Punjab-Haryana High Court
Additional Chief Engineer/Director ... vs S.P. Chopra And Co. And Ors. on 3 May, 2000
Equivalent citations: (2000)126PLR84
Author: R.L. Anand
Bench: R.L. Anand
JUDGMENT R.L. Anand, J.
1. Additional Chief Engineer/Director Construction, W.Y.C. Hydro Electric Projects, H.S.E.B. Bhudkalan, Executive Engineer, HC-I, W.Y.G. Hydro Electric Project, H.S.E.B. Bhudkalan and Haryana State Electricity Board (hereinafter called 'the Board') through above officers have filed this civil revision against M/s S.P. Chopra & Co and Shri S.P. Chopra, its partner and it has been directed against the judgment dated 7.11.1992 passed by the Court of Additional District Judge, Yamuna Nagar at Jagadhari, who allowed the appeal of M/s S.P. Chopra & Co and its partner by setting aside the order dated 27.7.1991 passed by the Court of Senior Sub Judge, Jagadhri, which allowed the objections under Sections 30/33 of the Arbitration Act filed by the present petitioners. The learned Addl. District Judge, Jagadhari while setting aside the order of the lower Court made the award dated 15.9.1989 as rule of the Court and further granted interest @ 12 per cent on the amount of the award w.e.f. 15.9.1989 till 13.10.1989, the date of the filing of the petition under Sections 14 and 17 of the Arbitration Act by the contractor and the contractor was further awarded future interest at the rate of 12 per cent per annum from the date of filing of the petition i.e. 13.10.1989 till the actual payment is made.
2. The brief facts of the case are that the Board vide agreement No. 19 dated 7.12.1980 allotted earth work excavation and its transportation for filling along RD1750 to RD 2800 of Hydel Channel of W.Y.C. Hydel Project to M/s S.P. Chopra & Co., Yamuna Nagar (hereinafter called the contractor'). Differences and disputes arose between the Contractor and the Board out of that contract and vide memo dated 13.10.1983, the Secretary, Legal Section, Haryana State Electricity Board, Chandigarh, in exercise of its powers, vide Clause 25-A of the agreement appointed the Chief Engineer P&T, Haryana State Electricity Board, Chandigarh as sole arbitrator to settle the differences. The arbitrator entered upon the reference on 7.11.1983 and he issued notices to both the parties. The contractor submitted his claim petition dated 6.12.1983 and counterclaims were also submitted by the Board before the arbitrator. The arbitrator framed 19 issues on 26.2.1985 and after prolonged deliberation Shri P.C. Sharma, Chief Engineer gave the award dated 15.9.1989 and sent a copy of the award each to both the rival parties.
3. Both the parties moved applications under Sections 14 and 17 of the Arbitration Act for directing the arbitrator to file the award and thereafter the Board filed objections under Sections 30 and 33 of the Act challenging the said award. In the objections filed by the Board it was inter alia pleaded that the contractor firm was not a registered firm and under the provisions of Indian Partnership Act, a firm not duly registered has no legal entity to move the court for any judicial proceedings and as such the entire proceedings including the award were stated to be void. It was next stated that the Board was a body corporate constituted under the Electricity Supply Act No. 54 of 1948 and could not be sued as such. However, the award was alleged to have been made against the two employees of the Board and it was also pleaded that the Board was not impleaded as such and this omission was fatal. The arbitra tor was alleged to have misconducted himself in ignoring this aspect. It was also pleaded that the arbitrator could not be appointed unilaterally. It was further pleaded that the sole arbitrator has awarded various amounts in violation of the terms of the contract executed between the parties and has thus misconducted himself and the proceedings and all the amounts awarded by the arbitrator to the contractor were not legally and factually sustainable.
4. The reply was filed by the contractor to the objections under Section 30/33 of the Arbitration Act filed by the Board and it was pleaded that the arbitrator has not misconducted himself. The award has been given on merits and the merits of the case could not be considered by the executing Court. It was alsopleaded by the contractor form that it was duly registered and the registration certificate has already been produced before the arbitrator during the arbitration proceedings.
5. The trial Court framed the following issues:-
1. Whether the award dated 15.9.1989 is liable to be set aside on the basis of objections as mentioned in objection-petition? OPP
2. Relief.
6. The parties led evidence in support of their respective cases. The learned Senior Sub Judge, Jagadhri vide his order dated 27.7.1991 allowed the objections of the Board as well as its Additional Chief Engineer and Executive Engineer and set aside the award. The observations of the trial Court are reproduced as follows:-
"12. Lastly, a meaningful objection has been taken on behalf of the objector. It is submitted that the contract was between the H.S.E.B. and the contractor. It was not between the contractor and respondents No. 2 and 3. The contractor was thus required to implead the H.S.E. Board, respondent No. 1 as party in the claim petition as he has been done now by them in petition under sections 14 and 17 of the Act. That being so, the proper party i.e. the objec tor-Board respondent No. 1 was not before the arbitrator and the award is totally illegal. In this regard, it has also been pointed out that the contractor made statement in the court that they did not claim any relief against respondents No. 2 and 3 or the arbitrator respondent No. 4, in their personal capacity. That being the position, the impugned award cannot be made rule of the court against the objector-respondent No. 1 i.e. the Haryana State Electricity Board which was not the party before the arbitrator.
13. To meet the aforesaid objection, it has been pointed out that respondents No. 2 and 3 had been representing the Board throughout before the arbitrator. The Board thus could not take objection that it was not impleaded contractor at this stage. Hence the objection taken by the objector be rejected.
14. To my mind the position taken by the contractor cannot prevail. The claim petition dated 6.12.1983 has been taken reference containing dispute as per position discussed in para No. 8 of this judgment. The perusal of the claim petition clearly shows that Haryana State Electricity Board was not impleaded as a party. The respondents No. 2 and 3 were only impleaded as a party in the claim petition. The Haryana State Electricity Board was not impleaded through any of these respondents. The arbitrator has thus given the award against these two respondents and not against the Board. Shri G.S. Khurana, learned counsel for the contractor made a statement in the court that they did not claim any relief against the respondents No. 2 and 3. Keeping in view the facts and circumstances of the case, the award is found to be illegal as it is not between the parties to the contract i.e. contractor and the Haryana State Electricity Board. Resultantly, the impugned award dated 15.9.1989 is set aside and issue No. 1 is decided in favour of the objector and against the respondents."
In para No. 10 of the said order, the learned Senior Sub Judge while rejecting the objections of the Board held as follows:-
"10. It has next been urged on behalf of the objector that the contractor is a registered partnership firm and claim petition was filed by Shri S.P. Chopra one of its partners. It was the duty of the contractor to prove the fact of registration of partnership firm by leading evidence as the objector had raised objection regarding the same. In reply to the claim petition, the contractor did not lead any evidence to this effect before the arbitrator. The contractor has even not produced any document to show that their firm was registered partnership firm before the Court. That being so, the award is illegal. In reply, it has been admitted on behalf of the contractor that it was S.P. Chopra who had entered into agreement with the objector Board. It was he who had submitted the claim. He has now stated on oath in the court that he is the one of the partners of the registered partnership firm. There is no evidence to contradict this position. Resultantly the objection is not maintainable. Keeping in view the statement made by S.P. Chopra. In the instant case, it has to be taken Mat the contractor is a registered partnership firm and S.P. Chopra is one of its registered partners as no evidence was led by the objector in rebuttal to contradict this position. Consequently, the objection is over ruled."
7. I have quoted the above paras of the order of the trial Court, because the arguments were advanced by the learned senior counsel Mr. Setia on these aspects of the case.
8. M/s S.P. Chopra & Co. was not satisfied with the order of the learned Senior Sub Judge, Jagadhari and they filed appeal before the Court of Addl. District Judge, Jagadhri and vide impugned judgment dated 7.11.1992 learned Addl. District Judge set aside the order dated 27.7.1991 and made the award rule of the Court, as stated above, and also awarded interest as I have mentioned above in para No. 2 of the judgment.
9. I have heard Mr. R.C. Setia, Senior Advocate, on behalf of the petitioners, Mr. S.P. Gupta, Senior Advocate on behalf of the respondents and with their assistance have gone through the records of this case.
10. The learned senior counsel for the petitioners submitted that the award was against the Additional Chief Engineer and Executive Engineer. It was never against the Board, which is an independent entity. The contractor has already made a statement that they do not want to realise the amount from the Additional Chief Engineer and Executive Engineer, and, therefore, the award could not be enforced against the Board as the Board was not a party to the award and the award itself does not fasten the liability upon the Board.
11. The argument of the learned senior counsel may look attractive at the first instance, but on my deeper scrutiny I have find it without arty merit. While arguing this aspect of the case, I cannot brush aside the background under which the matter was referred to the arbitration. The contract was between the Board, which functions through its functionaries like Secretary, Additional Chief Engineer, Executive Engineer and so on. It was the Board who entered into an agreement No. 19 dated 7.12.1980 and also allotted the earth work and its transportation for filling along RD-1750 to RD-2800 to M/s S.P. Chopra & Co. Differences arose between the Board and the contractor and the matter was referred to the nominated arbitrator on behalf of the Board vide memo dated. 13.10.1983 through its Secretary, Legal Section in exercise of the powers vested in him vide Clause 25-A of the agreement. So, in this manner it can be safely concluded that the agreement was between the Board and the contractor. The matter was referred by the Board to the nominated arbitrator and the employees of the Board had been participating before the arbitrator on behalf of the Board and not in individual capacity. Virtually, the Board and the contractor were the parties to the arbitration proceedings. In that light, the award of the arbitrator has to be read. It may also be mentioned here that it was the Board who filed the counter-claim before the arbitrator. The Addi tional Chief Engineer or the Executive Engineer were not appearing before the arbitrator in their personal capacity as they had no dispute with the contractor. In this view of the matter, the arbitrator wanted to give the decision between the Board and the contractor and not against the employees in their individual capacity. If the arbitrator has not specifically mentioned that the Board was liable for the awarded amount, it is only a mere irregularity and not ah illegality as was sought to be pointed out by the learned counsel for the petitioners. The arbitrator never wanted to fix the liability upon the Additional Chief Engineer or the Executive Engineer. At the most, it is an error in the award which can be corrected by the Court itself by virtue of the provisions of Section 15 of the Arbitration Act without remitting the award to the arbitration. In this regard learned counsel for the respondents relies upon Union of India and Anr. v. Himmatsingha Timber Ltd., A.I.R. 1964 Calcutta 91, where it was held as follows :-
"No suit can be instituted against the President, and no decree can be passed against the President directing him to make any payment whatsoever. The award of the arbitrator directing the President of India to make payment of the amount due to the contractor cannot be made in law.
The subject-matter of the arbitration was a contract between the Union of India on the one hand and the contractor on the other. The contract, however, had been entered into in the name of the President of India as provided in the Constitution. Because of this, the contractor was foolish enough to give the cause title in his state of facts as follows :
"In the matter of Indian Arbitration Act -The President of India v. Ourselves" There was no manner of doubt that the claim was being made by the contractor against the Union of India as representing the Indian Railways and there was no manner of doubt either that the arbitrator by his award made the Government of India liable. He, however, in his award directed the President of India through the Sleeper Control Officer, South Eastern Railway, to pay the claimant's dues:
Held that the arbitrator intended to make the award as against the Union of India representing the Indian Railways and the form of the award was clearly a mistake. The mistake in the award could be corrected either under Clause (b) or Clause (c) of section 15 of the Arbitration Act. The arbitrator while intending to make the Union of India liable had through mistake made the President of India liable and had thereby committed an obvious error. Alternately, it was a clear case of an accidental slip on the part of the arbitrator in not making the Union of India liable. On this ground the Court had got power to correct the award."
My attention was also drawn to Union of India v. Salween Timber and Construction Co. (India) Ltd. and Anr., A.I.R. 1983 Calcutta 307, wherein it was held as follows:-
"(9) In the instant case the dispute was between the Union Government on one side and the contractor on the other. The counter statement of facts filed before the arbitrator was filed by the Union of India and everybody proceeded on the basis that the liability, if any, was that of the Union of India. No doubt the contract was in the name of the President of India as is required by the Constitution but that the liability, if any, was that of the Union of India there was not the least of doubt in the mind of the parties. Nor have I any doubt whatsoever that what the arbitrator meant was to make the Union of India liable. In my opinion there is an obvious error in the award in direct ing the President to pay the amount under the award. Therefore, in exercise of the power given to the Court under Section 15 I correct the award by directing that the Union of India and not the President is made liable under the award."
12. It will also be useful for me to incorporate para No. 11 of the judgment of the first Appellate Court with which I am concurring, and the same reads as under :-
"11. I have given my serious consideration to the rival submissions of learned counsel for the parties. It is to be noted that the Board was a party to the contract No. 19 dated 17.12.1980 and the fact also remains that the Secretary, Legal Section, Haryana State Electricity Board, Chandigarh, had appointed the sole arbitrator to go into the disputes between the parties to the contract. It is also to be noted that in the daily proceedings recorded by the arbitrator, the Board has been mentioned as a respondent and it is nobody's case that the Additional Chief Engineer, Haryana State Electricity Board, Bhudkalan and Executive Engineer, HC-1, Haryana State Electricity Board, Bhudkalan, were appearing before the arbitrator in their individual capacity. They were obviously representing the Board before the sole arbitrator. So far as the claim application dated 6.12.1983 is concerned, a perusal thereof would show that the claim petition was submitted by the contractor alongwith a forwarding letter to the sole arbitrator and in the forwarding letter reference dt. 13.10.83 of Secretary, Legal Section, Haryana State Electricity Board, Chandigarh, was alluded to. As such I am of the opinion that the omission of the contractor to specifically mention the Board in the claim statement is of no consequence, because arbitrator was appointed to decide the disputes between the contractor and the Board, the parties to the contract and as already discussed above, the arbitrator had specifically alluded to the Board, as one of the parties to the dispute in its day to day proceedings. In the wake of this situation I have not the least doubt that the intention of the arbitrator was to make the Board liable under the award. The fact remains that the arbitrator was not called upon by either party to decide whether the Additional Chief Engineer or Executive Engineer of Haryana State Electricity Board, would be liable. That question was never before the arbitrator. Nobody even dreamt of making claim against the Additional Chief Engineer and Executive Engineer in their individual capacity and no such claim" was ever made, even though through error, in the title in the claim statement furnished by the contractor, as also in the award, the Additional Chief Engineer and Executive Engineer were shown as respondents. In my opinion while making the award the arbitrator did not intend to impose liability or obligation on the' Additional Chief Engineer or the Executive Engineer but the intended to impose liability on the Board. In my opinion, under Section 15 of the Arbitration Act, this obvious error in the award can be corrected without affecting the award and this correction could be made under clause (b) or clause (c) of Section 15 of the Act. It is a clear case of exceptional slip on the part of the arbitrator in not making the Board liable and the arbitrator while intending to make the Board liable has through mistake made the Assistant Chief Engineer and Executive Engineer, liable and has thereby committed an obvious error. The court has got ample powers to correct such apparent error in the award, as held in Union of India and Anr. v. Himat Singla Timber Ltd., A.I.R. 1964 Calcutta 91. The finding recorded by the trial court on this point is, hereby, reversed and the award is ordered to be corrected thereby making the Haryana State Electricity Board, as liable instead of Additional Chief Engineer and Executive Engineer, as mentioned in the award."
In this view of the matter I repel the first argument raised by Mr. Setia.
13. It was then submitted by the learned senior counsel for the petitioners that the contractor filed the application under Section 14 read with Section 17 of the Arbitration Act. There is no proof of the registration of the said firm with the Registrar of Firms under the Indian Partnership Act and, therefore, the application under Section 14 read with Section 17 of the said Act filed by the contractor should be dismissed on the short ground, as a result of which the objections under Section 30/33 of the Arbitration Act filed by the Board stand allowed automatically and the award goes into the winds. The learned counsel relies upon Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., A.I.R. 1964 Supreme Court 1882 wherein it was held as follows:-
"Interpretation ejusdem generis or noscitur a sociis need not always be made when words showing particular clauses are followed by general words. Before the general words can be so interpreted there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted.
The expression 'claim of set off in Section 69(3) of the Partnership Act does not disclose a category or a genus. The words 'other proceeding' which follow must, therefore, receive their full meaning untrammelled by the words 'a claim of set off. The latter words neither intend nor can be construed to cut down the generality of the words 'other proceeding'. The sub-section provides for the application of the provisions of sub-sections (1) and (2) to claims of set off and also to other proceedings of any kind which can properly be said to be for enforcement of any right arising from contract except those expressly mentioned as exceptions in sub-section (3) and sub-section (4). Where, therefore, a partner of an unregistered partnership applies under Section 8(2) of the Arbitration Act to enforce a right arising from a contract between the partners, the proceedings are barred by Section 69(3) of the Partnership Act."
14. Again there is a fallacy in the argument raised by the learned counsel for the petitioners. It was for the objector to prove about the registered nature of the firm known as M/s S.P. Chopra & Co. Secondly, in the present case the proceedings started with an application under Section 14 read with Section 17 of the Arbitration Act to make the award rule of the Court. The contractor had started the proceedings on the award and, therefore, the judgment of Jagdish Chandra Gupta's case (supra) would not be applicable in this case. Further, Mr. Setia has forgotten that there were two applications which were moved one by the Board and one by the contractor. The prayer of the Board itself was that let the arbitrator be directed to file the award under Section 14 of the Act and on the filing of the award, the Board filed objections under Section 30 read with Section 33 of the Arbitration Act. Once the objections are filed, it is obligatory on the part of the Court to decide those objections after giving opportunities to the opposite party. The award cannot remain inchoate. It has to be either affirmed, or set aside. Even if it is assumed for the sake of argument that the application under Section 14 read with Section 17 of the Arbitration Act of the contractor fails on account of the non-production of the partnership certificate, still the court was competent to adjudicate upon- the objections of the Board and could come to the conclusion whether the arbitrator had misconducted himself or the proceedings or not. I fully concur with the findings of the first Appellate Court that the application under Section 14 read with Section 17 of the Arbitration Act filed by the contractor would not fail. For advantage, I am again re-quoting paras No. 13 and 14 of the order of the first Appellate Court, as under :-
"13. Sh. I.S. Bhatia, learned counsel for the Board, raised an objection that as M/s S.P. Chopra and Company, was not proved to be a registered partnership firm, the filing of the application under section 14 of the Arbitration Act, by the unregistered firm was bound to fail in view of the bar of section 69(3) of the Partnership Act and in support of this contention Shri I.S. Bhatia, learned counsel for the objectors banked upon the observations made in Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd., A.I.R. 1964 Supreme Court 1882 and the other authority in this connection referred to is reported as Buta Mal Dev Raj v. Chanan Mal and Ors., 1964 Cur. L.J. 232.
14. There could be no dispute that in order to institute a suit, the partnership firm must be registered firm when a suit is brought on behalf of the firm to enforce a right arising out of a contract and if the partnership firm is not registered, sub section (2) of Section 69 of the Partnership Act, provided that such a suit was incompetent. The law enunciated by Punjab and Haryana High Court in Buta Mal Dev Raj's case (supra) is thus unexceptionable. In the authority of Jagdish Chandra Gupta's case (supra); there was an application under Section 8 of the Arbitration Act, for referring the dispute between the partners to arbitrator, as provided in their agreement and it was held by the Hon'ble Supreme Court in this authority that the power under section 69(3) of the Indian Partnership Act, applies to all proceedings including the one under section 8(2) of the Arbitration Act. In this authority the phrase "other proceedings" in sub-section (3) of Section 69 of the Act, was under interpretation and it was held that this phrase must receive their full meaning and it was held that where a partner of an unregistered partnership applies under section 8(2) of the Arbitration Act, to enforce a right arising from a contract between the partners, the proceedings were barred under section 69(3) of the Partnership Act. Before Hon'ble Supreme Court the authority of Hafiz Amar Din v. Nur Din, A.I.R. 1936 Lahore 136 and Babulal Dhandhania v. M/s Gautam and Co., A.I.R. 1950 Calcutta 391 were referred to. In these two authorities proceedings were started on an award, in one to make it a rule of the Court, and in the other to get it set aside and the Hon'ble Supreme Court held that these two authorities were distinguishable because they dealt with awards and the Hon'ble Supreme Court did not consider it necessary to decide whether after an award the proceeding is one to enforce a right arising from a contract. In the instant case also, there is a petition by the contractor to make award rule of the court and in this way the contractor had started the proceedings on an award and as such the authority of Jagdish Chandra Gupta's case (supra) is distinguishable on facts and it cannot be said that the provisions of section 69(3) of the partnership Act, are attracted to the facts of this case. I, therefore, negative this objection raised by Sh. I.S. Bhatia, learned counsel for the objectors and affirm the finding recorded by the trial Court, though on different grounds."
15. It was then submitted by the learned counsel for the petitioners that the claim made by the contractor was time barred and on this score the award is liable to be set aside. This argument is not acceptable to this Court. It was observed in Union of India v. Salween Timber and Construction Co. (India) Ltd. and another (supra) that decision, of the arbitrator right or wrong is not liable to be set aside, unless the error of law is apparent on the face of the award and a claim more than three years old may yet be alive by reason of acknowledgement in writing made by the debtor. Mr. Setia has not been able to show me how the claim filed by the contractor was time barred.
16. No other point survives for determination. 17. The net result is that this revision is totally devoid of any merit and the same is hereby dismissed with costs which are assessed at Rs. 1,000/-.