BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS RAMA KANT SINGH

BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS RAMA KANT SINGH

1
NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2030 OF 2022
[arising out of SLP (CIVIL) No.  4843 OF 2022]
[DIARY NO. 41870 OF 2019] 
BIHAR INDUSTRIAL AREA DEVELOPMENT
AUTHORITY & ORS. …     APPELLANTS
v.
RAMA KANT SINGH …    RESPONDENT
J  U  D  G  M  E  N  T
ABHAY S. OKA, J.
Delay condoned.  Leave granted.
1. The   first   appellant,   the   Bihar   Industrial   Area
Development   Authority,   has   been   constituted   under   the
provisions   of   the   Bihar   Industrial   Area   Development   Act,
1974. A tender was invited by the executive engineer of the
first appellant to carry out the drainage work in an industrial
area. The respondent offered a bid which the first appellant
accepted. Accordingly, an agreement was executed on 15th
2
December 2007 by and between the first appellant and the
respondent.   After   issuing   a   notice,   the   first   appellant
terminated the agreement and forfeited the security deposit of
the respondent.
2.  Under   the   Bihar   Public   Works   Contracts   Disputes
Arbitration Tribunal Act, 2008 (for short “the 2008 Act”), the
Bihar Public Works Contract Disputes Arbitration Tribunal
(for short, “the Arbitration Tribunal”) has been constituted for
dealing with and deciding the disputes between the parties to
a works contract. Clause (a) of Section 2 of the 2008 Act
defines what is meant by a works contract.
3. Under sub­section (1) of Section 9 of the 2008 Act, when
any   dispute   arises   between   the   parties   to   the   contract,
irrespective of the fact whether such contract does or does
not contain an arbitration clause, either party can refer the
dispute in writing in the prescribed form to the Arbitration
Tribunal.  The dispute can be referred within one year from
the date on which the dispute has arisen. The respondent
filed a reference to the Arbitration Tribunal on 21st  March
2013.     The   dispute   was   regarding   the   termination   of   the
agreement made on 8th June 2010. The Arbitration Tribunal
made   an   award   on   15th  September   2014.   One   of   the
3
contentions   raised   by   the   first   appellant   before   the
Arbitration Tribunal was that the respondent did not refer the
dispute to the Arbitration Tribunal within one year from the
date on which the dispute had arisen as provided under subsection   (1)   of   Section   9   of   the   2008   Act.   The   Arbitration
Tribunal held that Article 137 of the Limitation Act, 1963 (For
short, “the 1963 Act”) was applicable. Hence, it was held that
the reference made to the Arbitration Tribunal on 21st March
2013, raising a dispute about the termination order dated 8th
June 2010, was not barred by limitation. The Arbitration
Tribunal held that the respondent was entitled to a refund of
the earnest money and the security deposit. It was held that
the respondent was entitled to unpaid dues in the sum of Rs.
27,94,990/­ (Rupees twenty­seven lakh ninety­four thousand
nine hundred ninety only). The Arbitration Tribunal held that
the respondent is entitled to Rs.22,42,269/­ (Rupees twentytwo   lakh   forty­two   thousand   two   hundred   and   sixty­nine
only)   towards   the   security   deposit.  In   addition,   the
Arbitration Tribunal held that the respondent is entitled to
the amounts of Rs.6,22,476/­  (Rupees six lakh twenty­two
thousand  four hundred seventy­six only) and  Rs.50,000/­
4
(Rupees fifty thousand only) deducted towards the penalty by
the first appellant. Even the amount of provisional deduction
in the sum of Rs.3,68,400/­  (Rupees three lakh sixty­eight
thousand four hundred)  was ordered to be refunded to the
respondent. The Tribunal granted simple interest at the rate
of 10% per annum on the amounts mentioned above. Except
on the amount of Rs.22,42,269/­, interest was made payable
from   29th  July   2010.   On   the   amount   of   Rs.22,42,269/­,
interest at the same rate was made payable from 1st February
2011.
4. Being aggrieved by the award, the appellants filed a
revision petition before the High Court by invoking Section 13
of the 2008 Act.  By the impugned judgment, the High Court
dismissed the revision petition. The High Court also held that
Article 137 of the 1963 Act was applicable and, therefore, the
dispute   raised   by   the   respondent   was   not   barred   by   the
limitation. 
5. Shri Rajiv Dutta, the learned Senior Counsel appearing
for the appellants submitted that under sub­section (1) of
Section  9  of  the  2008 Act,  a  reference  to  the  Arbitration
Tribunal was maintainable provided it was made within one
5
year   from   the  date   on   which   the   dispute   had  arisen.  He
pointed out that the dispute arose on 8th  June 2010, when
the agreement was terminated, and the respondent's earnest
money and security deposit were forfeited. He pointed out
that by the said order, the respondent was blacklisted. He
further pointed out that the reference to the Administrative
Tribunal was made belatedly on 21st March 2013. He urged
that   the   reference   application   filed   by   the   respondent
proceeds on the erroneous footing that it was filed within
limitation.   He   invited   our   attention   to   sub­section   (2)   in
Section 29 of the 1963 Act. He submitted that the 2008 Act is
a local law which describes a period of limitation different
from the period prescribed by the Schedule to the 1963 Act
and,  therefore,   Section  5   of   the  1963   Act   will   not  apply.
Moreover, Article 137 of the 1963 Act will have no application
as sub­section (1) of Section 9 of the 2008 Act prescribes the
period of limitation of one year. He submitted that as the
respondent was blacklisted, the earnest money and security
deposit paid by the respondent was rightly forfeited.
6. The learned senior counsel relied upon a decision of this
Court  in  the   case  of  Hukumdev   Narayan   Yadav  v.  Lalit
6
Narayan Mishra1
.  This decision was relied upon to support
the contention that Section 5 of the 1963 Act will not apply.
The learned Senior Counsel also relied upon a decision of this
Court in the case of the  State   of   Bihar  v.   Brahmaputra
Infrastructure  Limited2
. He submitted that as there is no
agreement between the parties to conduct the arbitration in
accordance with the Arbitration and Conciliation Act, 1996
(for Short “the 1996 Act”), the reference to the Arbitration
Tribunal will be governed by the provisions of the 2008 Act.
He urged that grant of interest at the rate of 10% per annum
is illegal. 
7. The   learned   counsel   appearing   for   the   respondent
submitted   that   under   Section   18   of   the   2008   Act,   the
Arbitration   Tribunal  has   a   power  to   extend   the  period   of
limitation. He, therefore, submitted that there is no infirmity
in the finding recorded by the Arbitration Tribunal on the
ground of bar of limitation. He submitted that the Arbitration
Tribunal has recorded a finding that there was no clause in
the   agreement   providing   for   the   forfeiture   of   the   earnest
money and security deposit. He submitted that the Tribunal
1 AIR 1974 SC 480.
2 (2018) 17 SCC 444
7
also held that there was no power to impose a penalty. He
urged   that   the   award   of   interest   at   the   rate   of   10%   per
annum was justified. 
8. We have given careful consideration to the submissions
made across the Bar. Sections 8, 9, 13 and 18 of the 2018
Act are relevant which read thus:
"8.   Act   to   be   in   addition   to   Arbitration   &
Conciliation   Act,   1996.   ­  Notwithstanding
anything   contained   in   this   Act,   any   of   the
provisions   shall   be   in   addition   to   and
supplemental   to   Arbitration   &   Conciliation   Act,
1996 and in case any of the provision contained
herein   is   construed   to   be   in   conflict   with
Arbitration Act, then the latter Act shall prevail to
the extent of conflict."
"9.   Reference   to   Tribunal   and   making   of
award.   ­  (1)  Where   any   dispute   arises
between   the   parties   to   the   contract,   either
party   shall,   irrespective   of   whether   such
contract   contains   an   arbitration   clause   or
not, refer, within one year from the date on
which  the  dispute  has  arisen,   such  dispute
in writing to the Tribunal for arbitration in
such   form   and   accompanied   by   such
documents   or   other   evidence   and   by   such
fees, as may be prescribed.
(2) On receipt of a reference under sub­section (1),
the Tribunal may, if satisfied after such inquiry as
it may deem fit to make, that the requirements
under   this   Act   in   relation   to   the   reference   are
complied with, admit such reference and where
8
the Tribunal is not so satisfied, it may reject the
reference summarily.
(3) Where the Tribunal admits the reference under
sub­section (2), it shall, after recording evidence if
necessary, and after perusal of the material on
record   and   on   affording   an   opportunity   to   the
parties   to   submit   their   arguments,   make   an
award  or an  interim award, giving its  reasons
therefor.
(4) The Tribunal shall use all reasonable dispatch
in entering on and proceeding with the reference
admitted by it and making the award, and an
endeavour   shall   be   made   to   make   an   award
within four months from the date on which the
Tribunal had admitted the reference.
(5) The award including the interim award made
by the Tribunal shall, subject to an order, if any
made   under   Section   –   12   or   13,   be   final   and
binding on the parties to the dispute.
(6)   An   award   including   an   interim   award   as
confirmed or varied  by an order, if  any, made
under Section – 12 or 13 shall be deemed to be a
decree within the meaning of section – 2 of the
Code   of   Civil   Procedure,   1908   of   the   principal
Court of original jurisdiction within the local limits
whereof the award or the interim award has been
made and shall be executed accordingly.” 
                                   (emphasis added)
"13. Revision.­ (1) The High Court may, suo motu
at any time or on an application made to it within
three months from the date on which the award or
interim award is made or reviewed under this Act,
by any party aggrieved by the award or interim
award so made or reviewed, call for the record of
any case in which an award or interim award has
9
been made or as the case may be reviewed and if
the Tribunal appears­ 
(a) to have exercised a jurisdiction not vested
in it by law, or 
(b) to have failed to exercise a  jurisdiction   so
vested, or 
(c)   to   have   acted   in   the   exercise   of   its
jurisdiction   illegally   or   with   material
irregularity, the High Court may make such
order in the case as it thinks fit.
(2) For the purpose of exercising its powers of
revision under this section, ∙ the High Court
shall have the same powers as it has, and as
far as may be, follow the same procedure as it
follows,   under   the   Code   of   Civil   Procedure,
1908 while exercising its powers of revision
under  section­115   of   the   Code   and   for  that
purpose the Tribunal shall be deemed to be a
Court subordinate to it.”
“18.   Extension   of   period   of   limitation   in
certain   cases.   –  The   Tribunal   may   admit   a
reference   under   sub­section   (2)   or   entertain   an
application   for   review   under   sub­section   (1)   of
Section 11 or for revision under sub­section (1) of
Section 12 after the period of limitation laid down
in sub­section (1) of Section 8, sub­section (2) of
section 11 or as the case may be, sub­section (1)
of Section 12 if the party satisfies the Tribunal
that the party had sufficient cause for not making
the   reference,   or   as   the   case   may   be,   the
application   for   review   or   revision   within   such
period.”
9. In this case, admittedly, there is no arbitration clause in
the agreement between the parties. Sub­section (1) of Section
10
9 provides that even if there is no arbitration clause, the
dispute arising between the parties to the contract must be
referred to the Arbitration Tribunal. The dispute has been
defined under Clause (e) of Section 2 of the 2008 Act. It
means any difference relating to any claim arising out of the
execution or non­execution of the whole or a part of a works
contract, including the dispute regarding rescission thereof.
Section 22 of the 2008 Act starts with a non­obstante clause
which provides that notwithstanding anything contained in
any other law, rule, order, scheme, or contract, any dispute
as defined under section (e) of Section 2 shall be regulated by
the   provisions   of   the   2008   Act   in   the   absence   of   an
arbitration clause in the agreement.
10. In   view   of   Section   8   of   the   2008   Act,   if   any   of   the
provisions of the 2008 Act are in conflict with the 1996 Act,
the latter shall prevail to the extent of the conflict. In the
present   case,   as   there   is   no   arbitration   clause   in   the
agreement between the parties, the provisions of the 1996 Act
will   have   no   application.   Therefore,   the   reference   to   the
Arbitration Tribunal will be governed by the 2008 Act.
11. As noted earlier, under sub­section (1) of Section 9 of
the 2008 Act, the period of limitation is of one year from the
11
date on which the dispute has arisen, which date in the
present   case   is   8th  June   2010,   when   the   first   appellant
terminated the agreement.
12. As   the   2008   Act   provides   for   a   specific   period   of
limitation, Article 137 of the schedule in the 1963 Act will not
apply. To that extent, the Arbitration Tribunal has committed
an error. Under Section 18 of the 2008 Act, the Arbitration
Tribunal has the power to condone the delay. The High Court
recorded a finding that as the representation made by the
respondent against the order of termination of the contract
was kept pending for an inordinately long time and was not
at all decided, the delay was explained by the respondent.
The High Court, by recording the said finding in paragraph
10 of the impugned Judgment, held that sufficient cause was
made   out   by   the   respondent   for   the   delay.   As   observed
earlier, the Arbitration Tribunal has the power to condone the
delay in making a reference. Therefore, under Article 136 of
the Constitution of India, this is not a fit case to interfere
with the award on the ground that the reference was barred
by limitation. 
12
13. On merits, we find that the Arbitration Tribunal has
interpreted   various   clauses   of   the  agreement   between   the
parties and held that there was no provision therein to forfeit
the   earnest   money   as   well   as   the   security   deposit.   The
Arbitration Tribunal held that the first appellant had made
only a part payment of the 4th bill. The Arbitration Tribunal
held   that  an   amount   of  Rs.   27,94,990/­ (Rupees   twentyseven lakh ninety­four thousand nine hundred ninety only)
was not paid as per the 4th bill.
14. As can be seen from Section 13 of the 2008 Act, the
scope of revision is limited. A perusal of the judgment of the
High   Court  shows  that   it  has   considered   and  interpreted
some of the clauses in the agreement between the parties.
High   Court   found   that   the   Arbitration   Tribunal   had   the
jurisdiction to make the award and that the award does not
suffer from manifest illegality and material irregularity. The
High Court rightly found that the scope for interference with
the   award   of   the   Arbitration   Tribunal   in   revisional
jurisdiction   was   very   narrow.   In   the   absence   of   any
perversity, the High Court could not have given a different
13
interpretation to the clauses in the agreement from the one
provided by the Arbitration Tribunal.
15. Though the High Court held that the respondent had
explained the delay in approaching Arbitration Tribunal, the
delay   was   of   21   months.     Moreover,   the   respondent's
reference petition proceeded on the footing that there is no
delay. The Arbitration Tribunal granted interest at the rate of
10% on Rs. 22,42,269/­ (Rupees twenty­two Lakhs forty­two
thousand   two   hundred   sixty­nine   only)  from   1st  February
2011. On the other claims, the interest was granted from 29th
July   2010.   In   the   facts   of   the   case,   we   do   not   find   any
justification for the grant of interest on the claims made by
the respondent. To that extent, the award will have to be
modified. 
16. However, interest will be payable by the appellants on
the amounts awarded at the rate of 10% per annum from the
date of making the reference to the Arbitration Tribunal, in
the event the entire principal amount made payable under
the award is not paid to the respondent within three months
from today. 
14
17. Hence,   the   appeal   is   partly   allowed.   The   impugned
award made in Reference Case No.35/2013 is modified only
to the extent to which interest at the rate of 10% was allowed
on the claims. 
18. We   direct   the   appellants   to   pay   only   the   principal
amounts payable as per the award to the respondent within
three months from today.  On the failure of the appellants to
pay the said amounts within three months from today, the
appellant shall pay the interest at the rate of 10% per annum
on the principal amounts set out in the award with effect
from 21st March 2013.
19. The   Civil   Appeal   stands   disposed   of   with   the   above
directions.   All the pending applications, if any, also stand
disposed of.            
……..…………………J.
(AJAY RASTOGI)
……..…………………J.
(ABHAY S. OKA)
New Delhi;
March 15, 2022. 

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

Comments

Popular posts from this blog

संविधान की प्रमुख विशेषताओं का उल्लेख | Characteristics of the Constitution of India

100 Questions on Indian Constitution for UPSC 2020 Pre Exam

भारतीय संविधान से संबंधित 100 महत्वपूर्ण प्रश्न उतर