Kohinoor Rubber Works Pvt. Ltd. vs Union Of India (Uoi)
2006 Latest Caselaw 554 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. This petition under Section 32 and 33 of the Arbitration Act, 1940 (hereinafter referred to as 'the said Act') is directed against the arbitration proceedings which were commenced and continued on the basis of a claim filed by the respondent before the learned arbitrator (Mr P.C. Kaicker) on the submission of a claim. On 09.07.1982, the petitioner filed an application challenging the authority of Mr Kaicker to proceed with the arbitration. No reply to this application was filed by the respondent. In the meanwhile, Mr Kaicker had resigned as the Arbitrator and in his place one Mr M.L. Gupta was appointed as the Arbitrator who also resigned and ultimately Mr R.N. Mishra came to be appointed as the Arbitrator. It is during the pendency of proceedings before him that the present OMP came to be filed. Essentially, the petition is directed against the continuance of arbitration proceedings as also the initiation of arbitration proceedings by the respondent in view of the fact that in an earlier round, an award had already been made and the same had been made a rule of the court. It is the case of the learned Counsel for the petitioner that the subsequent claim filed by the respondent in the pending arbitration proceedings would be barred by the principles of Order 2 Rule 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'the CPC'). On the other hand, Mr Gambhir, who appears for the respondent, submitted that the provisions of Order 2 Rule 2 itself permit such a claim being filed with leave of the court which is exactly what has taken place in the present case.

2. To appreciate these rival contentions of the parties, it would be necessary to narrate in brief the background of the case. Certain disputes had arisen between the petitioner and the respondent and in respect of which a petition under Section 20 of the said Act (Suit No.431A/1980) was filed by the petitioner. That petition was disposed of by an order of this Court referring the disputes to arbitration. The parties were before the arbitrator and the petitioner submitted its claim. The respondent also made its counter-claim. However, the petitioner raised objection with regard to the counter-claim being beyond the scope of the reference. In these circumstances, the respondent moved an application before the then arbitrator (Shri P.C. Rao) to permit the respondent to withdraw the counter-claim inasmuch as the respondent had decided to make a separate reference in respect of the counter-claim. Accordingly, the respondent requested the learned arbitrator not to determine the counter-claim of the respondent in the dispute pending before the arbitrator for which purpose the respondent would make a separate reference. This application was dated 15.03.1982. On 15.03.1982 itself, the order sheet of the learned arbitrator reveals that the contractor (the petitioner) had no objection to the withdrawal of the counter-claim by the respondent from the reference. Accordingly, the learned arbitrator decided to exclude the counter-claim filed by the respondent from the reference pending before him. Thus, the arbitrator heard the parties only on the claim filed by the petitioner and ultimately made an award dated 31.03.1982 which was made a rule of the court on 30.11.1982. This award was in favor of the petitioner. The award has been executed and the money has been received by the petitioner under the award.

3. Since the exact wording of the order passed by the arbitrator is of material significance, it would be appropriate to reproduce the same in its entirety which reads as under:

ORDER SHEET

15.3.82 Shri H.S. Mac, Counsel for the UOI.

Shri Shiv Khorana, Counsel for the Contractor.

UoI have filed an application dt. 15-3-82, wherein they stated that they have decided to make a separate reference in respect of their counter claim and that, consequently, I may not determine their counter claim in this case. Contractor has no objection for the withdrawal of the counter claim by the UOI from the present reference. Accordingly, I decided to exclude from the present reference the counter claim filed by the Union of India in the present case.

Heard the parties on the claim filed by the contractor. The case is closed for making the award.

Let the contractor file the requisite stamp paper.

Sd/-

P.C. Rao,

Sole Arbitrator.

4. It is the contention of the learned Counsel for the petitioner that the subsequent claim filed by the respondent on 09.07.1982 before another arbitrator would be barred by the principles of Order 2 Rule 2, CPC. It is his case that the counter-claim was withdrawn unconditionally and it was stated at the time of withdrawal of the counter-claim by the respondent that they would prefer a separate reference. The counsel for the petitioner submitted that they had time to file a separate reference before the very same arbitrator who was dealing with the claim of the petitioner. The respondent did not do so and, therefore, lost its right to agitate the issues now being raised in the present claim. The learned Counsel for the petitioner relied upon the decision of the Supreme Court in the case of K.V. George v. The Secretary to Govt., Water and Power Dept., Trivandrum and Anr. and in particular he referred to paragraph 16 thereof which reads as under:

16. In the instant case, the contract was terminated by the respondents on April 26, 1980 and as such all the issues arose out of the termination of the contract and they could have been raised in the first claim petition filed before the Arbitrator by the appellant. This having not been done the second claim petition before the Arbitrator raising the remaining disputes is clearly barred.

Upon going through the said decision, I find that the facts of the case were entirely different and that in that case, no leave had been taken for filing the claim or counter-claim separately, whereas in the present case, one finds that the respondent had made an application before the arbitrator requesting the arbitrator not to determine the counter-claim in the reference pending before him and also indicating that they would be filing a separate reference with regard to the counter-claim. This was not objected to by the petitioner and, accordingly, the learned arbitrator excluded the counter-claim of the respondent from the purview of the reference pending before him and proceeded to make his award, which he did, on 31.03.1982.

5. If one were to examine the provisions of Order 2 Rule 2, CPC and Sub-rules 2 and 3 thereof, it would be clear that, first of all, there must be a relinquishment of a portion of a claim by a party and it is thereafter that no claim can be preferred on the basis of the portion so omitted or relinquished. No relinquishment is discernible in the present case inasmuch as the respondent had clearly and categorically stated that the counter-claim be excised from the purview of the pending arbitration proceedings because the respondent was going to prefer a separate claim in respect thereof. This is certainly not a relinquishment of a claim. Secondly, if one were to examine the provisions of Sub-rule 3 of Rule 2 of Order 2 CPC, it becomes clear that all the reliefs which can be claimed out of the same cause of action must be claimed at the first instance and if a party omits to claim any one such relief, then he cannot subsequently sue for such a relief, except, of course, without the leave of the court. Mr Gambhir, who appeared for the respondent, submitted that the provisions of Order 2 Rule 2 would be clearly applicable to arbitration proceedings. In support of this, he relied upon the decision in the case of Madan Construction Company v. Delhi Development Authority and Shah Construction Co. Ltd., Bombay v. Delhi Municipal Corporation . Both these decisions support the contention raised by Mr Gambhir. Furthermore, a decision cited by the learned Counsel for the petitioner, namely, Delhi Development Authority v. Alkarma also supports this proposition. In the latter decision, it was, in fact, held by a Division Bench of this Court that the provisions of Order 2 Rule 2 would apply if the request for referring more disputes to arbitration is made after the making of the award.

6. The learned Counsel for the petitioner sought to make capital out of this statement by saying that since the claim made by the respondent was subsequent to the making of the award by the arbitrator, therefore, principles of Provisions of Order 2 Rule 2 would apply and the second claim would be barred. However, application of Order 2 Rule 2 is subject to the exception that reliefs not claimed in the earlier proceeding can be claimed subsequently with the leave of the court. Since the provisions of Order 2 Rule 2 clearly apply to arbitration proceedings, the expression leave of the court would also imply leave of the arbitrator.

7. In the present case, what I find is that the respondent had clearly made an application for removing the counter-claim from the purview of the pending reference before the arbitrator with liberty to file a fresh reference. It is not necessary that the reference ought to have been made before the very same arbitrator. Nor was it necessary that the fresh reference be made before the award in the pending reference. Moreover, the petitioner did not object to the withdrawal of the counter-claim under these circumstances. Therefore, the petitioner cannot now be permitted to object to the arbitration proceedings with regard to the subsequent claim made by the respondent which is pending arbitration.

This petition is dismissed. No order as to costs.