Telecommunications Consultants ... vs Nangia Constructions (India) ...
1998 Latest Caselaw 323 Del

JUDGMENT

Lokeshwar Prasad, J.

1. The petitioner, named above, has filed the present petition under Section 33 of the Arbitration Act 1940 (hereinafter referred to as 'the Act') read with Section 151 of the Code of Civil Procedure, 1908 averring that the Ministry of Posts, Telegraphs & Telephone, Kingdom of Saudi Arabia (PTT) awarded the work for outside plants, construction, installation, supply of materials and equipment etc. In Dammam (Saudi Arabia)' to Abdul Aziz Zaidan & Partners (hereinafter referred to as 'BETA'), a Company, incorporated in Saudi Arabia. A contract agreement dated the 14th February, 1985 was signed between PTT and BETA. The petitioner further awarded the sub-contract to the respondent on back to back basis and a sub-contract agreement was executed between the petitioner and the respondent on 21.3.85. The sub-contract agreement, executed between the parties, contained an arbitration clause to the following effect:

"If any dispute or difference arises in connection with the Main Contract and such dispute touches or concerns the sub-contract Works, then the decision by the Grievances Board of the Kingdom of Saudi Arabia (as foreseen under the provisions of the Main Contract) shall also be finally binding upon the subcontractor in so far it touches or concerns the sub-contract works.

If any dispute or difference arises between the Contractor and the subcontractor in connection with the sub-contract either party may give notice to the other in writing of the existence of such dispute or difference, specifically its nature, and if the Contractor determines that the dispute does not concern the Main contract, it shall be subject to the provisions of the Rules of Conciliation and Arbitration of the International Chamber of Commerce thereupon be referred to arbitration for final decision of one or more Arbitrators appointed in accordance with said Rules. Such arbitration shall be held in English language and shall take place in Geneva, Switzerland. Notwithstanding any of the provisions of this Clause performance of the sub-contract shall continue during such arbitration proceedings except to the extent that the Ministry or the Contractor may order the suspension of the Sub-contract Works or any part thereof."

1.2. Clause 15 of the sub-contract provided that the terms and conditions of the contract shall not be modified, varied, changed, altered or rescinded except in writing signed by both the parties. Clause 15 further provided that the sub-contract would be governed and construed by the laws of Saudi Arabia. The sub-contract was to be executed in Saudi Arabia and the payments under the sub-contract were also to be made in Saudi Riyals. As per the case of the petitioner the sub-contract and the main contract were highly interlinked and inter-related and the subcontract was heavily dependent upon the main contract,

1.3. It is stated that the respondent filed an application under Section 20 of the Act (Suit No. 1371-A/86) with the prayer that the petitioner be directed to file the arbitration agreement in the Court and after the same is filed, the disputes mentioned in para 17 of the petition be referred to arbitration in accordance with the arbitration clause contained in the contract. It is further stated that the respondent withdrew the above mentioned petition (Suit No. 1371-A/86) unconditionally and the same was dismissed as withdrawn vide order dated 11th August, 1986.

1.4. It is further stated that the respondent again filed a similar petition(Suit No. 1703/87) and made identical prayer as in the earlier petition (Suit No. 1371-A/ 86). The above mentioned petition (Suit No. 1703/87) was also withdrawn unconditionally by the respondent. It is averred that the respondent filed yet another application (Suit No. 690/91) on similar facts and making the identical prayer as in the 1st petition (Suit No. 1371-A/86) and 2nd petition (Suit No. 1703/ 87). It is stated that the plea of the petitioner in the third petition was that the petition was not maintainable. On 25.9.91, the learned predecessor of this Court passed the following orders in the above mentioned petition (Suit No. 690/91):

"On hearing learned Counsel for the parties, prima facie, it seems just and proper in the facts and circumstances of the case, that a retired Judge of High Court or of the Supreme Court be appointed as a Sole Arbitrator. Mr. Sicker prays for a short adjournment. List this on 4th October, 1991."

1.5. On 21.10.91 the above mentioned petition (Suit No. 690/91) was disposed of by the learned Predecessor of this Court by passing the following orders :

"Mr. Sikri states that his clients will have no objection if Mr. Justice V.S. Deshpande, former Chief Justice of this Court is appointed as a Sole Arbitrator to adjudicate the disputes specified in the petition and the counter claims of the respondent, if any, Mr. Chandhiok has no objection to the name suggested by Mr. Sikri.

In view of the aforesaid, Mr. Justice V.S. Deshpande is appointed as a sole Arbitrator to adjudicate the disputes specified in the petition as also counter claims of the respondent, if any, in accordance with law.

Parties shall appear before the learned Arbitrator on 2nd November, 1991 at 11.00 a.m.

In view of the aforesaid, the suit is disposed of."

1.6. On the unfortunate death of Mr. Justice V.S. Deshpande, the above said disputes between the parties were referred for adjudication to Mr. Justice G.C. Jain, a retired Judge of this Court vide order dated the 1st October, 1992 passed in IA 10391/92. The newly appointed Arbitrator [(Mr. Justice G.C. Jain (Retd.)] entered upon the reference. The respondent filed its statement of claim before the learned Arbitrator which was refuted by the petitioner mainly on the ground that the petitioner in reply to third petition (Suit No. 690/91) filed by the respondent, had raised the plea that the same was barred under the principles of res-judicata and under Order XXIII, Rule 1, CPC. It was pleaded by the petitioner before the learned Arbitrator that the above said pleas taken by the petitioner were not decided and the same be decided in the arbitration proceedings. The learned Arbitrator framed issues in the proceedings pending before him on 6.9.95 and vide order dated 27.5.96 directed that the following issue would be treated as a preliminary issue :

 (1)    whether the claims raised by the claimants are barred by principles of res-judicata and principles of Order XXIII, Rule 1, CPC?"
 

1.7. The learned Arbitrator vide order dated 9.1.97 has decided the above issue against the petitioner.
 

1.8. Feeling aggrieved the petitioner has filed the present petition under Section 33 of the Act with the prayer --
  

(a)    to declare that arbitration proceedings pursuant to the Order of this Court are null and void;
 

(b)    that the Order of the learned Arbitrator dated January 9, 1997 is bad in law;
 

(c)     to declare that this Court had no jurisdiction to try Suit No.  690/91 and to recall Orders dated October 21, 1991 and October 1, 1992;
 

(d)    to pass such other order(s) as this Court deems just and fair and proper in the circumstances of the case; and
 

(e)     that cost of this petition may be awarded in favour of the petitioner.
 

2. Notice of the petition was issued to the respondent who has filed a detailed reply taking preliminary objection with regard to the maintainability of the petition. On merits it is stated that both the parties agreed in writing before the learned Predecessor of this Court for reference of all disputes and differences to the arbitration of Mr. Justice V.S. Deshpande and the petitioner even sought reference of its counter claim besides the claim of the respondent. It is stated in the reply, filed on behalf of the respondent that in terms of the provisions of Clause (a) read with Clause (e) of Section 2 of the Act the parties to the contract at any time could agree for reference of all the disputes/differences arising out of contract to arbitration. It is stated that in view of the above settled legal position there is no question of petitioner's challenging the same now before this Court. It is stated that the learned Arbitrator has not erred in any manner and that the present petition filed by the petitioner is nothing but is an abuse of the process of law. It is stated that the present petition, filed by the petitioner, be dismissed with special costs and with the request to the learned Arbitrator to decide the arbitration within a specified time.

3. The petitioner has filed a rejoinder to the reply filed on behalf of the respondent, controverting the pleas taken in the reply and reiterating the averments made in the petition.

4. I have heard the learned Counsel for the parties at length and have also carefully gone through the documents/material on record. The learned Counsel for the petitioner, while arguing the case on behalf of the petitioner, stated that the third petition (Suit No. 690/91) was instituted against the mandate of Order XXIII, Rule 1(4), CPC and, therefore, the Court had no jurisdiction over the subject matter of the above said petition. It was further stated by him that consent does not cure the defect of jurisdiction and, therefore, an order passed without jurisdiction, as in the present case, is nullity i.e. no nest existence in the eyes of law. The learned Counsel for the petitioner in support of his above contention placed reliance on a decision of the Supreme Court in case Chiranji Lal Shri Lal Goenka (deceased) through L.Rs v. Jasjeet Singh and Ors., . It was further stated by the learned Counsel for the petitioner that after the withdrawal of the two earlier petitions, the third petition (Suit No. 690/91) could not have been instituted and since the third suit was instituted against the mandate of Order XXIII, Rule 1 (4), CPC, the Court had no jurisdiction over the subject matter of the third suit and the so called consent order passed by the learned predecessor of this Court on 21.10.91, appointing Mr. Justice V.S. Deshpande, a former Chief Justice of this Court, as the Sole Arbitrator, was therefore, a nullity in the eyes of law. It was stated by him that if under Section 9 read with Order XXIII, Rule 1 (4), CPC this Court did not have the jurisdiction to try the third suit, the consent of the parties for the appointment of Mr. Justice V.S. Deshpande, as an Arbitrator, could not confer jurisdiction on the Court and since the Court had no jurisdiction, the order dated the 21st October, 1991 shall be deemed to be an order passed by the Court without jurisdiction which cannot be enforced legally even with the consent of the parties. It was further stated by him that an aggrieved person need not agitate an order which is a nullity and can rake up the issue when used against him.

5. The learned Counsel for the respondent on the other hand stated that the petitioner before filing the present petition had filed a petition under Section 33 of the Act which was registered as OMP No. 46/95 entitled as Telecommunications Consultants India Ltd. v. Nangia Constructions (India) Pvt. Ltd. and was finally decided by Brother K. Ramamoorthy, J. vide order dated 3rd August, 1995. It was stated by him that the above said decision of Brother K. Ramamoorthy, J. In the above said petition has become final as no appeal was filed by the petitioner against the aforesaid decision. It was further stated by him that in view of the findings of Brother K. Ramamorthy, J. In the above mentioned case the petitioner is debarred from filing the present petition. It was further stated by him that the first petition, under Section 20 of the Act bearing Suit No. 1371 -A/86 was filed by the respondent when the work was still continuing which continued upto December, 1987 and, therefore, the above said petition related to claims only upto July, 1986 and the disputes/differences/ claims which arose after July, 1986 were in any case not covered by the earlier petition. The second petition, under Section 20 of the Act, filed by the respondent, bearing Suit No. 1703/87, which was filed in August, 1987, related only to part encashment of Bank Guarantee towards Euro Dollar Loan and, therefore, did not touch any of the claims/ disputes/differences arising out of the contract for the entire work done by the respondent upto December, 1987. It was stated by him that in the third petition, under Section 20 of the Act, bearing Suit No. 690/91, the respondent had set out all disputes/ differences and claims which arose out of and in connection with the contract and work done by respondent upto December, 1987 which had neither been decided nor agitated earlier. It was stated by him that in view of the above position the argument advanced by the learned Counsel for the petitioner that the third suit was instituted by the respondent against the mandate of Order XXIII, Rule 1(4), CPC is devoid of substance. The learned Counsel for the respondent further stated that the provisions of Section 9 Order VII, Rule 11(1)(d) and Order XXIII, Rule 1(4), CPC on which much reliance has been placed by the learned Counsel for the petitioner are not applicable to a petition under Section 20 of the Act. The learned Counsel for the respondent further stated that the order dated the 21st October, 1991, passed in Suit No. 690/91, appointing Mr. Justice V.S. Deshpande, a former Chief Justice of this Court as Sole Arbitrator is an appealable order against which an appeal could have been preferred under Section 39(1)(iv) of the Act and as no appeal has been preferred by any of the parties the above said order passed by this Court has become final and binding on the parties. It was stated by him that the present petition filed by the petitioner is virtually an abuse of the process of the Court and deserves to be dismissed with exemplary costs.

6. As already stated the main thrust of the learned Counsel for the petitioner, during the course of arguments, was that the third petition (Suit No. 690/91) was instituted against the mandate of Order XXIII, Rule 1(4), CPC and, therefore, the Court had no jurisdiction over the subject matter of the suit. The question of questions, therefore, is as to whether a petition, filed under Section 20 of the Act is a suit within the meaning of CPC and the provisions of CPC as such are applicable in respect of such a petition. It was held by the Bombay High Court in Raj Mal Girdhari Lal Marwadi v. Maruti Shivaram and Ors. AIR 1921 Bombay 389, that although an application under para 20 Schedule 2, CPC is numbered and registered as a suit, the proceedings are not proceedings in a suit. The same view has been taken by the High Court of Patna in case Satish Chandra Bose and Ors. v. Pali Ram Agarwala, AIR 1921 Patna 161. In case The Ruby General Insurance Company Limited v. The Bharat Bank Limited and Ors., reported as AIR (37) 1950 (East) Punjab 352, it has been held that the proceedings under Section 20 of the Act are not a suit. The Bombay High Court in case Gurbaksh Singh v. Sant Ram reported as AIR 1929 Lahore 533 has held :

"It is clear that an application under Section 20, Schedule 2, Civil P.C., is not a plaint and that the hearing of such an application is not a suit though under Sub-Clause 2, Section 20, it has to be numbered and registered as a suit."

7. This Court, relying on the above decision of the Lahore High Court in Gurbax Singh's case (supra) has also taken a similar view in case Inderpal Singh Hassanwalia v. Bir Tibetian Woollen Mills and Ors., . Similar view has been taken by the High Court of Rajasthan in case Usha Rani and Ors. v. Indermal & Sons and Ors., reported as .

8. In view of the above settled legal position, culled out from the various judicial decisions referred to above, a petition under Section 20 of the Act though registered as a suit in terms of the provisions contained in Section 20(2) of the Act, yet the same is not a suit within the meaning of CPC and, therefore, the provisions of Section 9, Order VII, Rule 11(1)(d) and Order XXIII, Rule 1(4), CPC are not applicable to such A petition and the present petition, filed by the petitioner, in my opinion, is liable to be rejected on the above ground alone. Even otherwise Order XXIII, Rule (1)(4), CPC prohibits the plaintiff who withdraws from a suit or part of a claim without the permission of the Court referred to in Sub-rule (3), from instituting a fresh suit in respect of the same subject matter or such part of the claim but the above said provision does not expressly or by implication bars the jurisdiction of the Court to try the subsequent suit. The prohibition of filing a subsequent suit on the same subject matter shall not fall within the term "excepting suits of which their cognizance is either expressly or impliedly barred" occurring in Section 9, CPC.

9. The argument, advanced by the learned Counsel for the respondent that the order dated the 21st October, 1991, passed by the learned Predecessor of this Court in Suit No. 690/91 entitled Nangia Construction (India) Private Limited v. Telecommunications Consultants India Limited was an appealable order and as no appeal has been filed by any of the parties the above said order has attained finality, in my opinion, is also not without substance.

10. The petitioner, who is a respondent in the third petition (Suit No. 690/91), had taken a specific plea of bar of Order XXIII, Rule 1, CPC in reply to the third petition filed by the respondent under Section 20 of the Act and inspite of the above plea the petitioner (respondent in third petition) consented that the disputes mentioned in the petition be referred to Mr. JusticeV.S. Deshpande, a former Chief Justice of this Court for adjudication. From the above facts it is obvious that the petitioner (respondent in the third petition) had waived the above plea which, in my opinion, could have been waived legally. After waiving the above plea and consenting to the disputes between the parties being referred to Mr. Justice V.S. Deshpande, a former Chief Justice of this Court for adjudication, it is now not open to the petitioner to agitate this issue before this Court at this stage in the present proceedings and the petitioner is, therefore, precluded from taking such a plea as has been taken by him in the present proceedings.

11. As already stated, the learned Counsel for the petitioner has placed reliance on a decision of the Supreme Court in case Chiranji Lal Shri Lal Goenka (deceased) through L.Rs v. Jasjeet Singh and Ors., . I have gone through the above decision of the Supreme Court. There can be no two opinions in so far as the proposition of law, laid down by the Supreme Court in the above said decision is concerned. However, in the facts and circumstances of the present case the same does not help the cause of the petitioner at all.

12. The petitioner, in the present proceedings, as already stated, has also assailed the order dated the 9th January, 1997, passed by the learned Arbitrator deciding the preliminary issue against the petitioner. I have also gone through the above said order, a copy of which is on record (at pages 125 to 129 of the paper book). In my opinion, the above order suffers from no legal infirmity and calls for no interference by this Court.

13. For the above stated reasons the petition is liable to be dismissed. Accordingly the same is dismissed with no order as to costs.