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Maltexmalsters Private Ltd. Vs. Allied Engineers - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberCivil Miscellaneous Appeal No. 801 of 1974 and First Appeal No. 19 of 74
Judge
Reported inAIR1975Delhi123; ILR1975Delhi57
ActsCode of Civil Procedure (CPC), 1908 - Sections 149 - Order 41, Rule 1; Court Fees Act, 1870 - Sections 6; Arbitration Act, 1940 - Sections 20
AppellantMaltexmalsters Private Ltd.
RespondentAllied Engineers
Advocates: R.M. Gupta,; P.L. Vohra and; Harjinder Singh, Advs
Cases Referred and Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal
Excerpt:
.....called 'the act') for an order of the court to make a reference to arbitration according to the arbitration clause. it is just like an order passed under the hindu marriage act. shamsher kaur this is what the court observed in the context of such like orders under the hindu marriage act. speaking for the court said :apartfrom the decisions bearing on the point, there can in our opinion, be no doubt that section 4 of the court fees act is not the last word on the subject and the court must consider the provisions of both the act and the code to harmonise the two sets of provisions which can only be done by reading section 149 as a proviso to section 4 of the court fees act by allowing the deficiency to be made good within a period of time fixed by it. if the deficiency is made good no..........ground:(13) in support of the first ground the argument was that according to the arbitration clause (clause 36 of the agreement) the decision of the architect was a condition precedent and as there was no valid decision of the architect in the instant case the basis for invocation of clause 36 was absent. clause 36 reads as under : 'alldisputes and differences of any kind whatever arising out of or in connection with the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract) shall be referred to and settled by the architect who shall state his decision in writing. such decision may be in the form of a final certificate or otherwise. the.....
Judgment:

S.N. Shankar, J.

(1) This appeal under Section 39 of the Arbitration Act, 1940 (hereafter called 'the Act') is directed against the order of the learned single Judge of this Court dated March 11, 1974 directing that the arbitration agreement between the parties be filed and the dispute between them be decided by a sole arbitrator.

respondent Allied Engineers, is a firm of Engineers. As per terms of the agreement dated January 20, 1969, they agreed to erect a building at Patiala for the appellant, M/s. Maltex Malsters Private Limited. The appellant is referred to in the. agreement as 'Employer' and the respondent as 'contractors'. According to clause 33 of the Articles of Agreement, the respondent-contractor was to be paid by the Employer from time to time by Installments under interim certificates to be issued by the Architect to be appointed in terms of the agreement for the works executed when in the opinion of the Architect work to the approximate value had been done in accordance with the contract. Clause 35 provides that decision, opinion, direction and certificate of the Architect with respect to matters covered by this clause were final and conclusive. Clause 36 then sets out the arbitration clause according to which all differences and disputes between the parties falling within it had to be referred to arbitration in terms of the clause.

(2) Disputes arose between the parties and on failure of the appellant to refer the same to arbitration, in October, 1971 the respondents applied under section 20 of the Arbitration Act (hereafter called 'the Act') for an order of the court to make a reference to arbitration according to the arbitration clause. The appellant contested the application on several grounds. Amongst others, they maintained that the courts at Delhi had no jurisdiction to try the application and that in any case the application was liable to be stayed in view of a previous application filed by them at Patiala under section 33 of the Arbitration Act. The learned single Judge framed the following issues: (1) Whether this Court has jurisdiction to hear the application? (2) Whether this petition is liable to be stayed under sections 10 and 151 of the Code of Civil Procedure? (3) Whether there is an arbitration agreement between the parties If so, whether there are existing disputes which can be referred to arbitration (4) What is the effect of the suit filed by the petitioner against the respondent at Patiala on the arbitration agreement? (5) Relief.

(3) Issues I and 2 were treated as preliminary issues and were decided by order dated February 13, 1974 and the application was directed to be tried on merits. Evidence of the parties was taken by affidavits and on this evidence the other issues were also decided against the appellant by order dated March Ii, 1974. It appears that during trial the appellants also applied for permission to lead oral and documentary evidence to substantiate the issues and this application was also dismissed on March Ii, 1974 but by a separate order.

(4) On issues 1, 2 and 4 the learned single Judge held that as the agreement was executed in Delhi and the building in pursuance of the agreement was constructed at Patiala, courts at both the places had jurisdiction to try the dispute arising out of the agreement but as clause (8) of the agreement specifically provided that courts at Delhi alone will have jurisdiction, Delhi courts alone could try the application and the question of its stay because of the pending application under section 33 filed by the appellant at Patiala did not arise. The institution of the suits by the respondent at Patiala, it was held, made no difference in view of the said clause (8) of the agreement. On issue No. 3, the learned single Judge held that there was a dispute between the parties that was covered by the arbitration clause and, thereforee, directed the agreement to be filed and appointed Professor C.H.S. Jhabavala as sole arbitrator to decide them.

(5) The last date for filing this appeal was April 20. 1974. The appeal was filed on April 18, 1974. The memo of appeal was accompanied by certified copies of three orders passed by the learned single Judge, namely, (i) certified copy of the final order dated March Ii, 1^74 accepting the application, (ii) certified copy of the order dated February 13, 1974 deciding the preliminary issues and (iii) certified copy of the order dated March Ii, 1974 dismissing the appellant's application for permission to lead oral and documentary evidence. A court-fee stamp of Rs. 3.00 was affixed only on the certified copy of the order dated February 13, 1974 but no stamp was affixed on the other two certified copies. The memo of appeal was also stamped with a court-fee of Rs. 5.25 only as against the requisite court-fee of Rs. 15.00 . On April 29, 1974 the Registry returned the appeal with the endorsement that it was not sufficiently stamped, that the duplicate set of the appeal papers had also to be filed and that certified copy of the impugned order was not properly stamped. The appellant was directed to re-file the appeal within a week. The appellant re-filed the appeal on May 8, 1974 with an additional court-fee stamp of Rs. 10.00 on the memorandum of appeal and with the requisite court-fee stamps of Rs. 2.75 each on the other two certified copies. It was again returned by the Registry with the endorsement that as the appeal was prima facie barred by time an application for condensation of delay be filed. On May 10, 1974 the appeal was re-filed with the application for condensation.

(6) Learned counsel appearing for the respondent at the outset urged that the appeal was barred by time. The argument was that certified copy of the last order dated March 11, 1974 by which the application of the respondent under section 20 was accepted bore no court-fee stamp when the appeal was filed and as such there was no valid appeal in the eye of law and the subsequent affixation of the requisite stamp on this copy sometimes on May 8, 1974 after the expiry of limitation for filing the appeal did not validate it. The order, it was maintained, was a 'decretal order' or the order having the force of decree within the meaning of Order 41 rule 1 and as the appeal was not accompanied with a copy of this order the appeal was incompetent.

(7) We see no merit in this contention. The order accepting the application under section 20 is not the 'decree' that is envisaged in Order 41 rule 1. It is an order and is appealable as an order by virtue of Section 39 of the Act. The word 'decree' in the last sentence of rule 1 of Order 41 means nothing other than a 'decree' as defined in sub-section (2) of Section 2 of the Code of Civil Procedure i.e. the formal expression of any adjudication which so far as regards the court expressing it conclusively determines the rights of the parties with regard to all or any of the matters in controversy in suit. Section 33 of the Code provides that the court after the case has been heard shall pronounce judgment and 'on such judgment a decree shall follow'. It is this 'decree' which Order 41, rule 1 requires to accompany the memorandum in case of appeals under the Code. There is no provision in the Arbitration Act requiring such a decree to be drawn up after the Court makes an order under section 20. The order remains an order and it does not become a decree simply because it is appealable or enforceable and executable. It is just like an order passed under the Hindu Marriage Act. In Daljit Singh Piara Singh v. Smt. Shamsher Kaur this is what the Court observed in the context of such like orders under the Hindu Marriage Act.

'THECode requires in an ordinary suit that the Judge shall make a judgment and that will be followed by formal expression in the shape of a decree. But no such pattern is to be found in any provision of the Act. Apparently a petition under the Act is not something in the nature of a suit. Whatever right of appeal there is under the Act as provided under Section 28 cannot be made subject to any limitations in regard to an appeal in the Civil P. C. consequently the right of appeal in Section 28 of the Act cannot be in any manner circumscribed by 0. 41 R.1 of the Civil P. C.'. The argument, thereforee, that order under appeal is a decree is not correct and has to be repelled.

(8) It is true that this order, when the appeal was filed, was not stamped. It was argued that as certified copy of this order had to accompany the appeal and according to Section 6 of the Court-Fees Act read with the schedules the certified copy filed could not at all be looked into by the Court being not sufficiently stamped, there was no proper appeal. But reliance on Section 6 of the Court Fees Act alone is misconceived. There is also the provision of Section 149 of the Code of Civil Procedure in regard to Court-fees. It provides that where the whole or any part of any fees prescribed for any document by the law for the time being in force relating to Court- fees has not been paid the court may in its discretion at any stage allow the person by whom such fees is payable to the whole or part as the case may be of such court fees and upon such payment the document in respect of which fee is payable shall have the same force and effect as if such fees had been paid in the first instance. In Munnan Lal v. Mst. Chhotka Bibi: : [1971]3SCR247 the effect of Section 4 of the Court Fees Act and Section 149 of the Code of Civil Procedure came up for consideration before the Supreme Court. Mitter, J. speaking for the Court said :-

'APARTfrom the decisions bearing on the point, there can in our opinion, be no doubt that Section 4 of the Court Fees Act is not the last word on the subject and the Court must consider the provisions of both the Act and the Code to harmonise the two sets of provisions which can only be done by reading Section 149 as a proviso to Section 4 of the Court Fees Act by allowing the deficiency to be made good within a period of time fixed by it. If the deficiency is made good no possible objection can be raised on the ground of the bar of limitation : the memorandum of appeal must be treated as one filed within the period fixed by the Limitation Act subject to any express provision to the contrary in that Act and the appeal must be treated as pending from the date when the memorandum of appeal was presented in Court. In our view it must be treated as pending from the date of presentation not only for the purpose of limitation but also for the purpose of sufficiency as to court-fee under Section 149 of the Code'. Recourse to Section 149 of the Code of Civil Procedure is, thereforee, available to the appellant.

(9) In support of his application for condensation the learned counsel for the appellant has filed his own affidavit as well as the affidavit of his clerk. The learned counsel in his affidavit stated that throughout the day on April 18, 1974 when the appeal was filed he was suffering from high blood pressure and giddiness and was for that reason unable to properly check the memo of appeal and the stamps affixed thereon and the deficiency was not detected by him. There is no rebuttal to this affidavit. We have no reason to disbelieve this statement of the learned counsel. This sufficiently explains how the appeal came to be filed without affixing a court fee stamp on the final order even though a court fee stamp of Rs. 3.00 was affixed on the order dated February 13, 1974 which was not the order appealed from. Shri F. U. Hashmi, clerk of the learned counsel gave Explanationn of the subsequent delay. He has stated in his affidavit that after the appeal was returned by the Registry to be filed within a week the counsel for the appellant gave him the papers to go to court and refile the same but while coming to court he came to know that some disturbances had taken place in Fatehpuri area where he lived and so he had to go to his home and the appeal could not be filed until May 8, 1974. There is no rebuttal to this affidavit also.

(10) 'THE discretion conferred by section 149 of the Code of Civil Procedure has normally to be exercised in favor of the litigant except in case of contumacy or positive mala fides or reasons of the similar kind'-(See Custodian of Evacuee Property, New Delhi v. Rameshwar Dayal and others: : AIR1968Delhi183 ). In this case the court also held that the question of bona fides for purposes of this section has to be considered from the point of view of the definition as contained in the General Clauses Act and not as in the Limitation Act so that a thing should be presumed to be done bona fide if it is done honestly, whether it is done negligently or not. In Mahanth Ram Das v. Ganga Das: : [1961]3SCR763 also the Supreme Court has ruled that a liberal view in regard to the powers of the court under this section has to be taken.

(11) In the facts of this case, having regard to the unrebutted statements made in the affidavits, referred to above, no mala fides or contumacy can be attributed to the appellant. In our view, a good case is made out for exercise of the court's discretion in his favor. Upon the affixation of the requisite court fee stamp on the final order the certified copy in this case has to be considered to have 'the same force and effect as if such fees had been paid in the first instance' vide Section 149 of the Code of Civil Procedure. There is no merit, thereforee, in the objection that the appeal is barred by time

(12) On merits, learned counsel for the appellant assailed the order of the learned single Judge on the following grounds : (1) that condition precedent to the invocation of the arbitration clause had not been fulfillled in this case and, thereforee, there could be no reference to arbitration and the application under section 20 should have been dismissed ; (2) that the application in any case should have been stayed under sections 10 and 151 of the Code of Civil Procedure because: (a) the respondents had themselves waived clause (8) of the agreement by filing two suits at Patiala; (b) because the previously instituted application under section 33 filed by the appellant was already pending in the court at Patiala. First GROUND:

(13) In support of the first ground the argument was that according to the arbitration clause (clause 36 of the agreement) the decision of the Architect was a condition precedent and as there was no valid decision of the Architect in the instant case the basis for invocation of clause 36 was absent. Clause 36 reads as under :

'ALLdisputes and differences of any kind whatever arising out of or in connection with the Contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the Contract) shall be referred to and settled by the Architect who shall state his decision in writing. Such decision may be in the form of a Final Certificate or otherwise. The decision of the Architect with respect of any of the excepted matters shall be final and without Appeal as stated in the preceding Clause. But if either the Employer or the Contractor be dissatisfied with the decision of the Architect on any matter, question or dispute of any kind (except any of the excepted matters) or as to the withholding by the Architect of any Certificate to which the Contractor may claim to be entitled, then and in any such case either party (the Employer or the Contractor) may within twenty-eight days after receiving notice of such decision give a written notice to the other party through the Architect requiring that such matters in dispute be attributed upon. Such written notice specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the Arbitration and final decision of a single Arbitrator being a Fellow of the Indian Institute of Architects to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of single Arbitrator, to the Arbitration of two arbitrators both being Fellows of the Indian Institute of Architects, one to be appointed by each party, which arbitrators shall before taking upon themselves the burden of reference appoint an Umpire.'

IT is not disputed that in the instant case there was a certificate dated March 2, 1971 issued by the Architect duly appointed within the meaning of this clause but it is urged that the Architect so appointed was the firm M/s. Teja Singh and Monga but the certificate was not issued by this firm only by one of he partners of the firm and that too, according to the appellant, after the firm had been dissolved, A persual of the clause would show that it is all embracing. All disputes and differences of any kind whatever, arising out of or in connection with the contract are covered by this clause. A dispute as to whether the alleged certificate which, it is not denied, was the certificate in regard to the work carried out under the contract was a certificate duly issued or not would be a dispute arising out of or in connection with the contract and as such would be a matter for decision by the arbitrator. We further find that in this case this certificate was not acceptable to the respondents also and on March 30. 1971 they gave a notice to the appellant and to the Architects that they wanted the matter to be settled by arbitration. The dispute thus, in our view, is fully covered by the arbitration clause.

(14) The learned counsel for the appellant drew our attention lo clause (3) of the Articles of Agreement which defines the term 'Architect' and provides that the 'architect' shall mean the 'architect' appointed by the parties and in the event of his death or ceasing to be architect for purposes of the contract such other person as shall be nominated for the purpose by the employer. The learned counsel urged that as the original firm appointed as 'architect' was dissolved, it was incumbent for the respondent to approach the employer, namely, the appellants for the nomination of another architect and it was the certificate of this architect alone which could be valid. The submission is misconceived. The very fact that the respondent disputed the correctness of the certificate raised a dispute that was to be decided in accordance with the arbitration clause. It was not necessary for them to have a fresh architect appointed under clause (3). It is, thereforee not correct to say that any condition precedent to the invocation of the arbitration clause had not been fulfillled. Second GROUND:

(15) The background of the submission under ground 2(a) is that the building constructed by the respondent at Patiala collapsed. The respondents maintained that it was due to wrongful and unauthorised stocking of barley by the appellant in the constructed premises which caused its collapse. In July, 1970 the respondents lodged a suit against the appellant before Senior Sub-Judge, Patiala praying for an injunction against the appellant from removing barley which had caused the collapse of the walls and the roof. It appears that thereafter the appellant also started making some additions and alterations on the site and the respondent filed a second suit in August, 1970 at Patiala praying for injunction to restrain the appellant from making additions, alterations etc. in the building which had been completed by them. The learned single Judge while deciding that Delhi courts alone had jurisdiction to try all matters in relation to the agreement held that by clause (8) of the Articles of this agreement parties had agreed that all disputes arising out of or in any way connected with this agreement shall be deemed to have arisen in New Delhi and only the courts at New Delhi had jurisdiction lo determine the same and, thereforee, the courts at Patiala had no jurisdiction in the matter. Learned counsel for the appellant urged that by filing these two suits in disregard of this clause the respondents themselves had waived it and it could not be invoked in their favor by the learned single Judge. There is, however, no substance in this contention. It is not denied that the appellant contested both the suits and the same are no longer pending. There is nothing on the record to show that the appellant in consequence changed his position. Mere filing of the suits, in our view, in the facts of this case, did not operate to amount to waiver to estop the respondents from invoking clause (8) of the agreement. Ground 2(b).

(16) This is the main contention canvassed before us. It is not disputed that prior to the institution of the present application under section 20 in April, 1971 the appellant had filed an application in court at Patiala under section 33 of the Arbitration Act. In view of our conclusion that clause (8) of the Articles of Agreement still remained operative, as held by the learned single Judge, it is clear that application of the appellant in court at Patiala is not competent. This fact alone makes the provision of Section 10 inapplicable. But, in addition to this we find that even if it be assumed that clause (8) stood waived that did not debar the respondents from filing the application under Section 20 of the Act at Delhi because the agreement containing the arbitration clause was admittedly entered into at Delhi. So, if this application could be filed at Delhi the simple question is whether it could be stayed because of the previously instituted application of the appellant under section 33. The answer, in our view, has to be in the negative because 'the scope of the two provisions of the Act are different. While under Section 33 the Court can only give a declaration as to the existence or otherwise of the arbitration agreement, under section 20 the court cannot only direct it to be filed but also appoint an arbitrator. The relief awardable under section 20 is more comprehensive in nature' and this consideration excludes the application under section 10 of the Code of Civil Procedure. In Brij Lal & Co. v. Madhya Pradesh Electricity Board: : AIR1975Cal69 two suits against each other were filed by the same parties regarding the same subject matter but the prayer under section 10 in regard to the subsequently instituted suit was refused on the ground that the previously instituted suit was not comprehensive. It was held :

'THATthe entire controversy between the parties could not he finally determined in the suit instituted first ; since the field of controversy and claim in the later suit was far more comprehensive the petition to stay the latter suit could not be granted although there were some common issues in the two suits.'

LEARNEDcounsel for the appellant referred to observations in Indian Express Newspapers (Bombay) v. Basumati Private Ltd: : AIR1969Bom40 where it was held 'that the true intent of provision of Section 10 is that the common matters in issue in two suits should be ordinarily decided in a previously instituted suit. This case is no authority for the proposition that if only some of the questions in the two suits are common the subsequently instituted suit must necessarily be stayed. The word 'ordinarily' used by the Bench in this case is significant. Each case has to be decided on its own facts'. As we have said already in view of clause (8) of the agreement the court at Patiala is not competent to entertain the application under section 33 and in any case in view of the limited scope of Section 33 the Patiala Court has no 'jurisdiction to grant the relief' prayed for by the respondent in the present application, which is a condition precedent for the applicability of section 10. Provisions of Section 10 in this situation, thereforee, are not attracted to the instant case.

(17) Relying on Jugometal Trg. Republike v. Rungta and Sons (Private) Ltd: : AIR1966Cal382 and Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal : : AIR1962SC527 the learned counsel then argued that the court has inherent powers apart from Section 10 to stay the present application. We find no justification, in the facts of this case, to invoke the inherent powers. The learned counsel had to concede that if the application under Section 33 is dismissed by Patiala court the appellants will still have to take resort to Section 20 for the relief prayed for by them. This will result in unnecessary delay and needless multiplicity of judicial proceedings and a piece meal decision of the controversy by two different courts.

(18) For reasons aforesaid, we find no merit in this appeal. The same is, thereforee, dismissed, but having regard to all the circumstances of the case we leave the parties to bear their own costs.


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