Gujarat High Court
The Stae Of vs Hitesh on 9 June, 1986
Author: C.L. Soni
Bench: C.L. Soni
THE STAE OF GUJARATV/SHITESH CONSTRUCTION....Respondent(s) C/SA/274/2012 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SECOND APPEAL NO. 274 of 2012 With CIVIL APPLICATION NO. 13117 of 2012 In SECOND APPEAL NO. 274 of 2012 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE C.L. SONI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the Civil Judge ? No ========================================= THE STAE OF GUJARAT & 1 Versus HITESH CONSTRUCTION ========================================= Appearance: MR JANAK RAVAL AGP for the Appellants MR BS PATEL, ADVOCATE for the Respondent ========================================= CORAM: HONOURABLE MR.JUSTICE C.L. SONI Date : 30/01/2013 ORAL JUDGMENT
[1] This appeal under Section 100 of the Civil Procedure Code is at the instance of the original defendants against whom the respondent original plaintiff filed Special Civil Suit No.93 of 1990 for recovery of Rs.4,63,328.80. It is the case of the plaintiff that the plaintiff was awarded public contract for construction of structure (except acquaduct) on Karjan Left Bank Main Canal from Ch.43.175 to 51.005 kilometers. For the said purpose, agreement was executed between the parties and the plaintiff was required to commence the work from 29.11.1983 and the same was to be completed within a period of 24 months i.e. on or before 28.11.1985. As per the agreement, the work contract was of Rs.26,10,020.63. It is further case of the plaintiff that the parties were to perform mutual contractual obligation. However, due to delay, hindrance, breaches and failure on the part of the defendants, the work could not be completed within stipulated time limit. The defendants had not acquired the entire site and, therefore, could not give line out of the project site to the plaintiff. The defendants also were required to give designs, drawings, instructions etc. but the same were not provided to the plaintiff. The defendants were also required to supply material as per Schedule A to the plaintiff, however, the same was not supplied to the plaintiff. The plaintiff was always ready and willing to abide by all terms of the contract within the time limit, however, because of the fault on the part of the defendants, the work could not be completed within stipulated time period though the plaintiff was ready and willing to carry out the work if time limit was extended. However, instead of accepting the demand of the plaintiff for extension, the defendants resorted to action of termination of contract. The plaintiff then called upon the defendants for compensating the plaintiff for future in execution of the work and though there were meetings between the parties, there was no amicable settlement between the parties and ultimately, the defendants did not extend time limit and instead proceeded with illegal action of termination of contract. It is further case of the plaintiff that during the pendency of the contract, the defendants did not pay legitimate dues to the plaintiff. The plaintiff was, therefore, constrained to issue legal notice dated 09.06.1986 demanding the payment from the defendants. However, the defendants did not settle the bill of the plaintiff and, therefore, the plaintiff had to file Special Civil Suit No.30 of 1987 for appointment of Arbitrator and the learned Civil Judge (S.D.) was pleased to appoint Arbitrator to arbitrate upon the disputes between the parties. It is further case of the plaintiff that after the above suit was filed, the defendants passed an order dated 13.02.1987 terminating the contract and since such termination of contract was illegal and since the plaintiff was entitled to claim amount for the work done, the plaintiff filed the present suit for the recovery of the due amount with interest at the rate of 20% from filing the suit till its realization. The suit of the plaintiff was resisted by the defendants by filing written statement at Ex.15 inter alia stating that the suit was bad for want of notice under Section 80 of the Civil Procedure Code. The plaintiff was required to do twelve kinds of work under tender and they were not connected with each other and, therefore, it was the duty of the plaintiff to start the individual work, that the plaintiff was already handed over the possession of the site and the defendants had not wasted time for handing over such site to the plaintiff, that the plaintiff was also supplied necessary material as per the terms of the contract and it was the plaintiff who committed mistake by not taking over the possession of the material within time limit and by not supplying the material to the labourer within time and, therefore, plaintiff was responsible for not completing the work under the contract within stipulated time. It is further stated that it was the plaintiff who was responsible for the breach of contract. The defendants have also stated in written statement that the suit is based on the agreement between the parties and as per the said agreement, the dispute is first required to be referred to the Arbitrator and before resorting to the arbitration, the Court is not competent to hear the suit and, therefore, the suit deserves to be dismissed.
[2] On the basis of the pleadings, the learned trial Judge framed the issues at Ex.15A as under.
(1) Whether the plaintiff proves that the defendants have committed the breach of contract and because of the negligence on the part of the defendants he was not able to complete the work in time ?
(2) Whether the plaintiff proves that he has suffered the damage of Rs.4,63,328.80 as shown in para 8 of the plaint because of the negligence of defendants ?
(3) Whether the plaintiff proves that he is entitled to get interest at the rate of 20% p.a on the suit amount ?
What order and decree ?
[3] Before the trial Court, the plaintiff examined one witness at Ex.125 and also adduced documentary evidence. Similarly, the defendants also examined one witness at Ex.195 and adduced documentary evidence.
[4] On appreciation of the evidence, learned Trial Judge recorded finding that the plaintiff could not complete the work within the time limit on account of failure on the part of the defendants in not providing the site to the plaintiff and in not providing the material to the plaintiff in time. The learned Trial Judge further found that before institution of the suit, the plaintiff has already served the notice under Section 80 of the Civil Procedure Code to the defendants. Learned Trial Judge further recorded that after the order of appointment of Arbitrator was passed in the earlier suit being Special Civil Suit No.30 of 1987, the dispute was referred to the Arbitration Tribunal. However, the Chairman of the Tribunal by order dated 24.06.1996 remitted back the matter to the Civil Court. Learned Trial Judge further observed that after the present suit was filed on 20.04.1990, the defendants appeared in the suit but did not give any application under Section 34 of the Arbitration Act, 1940. The learned Trial Judge further observed that such application made by the defendants at Ex.158 on 22.07.2004 for staying the proceedings of the suit was rejected as the same was preferred after a period of 14 years. The learned Trial Judge also considered the point of limitation and held that the suit was filed within three years after the contract was terminated by the defendants and, therefore, the suit was within the time limit. The learned trial Judge then considered various claims in the suit and held the plaintiff entitled for an amount of Rs.3,83,244/- to be recovered from the defendants. The learned Trial Judge thus partly allowed the suit and directed the defendants to pay an amount of Rs.3,83,244/- with interest at the rate of 15% p.a from the date of filing of the suit till realization.
[5] The defendants filed Regular Civil Appeal No.62 of 2007. The learned Appellate Judge, on appreciation of evidence and on construction of the terms of the contract, concurred with the findings of the learned Trial Judge and held that the defendants were responsible for causing the delay in getting the work completed by the plaintiff and also held that the termination of the contract by the defendants was illegal and unwarranted. The learned Appellate Judge also came to the conclusion that the suit of the plaintiff was not barred under Order 2, Rule 2 of the Civil Procedure Code on account of filing of the earlier suit being Special Civil Suit No.30 of 1987 which was purely for the purpose of appointment of Arbitrator. The learned Appellate Judge further recorded that after the order of appointment of Arbitrator was passed in the above said suit and the matter was referred to the Arbitration Tribunal, the matter was remitted back to the Civil Court by order of the Chairman of the Tribunal. Learned Appellate Judge further recorded that the defendants participated in the present suit which was filed after termination of the contract by the defendants. Learned Appellate Judge then recorded that since the defendants did not take any action under the provision of the Arbitration Act, the learned Trial Judge rightly decided the suit on the basis of the evidence available on record. On above reasoning and conclusion, the learned Appellate Judge dismissed the appeal by judgment and decree dated 21.07.2011. It is this judgment and decree of the first Appellate Court which is under challenge in this appeal before this Court.
[6] I have heard learned advocates for the parties.
[7] Learned AGP Mr.Janak Raval for the appellants submitted that the suit of the plaintiff suffered by provisions of Order 2, Rule 2 of the Civil Procedure Code. He submitted that since the plaintiff already filed Special Civil Suit No.30 of 1987 for same facts and sought for appointment of the Arbitrator, the plaintiff was not entitled to file the present suit on similar facts for the disputes arose between the parties under the contract. He submitted that after the first suit was allowed and Arbitrator was appointed, the defendants had challenged the said judgment of appointment of Arbitrator by filing First Appeal No.820 of 1990 and since the said appeal was pending before this Court, neither the plaintiff was justified in filing another suit for the dispute arose under the contract between the parties nor the Civil Court was competent to decide such suit. He thus submitted that the suit filed by the plaintiff was barred by the provisions of Order 2, Rule 2 of the Civil Procedure Code.
[7.1] Learned AGP Mr.Raval submitted that the Courts below have failed to consider the provisions of Section 52 of the Contract Act. He submitted that the plaintiff was not entitled to any relief in his suit by virtue of the said provisions and, therefore, the Courts below have committed serious error in accepting the claim of the plaintiff.
[7.2] Learned AGP Mr.Raval submitted that the Courts below have also committed an error in not considering Section 34 of the Arbitration Act, 1940 and Section 8 of the Arbitration Act, 1996. He submitted that even if there was no application under Section 34, since there was already suit filed prior in time for appointment of Arbitrator and since the Arbitrator was already appointed, the Civil Court was not competent to entertain and decide another suit filed by the plaintiff on the basis of same facts. He submitted that not only, pursuant to the order dated 07.01.1989 passed by the Civil Court in the first suit one Shri R. G. Patel was appointed as Arbitrator but the judgment passed in the first suit appointing arbitrator was also confirmed by this Court in First Appeal No.820 of 1989 and, thereafter, at the instance of the plaintiff, the Arbitrator was changed by order dated 16.12.2011 passed by this Court in Misc. Civil Application No.1448 of 2011 appointing Shri N. Ramaswamy Retired Secretary, Government of Gujarat as Arbitrator in place of Shri R. G. Patel. He submitted that since the Arbitrator was appointed by the aforesaid order which was in continuous of the original order of appointing Arbitrator in the first suit, the plaintiff could not be made entitled to any claims under the contract. Learned AGP thus urged to entertain this appeal on the substantial questions of law as suggested in paragraph No.2 of the appeal memo which reads as under.
(A) Whether both the learned Courts below have erred in not considering the provisions of law that suit is barred under Order-2, Rule-2 of the Code of Civil Procedure since, as per the contract agreement, there is a Clause for the appointment of the Arbitrator and the said Clause has been invoked by the parties and the appointment of the Arbitrator was also made and the same issue is pending for adjudication before the Arbitrator?
(B) Whether both the learned Courts below have erred in not considering the settled principles of law and Section 9 of the Code of Civil Procedure, in which, it is provided that the Hon ble Court shall have jurisdiction to trial all the try all suits of a civil nature expecting suits of which their cognizance is either expressly or impliedly barred ?
(C) Whether both the learned Courts below have erred in not considering the Section 52 of the Indian Contract Act ?
(D) Whether both the learned Courts below have erred in not considering the Section 34 of the Arbitration Act, 1940 and the provisions of Section 8 of the Arbitration Act, 1996 ?
(E) Whether both the learned Courts below have erred in not considering the fact that before filing Civil Suit No.93 of 1990, the previous suit being Civil Suit No.30 of 1983 was filed on 04.03.1987 by the respondent before the Court at Mirzapur, Ahmedabad and the said suit was determined and the Hon ble Court has passed an order on 07.01.1990 and by the said order, one Mr.R. G. Patel was appointed as an Arbitrator. However due to the death of the said Arbitrator, the Hon ble Court (Coram : K. S. Jhaveri, J. ) by an order dated 16.12.2011 passed an order in Misc. Civil Application No.1448 of 2011 in First Appeal No.820 of 1989 and appointed new Arbitrator Shri N. Ramaswamy Retired Secretary, Government of Gujarat ?
(F) Whether both the learned Courts below have erred in not framing the issue with regard to bar of suit despite specific plea raise ?
[8] In reply, learned advocate Mr.C. B. Patel for learned advocate Mr.B. S. Patel appearing for the respondent submitted that earlier suit being Special Civil Suit No.30 of 1987 was filed for limited purpose of appointment of Arbitrator which was allowed by the Court and Arbitrator was ordered to be appointed against which the defendants filed First Appeal before this Court which remained pending. He submitted that the said suit was filed before termination of contract of the plaintiff and the dispute in the said suit sought to be arbitrated was of non-payment of some pending bills. He submitted that the present suit was filed after termination of contract on the ground that the termination of contract was illegal and the defendants were responsible for the breach of contract and, therefore, the plaintiff was entitled to various claims putforth in the suit for the work done by the plaintiff under contract with claim for loss of profit. He submitted that neither the suit was barred under Order 2, Rule 2 of the Civil Procedure Code nor was barred under the provisions of the Arbitration Act. He submitted that in the present suit, the defendants did not move any application immediately after filing the suit under Section 34 of the Arbitration Act, 1940 for staying the proceedings of the suit. He submitted that at very late point of time i.e. in the year 2004, the defendants had moved one application under Section 32 of the Arbitration Act, 1940 along with a prayer for staying the proceedings of the suit which was rightly rejected by the learned Trial Judge and the order rejecting the application had become final. He submitted that when the defendants had participated in the suit proceedings and even adduced the evidence oral as well as documentary and when the plaintiff has successfully proved the suit claims, it is not open to the defendants to now raise objection about the bar of the suit either under Order 2, Rule 2 of the Civil Procedure Code or under the Arbitration Act. He thus urged to dismiss the appeal.
[9] Having heard learned advocates for the parties and having gone through the judgment and decree passed by both the Courts below, with record and proceedings of the case, it appears that earlier suit being Special Civil Suit No.30 of 1987 was under Section 20 of the Arbitration Act, 1940 only for the purpose of appointment of the Arbitrator in respect of the dispute for various claims. It is required to be noted that the defendants did not accept the judgment of appointment of the Arbitrator and, therefore, they preferred appeal before this Court. The said appeal remained pending till 22.12.2010 and this Court ultimately dismissed the appeal. It appears that in the said appeal subsequently an application was filed with a prayer to appoint another Arbitrator in place of Shri R. G. Patel who had died after his appointment. The said application was allowed and one Shri N. Ramaswamy, Retired Secretary, Government of Gujarat came to be appointed as Arbitrator. Therefore, earlier suit was purely for appointment of Arbitrator which was challenged in First Appeal and the present suit since for different cause of action and for different relief it could not be said to be barred under Order 2, Rule 2 of the Civil Procedure Code.
[10] Then the questions as to whether because of the clause of arbitration in the contract, the present suit filed by the plaintiff was barred and whether the Courts below committed an error in not considering Section 34 of the Arbitration Act, 1940 and Section 8 of the Arbitration Act, 1996. It is required to be noted that the defendants neither made any application under Section 34 of the Arbitration Act, 1940 or under Section 8 of the Arbitration Act, 1996. What could be found from the record of the case is that after a long period of about 14 years, the defendants preferred an application under Section 32 of the Arbitration Act, 1940 with prayer for staying the proceedings of the suit on the ground that there is a clause for arbitration. However, the Court below rejected such application on the ground that the suit is not for challenging existence of arbitration or effect thereof and no specific application under Section 34 of the Arbitration Act, 1940 was made. It appears from the record that the defendant made application under Section 32 of the Arbitration Act. But such application and the prayer for stay made therein was made after 14 years from the date of the suit when not only issues were finalised but the evidence of the plaintiff was also over. The defendants then not only allowed the suit to proceed but also adduced oral as well as documentary evidence. Therefore, the Courts below have rightly not entertained such plea of the defendants that the suit of the plaintiff was barred on account of arbitration clause in the contract. At this stage, it is required to be noted that the present suit is of the year 1990 and in the earlier suit, when the Arbitrator was appointed, the Chairman of the Arbitration Tribunal had sent back the matter for decision by the Civil Court. It appears that, the Chairman of the Arbitration Tribunal was justified in sending back the matter for decision of the Civil Court. As held by this Court in the case of Ajay S. Patel, Engineers Contractors and Consultants Vs. State of Gujarat and another, reported in 2007 (2) GLH 567, the civil suit instituted prior to 1.1.1994 is not barred under the provisions of the Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992. The suit is also not barred because of appointment of arbitrator and confirmed by this Court in appeal. In fact by virtue of the provisions of Section 35 of the Arbitration Act, if the legal proceedings upon the whole of the subject matter of reference have been commenced and a notice thereof is given to the Arbitrator all proceeding in reference shall be invalid in absence of stay under Section 34 of the Act. In the present case there was no stay under Section 34 and not only legal proceedings were commenced but were also concluded on the basis of evidence adduced by both the parties. Therefore, even if arbitrator is appointed, the same will not vitiate the legal proceeding and the ultimate decision in the suit. The last substantial question of law also gets answered with this question.
[11] As regards the substantial question of law to the effect that the Courts below have not considered the provisions of Section 52 of the Indian Contract Act is concerned, it is required to be noted that the contract between the parties provides for reciprocal promises to be performed by them. The Courts below have recorded finding of fact on appreciation of the evidence that the plaintiff could not complete the work under the contract within stipulated time on account of negligence and fault committed by the defendants by not providing the site, by not giving line out for the plaintiff at the site and by not providing material to be given to the labourers for the commencement of the work and also not providing necessary design, drawings etc. It is required to be noted that if the plaintiff was to commence the work under the contract, the defendants were under obligation to first provide necessary line out from the site and to provide material for the purpose of commencement of the work as per the contract. Such being the obligation to be performed by the defendants and if the defendants are found to have committed breach of terms of the contract in this regard, it cannot be said that the Courts below have failed to consider the provision of Section 52 of the Indian Contract Act.
[12] In view of the above, the appeal deserves to be dismissed and hence, the same stands dismissed.
[13] In view of the aforesaid order, the Civil Application would not survive and hence, the same stands disposed of.
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