nos..§ a11d..t7"1iei:s* held as izndtertzy "In order that a plea'qi'}:'b¢i:fu§:;ier'_.o.2 112(3), Civil Procedure._ s.iu::ceed«v,t'?l'te defendant who raises p.l.e'a :'oii.t' {I} that: the second: the same cause of ac'ifion._ that o:1--~i_ijhich'vth.e.. preajious suit was based; {2} t"l1at:'in"respe.ei' ll:l'i(;il.."€tiLiS€ of action the plaintiff' was eri't"iiledtov._ rrio_re'~.--i'har1 one relief.' {3} that being to more than one relief the plaintiff, « _ xlliuithouil leave obiainedfrom the Court, omi.t.t.ed to sue V , reltiejijor which the second suit; had been filed. '"Fr'on«1 analysis it. would be seen that. the l""def1e:ndar1t' would have to est'a.blish primarily and. to j sttarlltviih, the precise cause of action upon which the '.flpf'€:'UiOt.tS suit. was filed, for unless there is iderziity ' "between the cause ofaciion on which the earlier suit was filed and that on which the claim in the later suit is based there iuould be no scope for the 36 application of the bar. No doubt, a relief which. is__ sought in a plaint could ordinarily be traceable particular cause of action but this rnight. means, be the universal rule. As the plea technical bar it had to be estab--lisl.1ed :§atlis}"ar;ftorilg;l_' and cannot: be presumed rrierelyl nflont, b.as*isl'rvof_ .l inferential reasoning. It isfor this. reason that plleaa ll of a bar under 0.2 R2, 'Procedure 'Coax;
established only if deleitdazitfiles inlevidence the pleadings in the pi'etii'QLls proloes to the Court the identitgl .AAgflllaction in the two suits. 'Title cause"Q;l;acjl'iar:._inthefiorevious suit would .be--__ facts. l:Ulll'Cl"_l,l the gjiaimyjr had then al:'._legedl_' to the relief that he claimecl. lWitho't:.t before the Court the plaint in which those l_';'actsl_.'=were alleged, the defendant égclan-not inL*itel't'he Court to speculate or infer by a V' goro'cess..Q/'dedilction what t.hose facts might be with = referen_eeA"to_t'he reliefs which were then claimed. It is " .._not:' irijpossible that reliefs were claimed without. the necvessarg averments to jiistifg their grant. From the rnere use of the words 'mesne profits' in the previous A'*~._suit. one need not necessarily infer that the "jaossession of the defendants was alleged to be wrongful. It is also possible that the expression has been used in the present' plaint: without a proper appreciation of its significance in law. What, r71df'tei"sfl".g. is not the charact'erisat.iOn of the part'icu__lar l"

demanded but what in substance is t.he a.l.lega.f.t.oln-l.Or1._ Lohich the claim to the sum regards the legal relationship on that relief was sought. It is t2ecaitse._o)" l'rea.s_on5_Vl§ that: a plea based On tl1ei'r»..e}cit9t'encle~.Qt' a fornier pleading cannot be e.'.1_t'ert'ai.r'i.ed the loleading On which it res t.s has not toeert. "

Similar is to the el'f¢Ct""--1'i3 Ifoi' M/SBENGAL WATERPROOR. 7.L1n§ifIfri5:o if Ml,/:S,;SOIvre'AY WATERPROOF MANUFAlCTUl?I1'€fG ANDWANOTHER reported in AIR 1997 SC At as under:
V _ "Wherellt'he eause of action for the first suit lua;~: biased onlWt;he infringement of plaintiffs trade * tniarttt defendants till the date of the suit and regarding passing Off of the défézidarits' goods as if they were ptair1t.i}f}"s goods u.»_a_;«:. also confined. t.O the situation prevailing On the it date of the earlier suit, the second suit' i.n which ":plainti[f's grievance was regarding the Continuoits acts of i.nfringer'r'ient of its trade mark and the continuous passing off action on the part of the def'endanl's, subsequent. to the filing of the suii and which had continued on the dale '7' second suit' would not be barred under Such i.nfn'ngemeni' ofa r'egisleredWl:rade_ nflarlc onfrom lime to time would give"=a A action to the holder of ifie«.__lrader.niarlc i;)v"'iiiii:zl.c_e grievance about the salniegilllland similarly 2'*such impugned pCiSSiTlQ.=' of/' acii.ior«i.s:'--al*so would-. a recurring cause of"acl.i.o.n'--.i.oailiell to make a grievance about tliewsanjie to-.seeiclappropriaie relieffrorin i'h.e':Cou£{i. Vgcoriiinuous causes of aclio':1"*vba}fil.Q]' 'Q,:23 3.2.: sub-rule' (3) cannot be invoked, ':Asg._Vacl' of. oi?" an act' of deceit and tori "e.fverg{liri1e sucli ioriious act or deceit is V"con1mit.i'ed'«'b'; V i'I1e'l'id.efer1danl' the plaintiff' gets a fresh°*.cau.sex' of1aci.i:o_n to come to the Cour: by 4iappropriaieproceedings. Similarly infringement of a llregisieired irad'e""mark would also be a continuing _, 1Lv':sQ%'lg:'so"lor1g as infringement continues. .'I'herefore, " ..'geivlieih.e_r'llie earlier infringement. has continued or a new' i.n}7rir'zgerr1er1i:' has taken place cause of action j'or_f:ilir1g afresh suit would obviously arise. It was A '*u_rnore so ivhen earlier suil was disposed of as 'iecliriicallg not mainlainable in absence of proper reliefs. In such. a casefor all limes to come in future a'efen.dan.l of such a suit cannoi. be armed wiih a x 'e\»./'"
39

licence (.0 go on conirnitting fresh acts". (';-,f.' :'-_ ir';fn'r'1ge:neni and passing Qjj' with I..I7"£pl,£IU'{.y'~'iif,3iI'hC'i--i.i_'''* *' being sutgjecied to any legal action aga1'I1f3':.._Su:eh._ fixture acts. "

13. In the context: of A1*bii.ra'{:ioi1._iA:et ia'}3 e_.»_0ur' Court has an occasion to e0nsic1_er»,_wheth.er'i}1ese"".1;jrinc:ipIes, "

which are weli settled L1r1c;1er the 0I'i"f1e..CQrj§e of Civil Procedure with referenceife? -- Vri.1a{:ie:1's "are applicable to arbitrati.01'1 proceedings?
14," """ "1:;a.1,§'tise orrjN1oi\f_"'oi«*"'1NDIA AND OTHERS wusv M/s.V.L.RQCHE Aixuj' 'reported in 2002(4) KCCR SN 372 {DB}, he-V1d'._i.hai.,V.-afte1' laying down the Conditions. "'~wr1ieh be sat'isi'i.ed.,.i'0r applying Order IE Rule 2 of CPC, in 7a d.i'spute__Vw'tjieI*1arose between Railways and contractor in Coristr-:iietiVdr1.iWeAi¥1{ of Hassan-Marlgalore Raiiway Track that an 'earlier giiSpLzi'.e was referred to a1'biirat.i0I1 and award was ..sa,t:Aisii'i-ed by Railways. Later. C0nt.raCt.0'r raised a second
--@£:?lis'puie for reference {.0 arb1'i,ra1,i()1'1 basing" its Claim on the f.1'i3'diI1gS of the Arbitrator in the earlier reference. Trial Court allowed the reference. On appeal one of the second refelenee application with respeei. to C1aii1'1 iteliiir-'.i"ao.V§¥} V' was mainizairiable and rejected the resi:.»--.An--othei'"i:1e1"hber of Division Bench, held the entire seeo'i1d7.re'fe1'ei1e_e .ap;:31i'e::*ll:io'i1. was not niainiainable. On refere.i1'CeV1o third jL_1dge,'i__€"was:held* V that entire second reference not nlziizivteiirivribie and dismissed the entire refere'1*l::e-- jcirb_it1*al.ion.
15. SimiEa.i'l"v.iew ":'ak¢;1.'hy.._i11¢- Iizielhi High Court in the case of :__I3'i;'£:'1Zf__1'l53l:l1);§fVEZlLQPMENTfAUThlC)RITY, NEW DELHI AND ANoTH'@Rf;:+ugi*§t.3;v1,rs;ALKARM2=i,' "NEW DELHI reported in AIR i985"'pEi,i11 16 it is held as under:
V 2 "lTheV'vieLi~> t'ri;:iiVi'nVrio case would the provisions R..2V"be,V(1pplicable to arbitration proceedings 'A accepted. The provisions of 0.2. R2 ii>oVi_:l'Ed.h aloplyif the requesifor referring more d.ispu.i.es .' A arl)iir';:a.i.ior1 is made dfier the making of the award. all award. has been made a party cannot be j perznii'i.ed to raise more disputes which he/if' could "tC._*«f1d ought to have raised. earlier. Where however, an ' 'award has not been made, it. is open to a claimant, to ask for more disputes to be referred to arbiI:ra,tion /"

\v 31 provided the arbitration proceedings are not yet over. In such an event. if the authority competent to appoiilt an arbitrator and to refer the disputes, to do so, the Court: has the jiII'iSdiCi.iOn to 1- filing Q)' the arbitration agreement' and to. Engineer Member (con'1petent aI:tho'ritu;« fiu.?1der'--:V«' arbitration clause} to referlj '~'bVdispu'teiS arbitration. "

The Apex Court in the Case of 1{;r4i{oEoRGE_ sj:{:Ri;TARY TO GOVERNMENT, WATER Aixio r--:1jsPC§wi:R oEPARTMENT, TRIVANDRUM AND ANOTHER AV1-é§;:c5'r{ed..jr17_'(1,9S9) 4 SCC 595, Cleaiing xisrith _Q.rde}: 11 Rule 2 to the arbitration proceedings held and 15 as under:
=ttis~ to refer in this connection to , d'.decisuion_i: V in Muhammad Hafiz u. Mirza .V V'?/ittiilarnrnad Zaicariya wherein a mortgage deed. that if the interest: was not: paid for six in"rnortti'ts';---theuereditor should be competent to realise i"'eit'her ihe unpaid amount" of the interest." due to him orbbthie' amount of principal and interest'. by bringing a it i';~;_1.t.it' i.n court" i.m'thout: wai.t"ing_for the expiration of the timefixed. and the plaintiff. more than 3 years after {i.e. timefixed}, brought a suit for interest alone and got" a decree. It was held that the second. suit: for principal and arrears of interest was maintairiable as under Order II, Rule 2, CPC be deemed to have relinquished his claim_fo4rjii.rtihe.f" lb".

relief. he h.aLiing exercised the option interest alone. It iuasfurther 'the-I action referred. to in the rule it which gives occasion to, jbar'idati'i;nt_oVfe..3 the suit, and if that cause enables a for larger and wider relief t.ha'rt to.._which"he"limtt's his claim. he cannot' zseeli:V:dto_Vrecouer the balance by independent: proceediig" " \\ the' instant" contract was te:iiminated'*l:y»..the »resbo.nderits on April 26, 1980 and as such all'th_e out of the termination of the contract "could have been raised in the j:firstE~clain1u' p-etittonfiled be ore the arbitrator by the in Thiswhaving not been done the second d_ it before the arbitrator raising the ../.fen1aihj£:_i1§fdisputes is clearly barred. "

' '.F1'om'' t;h:éi..a.fo1*esaid judgment, it is clear that, the principle "..:tu.r1de':uIyi1ig Order I1 Rule 2 is equally applicable to proceedings u"i:;i'eg¥ the Arbitration Act. X 34 as the pleadings in the earlier proceedings are not produced. the courts were not justified in upholding the pleali»._of._Vres judicata.
17. They have not laid dow-n"'"as.a oilawul that. if the pleadings in the earlier in the subsequent proceedings,' of 2b of: V CPC cannot at all be considered------by'1vthe~..courts.---_1t depends on facts of each case. In claim, which was put forth by .cont:ractor¥ proceedings is available""o"n- thewv-clfaim petition itself is not p1'oduce"dbeforlejtlie" Firstly, it is to be noticed that, in arbitration proceedingsgstrict rules of civil procedure need not,_"'b3i:: adhere toa,"'it.,is__ytt1e substance, which mattes. Secondly', 'in,Vt'h.e instaiitttcvase, claim No.8 as put forth by the contractor is clearlry the award of the Arbitrator passed in the j earlier dispute. The said claim we also have extracted as The Arbitrator understood the case of the contractor as the objection raised by the Government. in the light of it "tllie principle underlying Order ll Rule 2 of CPC and did not kl//or \\ have any difficulty in (tonsideling the said claim and iejeetiiig the same on the ground that the Order 11 Rule 2 Cl,'C».i<se._rV1ot attracted. No inferences are drawn by process of"deLriu.eti(:.11;*« The language emilloyed is unambigttous._*"~"iA1l€, 'Cl:.EiiA1I1 is, specifically mentioned. 'i'herefore. is the contention that in the ab'se__11ee 'or the plVes.5<,eli:igs iii the.P' earlier proceedings. the said pleaui'ea_lt'rm_ot ble--5:i;1t.e5rtali'r1ed at all. In fact, that is not the reasonixig either by Arbitrator or by the 1earr1edVCivil the Claim put forth is speeii"ioll';;a.s" well the 't)l3_§6_Cl.lO11 raised by the Govern fz_1en.t is al-so~._slpeeifieZ - --
18. (3-.nce the "e-.1;«;u;ri' and the objection is specific, the principle underlying Order ll Rule 2 is attraetedeto ithefacts of this case. We have set out in detail the pleadings 'ihj tflie present Case. The claim in the earlier proceedings is also based on the illegal l(3I'Il1lI'1al,iOI1 of Contract I 12.11.1986. The present claim is also based on the illegal ' te-§r1'11i11at.ioI1 of the contract on 17.12.1986. As is clear from claim No.8. because of the said illegal t.ermir1a1,ion. the. la, 36 Cont:raot.or was prevented from eo11.tei11uiz1g with the macliinezy, which he had ptmzhased out of ' advance given by the G.overnme11t, .was_<r1ot_'_"

therefore, as a consequence of idling charge of the machinery'£ya'a_pL1t."forth is. V L' clear from the words used in payment towards idle charges l'oi'...l:i'dlC'd~.pl;a1;it.u"arV1d"'znachinery till the claimant finds alternativei-vwork-- _c-,1j at least for 6 months whichever is €.€1§i7lie:§;'i'l'Triedolairriarit cf,oaldV'i'1aVe put forth a claim for idling of arid Arbitrator adjudicated the disp:1v:tle.Va1;1o:unt is paid to contractor. But the claimlaiit' el1oeeV'to'--re"st_,_1-ici'.his claim under the aforesaid head only for"~:»1 perio---_d of s'i;>En1or1t.l1s or till an alternative work fo:Li':1d,__y:whieheyer.._.i.svearlier. Therefore, though in law. a ela'1'ma11ty W.a.~3_e'1i1t':_it.led to damages under the aforesaid head till tf'i1._€V"..perr§;.ifl$s_io1.t;'"is granted to the eont.ract:or to sell the hypo't.he(:_at.et1:"'maehineiy or till the paseing of the award and dd""~._VV's1il3seqt1e_iit to the award till the payment, is made by the "(:1G\.'ff'31'.'Ifl.I1'1€',I1i., the claimant. chose to give up such claims.

" 'l'l;;erefore. Order 11 Rule 2 s'1.:bv--elause {2} squarely att.1'act'.ed to the facts of this Case where it has been p1'ain'(iI'f omitted to sue in respect of "

relinquishes. any portion of his (',1E'a.it1-'"1;'""l4?3' sue in respect of the portion so o111itt'e'-dV

19. In this case, the eta:'.n1' the' award was passed by tbeoauseh 'when once an award was passed bytthtthe' amount was deterrnined. the 'v:t3tVoVe1'nme11t' to the Contractor the amount due by the he had received by way of uadhvance of machinery and also additional ad<.zanvCeV R's_.3Q."~i'akhs. Therefore, it was contended '_that._"'fhey_x'oL;ght to «hayev adjusted this amount due under the of rn:aeh'i.ner__V_ advance and permitted the contractor to sell theA«i11:;tchi1rery.VA'T::as the hypothecation stood in the way. The ~VargunientAjs'that., the cause of action for the second claim is 'S>11x'QL'a'Sg1l€f1'L to the cause of action for the earlier Claim and _j_.t,he1"eIo'1'e, Order IE Rule 2 is not att1'ae1:e(1. Such an ~ in'1',e1'p1'etation would run counter to Order It Rule 2. The cause \a/ of action for all the claims for the cont.rac't'.oi' Government arose on the date the cont.ract stood" V' on 17.12.1986. Once the .A.1'bi»f1fat.o.=fih terinination is illegal. the cont1'ac1_o1'?'_A_Abevcaiiievll' damages, compensation.

the second claim is put forth, that._t:dAi~rect.ly eriia'11atesVAvl%i*oni such illegal termination. The1've'i'oxre.Avlze any substance in the contention rgtis.ecl on of in t.his regard.

20. ignored by the Arbitrator' There is an error apparent"-on: the V It is not a case of recording a wrong findiing on Faet.s.s 'alt. is a clear case of misreading the «evide~rf;c:e.V _tf11isappl'i'c;aiv.i_oi1vof law and the finding recorded runs .'~'VC0tVE.V1"1"i§3fI' t;o"t11'e_ express provisions cozitained in Order 11 Rule 2 OPCPC'. 'l"ii.e1felL:i9e, it constitut.es a legal misconduct. and said

-nnan¥ig to be set. aside. Accordiiigiy, it is set aside. 901341 No.3:

ll ':21. As set out in aiiswering point No.2, the question ~ Wl"aet.her the co11traci.or enliitied to idlirig charges on account. 39 of the illegal termination of the contract. on 17.12.1988 was directly and substantially in issue in the earlier proee.e>di._ngs between the same parties before an A1'bit1'at--o__1'.l'wh*o__T was-._ competent to determine the said issiie. Aftei""c;or:1_sidering pleadings of the parties, the rival produced on record, the Arbi!*rat'_or heldrthat not entitled to any payment under i.e., elairn No.8. The reason assiétned l«t_l1.e"'said is already included under the heading of the Arbitrator is upholding thlefigellairntl-.of§the eont'raeto.rlunde1' the aforesaid head '.;t1"lc1. claimant is awarded any compensation trn.der"t'he..:lhe.ad elairn No.8, it would be a repetition. The»rel"ore, the said claim was negatived holding that Vl'theVlelal'lnant~.is not entit,led to idling Charges on account of the of the contract on l7.l2.l988. When the Arb«i_trator passed an award, the Government being aggrieved lsame, preferred an appeal before this Court in all-.Alvl..F:A.No.78l/1990. which Came te be dismissed on E50' ll .8 H___Fl'leb1'uary 1991. However, as the finding in respect of elairn No.8 was against: the e.o11t1'aetor where his claim had been 40 negaiived, he did not Choose to challenge the '1'here1'o1'e, the said finding on claim No.8 atiained'lifihaliiylL" K concluded between the parties and iher'ei'ei'e, the Vsaiii-i4CI_uesi':ioi1.. could not have been re~agii.ated by Waly of i"1"'esl1'el_v2iim pe"Lii'iori,g camouflaging it as 21 subsequent, e\}'ei1i,. 'Ff1"e 'Said o1ai':1_i"oug'ht to "
have been put forth in the earlier..proc:e'e4:1Lings."'lnpihis regard. it is necessary to refer to ilih.elApex Court in the ease of K. V.GEORC_§E (supra).""A:'i 18 it has been held as under:
""" 'H6: to iiielllsliibrnission as to the applicabiliq of res judicala as prOvlel'€(l in 1 'tile Code ofCivil Procedure to Qrbii.rliiioVn'Cose,."-it to be noted that Section 41 _ AVrbii'roiio:1...A.ci:' provides that the provisions of A iiiepl i?ode"~--,of' Civil Procedure will apply to the V .._i-lcirbi:i'rai{iori;'-proceedings. The provisions of res l ' ,_:iiidie(1i'a:lgu'e based on the principles that': there shall lie Iiiiiliiplicitij of proceedings and there shall be A. ;i_fiI1Cvll'l'i:y' Qf proceedings. This is applicable to the V' * .,_el;"biii'a.ii.oi1 proceedings as well. It is convenient. to refer io ihe olecisiori. in Darycio v. State of UP. wherein ii has been held that the principles of res _judic.aI.a will apply even to proceedings under \x/ / Articles 32 and 226 Q!' the Const.ttt.ztfon of has been observed that:
"Now, the rule of res judir,:a'i"a---as if1d.icatie'd in Section 11 of the Code ofCI'i:il Proeed.tire doubt some t'ecl1r1ical,aspects;jor instanweglvtiie rule of constructive resjvilliticatav.r7'iag it be technical; l)i_tt:' the tvhicti' -the rule rests is \_f:bttFI_Cl(i'?d on c;o:isi'd_eraiions of public policy. It is in the interleslt' of at large that a firialityig Ito, binding decisiensitigjjaronojiiricczd iicourtsllllo/' competent; 'arId_:ttl.':is also the pu.bti.c interest "tlta't'sti"ould vexed twice over v:"'.LU:ilt1 otflttigation. if these two princriples-_fornz.,.the»l;foitndat'1'.on of the general
-- . rillell"of:Vreshvjildicata they cannot be treated as E_._irr<:glevan't:l oninadniissible even in dealing with _VA_fnricla~:nei1tal rights in petitions filed under it ~
17." In Satish Kumar 1). Surinder Kumar ts x g has-l}:'een observed that:
"Tile true legal position in regard to the effect of an award is not in dispute. It is well settled that as a general rule, all claims wliich are the km /..
/ subject matter of a reference to arbitration-'--___ merge in the award. which is pronounced in. proceedings before the arbitrator and tliat."'a/7te:'--. » it an award has been pronounced , the rights andh' liabilities of the parties in.-respect claims can be determined vot1.ly:"or1:'thebasis."Qt--,, the said award. After an ClLl)CtI'lZl" is dete-rrnined only on the basis of said award...T2%f:er"Vah it award is prortoimced,Aenoiaotioh can "be_started on the origirial_..V:tt:lai;'jn ;tsl1i'eIi»..i been the subject matter 'of This eonclttsioru._acqordin_g: "t~he.__lear"ned Judge. is bas.ect.. the _eleme.ntdry principle that. as betAit5c.fg,.rz and their privies, an award ._entitledV,respect which is due to jiidghtenht o/:a_ Coii_.t*t' of last resort". Therefore, if the V ateard iuliich has been pronounced ?.,."trbe't.zbeen tzheljaartties has in fact, or can, in law, to have dealt with the present.
the second. reference would be ___v'inco'rripet'erttt:. This position also has not been " V "and. cannot be seriously dispi.tted."

18. Considering the above observations of this Court in the aforesaid. cases we hold. that. the principle of res _jttdiC(,tlt.'1 or for that the principles of constructive res j1,tdicat.a. apply to arbitration La' \& 43 proceedings and as such the award made in second arbit'rai.i.on proceeding being Arb_it';rationft:"* Case No.276 of 1980 cannot. be sust'a.in.ed. ._ therefore, set: aside. The Higl'1hACot.t.r{_ l1ClS-;'i?lT_gjftI.l};[vv"'V' allowed the F.M.A. No.304 of 1982 i.if;otd:n.g~.z__t%i'at.'p appellant-contractor was preelttdedfrorn seekirégtiie second reference. No other po_in~i.s i1aoe~.bee~n-I raised before us by the apvp.e.ll.ant'. -. ' In fact, reliance was p1aeeda'j.udg:11eni of the Apex Court by hcuontractor in the case of ISHEQR AND OTHERS reported AI--R.AVVV1l'Q.65_»__ Al paragraph--3, it is stated as under:

V "The point that is raised in this appeal is
-[r.ea't'.--l'y snot so nitvlclilvas to the scope of a plea of res it "jz.ttdtcata;'va:n'd_the law bearing upon it. but merely the well~sei:'tled principles to the facts of A'~-..ihev_::ase!; it The main submission of Mr. Bishan Narain e learned Counselfor the appellant: was th.at At issue as regards the relationship of the it :*esporident's to the deceased ~« Jati as his collaierals was not "a matter directly and substantially in issue" in the Jenner suit. Obiaioitsly, this question 443 has to be decided ta) on the pleadings in the suit, {to} the issues struck therein, and ' decision in the suit. So far as tlie_p.leadings themselves are concerned, :i;heg"~ idid. controversy as to whether the reispohderiiisrwere 76 ' collaterais o_fJatt. The plairit_?/'iledlqyl'isher,Si-ngh_ on January 20, 1954 is by nolneans alor'LgOi1e. «V2;/'iélr reciting in paragraph 2 the----d"eath.._of Jaii-icuit'hottt leaving any widozb or:i"issti_e, {he .l/;A:i1't'_gbth.at; he had been rendering service to and the latter beirig liinL'~b.l}_nadeaiihv oral will in respect. «of 'njroc-ealjt-e immoveable properiiies his thus declared him toibe 'h'eir.w out the proceedings in regardlto n'iiVi:irattonl'i'and pointed out that the oral will noixlpelrrnitted to be established in those 4;o'r'oceedirigs.,.V_V 'with the result that the matter had " decided Revenue authorities against his »con._tenti'on.' .._It is ara ra h 4 which is uen relevant "harid «zi_te__sl~i;al'l read it infull:
'I' he deg/'endant.s are altogether strangers .. and not heirs. They are not at all related to Jan' V' = __ rdeceased. Nor are they his collaterals. On the other hand, they belong to a separatefamily. Besides it. the 'Will' made infauour of the plaintiff is valid and is not open to objection. So the de_fend.ants have no it/"
#5 rights of succession qua the _plairiii'[/' in respect ("he land in dispute."
Paragraph 5 afier seiiing our the r77.ni:aI:'iolti'---.. -1- V proceedings, stared that the defendanrs Hnayeiet befiié upon denying the plainly'/'s oa2ne'rsh«ip. and _.addve.d: "They are threatening to llrialcle-,_posses'sion of ll ihe land. So the plaintiffrighi"i.ofiie_ih,is21-§aii."' and paragraph 6 was the seaiiel and ii rea.d;' F "The defendalhis-Loeref.lr.epeaiiedl_y_V asked to ackriowledgeihe r'igh.i...o}'7.ow.nership lojdfeie plaintiff and to reijrain fl-'on1;=__i'aIgcingj' of the land, buililielijl af evasive replies they 'flaily re)'/_"usedl "I{:oti.al'a,:a.2eek ago. The right to sue has ak:c_ruc=d lio plaini'ifj'jrom. the 7"" October, 195.3,. the-. of 'the order of ihe financial
- .icorn_missior1e1' Paiiala.

lieflreliefl"clainled was a declaration that the ._plair1i_ifl:s:lhad title to the suit properties and that a perrhar1eni' z'ry'un.ci:ion be issued restraining the .. Vscdeferidariis from iaking possession of the land in v __sij.ii. "

22. In the light: of the aforesz-Lid settled legal position. 'applyillg to the facts of the present. case, the question whether kin//,.
46 the crontmcior is em.it.led to idling charges was earlier p1'OC('3€3diI}gS and it was 1'eject.ed and the in the subseqL1ei11'. proceedings a1'ise:~o'{1'i.'-oi' action and t.herei'ore, the claimant such Claim. U1"if()1'{L1I"iE11,€1y. Arbit_i'z:t;oAri'~.§t1i:dVThe"Civild' Judge have not appreciated ITF.'.1"c3."'{:€'1'ii_'cA11VA.v'E)I1 record properly and erroneously i;,r_3 that the said doctrine of resjtidicata is:.;io'I:' Cause of action for the stibseqtierii, Cause of action for the eavifiievr reasons, the said finding ai1__so~'and accordingly. it is hereby set aside. V .
i-0_I1sr_;1.;= V' regarding the scope ofjudicial intervermon ' Lmde'ii__i:he_v'Arh:i'i'.rai4io11 Act. to awards passed by the Arbitrator u""'«__Vt1"ngier t.he,/'iLot. In this context. aiso, the iaw on the point is well T:s'e.1,t1ed:.:5 The Apex Court in the case of M/SSUDARSAN .':Vri§gii)iNG CO.--us+ firm: sow. or' KERALA AND ANOTI--.{I:2R :.re1:3ori':ed in AIR 1989 SC 890 [Keraiaj at pz::ragra»1pl1A28 has held 47 that, an award could be set aside if the miseonducted himself or the proceedings or beyond his jurisdiction. These ai'e""Vsep.a&r2'ite grounds for challenging an award.
apparent on the face of the axvzii'd:_it..scan»onlyheb'set':..a'side'V:if in i' the award there is any proposition«--oli"Liawuwhieh'is,ap.;3arer1t on the face of the award, itself or any document incoi'po_i'ated reiied on the observations gr. ALOPI PARSHAD AND soNs1,_i,rr9...Vi§:ié;:sgérgiaiiiréported in AIR 1960 so 588, award was liable to be set aside because of an error ajaparent on the face of the award. V An arbit.r:itio11 awardviiiiight be set aside on the ground of an 'V.Ve.rror on the face of it when the reasons given for the decision, eii't'r.1eI9'_inlAt'he"«awartd--"'or in any document incorporated with it are based"«4._L1pevn'a.--7lega1 proposition which is erroneous. It was » ..,'i.",:"rftirthe1' lieid that, these two grounds ViZ.. error apparent on the taee'of_.the record and the A1'bi.t:1'alor exceeded his jurisdiction .are__7t.w0 different and distinct.. grounds on which the award of " ._~a11 Arbitrator could be aside. Again the Apex Court in the /« 14¢' 438 case of FOOD CORPORATION OF INDIA st/=s~ JOGil\ll3li§Rl5A.,I. MOHINDERPAL AND ANOTHER reported in (1s28_9f.:2ll . held at para~'7 to the effect that, one should 2. limit of correC.t:i0n by the court a1i1_§1l\§#.eird Arbitrator in the context of the princiral-ed t1ndle'if3A}lfi'iig::
Arbitration Act. It is 11ecesse1i§,r:.'l"t.o fi.nd...ou..t thelll arbitrator has miscoiidtzeted 11in1.s.ellll"Qrlthe proc-e.edinlgs legally in the sense whether thevaii'bitifatQr contrary to the terms on 1'eferenr?.e whether the arbitrator has eonireti-t'ted:l«zin;;r 'e"rroi" of'-law..a*pparent to the face of the a'u.va1"d. l'Ii-'i'_is_"i1eC'etssa.ry to emphasize that these are grounds I'oi',Vset't§ing=asi--de t_.h'e_ award, but these are separate and disti11ct._groulnds_l award can also be set aside, if it
--'v.he11efit.5e.d:itheé a.rhit1'at._o1?i who misconducted himself or the iiroeeedinge, .In'«--.Iact. the Supreme Court after referring to the eat':en[a of...deClisiVon:s' and the problerns which are faced by the Codrtisll ir3.lli'd.eali11g with this award, had expressed 4 O{:ompreh.en':§ive1y regarding the jurisdiction of the Court in such l..ri1..atte.rs in the of STATE OF RAJASTHAN VS. PURI 4') CONSTRUCTION CO. LTD. AND ANOT}:1't?IR reported in (.1994) 6 SCC 485, it is held as U.I"iCl€l'Z "31. In recent. times, error in law and basing an award has not bee:i~rgiuen.'_'the'it iI7UT1l.ll'1ll.y as enjoyed earlier. ;_eXp.fian'di.ng' import and implication offlegal rniscond.aCi'7'"--lo;l'V'ar"1 arbitrator so that award by-v..tih'ebarbitrator.,d.oes*not:'"

perpetrate gross iniscarriaga at 'jiistice " and _the same is not reduC€d.'..fi'0 .r)j7_a'fai.r' decision of the lis between the 'iof.:l.V§;rbitration.

Precisely fO.*.-the erroneous applicat;i0}f1 Qfsflaw C(§:t1S:EllLlt'li1~g:lhtd basis of the ataard and'~"2im.proper. incorrect'fin.dings QffClCl'. wh,i.cli 'withoiltj intrinsic scrutiny, are dernor1st..rableV'voni~.,_the"ll_]tice of the materials on ..«.irecot'd, haUe._bee&n held, very rightly. as legal rendering the award as invalid. It is it "l1OLU€U€I', to put a note of caution that bin tl1el'ii'aréxi.et:y to render justice to the party to x4"'arl)i:ti'at'ion, the court should not reappraise the ebiderices intrinsically with a close scri.iti.ng for lllfiildlflg out that the conclusion drawn from some 'facts, by the arbitrator is, according to the understanding of the court'. erroneous. Such. exercise of power which can be exercised by an it 50 appellate court. with _pOl.U€I' to reverse tl1e_fit1dirtg fact, is alien to the scope and ambit Qf'c*l1alle2n3ve ff b an award under the Arbitration. Act.

error of finding of'/acts l1.atJiri§r lbearirtg -IO:'.1V:..lIl1€;;fVV award is patent and is easilyir._Ad'errtorts:trabte without the necessity Of:C€1l'Cf]"ltl'ly._ tt;:'»._1'glting..;tit?"

various possible vietvpoit'1t:s} award based on :'t3rroneot't's=:;[indi:1Q Qt; factllis permissible. based by applying a prin.ciple.latv :._it)'h'iCh"*:--'is patently erroneotts; butlfor; application of legal t'lteV--.atvar'd Cjottld not: have been made. stteh be set aside by l1c:.ldingl_'t:rta[t. cttegal rniscondttet on thel'palrt_ ofthe' J11 ultimate analysis, i.t is a question o1'? balancing between the pe'r*nriissibte..lirnit' of error of law and fact and "l~p'ate:ttily..&erroneotts finding easily demonstrable front }'nate1'iats on record. and application of ._ E;/'lvlattv forming the basis of the award *~.__tvhieh patently erroneous. It may be indicated here";.ihat however objectively the problem may be A 'fiviewecl, the subjective element. inherent. in the "jttdge deciding the problem, is bound to creep in and in/litenee the d.eeision. By tong training in the art of dtspassionate analysts. sucrlt $ltbjeCt.t't.v(3 3%/,.....
element is. however, reduced to minimum.
Keeping the qforesaid principle in mind, the challenge to the validity of the impugned award: is to be considered with reference to 'j.:$_ctict'cttV1'''---- *' decisions on the subject."

24. Therefore the law and is also to be remembered that _tl1ese--o}t'lLzdgmen1.is'have";lbeelriV.L rendered under the earlier enaclfrllenti. '._Under the earlier enactment: there was no'n~eed for the' :1i*bi,trator to give reasons for his award. Once he gives reavsorils,__.itl 'ist"Vs1fejected to judicial scrut'in;,} anclit'Avi.ff'» _the7lreasC..r1's given' are patently erroneous, it expressly.sh--ovved_vvro.ntg--._ap}j1.:cation of law, omission to take into co_r1sidelra.tiVoneV"t.he'=_rele\rant material on record and has lV"vI'€C()t.ITtZl'€(i'--.fil}dlI1gS Wi1ie'ld run counter to statutory provisions, _c1*ear'case_ of legal misconduct is made out. A inlilite instant case, the dispute arouse because of the l"tern1inat,i_on of the Corltraeti on 17.12.1986 on the ground that it " is<:-tiillfegal termination. The contractor putforth several claims. the claims putforth by the contractor emanate from such V' wrongful terminalliorz. 111 the earlier proceedings the arbitrator '4 'var U1 ts) held the termination as illegal and allowed certain cla.i_Ins and disallowed certain claims. One such claim, which was _.pt_1'tfoi1,l'1 was claim for idling charges for machinery and plar1.tL*--ildl*fi.sng charges presupposes naacliinery is a,t...th_e sited,"thelfcontractor _ prevented from using the rnachineity normal circumstances are Vovierl' making available the plan, drawings to execute the work or to go on with the work. In those ci_rcumsta_nces has mobilized the plant. inaclfiiilery land 'r11en.._and'~----he is prevented from executing -theVWo;'l{,:heyi's._er1.titled to the idling charges. In the instant 'ease pleadiiigs on record, the earlier cori'e{spor.zdent7e-- the parties clearly show except the ycontract, in _qu.estion the contractor had no other work. He was government. to permit". him to sell the l1yp'othe__cai;r-zd articles, as he had no use of the said machinery. ' dirt tyhosev-clircurnstances as he had no work and he had incurred ' loa;n.in. purcliasing these I'I}'c1Ch.il'1€I'iCS, interest has to be paid. M .. wanted to reduce the burden by selling away rnacliirieiy. In the light of the aforesaid plea. he was not at all entitled to 1 idling charges which aspect has been clearly 1ost7_by. the arbitrator. Even otherwise in the earlier p1'oceedings; 'l't!:1pe arbitrator rejected the said claim on the contractor has been COIYip€I1Sali.€Cl.;1jl1'iCl.t:1" the hleadinlg._loss._Voi"

profit in executing t.he work as 'e_tl1e:"'e.cinti'a_ct. lWalsV:"iAl_lega_lly terminated. The contractor aclceptedlthellsaid not challenge the same and it Therefore.
it was not open for l1inil1.;pp_ pu_tf'olrt}1.:l:a. after the arbitrator has passed the award', it pm" that after award permission is not g.rante'd"to::'hirn_t'o_sell lrnachinery and he was permVitte.dt-filo'redeem hypothecated articles and the cause of action inthelplseclondlclairn is subsequent to the award. Thippspgj p1'ecisel§.{V_Vlwll1at' the law prohibits both under Order 2 Rule the.__Code of Civil Procedure. as well as under Section A l i:-"oils? Civil Procedure. Unfortunately, the arbitrator as ""well..__'a's-the learned Judge have overlooked these two legal principles, which underlines public policy and which also l un.d.erlines a rule of evidence. wliich. finds statutory recognition V. ,,_.and thus comniitted a serious error in upholding the claim. It was without. any basis. contrary in law, runs counter to the statutory prox-'isi0r1s. Therefore it is a clear Ca.se"-.4C--{..V'v!,he arbitrator c0mm1't.1'ing a legal n1isC0nduet.. --;"The-_errt;»r"*is*. apparent on the face of the rec01"dv.-i'"Thepre-tasortse*Vassig1red"by'VZ. him in u holdind claim are c0n1'.ra':. "st21t'ut<5w «r0*§2'istit<ms ca V p ._ . .: x .
and the principles ur1de1*1ir1ir1g_"the af'Caresaic1'..proVi'si.a;is and' therefore, the award is jiable to...1*r'e~.5et.._.asicte" ground of legal misconduct. V V . V
26. The clairrrs the above Claim. If the claim consequently the claim f-Q1" interest:.a3_»s0 failsn.'~---.. ' F0rV"th:eV'af0vt'esaid reasons, we pass the following .0rec1e1': '' .A ORDER AA {if The impugned award passed by the arbitrator dated 28.07.1990 and the judgment and decree passed by the 55 learned Civil Judge dated 30.IO.l998 are up hereby set aside. V a
(ii) The Claim made by the ;.

rejected both on the ground oj"_'iite*u--:

being hit by Order 2 Rtlile X» e Civil Procedure it of the Code of Ctvti it "
By virtue of the i.ntoerir_:1p this Court, the appellant was%_"rna;1e'Vt.o.deposit t4l1e:Var1"1ro11.n&t awarded. After the deposit the permitted to withdraw the said amount byropfurnishiiligbarilfiééguarantee. The said payment was to the "ult_imatev'result of this appeal. Now the appeal is VTa}1(§lN€(fi1,K:th'd".lIUpl1gI1€d award as well as the judgment and Court is set aside, the amount received by the"«--.res_pond'ent is to be paid back to the appellant. The respondent shall repay the amount. which he has Withdrawn it zuzithiln 90 days from today. If the amount is not repaid within /. days. the appellant. is entitled to invoke the bank guarantee and recover the said amount, with 12% interest till the date of 56 payment as ordered by this Court. in its _Q:'d:é;*r-":'dxéz$.ed 16.04.2010. Parties to bear their own cost. in .V"'u -- M 'z°Saj;fl0-E §3E " 70 IE3?
0"%Sd/J 00:0IUX3E