Bangalore District Court
Sri. V.M. Ganesh vs The Union Of India on 2 March, 2018
IN THE COURT OF THE XXX ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU CITY
DATED THIS THE 2nd DAY OF MARCH 2018
-: PRESENT: -
SRI.MAANU K.S., B,Sc., LL.B.,
XXX Addl. City Civil & Sessions Judge,
Bengaluru City.
A.S. NO. 60/2017
PLAINTIFF/S : Sri. V.M. Ganesh,
S/o Late V.M. Munirathnam
Mudaliar, Aged about 73 years,
R/a No.42, 3rd Main Road,
Ayyappa Reddy Garden,
Yeshwanthpura,
Bengaluru-560 022.
(By Pleader Sri.D. Shankar,
Adv.)
/VS/
DEFENDANT/S: 1. The Union of India,
Rep.by its Executive
Engineer/ BCD-III/CPWD,
Bengaluru-560 094.
2. Mr.P. Ravindranathan,
Addl.Director General
(Retd.), CPWD, Raxton -205,
Elan Homes, Sarjapura
Road, Bengaluru-560 035.
(Only Pro-Forma Party and
Production of record).
(By Pleader Sri.AJ., Adv. for
Respt.-1, Respt.-2 absent.)
*****
2 A.S. No. 60/2017
JUDGMENT
1. This is a suit filed by the plaintiff under Sec.34 of the Arbitration And Conciliation Act, 1996 {As Amended Act 2015 (3/2016)} with a prayer to set aside the award dtd.29- 03-2017 passed by the Sole arbitrator i.e. 2nd defendant in the arbitration proceedings held in respect of agreement No.33/EE/BCD and consequently to direct the 2nd defendant to adjudicate the claims of the plaintiff on merit and to award cost of the proceedings.
2. The brief facts of the case of the plaintiff are as under:
(a). It is the specific case of the plaintiff that he being a reputed civil contractor was entrusted with certain civil work by the defendant no. 1 on accepting the tender submitted by him under the agreement No.33/EE/BCD for the purpose of completing the balance work at CRPF Yalahanka, Bangalore which was satisfactorily executed by him and thereafter the defendant prepared a final bill on 29.12.2008 and the final bill amount was received by him under protest. It is further contended by the plaintiff that due to some ugly situation faced by him, wherein at the work spot after the completion of the work, due to the negligence of the 1st defendant, a boy of 10 years died by drowning in water tank which dragged the plaintiff unnecessarily to the 3 A.S. No. 60/2017 court of law for considerable length of time and he was made liable to share compensation along with 1st defendant by the Hon'ble High Court as per the orders in WP No.36942/2009 (GM-RES) dated 09.02.2011 due to which he could not submit his request to the defendant No.1 to appoint an arbitrator to resolve the dispute arising out of contract in question. . It is further contended by the plaintiff that after a gap of some considerable time he filed request to the defendant No.1's Chief Engineer on 15.03.2015 to appoint the arbitrator to decide the dispute raised by him for which the Chief Engineer referred the plaintiff's request to the Superintendent Engineer, Bangalore Central Circle, to resolve the differences and dispute of claim arising out of the above said contract by way of the conciliation process and assured the plaintiff that in case of failure of conciliation process he will appoint arbitrator.
(b). It is the further contention of the plaintiff that after the conciliation proceedings failed, the sole arbitrator who is the 2nd respondent herein was appointed before whom he filed a claim petition and the defendant No.1 after its appearance raised preliminary objection contending that the claim of the plaintiff is absolutely barred by limitation as per clause no.25 of the Contract as the claim has been made by the plaintiff after lapse of more than 6 years 9 months according to which the plaintiff ought to have submitted a 4 A.S. No. 60/2017 request for appointment of arbitrator within 120 days from the date of receiving intimation from the engineer in-charge that the final bill is ready for payment and based on the said objections the learned 2nd respondent after hearing both the parties on the said preliminary objections held that the claim of the plaintiff is barred by limitation and that the plaintiff ought to have filed his request to refer the dispute seeking after appointment of arbitrator within 3 years from the date of actual payment of the final bill and therefore terminated the arbitration proceedings u/s.32(2) of the Arbitration And Conciliation Act which is highly erroneous and biased and opposed to principle of natural justice and therefore he prayed to set aside arbitral award passed by the learned second defendant on the following grounds:
• that the second respondent being an ex-employer of the 1st defendant was biased in favour of the 1st defendant • he ignored the instructions contained in Circular No. DGW/Cib/141 dated:28-04-2000 • he committed legal misconduct by wrongly applying non applicable provisions of Limitation Act • he wrongly held that Section 5 of Limitation Act is applicable only to appeals and revisions and not to claims in arbitration references 5 A.S. No. 60/2017 • that the plaintiff is burdened to bear the fees of arbitration of Rs. 50,000/- which ought to have been levied on the defendant • that he wrongly relied on the rulings of Hon'ble Supreme Court in J.C. Budharaja's case and failed to apply the rulings of the Hon'ble Supreme Court in Rashtriya Ispat Nigam Ltd vs Prathyusha Resources and Infra Pvt Ltd and thereby the order passed by the second respondent is opposed to public policy.
3. The defendant no. 2 who is the sole arbitrator did not appear and remained absent after service of summons. The defendant no.1 has put its appearance through its advocate and has filed its objections contending that the grounds urged by the plaintiff is highly insufficient to make out a case in favour of the plaintiff; that the learned arbitrator after careful evaluation of the facts and after hearing the parties has passed the award; that the plaintiff had accepted the payment under the final bill without any protest towards full and final settlement; that the plaintiff after almost 6 years and 3 months from the date of acceptance of the final bill raised a claim and requested for appointment of an arbitrator which is barred by time; that inspite of giving opportunity to the plaintiff, the plaintiff has not participated in any of the meetings called by the Executive Engineer, who had finally given his report to the 6 A.S. No. 60/2017 Superintending Engineer on 27-7-2015 to the effect that after accepting the final bill, the plaintiff had no locus standi to put forth any claim; that the plaintiff having accepted the appointment of 2nd defendant as the arbitrator cannot be permitted to make any allegations; that the plaintiff has not satisfied the conditions as per Sec.34 of the Arbitration and Conciliation Act, 1996 and hence, prayed to dismiss the suit.
4. Perused the records and the written arguments filed by both the plaintiff and the 1st defendant.
5. On the basis of the materials placed on record and the contentions taken up by the plaintiff and defendant no.1, the following points arise for my consideration:
1. Whether the plaintiff has established that the termination of the arbitration proceedings u/s.32(2) of the Arbitration And Conciliation Act by the learned arbitrator is erroneous and biased?
2. Whether the impugned award dtd.29-03-2017 passed by the Sole Arbitrator in respect of the agreement No.33/EE/BCD is liable to be set aside under Sec.34 of The Arbitration and Conciliation Act, 1996 {As amended Act 2015 (3/2016)} ?
3. What order?7 A.S. No. 60/2017
6. On the basis of the materials placed on record, my answers to the above pointes are as under:
Point No.1: In the negative, Point No.2: In the negative, Point No.3: As per the final order for the following:
REASONS
7. POINT NOS.1 & 2: Since, these points are interlinked, discussion on one point has its direct bearing on the discussion on another point, to avoid repetition of discussion and facts of evidence, I have taken these two points jointly for discussion.
8. Before proceeding to discuss about the propriety or otherwise of the impugned order passed by the 2nd defendant, it would be better to understand the power of this court and scope of interference with the award passed by the 2nd defendant(sole arbitrator) as envisaged under Section 34(2) of the Arbitration and Conciliation Act. 1996 which empowers the Civil Court to set aside the award of the Arbitrator in the following circumstances:
(i) If a party was under some incapacity; or
(ii) If the arbitration agreement is not valid under any law, which the parties are subjected to; or
(iii) If the party was not given proper notice of the appointment of the Arbitrator or arbitral proceedings; or 8 A.S. No. 60/2017
(iv) If the award is not within the terms of the arbitration agreement; or
(v) If the arbitral award is in conflict with the public policy of India etc.
9. In the decision reported in AIR 2003 SC 2629 in the matter between Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd., his Lordship of the Hon'ble Apex Court has held that, the award could be set aside, if it is contrary to :
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) Justice or morality; or
(d) In addition, if it is patently illegal.
It is also held that, illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that the award is against the public policy. The award can also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court since such award is opposed to public policy and is required to be adjudged void.
10. Keeping in mind the above dictum laid down by the Hon'ble Apex Court, now I proceed to see whether the impugned award suffers from any patent error and illegality as envisaged in the above dictum.
11. It is the specific case of the plaintiff that after successfully completing the work entrusted to him by the 1st defendant in respect of Agreement No. 33/EE/BCD for 9 A.S. No. 60/2017 completing the balance work at CRPF, Yelahanka, Bengaluru, the 1st defendant had prepared the final bill on 29-12-2008 and the bill amount was received by him under protest and due to some unavoidable circumstances, he could not file the request to the 1st defendant to refer the matter to arbitrator which was filed by him on 15-03-2015 and the 1st defendant by accepting his claim to be genuine by acknowledging its liability directed the plaintiff to settle the claim by conciliation proceedings and referred the matter to Superintending Engineer with whom the plaintiff and 1st defendant made various letter communications and when the conciliation proceedings failed, the matter was referred to sole arbitrator by appointing him and when such being the case, the arbitrator(2nd defendant) was carried away with the preliminary objections raised by the 1st defendant regarding the limitation aspect and wrongly terminated the arbitration proceedings by holding that the claim made by the plaintiff is time barred and that section 5 of Limitation Act is not applicable to claim petitions.
12. In the written arguments, it was further contended by the plaintiff that as per well established principles laid down by Apex Court and various High Courts, for computing period of limitation, the date on which the right to apply for arbitration accrues is very much relevant and the same accrues only when the claims are rejected by the opposite 10 A.S. No. 60/2017 party and in the instant case, the Superintending Engineer rejected the claims on 01-02-2015 which was communicated on 04-12-2015 which was the actual date on which his right to apply for arbitration accrued and by virtue of section 43 of Arbitration and Conciliation Act, the provisions of Limitation Act applied to arbitration proceedings in the same manner as in civil court and as per Art. 137 of the Limitation Act, the limitation provided to file request for arbitration was 3 years from the date when the right to apply for arbitration accrued and therefore the claim made by him was within limitation but the learned arbitrator over looked the provisions of applicable law and passed the erroneous award which is gross illegality and legal misconduct and opposed to public policy.
13. It was further contended by the plaintiff in his written arguments that he had assigned a valid reason for not filing the request for arbitration and had also produced the copy of the W.P. 36942/2009 which was not considered by the 2nd defendant by holding that section 5 of Limitation Act is applicable only to appeals and revisions and not to claim petitions. It is further contended that when the 1st defendant by acknowledging its liability has referred the matter to conciliation, the same amounted to valid acknowledgment as per section 18 of the Limitation Act which saved the limitation and thereby brought the claim 11 A.S. No. 60/2017 within limitation and this fact was not appreciated by the 2nd defendant who passed the impugned award, terminating the arbitration proceedings under section 32(2)(c) of the Arbitration & Conciliation Act, 1996 and hence, the award passed by the 2nd defendant is patently illegal, which entails the award to be set aside and sought for setting aside the impugned award. In support of his contentions he referred to the following decisions without providing the copies of the same to the court.
i. 2016 SC page 861 in the matter between Rashtriya Ispat Nigam Ltd. Vs. M/s.Prathyusha Resources and Infra Pvt. Ltd. & anotr.
ii. 2009 AIR SCW 4672 in the matter between National Aluminium Company Ltd. & anotr. Vs. G.C. Kanungo.
14. On the other hand, the 1st defendant in its written arguments has vehemently contended that the suit is not maintainable as highly barred by limitation as the claim was made after lapse of more than 6 years by suppressing material facts. It further contended that the final bill was settled on 29-12-2008 and the plaintiff has accepted the payment in full and final settlement which was evident as per his own acknowledgment on the final bill and now after lapse of more than 6 years, the plaintiff has come up with this claim by falsely contending that the final bill payment was 12 A.S. No. 60/2017 received by him under protest. It is further contended that as per class no. 25 of the contract, the claim for arbitration ought to have been made by the plaintiff within 120 days which has not been made by the plaintiff and the learned 2nd defendant by considering all the aspect passed the impugned award terminating the arbitration proceedings by holding that the limitation for making a claim for arbitration was 3 years from the date of final bill was prepared which is absolutely in conformity with the various rulings of the Apex Court and that there was no illegality in the order passed by the learned arbitrator and sought for dismissal of the suit. In support of his contentions he referred to the following decisions without providing the copies of the same to the court.
(1) AIR 1963 SC 1685 in the matter between Union of India Vs. Ralia Ram.
(2) AIR 1999 SC 1047 in the matter between Sampuran Singh Vs Smt. Niranja Kaur.
15. I have carefully perused the impugned award passed by the 2nd defendant and the decisions referred by both the parties to the suit. As early stated supra, while dealing with the petition under section 34 of the Arbitration and Conciliation Act, this court cannot sit like an appellate court and try to find out where the arbitrator has gone wrong so as to modify, reverse or set aside the said findings. The legislatures while enacting the above legislation have 13 A.S. No. 60/2017 narrowed down the grounds to set aside or to interfere in the award of the arbitrator in the form of section 34 and it is obligatory on the part of the plaintiff to establish that the grounds urged by him satisfy any one of the grounds shown in that section and as per the running lines of section 34(2)(a) of the Act, the plaintiff must show the proof of the illegality in the order passed by the 2nd defendant which attracts any of the grounds set out in that section. In the present case on hand, the plaintiff has failed to establish before this court that the 2nd defendant was either biased or not followed the terms of the contract and the provisions of the Act. The award passed by the learned 2nd defendant is well founded and well reasoned award. By going through the said impugned award, it cannot be said that the same was either biased or opposed to public policy. Absolutely there are no materials before this court placed by the plaintiff that the arbitrator grossly and patently erred in applying the legal principles of law which resulted in miscarriage of justice.
16. The contentions of the plaintiff that the arbitrator erred in holding that section 5 of Limitation Act is applicably only to appeals and revisions cannot be accepted. As per section 43 of the Arbitration and Conciliation Act, the provisions of Limitation Act is applicable to the Act as it is applicable to cases before civil courts meaning thereby, the claim made to 14 A.S. No. 60/2017 refer for arbitration as suit and the same is governed under section 3 of the Limitation Act which clearly states that no suit or claim shall be entertained after lapse of limitation and section 5 of the Limitation Act has no application to the claim petition. This fact has been upheld by Hon'ble Apex Court in State of Goa vs. Western Builders (2006)8 SCC 229 = AIR 2006 SC 2525 and Union of India v. Popular Construction reported in 2001(8) SCC 470, wherein it has clearly held that section 5 of Limitation Act is not even applicable to petition filed under section 34 of the Act in view of the self contained time frame fixed under the said section to challenge the arbitration award. Therefore the claim made by the plaintiff after lapse of more than 6 years is highly barred by limitation and cannot be entertained and the 2nd defendant has rightly applied the established principle on this point by holding that Sec.5 of the Limitation Act is not applicable to the case on hand and rightly rejected the claim of the plaintiff.
17. The another contention of the plaintiff that the limitation started to run only when the Superintending Engineer rejected his claim and when the conciliation proceedings failed in the year 2015 and not from the date when the final bill was settled cannot be accepted. The further contention of the plaintiff that since his claim was not rejected by the 1st defendant till 2015 and since his claim was recognized by 15 A.S. No. 60/2017 the 1st defendant and referred to conciliation, the right to claim for arbitration accrued only in the year 2015 and not in the year 2008 and that there was valid acknowledgement of liability cannot be accepted as this contention is against to the terms of the very contract entered into between the plaintiff and the 1st defendant. As per clause 25 of the contract, the right to claim for arbitration accrued on the receipt of intimation of the preparation of final bill by the 1st defendant and a period of 120 days was set up in the said agreement to make such representation for referring to arbitration. In the present case, the plaintiff having accepted the final bill amount without reserving his rights to raise dispute and that apart, has remained silent for more than 6 years and moved the application for appointment of arbitrator and to refer the matter to arbitrator which shows that the plaintiff had no right to file any petition for raising any dispute after having accepted the final bill without protest and even if that is over looked then also, his claim is barred by limitation as the same is beyond the limitation set out in the contract. Even if the terms of contract is over looked, then also as per the provisions of Limitation Act the maximum period of limitation allowed to plaintiff to lay claim was only 3 years from the date of final bill and since the claim made by plaintiff is beyond the said 3 years period, his claim is hopelessly barred by limitation. 16 A.S. No. 60/2017
18. That apart, merely because the 1st defendant referred the matter to arbitration based on the representation made by the plaintiff that by itself will not amount to valid acknowledgment of liability saving the limitation and as rightly contended by the defendant no.1 that even if it is assumed that the referring the matter to arbitration amounted to acknowledgment of liability, then also the same cannot be termed as valid acknowledgment under section 18 of Limitation Act which saves the limitation. Hence, viewed from any angle, the impugned award passed by the 2nd defendant terminating the arbitration proceedings holding that the claim is barred by limitation does not suffer from any of the grounds set out by the plaintiff and the same does not call for any interference. Accordingly I answer points no. 1 and 2 in negative.
19. POINT NO.3: In view of the forgoing discussions and my answers to points no.1 & 2, in the negative, the suit filed by the plaintiff deserves to be dismissed. In the result, I proceed to pass the following:
ORDER The suit of the plaintiff is hereby dismissed.
The impugned award dtd.29-03-2017 passed by the 2nd defendant in Case No. ARB/PR/VMG - 17 A.S. No. 60/2017
CPWD/YEL pertaining to agreement no. 33/CE/BCD-III/2006-07 is hereby confirmed. (Dictated to the Judgment Writer on computer, corrected, signed and then pronounced by me in the open Court on this THE 2nd DAY OF MARCH 2018).
(MAANU K.S.), XXX ADDL. CITY CIVIL & SESSIONS JUDGE, BENGALURU CITY.