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Jiwnani Engineering Works Pvt. Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectArbitration;Civil
CourtKolkata High Court
Decided On
Case NumberSpecial Suit No. 62 of 1976
Judge
Reported inAIR1978Cal228
ActsArbitration Act, 1940 - Section 20; ;Code of Civil Procedure (CPC) , 1908 - Section 11 - Order 2, Rule 2
AppellantJiwnani Engineering Works Pvt. Ltd.
RespondentUnion of India (Uoi)
DispositionApplication dismissed
Cases ReferredUnion of India v. Bungo Steal Furniture
Excerpt:
- .....sought to be raised had been raised or was part of the reference made before. it appears that the claim raised before was a claim in respect of earthwork in embankment. now the claim sought to be raised is also a claim on account of earthwork but it was in respect of bridge work and turfing. the claim was a claim in respect of the earthwork, but at a different place. such niceties of bifurcation of claim depending on the location upon which the claim is made, in my opinion, would not be a proper way of looking at a claim made in the arbitration proceeding which, according to me, is meant for speedy and quick disposal of disputes between the parties. in my view, therefore, this claim which is now sought to be raised was part of the claim raised before. it is difficult to determine on.....
Judgment:
ORDER

Sabyasachi Mukharji, J.

1. This is an application under Section 20 of the Arbitration Act, 1940. Jiwnani-Engineering Works Pvt. Ltd., the plaintiff herein carried on and still carries on business as Railway Contractor and Engineer having its office at 75/C, Vivekananda Road, Calcutta. Pursuant to an invitation to tender by the defendant, the South Eastern Railway, the plaintiff duly submitted a tender for execution of earth work in formation, bridge works, buildings and other miscellaneous works in connection with the doubling of the railway tracks from Hijli to Balasore on the east coast of the South Eastern Railway. It is the case of the plaintiff that the plaintiff duly executed all the works under the agreement. Disputes arose and the same were referred to arbitration. The disputes referred contained as it appears from Annexure-A to the petition claims, inter alia, as follows :

'3. Earthwork in embankment. Final bill prepared by XEN as per actual cross-section vide pages 2115 to 2135 of M. B. No. 2/BKD/KCP-3,66,923 Cft @ Rs. 76.23 p. per 1000 Cft. Rs. 25,683.44 (This amount should have been Rs. 27,208.24 as per contractor's claim.'

2. The arbitrators held sittings on the said disputes and thereafter referred the matter to an Umpire and the Umpire has made the award on 24th May, 1975 directing the South Eastern Railway to pay to the plaintiff a sum of Rs. 75,802/-and also Rs. 4,312/- on fulfilment of certain conditions. It is the case of the plaintiff that during the currency of the proceedings before the said Umpire, the plaintiff found out that it had omitted to make a claim in respect of short payments made in the item of earth work in formation and filling done between the two banks and shrinkage and other quantities in slopes. The plaintiff, therefore, wanted to raise a claim of Rs. 88,408/- on that score. The said claim was sought to be raised by the letter dated 27th April, 1975. The said letter was to the following effect :

'ToThe General Manager,S. E. Railway/GRC/Cal-43,Dear Sir.Sub : Earthwork, Bridgework and turfing in Section 5 under Agreement No. CE/PD/54/64. Against the above-noted Agreement, we have been paid less with regard to the item of earth-work-information and filling done between the two banks as well as on account of Shrinkage.

This quantity comes to 11,59,765 Cft. and in terms of payment dues outstanding comes to Rs. 88,408/- as per the rates of the agreement and we claim the immediate payment for the same.

The Railways have further recovered a sum of Rs. 44,226/- in excess on account of recovery for alleged excess issue and use of cement and we claim for refund of the same.

The Railways having so far not paid us the dues, therefore we claim the interest at 12 per cent which is outstanding as at 31st March, 1975, and it amounts to Rs. 2,41,019/- having remained outstanding.

We also claim interest at 12 per cent till our dues are paid.

The aforesaid claims are not in the pending reference before the Umpire Sri K. Balachandran, Addl. Chief Engineer (G), S. E. Rly/GRC, Calcutta-43, for which arbitration of some other claims are before him.

Kindly either allow the aforesaid claims or refer the same for adjudication in an Arbitration Reference in terms of the Arbitration Clause No. 63 of General Conditions of the Contract.

This may please be treated as 'Urgent'. Thanking you,Yours faithfully, Sd/-for Jiwnani Engg. Works (P) Ltd.'

3. As the General Manager of the South Eastern Railway did not allow or refer the said claim in the pending proceedings, the plaintiff has now made this application, under Section 20 of the Arbitration Act.

4. In this application, several contentions were urged in opposition on behalf of the respondent. It was submitted, firstly, that the claim having not been preferred at the time of the first reference could not be preferred now. It was also submitted that the present claim was part of the original claim in respect of which award has been made by the Umpire. It was, then, submitted that the present application was belated. It would be advisable to deal with the last question first, viz. whether the claim is belated.

5. On behalf of the respondent, it was submitted that the work had been completed in or about 1968 and the instant application was made on the 24th May, 1975. It was, therefore submitted that under Article 137 of the Limitation Act, 1963 the present application was belated. Article 137 prescribes a period of three years from the date when the right to apply accrues. My attention was drawn to the decision of the Supreme Court in the case of Kerala State Electricity Board, Trivandrum v. T. P. Kunhaliumma, : [1977]1SCR996 . There, the Supreme Court held that Article 137 of the Limitation Act, 1963 would apply to petition or application filed under any Act and therefore, it was contended by virtue of the aforesaid decision, Article 137 would apply to an application under Section 20 of the Arbitration Act, 1940 and, therefore, the present application was barred. In this connection, reference must be made to the arbitration Clause 63 which is to the following effect :

'Clause 63(1). Demand for Arbitration.-- In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the railway of any certificate to which the contractor may claim to be entitled to or it the Railway fails to make a decision within a reasonable time, then and in any such case, but except in any of the 'ex-cepted matters' referred to in Clause 62 of these conditions, the contractor, after 90 days of his presenting his final claim on disputed matters, may demand in writing that the dispute or difference be referred to arbitration. Such demand for arbitration shall specify the matters which are in question, dispute or difference, and only such dispute or difference of which the demand has been made and no other, shall be referred to arbitration.

(2) Obligations during pendency of arbitration work under the contract shall, unless otherwise directed by the Engineer, continue during the arbitration proceedings, and no payment due or payable by the Railway shall be withheld on account of such proceedings provided however it shall be open for the arbitrator or arbitrators to consider and decide whether or not such work should continue during the arbitration proceedings.'

6. In view of the aforesaid, on behalf of the petitioner it was urged that the application in this instant case was not belated because the right to apply to this Court arose on the failure of the General Manager to comply with the request made by the contractor. That request was made by the letter dated 7th Apr., 1975 and this application has been made on 9th Dec., 1976. From that point of view it appears to me that the right to apply to this Court under Section 20 had not become barred. It was, then, contended on behalf of the respondent that in any event the claim sought to be referred to arbitration was belated and barred by limitation. There is a good deal of substance in the contention that the claim now sought to be referred to arbitration is barred by limitation. But the Supreme Court has observed in the case of Wazir Chand v. Union of India, : [1967]1SCR303 that in an application under Section 20 of the Arbitration Act the Court was not concerned with the question whether the claim sought to be referred to arbitration was barred by limitation or not. That was a matter within the jurisdiction of the arbitrators to decide. The same view was reiterated by the Supreme Court in the case of Mohd. Usman v. Union of India, : [1969]2SCR232 . The Supreme Court in its decision in the case of Kerala S. E. Board v. T. P. Kunhaliumma, : [1977]1SCR996 did not approve of the views of the Supreme Court in the cases mentioned before that application under Section 20 of the Arbitration Act, 1940 would not be governed by the limitation prescribed by the Limitation Act. But the Supreme Court was there dealing with the question whether in any application under any Act other than Civil Procedure Code, Article 137 of the Limitation Act would be applicable or not. The Supreme Court was not dealing in the last mentioned case with the question whether the contention that the claim was barred by limitation or not before the arbitrator is a relevant consideration for refusing an application under Section 20 of the Arbitration Act, 1940. In the aforesaid view of the matter it must be held that the Question whether a claim is barred by limitation or not before the arbitrator is not a relevant consideration for an order under Section 20 of the Arbitration Act, 1940. This contention urged on behalf of the respondent, therefore, cannot be accepted.

7. The other contention is whether the claim sought to be raised could be allowed to be raised at this time. This question involves two different considerations. First, whether this present claim had been in fact raised before or was part of the previous claim and secondly, whether, if It was not part of the previous claim, it could be referred again afresh. On behalf of the plaintiff reliance was placed on the decision in the case of Kerorimall v. Union of India, : AIR1964Cal545 . There P. C. Mallick, J. held that the same dispute once referred and embodied in an award could not be subject-matter of a fresh reference and to that extent rule of res judicata applied to arbitration proceeding. The learned Judge, however, further held that there was no authority for the proposition that the disputes which could have been raised but were not raised previously could not be raised on the principle of constructive res judicata. If, however, the arbitrator in determining his own jurisdiction considered a particular dispute sought to be raised by one party to be not within the reference and, therefore, he had no jurisdiction to decide it, then it could not be said that the arbitrator had adjudicated the dispute. If there had been no such adjudication of the dispute it could not be held that the subsequent reference to the dispute was bad and was not permissible, In such a case the subsequent reference could not be held to be illegal on the ground of res judicata or principles analogous thereto. Learned Judge referred to several authorities but the learned Judge in that case found as a (fact that the dispute which was sought to be raised before him had been expressly left out of consideration in the previous arbitration proceeding on the ground that the arbitrator lacked jurisdiction to entertain the dispute. Reliance was also placed on the decision in the case of Purser & Co. (Hillington) Ltd. v. Jackson, 1976 (3) All E R 641 where the learned Judge held that in arbitration proceedings ii was the terms of the reference of the arbitration which determined the issues which the arbitrator had to decide. Accordingly, if a particular issue was included in the terms of reference, the claimant would be estopped by the doctrine of res judicata from raising that issue in the subsequent arbitration proceedings, The first consideration, therefore, is to find out whether the claim now sought to be raised had been raised or was part of the reference made before. It appears that the claim raised before was a claim in respect of earthwork in embankment. Now the claim sought to be raised is also a claim on account of earthwork but it was in respect of bridge work and turfing. The claim was a claim in respect of the earthwork, but at a different place. Such niceties of bifurcation of claim depending on the location upon which the claim is made, in my opinion, would not be a proper way of looking at a claim made in the arbitration proceeding which, according to me, is meant for speedy and quick disposal of disputes between the parties. In my view, therefore, this claim which is now sought to be raised was part of the claim raised before. It is difficult to determine on what basis the Umpire has awarded the amount for claim for earthwork, entertaining a new claim for earthwork may require modification or alteration of the awarded amount. That is not possible. The claim adjudicated upon was claim for earthwork, the present claim is also a claim for earthwork. Therefore, both on the authority of the decision in the case of Kerorimall v. Union of India, : AIR1964Cal545 as also on the authority of the English decision referred to hereinbefore It must be held that the present claim is barred by the principles of constructive res judicata. Quite apart from that, it appears to me even if a view is taken that the present claim was not part of the original claim made because it is a claim in respect of earthwork at a different place, then in my opinion, it would require serious consideration whether the same is barred or not in this case. Arbitration is a procedure for speedy disposal of disputes between the parties. A claim which could have been raised and which had not been raised, in my opinion, should be considered to be barred even though the provisions of Order 2 Rule 2 of the Code of Civil Procedure in terms do not apply to arbitration proceedings in appropriate cases. In the judgment of the Calcutta High Court referred to in the case of Kerorimal v. Union of India, (supra) Mallick J. was concerned with the case where the dispute had been expressly left out That is not the case. The principle behind Order II of the Code of Civil Procedure is salutary. The principle is to prevent multiplicity of proceedings. Order 2 Rule 2 of the Code deals with the vice of splitting a cause of action. The purpose of arbitration proceedings is speedy disposal of disputes. To say that hundred or more different disputes could be permitted to be entertained simply because one was not part of the previous dispute would be defeating the object of arbitration proceeding. I do not see why the principles behind Order 2 of the Code should not be applied in the arbitration proceedings, in the case of Union of India v. Bungo Steal Furniture (Pvt.) Ltd., : [1967]1SCR324 the Supreme Court held that though in terms Section 34 of the C. P. C. did not apply to arbitration proceedings, the principles of that Section could be applied by the arbitrator for awarding interest. The Supreme Court observed at page 1035 of the report in that case that it was an implied term of reference that the arbitrator would decide the dispute according to existing law and give such relief as a court of law could give. Similarly it could well be said that the Umpire in this case can give such relief as the court of law could give and if the court of law is prohibited by Order 2 of the Code to entertain the dispute now sought to be raised I see no reason why the Umpire should not be, This is not saying that all disputes under an arbitration agreement must be disposed of by cne award. The circumstances under which there can be more than one award under one arbitration agreement need not be considered here. I am also not concerned here with any subsequent disputes arising out of the agreement. In the view I have taken on the question whether the present disputes are covered by the claim it is not necessary for me to rest my decision on this point. In the aforesaid view of the matter it must be held that the present dispute cannot be referred to the Umpire.

8. In the premises, this application fails and is accordingly dismissed. There will, however, be no order as to costs.


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