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D.H. Gajjar and Co. Vs. State of Gujarat - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1979)2GLR10
AppellantD.H. Gajjar and Co.
RespondentState of Gujarat
Cases ReferredAir Foam Industries Pvt. Ltd. v. Union of India
Excerpt:
.....of law strictly so-called. 6. a similar case like the one before the supreme court had arisen in this high court also in the appeal from order no. the corporation, however, arrogated to itself the right to determine its claim ignoring the claim made by the other side before the arbitrator, and called upon the contractor's guarantor, the bankers, to make good the payments......law allowed the application and had restrained the union of india from effecting recovery of the amounts claimed to be due from the other pending bills of the petitioner there. in above view of the matter, the revision application is allowed. during the pendency and final disposal of the aforesaid suit, the respondent state is restrained from effecting recovery of the alleged claim of the defendant under the suit contract from the other pending bills of the plaintiff. rule is accordingly made absolute with no order as to costs. for the sake of clarity, it is stated that the injunction granted by this court is not to be interpreted to mean that this court has given a specific mandatory order to the state government that it should pay up the remaining bills of the plaintiff. all that i.....
Judgment:

N.H. Bhatt, J.

1. This appeal from Order has been preferred by the original plainiff of the Special Civil Suit No. 28 of 1978 pending in the court of the Civil Judge (S.D.) Ahmedabad (Rural) at Narol, The appellant herein is the original plaintiff in that suit and the respondent herein, the State of Gujarat, is the defendant there. The plaintiff has filed the said suit for two reliefs. The first relief is for claiming a sum of Rs.3,37, 148.00 from the defendant State as the amount for which the State is alleged to be liable under the building contract between the parties. The plaintiff had undertaken the work of improvement and asphalting and bringing to the State High-way Standard the Dhudhrej-Vana-Malvan Road in Surendranagar District. The plaintiff-firm has alleged in the suit that it was able to execute the work upto the extent of Rs. 3,25,000/- and because of the breach on the part of the State Officers, the contract had become annulled on and from 17-4-74 and the plaintiff had become entitled to receive trhe price of the work done and damages available under the law. The plaintiffs' second prayer in the suit, however, is material for the purpose of this application. The case of the defendant-State appears to be that the plaintiff was not entitled to claim anything under this contract and, as a matter of fact, it was the defendant-State that stood to claim from the plaintiff-firm the sum of rupees more than a lakh. After the plaintiff served the defendant-State with a statutory notice under Section 80 of the Civil Procedure Code but before the suit came to be filed, the State ex parte adjudicated its claim against the plaintiff-firm and issued a sort of a confodential circular through its Executive Engineer, Surendranagar Division on 12-3-76 calling upon the Executive Engineers in the State and the Executive Engineers of the various District Panchayats to effect the recovery of the State's alleged claim under this contract, amounting to Rs. 189,603.88 out of the plaintiff's outstanding bills with them. The plaintiff in this suit, therefore, challenged the said circular letter as mala fide, wrongful, unwarranted and as a counter-blast to the statutory notice and threatended civil action by the plaintiff-firm against the defendant. The second prayer in the suit, therefore, is for a declaration that the confidential circular mentioned above issued by the Executive Engineer, Surendranagar Division be declared mala fide and wrongful and a further consequential prayer also is sought that the defendant-State be restrained from executing and implementing the said circular.

2. Along with the suit, the plaintiff had also filed an application for an injunction of the type mentioned in the suit by recourse to provisions of Order 39 Rules 1 and 2 and Section 152 of the Civil Procedure Code. The ex-parte injuction was granted by the learned trial Judge, namely, the Civil Judge (S.D.) Narol, but after bipartite hearing, the learned Judge was pleased to vacate the said order. It has given rise to the present proceedings filed initially as an Appeal from Irder under Order 43 of the Code.

3. At the outset, Mr. Kadri, the learned Assistant Government Pleader appearing for the State, raised a contention that the Appeal from Order was not completent because the order that was passed by the learned trial Judge could not be legitimately sought under the provisions of Rules trial Judge could not be legitimately said to be one only under Section 151 of the Code. Mr. Kadri, therefore, urged that once the court passed an order refusing to exercise its inherent powers under Section 151 of the Code, neither party to that application would have a right of appeal under the provisions of Order 43 of the Code. Mr. Kadri's submission appears to be very well-founded. Accepting this challenge flung by Mr. Kadri for the State, Mr. Sukhwani for the original plaintiff prayer for the court's permission for converting the Appeal from Order into a revision application under Section 115 of the Code. That prayer of Mr. Sukhwani has been granted by me and, therefore, the present proceedings are dealt with and disposed of by me as if they are the proceedings of a civil revision application under Section 115 of the Code. I had also ordered that filing of the affidavit in support of the revision application is dispensed with.

4. Arguing on the basis of the present proceedings being revisional proceedings under Section 115 of the Code, Mr. Sukhwani submitted that the learned trial Judge had proceeded on gross misconception of law and had on that account declined to exercise the jurisdiction vested in him by law. To me it appears that Mr. Sukhwani's submission is well-founded, through I hasten to add that in the firstr instance I too felt that this was not a case for granting any injunction.

5. Mr. Sukhwani's submission is that when the lis between the parties is pending in a competent court and when it was in the offing, the State Government arrogated to itself ex-parte right to adjudicate upon its own rights under the contract by by-passing the forums established by law for determining the controversial quetions between the two litigating parties. No doubt, under the contract, Clause 3(a) incorporated by the learned trial Judge in his order, paragraph 5 the State Government was entitled to deduct 'from any money due to him by Govenment under the contract or otherwise or from his security deposit or the proceeds of sale thereof or a sufficient part thereof.' The impugned circular issued by the Executive Engineer, Surendranagar seems to have been passed pursuant to this contractual right reserved for the State at the time of the contract. Mr. Sukhwani's contention, however, is that the State cannot arrogate to itself such a right to adjudicate, particularly when a competent civil forum is seized of the matter. Mr. Sukhwani in this connection involed the aid of the judgment of the Supreme Court in the case of Union of India v. Raman Iron Foundry : [1974]3SCR556 . In that case, it has been held as follows:

Where during the pendency of arbitration proceedings for determination of the mutual claims for damages arising out of a breach of a certain contract to supply goods the contractor apprehending that certain bills which had then become payable to him by the purchaser under other contracts would be withheld and appropriated towards the amounts of damages claimed by the purdhaser, applied for and obtained an interim injunction from the High Court restraining the purchaser from doing so under Clause 18 of the contract..The High Court was justified in issuing the order of interim injunction which was clearly within its power under Section 41(b) because the claim for damages formed the subject matter of the arbitration proceedings and the court could always say that until such claim is adjudicated upon, this purchaser shall be restrained from recovering it by appropriating other amounts due to the contractor.

The only distinction between the case before the Supreme Court and the case before this High Court is that in that case the court granted ad interim injuction during the pendency of the arbitration proceedings whereas in this case, the injunction is sought for during the pendency of the civil suit. Barring this distinction, between the nature of the proceedings, there is no distinction whatsoever. The powers to grant interim injuinctions vested in the court are generally regulated by the standards laid down for granting permanent injunctions as per the provisions of the Specific Relief Act. The underlying principles are always invoked and applied as principles at least of justice, equity and good conscience, if not the principles of law strictly so-called. What the Supreme Court has laid down in the above case will apply and in my view it must apply mutatis mutandis to an injunction prayed for in such suits.

6. A similar case like the one before the Supreme Court had arisen in this High Court also in the Appeal from Order No. 89 of 1975 decided on 6-10-75 by D.P. Desai J. of course it was a converse situation there. The appellant before the Gujarat High Court was the Gujarat Industrial Development Corporation, a semi-Government body so-called, and the respondent was a contractor. The trial court in that case had granted the injunction and the said Corporation had moved the High Court for vacation that injunction. The High Court firstly dismissed the Appeal from Order on the ground that it was not competent. The High Court then proceeded to deal with the merits of the case also in the course of that alternative adjudication, the principles applicable to this case were exquisitely reiterated by the learned Judge. It was a case of the Bank guarantee given by the contractor. The matter was pending before Arbitrator. The Corporation, however, arrogated to itself the right to determine its claim ignoring the claim made by the other side before the Arbitrator, and called upon the contractor's guarantor, the Bankers, to make good the payments. The contractor, had, therefore, applied for and got an injunction under Section 41(b) of the Arbitration Act, which injuction was sought to be vacated by the Corporation by preferring the said Appeal from Order. In the course of that Judgment, the learned Judge has inter alia observed as follows:

Prima facie therfor, as long as the liability arising on the default of the principal debtor is not made out, the Corporation cannot appropriate to itself, the amount of the Bank guarantee.... In my opinion suffcient material has not been placed before the court so as to entitle the court to come to a prima facie conclusion as regards the right of the Corporation to deduct the amount which is equal to or more than the amount of bank guarantee.

In case on hand also, the written statement filed by the State is not sufficiently clear even to prima facie uphold that the State's claim vis-a-vis the claim put forward by the plaintiff contractor is in all probabilities likely to be upheld.

7. Another case also is there, which was pressed into service by Mr. Sukhwani for the pentitioner-contractor. It is the case of M/s. Air Foam Industries Pvt. Ltd. v. Union of India : AIR1973Delhi253 . That case also is a case od an injunction issued under Section 41(b) of the Arbitation Act, 1949. In that case, the Delhi High Court on appreciation of all relevant factors and law allowed the application and had restrained the Union of India from effecting recovery of the amounts claimed to be due from the other pending bills of the petitioner there. In above view of the matter, the revision application is allowed. During the pendency and final disposal of the aforesaid suit, the respondent State is restrained from effecting recovery of the alleged claim of the defendant under the suit contract from the other pending bills of the plaintiff. Rule is accordingly made absolute with no order as to costs. For the sake of clarity, it is stated that the injunction granted by this Court is not to be interpreted to mean that this Court has given a specific mandatory order to the State Government that it should pay up the remaining bills of the plaintiff. All that I have stated is that the State's counter-claim in this suit shall not be adjusted towards the other bills due to the plantiff firm and no more.


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