Patna High Court
Chandra Dhan Singh vs The State Of Bihar And Ors. on 28 January, 1975
Equivalent citations: AIR1976PAT15, AIR 1976 PATNA 15
JUDGMENT S.K. Jha, J . 1. This is an appeal by the plaintiff under Section 39 (1) (iv) of the Indian Arbitration Act (hereinafter referred to as "the Act"). The plaintiff had filed a petition in the court of the Special Subordinate Judge, Ranchi, under Section 20 of the Act praying that the four agreements entered into between the plaintiff and the: defendants be directed to be filed in Court. By the impugned order dated the 23rd of July, 1970 the learned Subordinate Judge has dismissed the plaintiff-appellant's application under Section 20, being aggrieved by which the plaintiff has preferred this appeal. 2. The short facts relevant for the disposal of the appeal are these. The appellant in his petition under Section 20 of the Act filed in the court below stated that he carried on the business of contract and an agreement dated the 4th of September, 1964. was executed by the appellant on one side and the then Superintending Engineer, Chota Naepur Waterways Circle, Ranchi (respondent No. 2), on the other. The number of this agreement was F2-49 of 1964-65. This was in relation to earth work to be done bt the appellant in Seraikela Branch canal from Chainage 994 to 1209 in Rore Irrigation Scheme in the District of Singhbhum. The tender of the appellant was accepted at Ranchi and the agreement was entered into in pursuance thereof and the value of the work to be done was about Rs. 3,17,592/-. There were three other agreements, all dated the 5th of March 1965, bearing Contract Nos. F2-57, F2-58 and F2-59 of 1964-65 for construction of some structures in the said canal. The appellant's further case was that there was a dispute regarding structure work and the appellant had stacked huge quantities of ballast, boulders and chips near the work site and had paid advances to the labourers totalling Rs. 20,000/-. The work regarding structures could not be executed due to the fault and laches of the State of Bihar and/or its employees regarding the dispute for payment of the dues for the work done under the first agreement, in respect of the work done under the first agreement, it was asserted that the work as scheduled was changed from place to place due to the change in the alignment of the work. The first 'on account bill' was submitted for Rs. 35,878/- which was paid to the appellant. But this did not include certain work done for hard rock and Mica Schist. The second 'on account bill' was for more than Rs. 1,50,000/-, which was duly noted in the Measurement Book prepared by the then Sectional Officer and the Sub-Divisional Officer also signed the same but later on the officers of the Department resiled from the position and cancelled the original entries made in the Measurement Book. When the appellant came to know all these, he protested and moved the higher authorities in the matter. Numerous pieces of correspondence followed thereafter, according to the appellant, by him with the authorities in the various hierarchies of respondent No. 1. It seems, however, without going into all the other details of the matter, that according to the appellant the disputes in relation to the matters covered by the four agreements, aforesaid, were still outstanding and since all the agreements are incorporated in one of the clauses the usual arbitration clause, it was prayed in the application filed under Section 20 of the Act that the four agreements be directed to be filed in Court. 3. The respondents contested the application of the appellant under Section 20 and raised two objections, firstly, that there had been no agreement between the parties inasmuch as the agreements in question were not executed by the Superintending Engineer, who alone was empowered under law to execute the agreements on behalf of the State Government in consonance with the provisions of Article 299 (1) of the Constitution of India, and, secondly, that the court below had no jurisdiction in the matter as it was not a court competent to deal with the subject-matter of reference under Section 2 (c) of the Act. 4. So far as the first objection of the respondents is concerned, the learned Subordinate Judge held that out of the four agreements, which had been prayed to be directed to be filed, only three involved more than Rupees 50,000/- with regard to which the Superintending Engineer was the competent authority to execute the deeds by appending his signature on behalf of the State. With regard to the remaining fourth agreement, however, it was held that admittedly it was an agreement for a sum involving less than Rs. 50,000/- and had been duly signed by the Executive Engineer (respondent No. 3), who was competent to sign it, and this was in consonance with the provisions of Article 299 (1) of the Constitution. With regard to the second objection raised by the respondents, however, the court below held agreeing with the objection that it had no territorial jurisdiction over the matter involved in any of the four agreements in question and that, therefore, in spite of the fact that one of the agreements involving less than Rs. 50,000/- was in confirmity with the provisions of Article 299 (1) of the Constitution yet none of the agreements could be directed to be filed. 5. Mr. S. B. N. Singh, learned counsel for the appellant, submitted rather half-heartedly that the provisions of Article 299 (1) of the Constitution should not be held to be of such a mandatory effect as to disentitle the appellant of the benefits of the arbitration clause in the agreements which had been entered into on the representation of the Superintending Engineer, who was undoubtedly the competent authority. It should, in the circumstances, it was submitted, be taken as a mere lack of formality that the Superintending Engineer in spite of his oral agreement had not appended his signature to the three agreement deeds in question. With regard to the fourth agreement, learned counsel submitted that it had been duly executed by the Executive Engineer, the validity of which has correctly not been rejected by the learned Subordinate Judge. Regarding this aspect of the matter, suffice it to say that so far as the fourth agreement involving a sum less than Rs. 50,000/- is concerned, learned Standing Counsel No. 1 appearing for the State could not combat the position that it was free from any blemish regarding compliance with the provisions of Article 299 (1) of the Constitution and indeed the finding of the learned Subordinate Judge to that effect could not be assailed by any party. But with regard to the validity of the other agreements involving a sum of Rs. 50,000/- or more, the submission of learned Counsel for the appellant has been stated merely to be rejected. It is settled law now that in view of Article 299 (1) of the Constitution there is no scope for any implied agreement or contract between the Government and any other person as has been held by the Supreme Court in the case of K.P. Chowdhry v. State of Madhya Pradesh, (AIR 1967 SC 203). If the contract between the Government and another person is not in compliance with Article 299 (1) of the Constitution, it would be no contract at all and could not be enforced either by the Government or by the other person as a contract. Assuming, therefore, that all the negotiations up to the stage of incorporating the terms in the agreement had been done between the appellant and the Superintending Engineer, who was the competent authority, in the absence of the formal deed having been executed by such a competent authority, the agreement must be held to be non est in law. That being so, there is no contract in so far as the three agreements involving a sum of Rs. 50,000/- or more are concerned and there being no contract there is no clause of arbitration to be enforced. 6. This then brings us to the next question as to whether the court below is right in holding that it had no territorial jurisdiction in respect of the matter in question. The learned Subordinate Judge has referred to the definition of the term "Court'' in Section 2 (c) of the Act and has come to a conclusion that the definition of 'Court' in the aforesaid statutory provision read with Section 31 of the Act precluded the jurisdiction of the court below in regard to the subject-matter of reference. In my view, the learned Subordinate Judge has committed an error of law in so holding on this point, Section 2 (c) of the Act runs as follows:-- "2. In this Act, unless there is any thing repugnant in the subject or context- * * * (c). 'Court' means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under Section 21, include a Small Cause Court." The definition of 'Court' in Section 2 (c) makes it clear that all proceedings under the Act may be taken to the Court which shall have jurisdiction to decide the questions which form the subject-matter of the reference. So far as the three agreements, which did not comply with the provisions of Article 299 (1) of the Constitution, are concerned, this question does not actually arise since there is no agreement at all. But in so far as the fourth agreement is concerned, which has been held to have been duly executed by the competent authority, namely, the Executive Engineer (respondent No. 3), on behalf of the State Government (respondent No. 1), the agreement has been entered into at Ranchi, the parties have appended their signatures to the agreement at Ranchi and the entire course of negotiations culminating in the final execution of the deed took place at Ranchi. Any breach in respect of such an agreement could afford a cause of action even at a place where the agreement had been executed between the parties. As observed by Kania, J., in the case of Cursetji Jamsedii v. R. D. Shiralee, (AIR 1943 Bom 32), Section 2 (c) of the Act does not mean that a court has jurisdiction to receive an award only if the whole cause of action arose within the jurisdiction of the Court. I respectfully agree with the learned Judge when he says in the aforesaid case that under Section 2 (c) any Court which would have jurisdiction to decide the question arising from the subject-matter of the reference would be the proper Court in which the award may be filed and to give the Court jurisdiction it is not necessary that the whole cause of action should arise there. The Court has jurisdiction to determine the subject-matter of the disputes between the parties also when the parties reside within its jurisdiction or a part of the cause of action arises there. As was also held in the case of K. M, S. Mine & Mill-Owners v. Rohtas Industries Ltd., (AIR 1954 Pat 147), suit for damages for breach of contract may be filed where contract was made or where it should have been performed but for the breach. In the instant case, as I have already noticed above, the entire negotiations and agreement were entered into at Ranchi and any action in respect of breach of such an agreement would certainly lie before a competent Civil Court at Ranchi. There is thus no impediment in the court below having territorial jurisdiction in respect of the fourth agreement involving a sum less than Rs. 50,000/-. 7. The four agreements which have been prayed to be called for by the appellant were admittedly distinct agreements, each independent of any other. It cannot in any way be said that any one agreement is even remotely connected with any other of the four agreements in question. It will inevitably follow that the decision of the learned Subordinate Judge in respect of the agreement involving a sum less than Rs. 50,000/- is erroneous and to that extent only the appeal shall have to be allowed. I must make it clear that either from the materials on the record or as instructed by learned counsel for both the parties, it has not been possible for us to ascertain as to which particular agreement is in respect of a sum less than Rs. 50,000/-. 8. While allowing this appeal in part, I would, therefore, direct that the learned Subordinate Judge should apply his mind afresh to the four agreements in question only for the purpose of satisfying himself with the assistance of the parties as to which one of the four agreements in question involves a sum less than Rs. 50,000/- and so far as that agreement is concerned, the court below shall issue a direction for such an agreement to be filed in Court in pursuance of the provisions of Section 20 of the Act. 9. The appeal is thus allowed in part but in the circumstances there will be no order as to costs. S.N.P. Singh, C.J.
10. I agree.