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1987 Supreme(AP) 113
Andhra Pradesh High Court
Judges : B.P.JEEVAN REDDY, M.JAGANADHA RAO
C.Raghava Reddy - Appellant
Versus
Superintending Engineer, Irrigation Circle, Nizamabad - Respondent
Decided On : 02-20-87
The Court has no power, under the Arbitration Act, to grant an injunction restraining the Government from withholding the amounts due to the appellant herein in respect of other contracts, for the reason that such an injunction cannot be said to be for the purpose of, and in relation to the proceedings before the Court.
Headnote:
ARBITRATION - INTERIM INJUNCTION - POWER OF COURT - SCOPE AND EXTENT - RECOVERY OF MONEY FROM CONTRACTOR - POWER OF GOVERNMENT - INTERPRETATION OF CLAUSE 71 OF A. P. STANDARD SPECIFICATIONS.
Fact of the Case:
The appellant entered into a contract with the respondents (representing the Government) for construction of Masonry Blocks of Spillway at left flank of Signoor Project. The work was to be completed within 18 months, i.e., by 23-5-1985. It was not so completed. At the appellant's request time was extended on more than one occasion. Meanwhile, disputes arose between the parties with respect to certain other matters, as a result of which the appellant stopped the work with effect from 4-1-1986. The respondents, thereupon stopped all further payments, also contending that the agreement as extended expired on 30-6-1985. The appellant then raised a dispute claiming a sum of Rs. 33 lakhs from the respondent. The respondents not only disputed the appellant's claim but, in turn, claimed an amount of Rs. 21,58,400/- from the appellant representing the loss suffered by the Government on account of the appellant's abandoning the work, which they were obliged to get completed through another contractor.
Finding of the Court:
The Court held that the order of injunction passed by the Delhi High Court in Raman Iron Foundry's case was not incompetent or without jurisdiction. However, the Court clarified that the interpretation placed by the Supreme Court on the order of injunction passed by the Delhi High Court was not acceptable. The distinction made between an order directing the payment, and an order merely restraining the Government from recovering its claim by appropriating such amounts in satisfaction of its claim, was held to be a distinction without a difference. The Court further held that the power of the Court to grant an interim injunction under S. 41 (b) read with the Second Schedule to the Act can be exercised only "for the purpose of, and in relation to arbitration proceedings". Since the amounts payable to the supplier under other contracts were not the subject-matter of arbitration proceedings, the Court could not make an interim order which, in substance, amounted to a direction to the Government to pay the amounts due under such other contracts to the supplier.
Issues: 1. Whether the Court has the power to grant an injunction restraining the Government from withholding the amounts due to the appellant in respect of other contracts? 2. Whether the Government can invoke its power under Clause 71 of A. P. Standard Specifications without the claim being admitted by the contractor or adjudicated upon by a competent Court or authority?
Ratio Decidendi: 1. The power of the Court to grant an interim injunction under S. 41 (b) read with the Second Schedule to the Act can be exercised only "for the purpose of, and in relation to arbitration proceedings". 2. To enable the Government to invoke its power under Clause 71 of A. P. Standard Specifications, it is not necessary that its claim should either be admitted by the contractor, or should have been adjudicated upon by a competent Court or authority.
Final Decision: The Civil Miscellaneous Appeal was dismissed, in the circumstances, without costs.
( 1 ) THE Civil Miscellaneous Appeal is preferred against an interlocutory order passed by the learned Subordinate Judge, Medak, in a suit filed under S. 20 of the Arbitration Act. The appellant entered into a contract with the respondents (representing the Government) for construction of Masonry Blocks of Spillway at left flank of Signoor Project. The work was to be completed within 18 months, i. e. , by 23-5-1985. It was not so completed. At the appellant s request time was extended on more than one occasion. Meanwhile, disputes arose between the parties with respect to certain other matters, as a result of which the appellant stopped the work with effect from 4-1-1986. The respondents, thereupon stopped all further payments, also contending that the agreement as extended expired on 30-6- 1985. The appellant then raised a dispute claiming a sum of Rs. 33 lakhs from the respondent. The respondents not only disputed the appellant s claim but, in turn, claimed an amount of Rs. 21,58,400/- from the appellant representing the loss suffered by the Government on account of the appellant s abandoning the work, which they were obliged to get completed through another contractor. The 1st respondent, i. e. , the Superintending Engineer, I. D. Irrigation Circle - 3. Nizamabad, thereupon addressed letters to all other Circles in the State to withhold payments due to the appellant up to Rs. 21,58,000/ -. The letter reads as follows :-"by REGD. POST ACK. DUE : government OF ANDHRA PRADESH no. Dated : from : sri D. Muthyalu, B. Sc. , B. E. , MIE, executive Engineer, I. D. , singur Project Dam Dvn. No. 2, p. O. Singur, Medak District pin 502 293. To, the Executive engineer, I. D. , sir, sub : Singur Project - Construction of Blocks 7 to 14 up to EL + 504. 00 closing of work of Sri C. Raghava Reddy, Contractor under Clause 61 of APSS - Recovery of amounts due to the department - Reg. Sri C. Raghava Reddy, contractor was entrusted with the work of construction of spillway blocks from 7 to 14 up to EL + 504. 00. The contractor was not able to do the work in spite of extensions and he deserted the work from 4-1-86. As such the contract was closed under clause 61 of APSS on 16-1-86. The extra cost involved in carrying out the balance work deserted by the contractor comes to about Rs. 21,89,300/ -. Hence I request you to kindly send the; amounts that are payable to Sri C. Raghavareddy from your works to this Division, in favour of Executive Engineer, Dam Division No. 2, Singur Project by way of cheque or crossed demand draft at an early date. Yours faithfully, executive Engineer, I. D. , singur Project Dam Divn. No. 2, p. O. Singur, Medak District. Copy submitted to the Chief Engineer, Major, for favour of information. Copy submitted to the Superintending Engineer. I. D. irrigation Circle No. 3, Nizamabad for favour of information. Executive Engineer, I. D. Singur Project Dam Divn. No. 2, p. O. Singur, Medak District. . . . . "
( 2 ) ALLEGING that the arbitration clause contained in the agreement between the parties was vague and unworkable, and raising several other contentions, which it is not necessary to mention here, the appellant filed a petition under S. 20 of the Arbitration Act (numbered as O. S. 3/1986) for appointment of a sole arbitrator to decide the disputes arising out of the agreement between the parties. In the suit, the appellant filed I. A. No. 106/86 under O. XXXIX, R. 2, C. P. C. read with S. 41 and Cl. (4) of the Second Schedule to the Arbitration Act, for grant of a temporary injunction restraining the respondents from stopping payment of the contract bills, or any other amounts payable to the appellant in respect of the contracts done by him at Singoor Project, or at other places (i. e. under other contracts) pending disposal of the arbitration proceedings. This was opposed by the respondents. After hearing the parties, and following the decision of the Supreme Court in Union of India v. Raman Iron Foundry
