1964 Supreme(Pat) 38

HIGH COURT OF PATNA
H. MAHAPATRA, TARKESHWAR NATH, JJ.
State of Bihar
Versus
Rama Bhushan Basu
A.F.O.D. No. 559 of 1958
Decided On : 17-02-1964

Headnote:

CONTRACT - Arbitration clause - Interpretation - Whether clause 25 of the agreement is an arbitration clause - Held, no - Suit not barred under Section 21 of the Specific Relief Act.

Fact of the Case:

The plaintiff, a construction firm, instituted a money suit against the State of Bihar for Rs. 1,08,299-13-0, as detailed in Schedules A to F of his plaint, and claimed interest thereon at the rate of 8 per cent per annum with pendente lite and future interest on the money that may be decreed in his favour. He stated in his plaint that there was a contract in writing on the 25th of December 1947 between the plaintiff and the Superintending Engineer, Public Health Engineering Department, on behalf of the Governor of the State of Bihar for construction of a Raw Water Pump House and Intake Well for the Sindri Fertilizer Factory Supply. The plaintiff executed the contract work and received various payments on account bills. When the work was complete by September, 1950 a sum of Rs. 24,051-13-0 remained due to the plaintiff and a final bill was submitted by him to the Construction Engineer, Public Health Division, Sindri. This amount was on account of difference in rates, measurements and recoveries. This bill, however, did not include the plaintiffs claim for iron and steel reinforcements rods supplied for construction work, claim for clearing debris that fell within the Intake Well as a result of the collapse, claim for excavation through soft rock, claim for cement brick revetment and cement brick steps to the Intake channel and claim for payment of sales-tax as those claims had already been made before the submission of the final bill and were pending before the Superintending Engineer. Schedules B, C.D.E and F given in the plaint related to these claims. Schedule A detailed the claim of Rs. 24,051-13-0. All those works were done by the plaintiff as and when they became necessary during the execution of the contract work. Alternatively the plaintiff stated in his plaint that if those works were not part of the contract, or if the contract for execution of those works was found invalid, the plaintiff was entitled to receive the price of those works and supply of materials as the defendant enjoyed the benefit thereof. About the claim for sales-tax, the plaintiff averred that in accordance with the contract and the dealings between the parties, he was entitled to add sales-tax on the amount of his dues and recover the same from the defendant as he had paid such tax from time to time during the execution of the contract. He further stated that the Chief Engineer, Public Health Engineering Department, by his letter dated the 21st May 1954 offered Rs. 5,000/- in over-all settlement of all the plaintiffs claim in an arbitrary manner and took an unreasonable stand that all the plaintiffs claims as decided by the Superintending Engineer were final and conclusive. He refused to submit the matter of dispute to the arbitration of Mr. B.N. Choudhary, who had been appointed by mutual consent of the parties, to settle other disputes regarding another contract work of infiltration gallery and appurtenances works at Sindri. The plaintiff gave notice under Section 80, Civil Procedure Code, to the defendant on the 27th September 1954 which was received by the defendants Secretary in the Public Health Engineering Department at Patna on the 29th September 1954. On the 22nd January 1957 a reply was received from the Chief Engineer to the plaintiffs solicitors letter dated the 30th November 1956 asking the plaintiff to see the final bill in the Chief Engineers office and to give an acquaintance in full and final settlement of all demands made by him before any payment could be made to him. When the plaintiff went to the office of the Chief Engineer on the 12th February 1957 and inspected the final bill as prepared by the Public Health Engineering Department, he found that he could not agree to accept the sum of money offered to him. As there was no other alternative a suit had to be filed in Court for recovery of his dues.

Finding of the Court:

The suit brought by the plaintiff was not hit by the provisions of Section 21 of the Specific Relief Act. The trial Courts opinion that this clause 25 came in conflict with Section 28 of the Contract Act is not correct, because the right of the parties to take legal proceedings in respect of their claims arising out of the contract were not excluded by that condition.

Issues: Whether clause 25 of the agreement is an arbitration clause.

Ratio Decidendi: Clause 25 of the suit agreement does not at all establish in any clear manner that the parties to that contract intended to bring into existence a situation of that kind.

Final Decision: Appeal and cross-objection partly allowed.