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2019 Supreme(SC) 1019
SUPREME COURT OF INDIA
N.V. RAMANA, INDIRA BANERJEE, AJAY RASTOGI, JJ.
M/S. TULSI NARAYAN GARG, SARAWAGI MOHALLA, SHEOPUR THROUGH ITS PROPRIETOR TULSI NARAYAN GARG – APPELLANT(S)
VERSUS
THE M.P. ROAD DEVELOPMENT AUTHORITY, BHOPAL & OTHERS – RESPONDENT(S)
CIVIL APPEAL NO(S).6726-6729 OF 2019 (Arising out of SLP(C ) No(s). 1436-1439 of 2019)
Decided On : 30-08-2019
For the Petitioner(s): Mr. Suryanaryana Singh, Sr.Adv. Ms. Kaveri Vats, Adv. Mr. Dharmendra Kumar Sinha, AOR
For the Respondent(s): Mr. Rahul Kaushik, AOR
For the State of M.P. : Ms. Bhuvneshwari Pathak, Adv. Ms. Shilpi Satyapriya Satyam, Adv.
IMPORTANT POINT
When a matter is pending before Arbitral Tribunal, authorities should not initiate any steps in that matter.
Headnote:
Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 - Section 7 r/w clauses 44.1, 53.1, 24 and 25 of the Agreement - A party to an agreement cannot be an arbiter in his own cause - Appellant challenging claim of liquidated damages before Arbitral tribunal - During pendency of the reference Respondent no. 1 taking steps to recover the liquidated damages quantified by him - Not justified. (Para 11, 15, 17)
Facts of the case:
The appellant is a proprietorship firm registered as Class ‘A’ contractor. Tender for construction and maintenance of rural road under the Pradhan Mantri Gram Sadak Yojna for package no. 3712 and package no. 3714 consisting of two roads (i.e. constructed one way relating to Vijaypur to Chota Kheda way (2 km) and second, relating to Sonthava to Advad way (7.750 km) change 5240 meter in DPR slab culvert and protection wall, was awarded to the appellant and the work order was issued on 6th October, 2008 and pursuant thereto, agreement no. 11 and agreement no. 12 was executed between the appellant and the first respondent. As per the work order, the date of completion was twelve months, i.e. till 21st October, 2009. The first respondent, invoking clause 52 of the work agreement nos. 11 and 12, terminated the agreement for slow progress of work on 7th October, 2013 and 27th October, 2014 respectively.
The first respondent invoking clause 44.1 and 53.1 of the agreement served a notice to the appellant on 9th October, 2015 for determining the liquidated damages that came to be challenged by the appellant by filing of a Writ Petition No. 7003 of 2015 before the High Court. High Court disposed of the that writ petition with liberty to the appellant to challenge order of termination before the Arbitral Tribunal under the provisions of the Adhiniyam, 1983. The appellant filed a reference petition against the termination of agreement and damages claimed by the first respondent before the Madhya Pradesh Arbitral Tribunal which is still pending adjudication before the Arbitral Tribunal.
Pending adjudication before the Arbitral Tribunal, the first respondent issued notice to the appellant dated 17th March, 2017 for package 3712 and package 3714 to recover alleged damages. In furtherance thereof, respondent no. 2(General Manager of the 1 st respondent) issued the communication in which he asked respondent no. 3(Collector, Sheopur, M.P.) to take steps in respect of agreement no. 11 and agreement no. 12 towards alleged liquidation damages as arrears of land revenue for the aforesaid packages that were challenged by the appellant by filing the Writ Petitions specifically stating that what has been claimed by the respondents as liquidated damages is sub judice before the Arbitral Tribunal and action taken by the respondents pending arbitral proceedings is unwarranted.
The writ petitions came to be dismissed by the High Court.
Finding of the Court:
When matter was pending before arbitral tribunal, respondent no. 1 was not justified in initiating steps to recover the liquefied damages.
Result: Appeal allowed.
ORDER :
Rastogi, J.
1. The instant appeals are directed against the common judgment dated 26th February, 2018 and order in review petitions dated 7th September, 2018 of the High Court of Madhya Pradesh filed at the instance of the present appellant quantifying the liquidated damages assessed by the officer of the respondents to be recoverable pending adjudication before the Arbitral Tribunal constituted under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 hereinafter being referred to as “Adhiniyam, 1983”).
2. The facts in brief culled out from the record and relevant for the purpose are that the appellant is a proprietorship firm registered as Class ‘A’ contractor. In response to the notice inviting tender for construction and maintenance of rural road under the Pradhan Mantri Gram Sadak Yojna for package no. 3712 and package no. 3714 consisting of two roads(i.e. constructed one way relating to Vijaypur to Chota Kheda way (2 km) and second, relating to Sonthava to Advad way (7.750 km) change 5240 meter in DPR slab culvert and protection wall, tender was awarded to the appellant and in furtherance, the work order was issued on 6th October, 2008 and pursuant thereto, agreement no. 11 and agreement no. 12 was executed between the appellant and the first respondent. As per the work order, the date of completion was twelve months, i.e. till 21st October, 2009. The first respondent, invoking clause 52 of the work agreement nos. 11 and 12, terminated the agreement for slow progress of work on 7th October, 2013 and 27th October, 2014 respectively.
3. The first respondent invoking clause 44.1 and 53.1 of the agreement served a notice to the appellant on 9th October, 2015 for determining the liquidated damages that came to be challenged by the appellant by filing of a Writ Petition No. 7003 of 2015 before the High Court of Madhya Pradesh. In the first instance, that writ petition came to be disposed of vide order dated 6th September, 2016 with liberty to the appellant to challenge order of termination before the Arbitral Tribunal under the provisions of the Adhiniyam, 1983. In terms of the liberty afforded, the appellant filed a reference petition against the termination of agreement and damages claimed by the first respondent before the Madhya Pradesh Arbitral Tribunal under Section 7 of the Adhiniyam, 1983 and as informed to this Court that is still pending adjudication before the Arbitral Tribunal.
4. Pending adjudication before the Arbitral Tribunal, the first respondent issued notice to the appellant dated 17th March, 2017 for package 3712 and package 3714 to recover alleged damages. In furtherance thereof, respondent no. 2(General Manager of the 1 st respondent) issued the communication in which he asked respondent no. 3(Collector, Sheopur, M.P.) to take steps in respect of agreement no. 11 and agreement no. 12 towards alleged liquidation damages as arrears of land revenue for the aforesaid packages that came to be challenged by the appellant by filing the Writ Petition Nos. 4087 and 4088 of 2017 and it was specifically stated in Para XIX of the petition indicating that what has been claimed by the respondents as liquidated damages is sub judice before the Arbitral Tribunal and action taken by the respondents pending arbitral proceedings is unwarranted.
5. After hearing the parties, petitions came to be dismissed by the High Court vide judgment impugned dated 26th February, 2018 on the premise that General Manager of the 1st respondent has initiated the proceedings under clause 53.1 of the agreement and once the liquidated damages have been quantified by the authority, the action cannot be faulted with for initiating the recovery proceedings distinguishing the judgment of the full Bench of the Madhya Pradesh High Court on which the reliance was placed by the appellant in B.B. Verma and another Vs. State of M.P. and another AIR 2008 MP 202(FB) which is a subject matter of challenge in the instant appeals.
6. The main thrust of
