Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(SC) 1887

SUPREME COURT OF INDIA
B.R. Gavai, B.V. Nagarathna, JJ.
P. Seshareddy (D) Rep. By His Lr. Cum Irrevocable Gpa Holder And Assignee Kotamreddy Kodandarami – Appellant
Versus
State of Karnataka & Ors. – Respondents
Civil Appeal Nos. 8252 of 2022 (Arising out of SLP(C) Nos. 6354-6356 of 2020)
Decided On : 09-11-2022

Advocates Appeared:
Ms. Kiran Suri, Sr. Advocate, Mr. S.J. Amit, Advocate, Ms. Anushree Kumar, Advocate, Ms. Vidushi Garg, Advocate, Mr. B. Purushothama Reddy, Advocate, Mr. Kishor Kumar, Advocate, Dr. (Mrs. ) Vipin Gupta, Advocate, for the Appellant; Ms. Soumyan Tondan, Advocate, Ms. L.M. Bhat, Advocate, Mr. Hetu Arora Sethi, Advocate, Ms. Aishwarya Bhati, ASG, Ms. Swati Ghildiyal, Advocate, Mr. Amit Sharma, Advocate, Mr. V.M. Vishnu, Advocate, Mr. Akshay Amritanshu, Advocate, Mr. Arvind Kumar Sharma, Advocate, Mr. B. Suyudhan, Advocate, Ms. Tatini Basu, Advocate, for the Respondent.

The main legal point established in the judgment is that an agent with an interest in the subject matter of the agency, as per Section 202 of the Indian Contract Act, cannot have the agency terminated to the prejudice of such interest.

Headnote:
Contract - Arbitration Proceedings - Indian Contract Act, 1872 - Section 201, Section 202 - Assignment deed - Restoration of Arbitration Application - Code of Civil Procedure, 1908 - Order IX Rule 9, Section 151, Section 146
Fact of the Case:

P. Seshareddy entered into a contract with the State of Karnataka for a project. Disputes arose, and arbitration proceedings were initiated. After P. Seshareddy's death, his General Power of Attorney holder applied for restoration of the Arbitration Application. The State filed writ petitions challenging the restoration order.
Finding of the Court:

The court found that the appellant was entitled to continue with the arbitration proceedings due to the rights accrued to him by way of the assignment deed. The learned Single Judge's decision was not in consonance with Section 202 of the Indian Contract Act, and the order of the trial Judge was restored.
Issues: The issues revolved around the appellant's entitlement to continue with the arbitration proceedings after the death of the original contractor and the validity of the assignment deed.
Ratio Decidendi: The court held that the appellant had an interest in the contract and was entitled to continue with the arbitration proceedings as per Section 202 of the Indian Contract Act. The learned Single Judge's decision was found to be not in consonance with the Act, and the order of the trial Judge was restored.
Final Decision: The impugned judgment and order were quashed and set aside, and the order of the trial judge was restored. The court directed the expedited disposal of the proceedings within six months.

JUDGMENT

1. Leave granted.

2. The appeals challenge the judgment and order dated 12.11.2019 passed by the learned Single Judge, High Court of Karnataka, Kalaburagi Bench in W.P.Nos. 201087-88/2018 c/w W.P. No. 201321/2016 (GM-CPC), thereby allowing the writ petition(s) filed by the respondent-State.

3. The facts giving rise to the present appeals arise out of the following narrow compass:

4. One P. Seshareddy S/o P.C. Venkatreddy entered into a contract with State of Karnataka for execution of UKP project. He executed a General Power of Attorney dated 21.10.1982 in favour of one Kotermreddy Kodandarami Reddy authorising him to do all the acts necessary with regard to the execution of the said contract.

5. It appears that certain disputes arose between P. Seshareddy and the respondent-State with regard to the execution of the work, allotted to said P. Seshareddy. As such, he initiated arbitration proceedings by making an application under Section 8 of the Arbitration Act, 1940.

6. The said petition was presented through his General Power of Attorney holder Sri Kotemreddy Kodandarami Reddy.

7. The original contractor, namely, P. Seshareddy, died on 13.11.1995. After his death, his legal heirs were brought on record. However, it appears that the said Arbitration Case being Arbitration Case No.03/2004 came to be dismissed for default on 30.05.2008.

8. Thereafter, an application came to be made by Sri Kotemreddy Kodandarami Reddy for restoration of the Arbitration Application under Order IX Rule 9 read with Sections 151 read with Section 146 of Code of Civil Procedure, 1908. The aforesaid application came to be allowed by the learned Trial Judge.

9. Being aggrieved thereby, the respondent-State filed the aforesaid writ petition(s). The learned Single Judge vide impugned judgment and order allowed the the writ petitions and set aside the order(s) passed by the learned Trial Judge.

10. We have heard Ms. Kiran Suri, learned senior counsel appearing for the appellant and Ms. Soumyan Tandon, learned counsel appearing for the respondent-State.

11. Ms. Kiran Suri, learned senior counsel appearing for the appellant, submits that the learned Single Judge of the High Court while allowing the writ petition(s) has only considered the provision of Section 201 of the Indian Contract Act, but has ignored the provision of Sections 202 and 209 of the said Act. She submits that since the appellant had an interest in the said contract, he was entitled to continue with the proceedings in spite of the death of the original contractor. She submits that the learned Single Judge of the High Court has failed to take into consideration this aspect of the matter.

12. Ms. Soumyan Tandon, learned counsel for the State, on the contrary, submits that merely on the basis of General Power of Attorney, it cannot be construed that the appellant had an interest in the contract. In so far as the assignment deed is concerned, she submits that since there was no consent of the State for the said assignment deed, the same was not valid in law. She further submits that the rights in the contract could not have been transferred by way of an assignment deed.

13. Learned counsel for the respondent-State has relied on the judgment of this Court in the case of Indu Kakkar Vs. Haryana State Industrial Development Corporation Ltd. & Anr.-reported in (1999) 2 SCC 37 and also on the judgment of this Court in C.A. Nos. 10683-10686 of 2014 titled as 'Kapilaben & Ors. Vs. Ashok Kumar Jayantilal Sheth Through POA Gopalbhai Madhusudan Patel & Ors'.

14. We have perused the material placed on record.

15. The perusal of the assignment deed dated 02.07.1990 clearly reveals that the original contractor-P. Seshareddy had assigned all the rights and liabilities arising out of the said contract in favour of Sri Kotemreddy Kodandarami Reddy.

16. The perusal of the order passed by the Trial Court would show that, it has held that leaving apart the nature of GPA, the appellant was entitled to prosecute the arbit

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