Full Judgment Text
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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
Signature Not Verified
area. The respondent offered a bid which the first appellant
Digitally signed by
Jayant Kumar Arora
Date: 2022.03.15
16:52:50 IST
Reason:
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accepted. Accordingly, an agreement was executed on 15
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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.
Under the Bihar Public Works Contracts Disputes
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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
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filed a reference to the Arbitration Tribunal on 21 March
2013. The dispute was regarding the termination of the
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agreement made on 8 June 2010. The Arbitration Tribunal
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made an award on 15 September 2014. One of the
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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 sub
section (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
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the reference made to the Arbitration Tribunal on 21 March
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2013, raising a dispute about the termination order dated 8
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 twenty
two 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/
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(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
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from 29 July 2010. On the amount of Rs.22,42,269/,
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interest at the same rate was made payable from 1 February
2011.
Being aggrieved by the award, the appellants filed a
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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
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year from the date on which the dispute had arisen. He
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pointed out that the dispute arose on 8 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
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Tribunal was made belatedly on 21 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 v.
Hukumdev Narayan Yadav Lalit
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Narayan Mishra . 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
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Infrastructure Limited . 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
AIR 1974 SC 480 .
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2 (2018) 17 SCC 444
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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.
We have given careful consideration to the submissions
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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
(1)
award. 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
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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
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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
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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
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date on which the dispute has arisen, which date in the
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present case is 8 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.
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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
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only a part payment of the 4 bill. The Arbitration Tribunal
held that an amount of Rs. 27,94,990/ (Rupees twenty
seven lakh ninetyfour thousand nine hundred ninety only)
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was not paid as per the 4 bill.
As can be seen from Section 13 of the 2008 Act, the
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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
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interpretation to the clauses in the agreement from the one
provided by the Arbitration Tribunal.
Though the High Court held that the respondent had
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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
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thousand two hundred sixtynine only) from 1 February
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2011. On the other claims, the interest was granted from 29
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.
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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
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from 21 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.