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2016 Supreme(Raj) 998
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
MOHAMMAD RAFIQ, J.
M/s. PNC-Jain Construction Co. (JV) – Applicant
Versus
IRCON International Limited through Managing Director and Ors. – Respondent
S.B. CIVIL ARBITRATION APPLICATION NO. 22 of 2014
Decided On : 07-10-2016
For the Applicant : Mr. R.P. Singh, Senior Counsel assisted by Mr. Kanishka Gupta
For the Respondent: Mr. Shailesh Prakash Sharma with Mr. Ganesh Gupta
Headnote:
Civil Procedure Code, 1908 – Section 20 – Arbitration and Conciliation Act, 1996 – Section 11 and 2 – Indian Companies Act – Contract Act – Section 28 – Applicant Claims – Illegal Withholding – Case are that non-applicants awarded tender of aforesaid work to applicant vide letter of acceptance – Agreement was executed between parties on hands of Non-applicant and authorized signatory of the applicant at Jhalawar. As agreed, entire work was required to be completed within eleven months from date of acceptance letter and date of completion of work was applicant claims to have deputed its representative to take over the work site but Engineer-in-charge of non-applicants could not make work site available – Applicant then sent reminders to non-applicants – Engineer-in-charge of non-applicants vide letter informed the applicant that as advised at several occasions and also as confirmed by during last progress meeting entire site along alignment lying in government and private land is available for construction work except forest area – Held, Supreme Court in Patel Roadways Limited, Bombay while interpreting Section 20 C.P.C. held that choice of forum can be limited by incorporating exclusion clause under agreement but agreement cannot confer jurisdiction on a place where it does not lie otherwise. Interpreting explanation to Section 20(a) C.P.C., Supreme Court further held that where defendant company/corporation has its principal office at one place and subordinate office at another place and cause of action arises at place where subordinate office is located suit has to be filed only in court within whose jurisdiction company/corporation has its subordinate office and not in court within whose jurisdiction it has its principal office. A clause to the contrary in agreement would not be operative – Appeal accordingly allowed.
1. This application under Section 11 of the Arbitration and Conciliation Act, 1996(for short 'the Act of 1996') has been filed by the applicant M/s. PNC-Jain Construction Company inter alia praying for appointment of an independent arbitrator for adjudication of its disputes and differences with the respondents in respect of Agreement No. IRCON/3014/RRVUNL.RS/Tender/P-way (JHL to Plant) related to “Earthwork in Formation and Permanent Way work from proposed Jhalawar Railway Station to Kalisindh Thermal Power Plant in connection with railway siding work consisting of Earthwork in formation, supply of blanketing material, ballast and P.Way material, P.Way linking, commissioning and associated work.
2. Facts of the case are that the non-applicants awarded tender of aforesaid work to the applicant vide letter of acceptance dated 25.02.2011 for a sum of Rs.28,25,53,210/-. Agreement was executed between the parties on 25.04.2011 under the hands of Non-applicant No. 3 and authorized signatory of the applicant at Jhalawar. As agreed, entire work was required to be completed within eleven(11) months from the date of acceptance letter and thus, date of completion of work was 24.01.2012. The applicant claims to have deputed its representative on 02.03.2011 to take over the work site but the Engineer-in-charge of the non-applicants could not make the work site available. The applicant then sent reminders dated 07.03.2011, 20.04.2011 and 06.06.2011 to the non-applicants. The Engineer-in-charge of the non-applicants vide letter dated 07.06.2011 informed the applicant that as advised at several occasions and also as confirmed by DM/Jhalawar during last progress meeting, the entire site along the alignment lying in government and private land is available for construction work except the forest area. The applicant, however, still insisted that work site was not handed over and brought this to the notice of the non-applicant No. 3 vide letters dated 10.06.2011 and 11.06.2011. The applicant out of its own volition surveyed the entire site and communicated to the non-applicant No. 3 vide letter dated 23.09.2011 that at few places work can be commenced. Thereafter correspondences were exchanged between the applicant and the non-applicants to record progress of acquisition of work sites by the District Administration. In this regard, the applicant wrote letters dated 21.11.2011, 13.01.2012, 10.09.2012 and 18.01.2013 and non-applicants wrote letters dated 09.01.2012, 20.01.2012, 28.06.2012, 28.08.2012 and 12.09.2012.
3. Mr. R.P. Singh, learned Senior Counsel appearing on behalf of the applicant argued that progress of the work suffered due to reasons which have been detailed in extenso in Point No. (C) (i) to C(vii) of the present application. In view of those reasons, considerable delay occurred which was attributable to the non-applicants in not being able to provide work sites, earth and etc. on time, which resulted in huge delay in completion of contract work. As a consequence thereof, the applicant suffered huge losses on account of price escalation in terms of men and material cost, increased overheads, decrease of profit, illegal withholding of amount against executed items. The applicant vide letter dated 24.02.2013 submitted to the non-applicants an interim statement of claims(claims arising till 31.01.2013 only) in which it claimed heavy direct losses owing solely to the delay on the part of the non-applicants. As per the agreement, an attempt for mutual settlement was made. The non-applicants constituted a Committee of General Manager (Finance)-HQ IRCON, General Manager-II Jaipur and General Manager-I Jaipur, which, however, after holding few meetings reported failure under joint signatures vide letter dated 23.09.2013. The Committee opined regarding one of the interim claims for “earthwork in cutting for IRCON's earth for use in filling for embankment in alignment” that such a claim should be put forth after mutually exploring poss
