ORDER :

1. This appeal has been preferred against the judgment and order dated 19.4.2002, by way of which the High Court of Andhra Pradesh at Hyderabad while entertaining the first appeal under Section 96 of Code of Civil Procedure, 1908 (hereinafter referred to as Code of Civil Procedure), reversed the judgment and decree dated 12.7.1991 in Original Suit No. 62 of 1983 passed by the court of Subordinate Judge, Nizamabad. Facts and circumstances giving rise to this appeal are that:-

(a) One agreement between the Appellant and State of Andhra Pradesh for widening of road was entered into in February 1980. As the work was not started and executed within stipulated time, the Respondent No. 3 took action under Clause 60(b) of the Andhra Pradesh Detailed Standard Specification on 24.9.1980 and the said contract was terminated by the State Authorities on 13.1.1981.

(b) The Appellant vide Suit No. 62 of 1983 sought damages to the tune of Rs. 16,51,950. Respondents contested the suit, however, the learned trial court vide judgment and decree dated 12.7.1991 decreed the suit awarding the damages to the Appellant to the tune of Rs. 9,51,650/-.

(c) Aggrieved, the Respondent preferred appeal before the High Court which has been allowed vide impugned judgment and order dated 19.4.2002.

Hence, this appeal.

2. Shri L. Nageshwar Rao, learned senior counsel appearing on behalf of the Appellant, has submitted that the High Court while deciding the first appeal has proceeded with the premise that the suit for damages could have been entertained as the termination of contract was not challenged, particularly, when the Appellant himself has breached the conditions of the contract and was not able to execute the work. The High Court committed an error while deciding the first appeal in a cursory manner without meeting the requirement of Order XLI Rule 31 Code of Civil Procedure. The appeal has been decided without following the procedure prescribed for deciding the first appeal, thus; the impugned judgment and order stood vitiated. Thus, the appeal be allowed and the judgment and decree of the trial court be restored wherein findings of fact had been recorded in favour of the Appellant after examining the evidence on record.

3. Per contra, Shri A.T.M. Rangaramanujam, learned senior counsel appearing on behalf of the State, has contested the appeal contending that the agreement contained the arbitration clause, therefore, the suit instituted by the Appellant itself, is not maintainable; and the State of Andhra Pradesh was not impleaded as a party. Thus, in view of the provisions of Section 79 Code of Civil Procedure, the suit could have been entertained. The High Court has rightly appreciated the facts and allowed the appeal filed by the Respondents. Thus, the impugned judgment and decree do not warrant any interference and the appeal is liable to be dismissed.

4. We have considered the rival submissions made by the learned Counsel for the parties and perused the records.

5. The issue of non-impleadment of a necessary party in view of the provisions of Section 79 Code of Civil Procedure, has not been raised by the Respondents at any stage of the proceedings and suit had been filed against the officers of the State. The issue could have been raised and decided in view of the judgments of this Court in Ranjeet Mal vs. General Manager, Northern Railway, New Delhi and Another, AIR 1977 SC 1701 and District Collector, Srikakulam and Others vs. Bagathi Krishna Rao and Another, AIR 2010 SC 2617.

6. The question of maintainability of suit when the agreement contains an arbitration clause, the question does arise as to whether in such a fact-situation, suit can be entertained. While filing the written statement, the Respondents had raised this objection and taking note of the pleadings of the parties, the learned trial court framed Issue No. 1 in this respect. However, the trial court had taken note of such objections and answered the issue observing as under:

The coun