{"id":189948,"date":"2007-01-10T00:00:00","date_gmt":"2007-01-09T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/krishna-bhagya-jala-nigam-ltd-vs-g-harischandra-reddy-and-anr-on-10-january-2007"},"modified":"2017-11-24T14:10:22","modified_gmt":"2017-11-24T08:40:22","slug":"krishna-bhagya-jala-nigam-ltd-vs-g-harischandra-reddy-and-anr-on-10-january-2007","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/krishna-bhagya-jala-nigam-ltd-vs-g-harischandra-reddy-and-anr-on-10-january-2007","title":{"rendered":"Krishna Bhagya Jala Nigam Ltd vs G. Harischandra Reddy And Anr on 10 January, 2007"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Krishna Bhagya Jala Nigam Ltd vs G. Harischandra Reddy And Anr on 10 January, 2007<\/div>\n<div class=\"doc_author\">Author: Kapadia<\/div>\n<div class=\"doc_bench\">Bench: Dr. Arijit Pasayat, S. H. Kapadia<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  149 of 2007\n\nPETITIONER:\nKrishna Bhagya Jala Nigam Ltd\n\nRESPONDENT:\nG. Harischandra Reddy and Anr\n\nDATE OF JUDGMENT: 10\/01\/2007\n\nBENCH:\nDr. Arijit Pasayat &amp; S. H. Kapadia\n\nJUDGMENT:\n<\/pre>\n<p>J U D G M E N T<br \/>\n(Arising out of SLP (C)No.10418 of 2005)<\/p>\n<p>KAPADIA, J.\n<\/p>\n<p>\tLeave granted.\n<\/p>\n<p>\tTwo issues arise for determination in this civil appeal<br \/>\nfiled by Krishna Bhagya Jala Nigam Ltd. (for short, &#8216;Jala<br \/>\nNigam&#8217;) against the decision of the Division Bench of the<br \/>\nKarnataka High Court dated 28.1.2005 in Miscellaneous First<br \/>\nAppeal No.1785 of 2002 dismissing the said appeal preferred<br \/>\nby Jala Nigam under Section 37(1)(b) of the Arbitration and<br \/>\nConciliation Act, 1996 (for short, &#8216;the Arbitration Act&#8217;).<br \/>\n\tThe first issue is : whether Jala Nigam could be allowed<br \/>\nto raise the contention, on the facts and circumstances of this<br \/>\ncase, that Clause 29 of the Contract(Agreement) is not an<br \/>\narbitration clause and due to want of jurisdiction of the<br \/>\narbitral tribunal to adjudicate upon the claims made by the<br \/>\ncontractor (respondent no.1),  Award dated 25.6.2000<br \/>\npublished on 14.11.2000 was a nullity.\n<\/p>\n<p>\tThe second issue is regarding the merits of the claims<br \/>\nmade by the contractor.\n<\/p>\n<p>\tThe facts giving rise to the above civil appeal are as<br \/>\nfollows.\n<\/p>\n<p>\tOn 27.11.93 Agreement bearing No.41\/93 was entered<br \/>\ninto between Jala Nigam and the claimant (respondent no.1)<br \/>\nconcerning construction of Mulawad Lift Irrigation Scheme.<br \/>\nThe contract was for 36 months.  It was to be completed by<br \/>\n26.11.96.  In the course of execution of the contract, Jala<br \/>\nNigam entrusted to the contractor, certain extra work vide two<br \/>\nsupplementary agreements dated 11.6.96 and 7.11.98.  The<br \/>\ncontract was extended up to 31.12.2003.  The claimant<br \/>\n(contractor) raised disputes, said to have arisen out of the<br \/>\nworks entrusted under the contract.  By letter dated 23.3.98<br \/>\nthe contractor called upon the Chief Engineer to act as an<br \/>\narbitrator under Clause 29 of the Contract which is<br \/>\nreproduced hereinbelow:\n<\/p>\n<p>&#8220;Clause 29 &#8211; (a) If any dispute or difference of any<br \/>\nkind whatsoever were to arise between the<br \/>\nExecutive Engineer\/Superintending Engineer and<br \/>\nthe contractor regarding the following matters<br \/>\nnamely.\n<\/p>\n<p>(i)\tThe meaning of the specifications designs,<br \/>\ndrawings and instructions herein before<br \/>\nmentioned,\n<\/p>\n<p>(ii)\tThe quality of workmanship or materials used<br \/>\non the work and\n<\/p>\n<p>(iii)\tAny other question, claim, right, matter thing<br \/>\nwhatsoever, in any way arising out of or<br \/>\nrelating to the contract, designs, or those<br \/>\nconditions or failure to execute the same<br \/>\nwhether arising during the progress of the<br \/>\nwork or after the completion, termination or<br \/>\nabandonment thereof the dispute shall, in the<br \/>\nfirst place, be referred to the Chief Engineer<br \/>\nwho has jurisdiction over the work specified in<br \/>\nthe Contract.  The Chief Engineer shall within<br \/>\na period of ninety days from the date of being<br \/>\nrequested by the Contractor to do so, give<br \/>\nwritten Notice of his decision to the<br \/>\nContractor.\n<\/p>\n<p>(b)\tSubject to other form of settlement hereafter<br \/>\nprovided, the Chief Engineer&#8217;s decision in<br \/>\nrespect of every dispute or difference so<br \/>\nreferred shall be final and binding upon the<br \/>\nContractor.  The said decision shall forthwith<br \/>\nbe given effect to the Contractor shall proceed<br \/>\nwith the execution of the work with all due<br \/>\ndiligence.\n<\/p>\n<p>(c)\tIn case the decision of the Chief Engineer is<br \/>\nnot acceptable to the Contractor, he may<br \/>\napproach the Law Courts at.(*) for settlement<br \/>\nof dispute after giving due written Notice in<br \/>\nthis regard to the Chief Engineer within a<br \/>\nperiod of ninety days from the date of receipt of<br \/>\nthis Written Notice of the decision of the Chief<br \/>\nEngineer.\n<\/p>\n<p>(d)\tIf the Chief Engineer has given written Notice<br \/>\nof his decision to the Contractor and no<br \/>\nwritten Notice to approach the Law Court has<br \/>\nbeen communicated to him by the Contractor<br \/>\nwithin a period of Ninety days from receipt of<br \/>\nsuch notice, the decision shall be final and<br \/>\nbinding upon the Contractor.&#8221;\n<\/p>\n<p>By letter dated 26.3.98 the Chief Engineer refused to act<br \/>\nas an arbitrator on the ground that the contract did not<br \/>\nprovide for arbitration.  This led the contractor to file C.M.P.<br \/>\nNo.26\/99 under Section 11 of the Arbitration Act.  By order<br \/>\ndated 10.9.99 the High Court directed the Chief Engineer to<br \/>\nact as an arbitrator.  By the said order the High Court directed<br \/>\nboth the parties to file their respective claims and counter<br \/>\nclaims before the arbitrator.  By letter dated 12.11.99 the<br \/>\nArbitrator entered upon the reference.  He fixed the date of<br \/>\nappearance of the parties.  The Arbitrator gave necessary<br \/>\ndirections to both sides to file statements and counter<br \/>\nstatements.  The contractor placed before the Arbitrator 11<br \/>\nclaims in all.  Jala Nigam filed its counter statement.<br \/>\nUltimately, on the basis of the evidence produced by the<br \/>\nparties, the Arbitrator gave his Award on 25.6.2000 and the<br \/>\nsame was published on 14.11.2000.\n<\/p>\n<p>\tAggrieved by the Award, Jala Nigam filed a petition under<br \/>\nSection 34(2)(v) of the Arbitration Act before the Principal Civil<br \/>\nJudge (Senior Division) Bijapur vide Arbitration Case No.1 of<br \/>\n2001.  The Award was confirmed by the said civil court vide<br \/>\nJudgment dated 15.12.2001.  Aggrieved by the said decision,<br \/>\nJala Nigam carried the matter in first appeal filed under<br \/>\nSection 37(1)(b) of the Arbitration Act to the High Court.  Vide<br \/>\nimpugned judgment dated 28.1.2005 the appeal stood<br \/>\ndismissed.  Hence this civil appeal.\n<\/p>\n<p>\tMr. C.S. Vaidyanathan, learned senior counsel for Jala<br \/>\nNigam, contended that the above-quoted Clause 29 of the<br \/>\nContract was not an arbitration clause and, therefore, the<br \/>\nproceedings before the Arbitrator stood vitiated for lack of<br \/>\njurisdiction.  He contended that the proceedings before the<br \/>\nArbitrator were without jurisdiction for want of arbitration<br \/>\nagreement which cannot be cured by appearance of the<br \/>\nparties, even if there was no protest or even if there was a<br \/>\nconsent of Jala Nigam, since consent cannot confer<br \/>\njurisdiction and, therefore, the impugned Award was null and<br \/>\nvoid.  Learned counsel submitted that though the plea of &#8220;no<br \/>\narbitration clause&#8221; was not raised in the counter statement<br \/>\nbefore the Arbitrator, such a plea was taken by Jala Nigam in<br \/>\nC.M.P. No.26\/99 filed by the contractor and, therefore, Jala<br \/>\nNigam was entitled to raise the plea of &#8220;no arbitration clause&#8221;.<br \/>\nLearned counsel submitted that under the circumstances the<br \/>\ncourts below had erred in holding that Jala Nigam had waived<br \/>\nits right to object to the Award on the aforementioned<br \/>\ngrounds.\n<\/p>\n<p>\tWe do not find any merit in the above arguments.  The<br \/>\nplea of &#8220;no arbitration clause&#8221; was not raised in the written<br \/>\nstatement filed by Jala Nigam before the Arbitrator.  The said<br \/>\nplea was not advanced before the civil court in Arbitration<br \/>\nCase No.1 of 2001.  On the contrary, both the courts below on<br \/>\nfacts have found that Jala Nigam had consented to the<br \/>\narbitration of the disputes by the Chief Engineer.  Jala Nigam<br \/>\nhad participated in the arbitration proceedings.  It submitted<br \/>\nitself to the authority of the Arbitrator.  It gave consent to the<br \/>\nappointment of the Chief Engineer as an Arbitrator.  It filed its<br \/>\nwritten statements to the additional claims made by the<br \/>\ncontractor.  The executive engineer who appeared on behalf of<br \/>\nJala Nigam did not invoke Section 16 of the Arbitration Act.<br \/>\nHe did not challenge the competence of the arbitral tribunal.<br \/>\nHe did not call upon the arbitral tribunal to rule on its<br \/>\njurisdiction.  On the contrary, it submitted to the jurisdiction<br \/>\nof the arbitral tribunal.  It also filed written arguments.  It did<br \/>\nnot challenge the order of the High Court dated 10.9.99<br \/>\npassed in C.M.P. No.26\/99.  Suffice it to say that both the<br \/>\nparties accepted that there was an arbitration agreement, they<br \/>\nproceeded on that basis and, therefore, Jala Nigam cannot be<br \/>\nnow allowed to contend that Clause 29 of the Contract did not<br \/>\nconstitute an arbitration agreement.\n<\/p>\n<p>\tBefore concluding on this issue, one clarification needs to<br \/>\nbe mentioned.  On 26.7.2005 a three-Judge Bench of this<br \/>\nCourt has referred the question involving interpretation of<br \/>\nClause 29 of the Contract to the Constitution Bench in the<br \/>\ncase of <a href=\"\/doc\/102212981\/\">M\/s. P. Dasaratharama Reddy Complex  v.<br \/>\nGovernment of Karnataka and Another<\/a>  Civil Appeal<br \/>\nNo.1586 of 2004.  Placing reliance on the said order, learned<br \/>\ncounsel for Jala Nigam submitted that the hearing of this civil<br \/>\nappeal be postponed pending disposal of the above reference<br \/>\nby the Constitution Bench.  We do not find any merit in this<br \/>\nargument.  As stated above, the plea that Clause 29 of the<br \/>\nContract was not an arbitration clause, was raised in the<br \/>\npresent case for the first time only in Miscellaneous First<br \/>\nAppeal No.1785 of 2002 filed under Section 37(1)(b) of the<br \/>\nArbitration Act before the High Court.  As stated above, Jala<br \/>\nNigam, on the contrary, had consented to the Chief Engineer,<br \/>\nacting as an Arbitrator.  For the aforestated reasons and<br \/>\nparticularly in view of the fact that there has been<br \/>\nconsiderable delay in the litigation no useful purpose would be<br \/>\nserved by keeping the matter pending in this Court awaiting<br \/>\nthe decision of the Constitution Bench.  Therefore, on the facts<br \/>\nand circumstances of this case and in view of the conduct of<br \/>\nthe parties, we hold that Jala Nigam cannot be allowed to urge<br \/>\nthat Clause 29 of the Contract is not an arbitration clause.\n<\/p>\n<p>\tOn the merits of the claims made by the contractor we<br \/>\nfind from the impugned Award dated 25.6.2000 that it<br \/>\ncontains several Heads.  The Arbitrator has meticulously<br \/>\nexamined the claims of the contractor under each separate<br \/>\nHeads.  We do not see any reason to interfere except on the<br \/>\nrates of interest and on the quantum awarded for letting<br \/>\nmachines of the contractor remaining idle for the periods<br \/>\nmentioned in the Award.  Here also we may add that we do not<br \/>\nwish to interfere with the Award except to say that after<br \/>\neconomic reforms in our country the interest regime has<br \/>\nchanged and the rates have substantially reduced and,<br \/>\ntherefore, we are of the view that the interest awarded by the<br \/>\nArbitrator at 18% for the pre-arbitration period, for the<br \/>\npendente lite period and future interest be reduced to 9%.\n<\/p>\n<p>As far as idling charges are concerned, the Arbitrator has<br \/>\nawarded Rs.42,000\/- per day for the period 1.2.94 to 17.12.94<br \/>\nand from 1.6.95 to 31.12.95 excluding the period 18.12.94 to<br \/>\n31.5.95 and from 1.1.96 to 12.11.96.  On this basis the idling<br \/>\ncharges awarded by the Arbitrator was arrived at Rs.1.47<br \/>\ncrores.  It is contended that the contractor has not led any<br \/>\nevidence to show the existence of the machinery at site and,<br \/>\ntherefore, he was not entitled to idling charges.  We are of the<br \/>\nview that the Award of the Arbitrator is fair and equitable.  He<br \/>\nhas excluded certain periods from calculations, as indicated<br \/>\nabove.  We have examined the records.  The delay took place<br \/>\non account of non-supply of Drawings and Designs and in the<br \/>\nmeantime the establishment of the contractor stood standstill.<br \/>\nWe suggested to the learned counsel for the respondent<br \/>\n(contractor) for reduction of the awarded amount under this<br \/>\nHead from Rs.1.47 crores to Rs.1 crore.  Learned counsel for<br \/>\nthe respondent fairly accepted our suggestion.  We suggested<br \/>\nthe aforestated figure keeping in mind the longstanding<br \/>\ndispute between the parties.  Therefore, the amount awarded<br \/>\nunder this Head shall stand reduced from Rs.1.47 crores to<br \/>\nRs.1 crore.\n<\/p>\n<p>\tAccordingly the civil appeal stands allowed to the extent<br \/>\nindicated above with no order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Krishna Bhagya Jala Nigam Ltd vs G. Harischandra Reddy And Anr on 10 January, 2007 Author: Kapadia Bench: Dr. Arijit Pasayat, S. H. Kapadia CASE NO.: Appeal (civil) 149 of 2007 PETITIONER: Krishna Bhagya Jala Nigam Ltd RESPONDENT: G. Harischandra Reddy and Anr DATE OF JUDGMENT: 10\/01\/2007 BENCH: Dr. Arijit Pasayat [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-189948","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Krishna Bhagya Jala Nigam Ltd vs G. 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