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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ANOOP V. MOHTA, G.S. KULKARNI, JJ.
Ambernath Municipal Council, a body corporate, duly constituted under the provisions of Maharashtra Municipalities Act, 1965 - Appellant
Versus
M/s. Jai Hind Contractors Pvt. Ltd. - Respondent
FIRST APPEAL NO. 94 OF 2001 with CIVIL APPLICATION NO.401 OF 2001
Decided On : 04-08-2016
Arbitration Agreement - Municipal Council's Act - Section 143A(3) - The court held that there was no valid arbitration agreement between the parties under the Municipal Council's Act. The appointment of the arbitrator by the State Government was unilateral and lacked jurisdiction. The court also found that the objections raised by the Appellant were within the prescribed limitation period.
Fact of the Case:
The Appellant, Ambernath Municipal Council, appealed against the judgment and order allowing an application filed under Section 14 read with Section 17 of the Arbitration Act,1940. The dispute arose from a tender for the collection of octroi, and the Appellant was within its authority to appoint an agent for collection of octroi under the provisions of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965.
Finding of the Court:
The court found that there was no valid arbitration agreement between the parties, and the appointment of the arbitrator by the State Government was unilateral and lacked jurisdiction. The objections raised by the Appellant were within the prescribed limitation period.
Issues: The principal issues were whether there was a valid arbitration agreement existing between the parties, whether the appointment of the learned Arbitrator by the Government of Maharashtra under Government Resolution dated 14 November 1994 can be said to be legal and valid and permissible under the contractual terms, and whether on merits the award made by the learned Arbitrator and the impugned judgment confirming the award can be sustained.
Ratio Decidendi: The court held that there was no valid arbitration agreement between the parties under the Municipal Council's Act. The appointment of the arbitrator by the State Government was unilateral and lacked jurisdiction. The court also found that the objections raised by the Appellant were within the prescribed limitation period.
Final Decision: The court quashed and set aside the impugned judgment and order dated 22.9.2000 passed by the learned Civil Judge, Senior Division, Kalyan, and allowed the appeal with costs.
G.S.Kulkarni, J.
1. The Appellant judgment debtor, the Ambernath Municipal Council, is in appeal against the judgment and order dated 22 September 2000 passed by the Joint Civil Judge, Senior Division, Kalyan, whereby an application of Respondent No.1-Jai Hind Contractors Pvt. Ltd., filed under Section 14 read with Section 17 of the Arbitration Act,1940 (for short 'the 1940 Act') was allowed, holding that a decree of the Court be drawn up in terms of award dated 26 December 1994 passed by the Learned Arbitrator being the Revenue Commissioner, Konkan Division, Government of Maharashtra. The learned Judge further directed that the Appellant shall not encash the bank guarantee of Rs.1,07,92,000/offered by Respondent No.1 in favour of the Appellant.
2. In nutshell the facts are :
The Appellant is a Municipal Council governed under the provisions of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 (for short 'the Municipal Council's Act'). By virtue of the provisions of Section 143A of the Municipal Council's Act, the Appellant was within its authority to appoint an agent for collection of octroi. In March,1994, the Appellant issued a tender for collection of octroi for a period of one year beginning with 1 April 1994 to 31 March 1995. The advertisement provided for a reserve price and the term was, any offer lower than Rs.6,74,00,000/may not be considered and would be rejected. Another condition of relevance was that during the contract period of one year, the agent shall remit 2% of the contract amount every week to the Appellant irrespective of the actual amount of octroi collection. The other tender conditions were of earnest money of Rs.1,00,000/in the form of call deposit and a security deposit in the form of bank guarantee of a nationalised or scheduled bank for Rs.1,07,92,000/.
3. Respondent No.1 participated in the tender alongwith other bidders and was a successful bidder having submitted its bid for an amount of Rs.6,75,00,000/. The Appellant accepted Respondent No.1's bid and entered into an agreement with Respondent No.1 dated 30 March 1994 for the said octroi collection contract. The other formalities like submitting a bank guarantee etc. were also complied with by Respondent No.1.
4. As regards the controversy which falls for consideration in this appeal, two clauses in the said agreement on which the parties have placed reliance are clauses 20 and 24 which read thus:-
“20. Only because matter is referred to arbitration will not entitle the agent to continue the agreement and the contract shall stand terminated as per the provisions in the terms and conditions and the agreement. The agent shall not be entitled to claim any interim from the Court on the ground that the matter has been referred to arbitration. The agent shall not be entitled to claim any kind of interest on any of his claims as per the Interest Act or any other provisions.
…... …... …...
24. Notice inviting the offer, terms and conditions of the contract, tender form, form of acceptance, form of agreement and form of performance of guarantee, shall be part and parcel of this agreement/contract. “
A plain reading of clause 20 thus implies that if any matter is referred to arbitration, the same will not entitle the agent to continue the agreement, and the contract would stand terminated as per the terms and conditions of the agreement. In clause 24, the parties agreed that a notice inviting the offer, terms and conditions of the contract, tender form, form of acceptance, form of agreement and form of performance of guarantee shall be part and parcel of the said agreement.
5. Clause 22 of the “tender form” which becomes part of the agreement pertains to 'disputes' is also required to be noted and reads thus:
“Clause 22 : Disputes:
In case of any dispute, the same shall be referred to the Collector and his decision shall be final and binding on the Agent and the Council. Appeal against the decision of the Collector in ca
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