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Sate of Gujarat Vs. Patel Devjibhai Khimjibhai - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtGujarat High Court
Decided On
Judge
Reported in(1976)17GLR196
AppellantSate of Gujarat
RespondentPatel Devjibhai Khimjibhai
Cases ReferredShanti Shekhar Banerji v. Bombay Housing Board
Excerpt:
.....chhaya, the learned assistant government pleader, appearing on behalf of the state government, urged that the learned city civil judge was clearly in error in holding that clause 30 of the suit contract precludes the aggrieved party under the contract to approach civil court without first referring the matter in dispute to the superintending engineer. according to the respondent-firm, there were errors in the measurements taken by the state government and if the measurements were correctly taken, there would be no case for the state government to complain about the unexplained quantity of cement, steel or steel-wires as averred in the plaint. we are, therefore, of the opinion that all the tests are satisfied for coming to the conclusion that clause 30 contains an..........against the judgment and decree of the city civil judge, ahmedabad dismissing the suit of the state government for recovery of rs. 36, 781-09 paise after adjusting an amount of rs. 11,536-97 paise being the amount of security deposit against an amount of rs. 48,318-06 paise being the price of the materials, namely, steel, cement and steel-wire as well as empty cement bags supplied to the respondent-contractor. the suit has been dismissed by the learned city civil judge on the short ground that the suit was premature in view of the provision contained in clause 30 of the suit contract, requiring an aggrieved party to approach the superintending engineer before taking any legal action. the learned city civil judge has on the merits of the case found that the state government was.....
Judgment:

B.K. Mehta, J.

1. This is an appeal by the state of Gujarat against the judgment and decree of the City Civil Judge, Ahmedabad dismissing the suit of the state Government for recovery of Rs. 36, 781-09 paise after adjusting an amount of Rs. 11,536-97 paise being the amount of security deposit against an amount of Rs. 48,318-06 paise being the price of the materials, namely, steel, cement and steel-wire as well as empty cement bags supplied to the respondent-contractor. The suit has been dismissed by the learned city civil judge on the short ground that the suit was premature in view of the provision contained in Clause 30 of the suit contract, requiring an aggrieved party to approach the superintending engineer before taking any legal Action. The learned City Civil Judge has on the merits of the case found that the state Government was entitled to recover Rs. 36 781-09 paise from the respondent-contractor. It is this judgment and decree which is the subject matter of this first appeal before us.

2. At the time of hearing of this appeal, Mr. Chhaya, the learned Assistant Government pleader, appearing on behalf of the state Government, urged that the learned City Civil Judge was clearly in error in holding that Clause 30 of the suit contract precludes the aggrieved party under the contract to approach civil court without first referring the matter in dispute to the superintending engineer. In submission of Mr. Chhaya the provision contained in Clause 30 should not be construed either as a certification clause or as a clause providing for arbitration as a condition precedent to the filing of the suit. In support of his contention Mr. Chhaya relied on the decision of the division bench of this Court consisting of J.M. Sheth & B.K. Mehta, JJ. (per J.M. Sheth, J.) In appeal No. 34 of 1970 from order with Civil Revision Application No. 298 of 1970 with Civil Revision Application No. 299 of 1970 decided on 19th/20th January, 1971. He, therefore, urged that the learned city civil judge was, therefore, in error in dismissing the suit in spite of his finding that the state Government was entitled to recover Rs. 36, 781-09 paise from the respondent-contractor.

3. The rival cases of parties be stated for appreciating the contention of the learned assistant Government pleader. It is not in dispute that the respondent-firm was entrusted with the work of constructing 18 constabulary quarters at the head quarters police lines at ahmedabad on the terms and conditions contained in the contract document ex. 50. The work was commenced by the respondent-firm in the month of June, 1956 and it submitted running account bills from time to time and payments were made to it accordingly. The final bill was prepared and the respondent-firm was asked by letter dated November 2, 1960 to attend at the office of the Deputy Engineer, Shahibag Division, Ahmedabad to finalise the bill. The partnerof the respondent-firm requested the department to defer settlement of bill till November 20, 1962. The deputy engineer of the state Government by his letter of December 4, 1962 informed the respondent-firm about the quantity of cement and steel not accounted for in the running account bills as also about the fact that empty cement bags were not returned by the respondent-firm. The respondent-firm was accordingly informed by the letter of December 18, 1962, to which the respondent-firm by its letter of December 25, 1962 gave a false and evasive reply. Though the respondent-firm was asked to show the receipts for the return of empty cement bags, the receipts were not produced and shown. It was the case of the state Government that it supplied 498 tons of cement, 95.6-324 tons of steel and 0.5t-3h-14 c.w.t. of steel-wires for the suit work through the public works department of the state Government and the quantity accounted for according to the state Government, came to be tons 353-1 cwt. of cement 64t-3h-ooc. Of steel and the remaining quantity, namely 144 tons and 19 cwt. Of cement, 31t-3h-3.24 c.w.t. tons of steeland 05t-3h-14 C.W.T. of steel-wire remained unaccounted for, and for which no recoveries were made in the running bills. The state Government also claimed Rs. 3, 828-50 paise towards the cost of 5105 empty cement bags at the rate of Rs. 0-75 paise per bag. The state Government in all, therefore, claimed an amount of Rs. 48, 318-06 paise as the sum recoverable from the respondent-firm. However, the state Government adjusted an amount of Rs. 11,536-97 paise being the amount of security deposit against the aforesaid amount to be recovered and made a net claim of Rs. 36, 781-09 paise. The case of the respondent-firm, as disclosed in its written statement, ex. 12, was that the suit of the state Government was premature in view of Clause 30 of the suit contract under which all the disputes relating to the said agreement were required to be referred to the superintending engineer. The respondent-firm denied that it did not cooperate the state Government in finalising the bills. According to the respondent-firm it had returned the empty bags and, therefore, the state Government was not entitled to recover any amount on that count. The respondent-firm also asserted and maintained that there was no unexplained quantity of cement or steel as alleged by the state Government. According to the respondent-firm, there were errors in the measurements taken by the state Government and if the measurements were correctly taken, there would be no case for the state Government to complain about the unexplained quantity of cement, steel or steel-wires as averred in the plaint. The learned city civil judge on the basis of the respective cases of the parties raised necessary issues, and on the 2nd issue, whether the state Government has established its claim of Rs. 36,781-09 paise, it was found by the learned judge as under:

19. This oral evidence, supported as it is by the documentary evidence to which I shall presently advert, in my opinion, is sufficient enough to prove that the total quantity of steel and the cement, as claimed by the plaintiff, was supplied to the contractor, that the cost recovered therefore is as mentioned in the running account bills, and the balance remains payable by the contractor-defendant in respect of these materials supplied, as is an excess of the quantity mentioned in the running account bills and as finally mentioned in the final bill.

20. The important documents in this connection are the said 39 unstamped receipts exhibit 96 and the last unstamped receipt, exhibit 90. These receipts are passed by the defendant contractor, acknowledging the supply of the materials mentioned therein. The defendant has not examined any witness, nor has he led any documentary evidence from the firms account books, or any other document or paper to controvert the position as it emerges from these unstamped receipts. These receipts alone therefore are sufficient enough to establish the plaintiffs case with regard to the supply of the materials of cement and steel.

21. With regard to the empty cement bags, there is the cement bag register.... Maintained by the department, and entries therefrom are produced on record through witness Dineshchandra as per exhibit 105. Here also, there is no evidence brought on record from the side of the defendant firm to controvert the position of cement bags as it emerges from this register.

22. Apart from this, the seven running account bills, the entries in the contractors ledger (exhibits 48-49), the measurement books (exhibits 60-61) and the forms of indents for materials put in by the defendant-firm, which are at exhibit 111, strengthen the case of the plaintiff state with regard to the materials supplied, and empty cement bags not returned by the contractor, that is, the defendant-firm.

23. In this view of the matter, on merits, I do hold that the plaintiff state has established its claim for the suit-amount and my finding therefore, on issue No. 2 will be in the affirmative.

However, in the opinion of the learned City Civil Judge, the claim of the plaintiff-state with regard to the Recovery in connection with the materials supplied and unaccounted for as also with regard to non-return of empty cement bags which is disputed by the defendant-firm both in the written statement before the court as also in the correspondence that ensued between the parties prior to the filing of the present suit, was one which ought to have been referred to for the decision of the superintending engineer as provided in Clause 30 and since it was not done, the present suit was premature and not maintainable. The learned City Civil Judge followed the decision of the learned single judge of the Bombay High Court in Shanti Shekhar Banerji v. Bombay Housing Board in pauper petition No. 20 of 1955 and suit No. 377 of 1955 where the learned Single Judge of the Bombay High Court held in view of the provision contained in the contract before him which was pari-matena with the provision contained in Clause 30 of the suit contract document ex. 50, in the present suit, that it was a certification clause the compliance of which was a condition precedent to the filing of the suit the learned city civil judge found himself being bound by this decision as it was the decision of the Bombay High Court rendered before 15th March 1957 the learned City Civil Judge, therefore, having found himself bound by that decision held that the suit was premature and, therefore on that ground alone dismissed the suit.

4. Mr. Chhaya, the learned assistant Government pleader, was right when he contended that the provision contained in Clause 30 of the suit contract ex. 50 was neither a certification clause nor an arbitration clause by way of condition precedent. As far as this question is concerned the matter is concluded by the decision of a division bench of this Court consisting of J.. Sheth & B.K. Mehta JJ. In appeal No. 34 from order alongwith two other companion matters (Civil Revision Applications Nos. 298 and 299 of 1970) decided on 19th/20th January 1971 the said three matters were referred to the division bench as a common question of law had arisen therein. The reference was necessary as conflict arose in the interpretation of Clause 30 of the tender agreement in those three matters. The conflict arose on account of the decision of the learned single judge of the Bombay High Court in the matters reared to above and the decision of the learned single judge of this high court (coram: J.B. Mehta J.) in appeal from order No. 84 of s decwd on 17th September, 1968. In view of this conflict of decisions A.D. Desai, J. Has referred all the three matters to the division bench the clause in the contracts in those three matters, the interpretation which gave rise to the conflict, was pari-materia with the provision contained in Clause 30 in the present suit contract ex 50 the bench in its detailed judgment after considering all the authorities died at the bar and considering all the clauses of those contracts and he contentions which were urged before it held as under:

In such a case one has to take into consideration the scheme of the and Clause 30 in the context of the preceding clauses and arrive at the intention of the parties. The significance of adoption of the terms under Clause 30 of the tender agreement of comprehensive nature and of the widest import and connotation cannot be justifiably overlooked. It leads, in our opinion, to the inevitable conclusion that the parties to the contract intended that a person named therein had to Act judicially and not administratively. Looking to the nature of functions assigned to him for decision, it is obvious that the parties intended that there should be a judicial inquiry prior to his giving a decision. We are, therefore, of the opinion that all the tests are satisfied for coming to the conclusion that Clause 30 contains an arbitration clause, it is no doubt a limited ordinary arbitration clause. We are further of the opinion that it does not operate as a condition precedent. The liability to pay arises out of works contract. It was not dependent upon the award of an arbitrator. We are of the opinion that the view taken by our learned brother J.B. Mehta, J. Represents the correct view. With very great respect to coyajee, we may say that the view taken by him in pauper petition No. 20 of 1955 (suit No. 377 of 1955) in Shanti Shekhar Banerji V. Bombay Housing Board, decided on 15th March 1957, is not correct. We, therefore, find that this Clause 30 is neither a certification clause nor an arbitration clause which operates as a condition precedent it is in our opinion, a limited ordinary. arbitration clause.

5. The division bench of this Court considered all the provisions contained in the contracts before it and reached the conclusion, on the tests laid down by various authorities in this connection to determine, whether a particular provision is in nature of an arbitration clause or certification clause and held that the provision contained in Clause 30 in the contracts before it was a limited ordinary arbitration provision. The suit contract, ex. 50, with which we are concerned is a percentage rate tender contract and contained in form b-1 of the public works department. The suit contract, with which we are concerned, is in pari-materia with the contracts with which the division bench was concerned in those three referred matters. In that view of the settled position of law, as far as this Court is concerned, we do not think that the learned city civil judge was right in holding that it was a certification clause the compliance of which was a condition precedent to the filing of the suit. The learned city civil judge, therefore, was clearly in error in dismissing the suit on that short ground. In that view of the matter, therefore, this appeal should be allowed and the finding of the learned city civil judge on issue No. 1 that the suit was premature should be reversed. The finding of the trial court on issue No. 2 that the state Government was entitled to recover the amount of Rs. 36,781-09 paise should be affirmed. The result is that this appeal is allowed and it is ordered that the respondent-defendant-firm shall pay to the state Government a sum of Rs. 36,781-09 paise with running interest at the rate of 6 per cent from the date of the suit till realisation. The respondent-defendant-firm shall pay costs of the suit to the state Government as in the trial Court. There should be no order as to costs in this appeal. Decree be drawn accordingly.


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