Banco Construction Pvt. Ltd. (M/s. ) vs Brajesh Sharma

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(MP) 434

IN THE HIGH COURT OF MADHYA PRADESH
Sanjeev Sachdeva, Ag. CJ and Rajendra Kumar Vani, J.
Banco Construction Pvt. Ltd. (M/s.) v. Brajesh Sharma
Arbitration Appeal No. 46 of 2024 (Gwalior): against the order dated 29.2.2024 passed by the Commercial Court and Commercial Appellate Court, Gwalior in MJC-AV No. 01/2017; Decided on 23.9.2024

Advocates:
Arun Dudawat for appellant;
Sankalp Sharma for respondent.

Headnote:
(1) Arbitration and Conciliation Act, 1996 -- Ss. 37 and 34 -- scope of interference -- it is the domain of arbitrator to adjudicate upon facts and evidence -- arbitrator is the sole judge of quantity and quality of evidence -- award can be set aside only if it shocks conscience of Court. (2023) 9 SCC 85, (2018) 3 SCC 133, (2015) 3 SCC 49 and (2024) 1 SCC 479 followed. [Para 13]
(2) Arbitration and Conciliation Act, 1996 -- Ss. 37 and 34 -- Registration Act, 1908 -- S. 17 -- Stamp Act, 1899 -- Schedule I-A, Cl. 5(g) -- subletting agreement -- all points raised by appellant in appeal properly considered by arbitrator in award in proper and lawful manner -- objection regarding improper stamping of document not tenable as it was executed by appellant and appellant itself kept custody of original document -- original stamped agreement never produced by appellant to demonstrate stamp affixed on agreement -- adverse inference liable to be drawn against appellant, that document was duly stamped -- appellant also assigned work and paid certain amounts to respondent under this agreement -- it cannot take U-turn and raise objection regarding validity of document qua insufficient stamping and mandatory registration -- agreement not covered under documents referred to in S. 17 of Registration Act therefore registration not mandatory -- at relevant time, stamp duty of Rs. 100/- was provided for agreement not covered by sub-clauses (a) to (fa) of Cl. 5 -- apparently, agreement is properly stamped -- arbitrator has rightly concluded that minor modifications cannot be termed as bad work, there is no evidence showing any defect or slow progress of work on part of respondent, and appellant has committed breach of contract by stopping payment to claimant/respondent for work he has already completed -- claimant had to arrange for all resources therefore question of supply of such material by appellant to respondent through various bills and receipts does not arise -- arbitrator did not commit any mistake by disbelieving these bills -- no evidence to establish that appellant got work done from third party which was left over by claimant/respondent -- appellant re-allotted some remaining work to another agency without written consent of claimant, which amounts to violation of terms of agreement -- amount withheld by appellant comes to Rs. 55,97,532/- and no reasonable excuse for such withholding has been put forth -- claim of Rs. 55,97,532/- in favour of claimant/respondent rightly allowed with interest @ 9% per annum -- award not passed in casual and cavalier manner -- not against public policy -- not patently illegal or perverse -- does not shock conscience of Court -- arbitrator or Court dealing with application u/s. 34 of Arbitration Act have not exceeded their jurisdiction -- impugned order and award do not call for interference. [Paras 18 to 24, 26 & 27]
(3) Arbitration and Conciliation Act, 1996 -- Ss. 18 and 23 -- counter-claim -- appellant did not raise counter-claim after receiving notice for appointment of arbitrator and even after filing reply -- even failed to inform claimant by giving reply of notice as regards relief sought in counter-claim -- cause of action for counter-claim definitely arose when claimant/respondent stopped work -- limitation provides period of 3 years for initiation of suit of recovery, therefore, it was ex-facie time barred. [Para 25]
¼1½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 & /kkjk 37 rFkk 34 & gLr{ksi dh O;kfIr & rF;ksa vkSj lk{; ij U;k;fu.kZ; djuk e/;LFk ds {ks=kf/kdkj esa gS & e/;LFk lk{; dh ek=k vkSj xq.koÙkk dk ,dek= fu.kkZ;d gksrk gS & iapkV rc gh vikLr fd;k tk ldrk gS tc mlls U;k;ky; dh var'psruk dks vk?kkr igq¡psA ¼2023½ 9 ,llhlh 85] ¼2018½ 3 ,llhlh 133] ¼2015½ 3 ,llhlh 49 rFkk ¼2024½ 1 ,llhlh 479 vuqlfjrA ¼iSjk 13½
¼2½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 & /kkjk 37 rFkk 34 & jftLVªhdj.k vf/kfu;e] 1908 & /kkjk 17 & LVkai vf/kfu;e] 1899 & vuqlwph 1&d [kaM 5¼N½ & mi&iV~Vs dk djkj & vihykFkhZ }kjk vihy esa mBk, x, lHkh fcanqvksa ij e/;LFk us iapkV esa mfpr vkSj fof/kiw.kZ jhfr ls iw.kZ:is.k fopkj fd;k & nLrkost ij vuqfpr LVkai yxk, tkus ds ckjs esa vkifÙk ekU; ugha D;ksafd og vihykFkhZ }kjk fu"ikfnr fd;k x;k Fkk rFkk vihykFkhZ us gh ewy nLrkost viuh vfHkj{kk esa j[kk Fkk & djkj ij yxk;k x;k LVkai çnf'kZr djus ds fy, vihykFkhZ }kjk ewy LVkafir djkj dHkh çLrqr ugha fd;k x;k & vihykFkhZ ds fo:) ;g çfrdwy fu"d"kZ fudkys tkus ;ksX; fd nLrkost lE;d~:is.k LVkafir Fkk & vihykFkhZ us bl djkj ds v/khu çR;FkhZ dks dk;Z Hkh lkSaik vkSj dfri; jdeksa dk lank; fd;k & og iyV dj vi;kZIr LVkai vkSj vkKkid jftLVªhdj.k ds lacaèk esa nLrkost dh fof/kekU;rk ij vkifÙk ugha dj ldrk & djkj jftLVªhdj.k vfèkfu;e dh /kkjk 17 esa fufnZ"V nLrkostksa ds v/khu ugha vkrk blfy, jftLVªhdj.k vkKkid ugha & lqlaxr le; ij] tks djkj [kaM 5 ds mi[kaM ¼d½ ls ¼pd½ }kjk vkPNkfnr ugha mlds fy, :i;s 100@& ds LVkai&'kqYd dk mica/k Fkk & çR;{kr% djkj mfpr :i ls LVkafir gS & e/;LFk us lgh fu"d"kZ fudkyk gS fd xkS.k mikarj.kksa dks [kjkc dk;Z ugha dgk tk ldrk] çR;FkhZ }kjk dksbZ =qfV ;k /kheh dk;Z çxfr n'kkZus dk dksbZ lk{; ugha rFkk nkosnkj@çR;FkhZ }kjk tks dk;Z iw.kZ fd;k tk pqdk gS ml dk;Z ds fy, mldk lank; jksd dj vihykFkhZ us lafonk Hkax fd;k gS & nkosnkj dks leLr lalk/kuksa dh O;oLFkk djuk Fkh vr% vihykFkhZ }kjk fofHkUu fcyksa vkSj jlhnksa ds ek/;e ls çR;FkhZ dks ml lkexzh ds çnk; dk ç'u gh ugha mBrk & e/;LFk us bu fcyksa dk vfo'okl dj dksbZ xyrh ugha dh & ;g LFkkfir djus ds fy, dksbZ lk{; ugha fd vihykFkhZ us ijO;fä ls og dk;Z djok;k tks nkosnkj&çR;FkhZ }kjk NksM+ fn;k x;k Fkk & vihykFkhZ us dqN 'ks"k dk;Z fdlh vU; vfHkdj.k dks nkosnkj dh fyf[kr lgefr ds fcuk iqu% vkcafVr dj fn;k- tks djkj ds fuca/kuksa ds vfrØe.k dh dksfV esa vkrk gS & vihykFkhZ }kjk jksdh xbZ jde :i;s 55]97]532z@& gksrh gS rFkk ;g jde jksdus ds fy, dksbZ ;qfä;qä dkj.k ugha fn;k x;k gS & nkosnkj@çR;FkhZ ds i{k esa :i;s 55]97]532@& dk nkok 9 Áfr'kr çfro"kZ dh nj ls C;kt ds lkFk Bhd gh eatwj & iapkV uSfefÙkd vkSj ykijokg jhfr esa ikfjr ugha & yksd uhfr ds fo:) ugha & çR;{kr% voS/k ;k foi;ZLr ugha & U;k;ky; dh var'psruk dks vk?kkr ugha igqapkrk & ek/;LFke~ vf/kfu;e dh /kkjk 34 ds v/khu vkosnu ij fopkj djus okys e/;LFk ;k U;k;ky; us viuh vfèkdkfjrk ds ckgj dk;Z ugha fd;k & vkf{kIr vkns'k rFkk iapkV esa gLr{ksi okaNuh; ughaA ¼iSjk 18 ls 24] 26 ,oa 27½
¼3½ ek/;LFke~ vkSj lqyg vf/kfu;e] 1996 & /kkjk 18 rFkk 23 & çfrnkok & vihykFkhZ us e/;LFk dh fu;qfä dk lwpuki= çkIr djus ds i'pkr~ rFkk mÙkj Qkby djus ds mijkar Hkh çfrnkok ugha fd;k & ;gka rd fd çfrnkos esa bZfIlr vuqrks"k ds laca/k esa lwpuki= dk mÙkj nsdj Hkh nkosnkj dks lwfpr ugha fd;k & çfrnkos dk okn gsrqd fuf'pr gh rc mn~Hkwr gqvk tc nkosnkj@çR;FkhZ us dk;Z can dj fn;k & olwyh okn vkjaHk djus ds fy, ifjlhek esa 3 o"kZ dh vofèk micaf/kr gS- vr% og Li"Vr% le;oftZr FkkA ¼iSjk 25½

JUDGMENT

Vani, J. -- 1. The appellant impugns the order dated 29.2.2024 passed by the Commercial Court and Commercial appellate Court, Gwalior in MJC AV No.01/2017 under section 34 of the Arbitration & Conciliation Act,1996 (for brevity ‘the Act’) affirming the arbitral award dated 5.10.2016 passed by the learned Sole Arbitrator [Hon‘ble Shri Justice R.B. Dixit (Retd.)]; whereby, an award of Rs.55,97,532/- has been passed in favour of the respondent.

2. In brief, the facts of the case are that a work contract of construction of road was granted to the appellant for construction/upgradation of rural roads under Pradhan Mantri Gramin Sadak Yojna (PMGSY) in Package No.MP-2149 Khandwa by the M.P. Rural Road Development Authority (MPRRDA) vide agreement No.63-K/2008-09 dated 18.2.2009. As per Clause 7.1 of the said agreement subletting upto 25% was permissible with the approval of the employer in writing.

3. Vide agreement dated 14.9.2009, work of Rs.210 lacs was sublet to the respondent. Thereafter, a dispute arose between the parties, therefore, respondent served two notices dated 18.9.2012 on appellant for payment of dues and appointment of Arbitrator in the matter. Since no action was taken by the appellant for appointment of Arbitrator, respondent approached this Court by filing A.C.No.23/2012 and learned Single Bench of this Court vide order dated 20.8.2014 appointed Hon’ble Shri Justice R.B.Dixit (Retd.) as sole Arbitrator.

4. On the basis of the pleadings of the parties, Sole Arbitrator passed impugned award dated 5.10.2016 awarding an amount of Rs.55,97,532/- to the respondent along with interest @ 9% from the date of notice dated 18.9.2012 till its realization by allowing Claim No.’A’. Other claims of the respondent and counter-claim of the appellant were rejected.

5. Against the arbitral award dated 5.10.2016, appellant preferred an application under section 34 of the Act before the Commercial Court & Commercial Appellate Court by filing MJC AV/01/2017 which was dismissed vide order dated 29.2.2024. Hence, this appeal under section 37 of the Act.

6. The submission of learned counsel for the appellant is that agreement dated 14.9.2009 is not properly stamped and the said agreement was a void contract being executed contrary to the Condition No.7 of the agreement entered into between appellant and MPRRDA as according to said agreement subletting to the maximum 25% of the contract amount was permissible and that too after getting prior approval from the principal employer. The objection of the appellant in this regard was rejected by the sole Arbitrator on the ground that objections were already raised by the appellant in application under section 11 of the Act and that cannot be re-agitated again before the Arbitrator.

7. It is the submission of learned counsel for the appellant that said reasoning of the learned Arbitrator is patently illegal as the order passed by this Court on application under section 11 of the Act is not a judicial order but an administrative order and an order of administrative nature is not having binding judicial precedential value. The claimant/respondent himself submitted audited balance-sheet wherein in the category of sundry debtors balance has been shown as Rs.19,24,832/-, whereas learned Sole Arbitrator has awarded award of Rs.55,97,532/- against the appellant. Thus, award passed by the learned Arbitrator suffered from patent illegality. On these grounds, it is prayed that impugned award passed by the learned Sole Arbitrator as well as impugned order dated 29.9.2024 passed in MJC AV No.01/2017 be set aside.

8. Per contra, it is the submission of learned counsel for the respondent that learned Arbitrator with the consent has adopted the procedure for arbitration and according to the said procedure the parties have submitted documents and affidavits followed by their admission and denial. The learned Arbitrator found that respondent has executed the work and subsequent agreement dated 25.1.2011