Judgment:
1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE27H DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE K.SOMASHEKAR AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA MISCELLANEOUS FIRST APPEAL No.9430 OF2018(AA) CONNECTED WITH MISCELLANEOUS FIRST APPEAL No.9429 OF2018(AA) IN MFA NO.9430/2018 BETWEEN: MYSORE LAMP WORKS LIMITED GOVERNMENT OF KARNATAKA COMPANY HAVING ITS REGISTERED OFFICE AT: P.B.NO.5551, OLD TUMKUR ROAD MALLESHWARAM WEST BENGALURU – 560 055 REP. BY MANAGING DIRECTOR MR. ANIL UPPIN. …APPELLANT (BY SRI. SAJI P JOHN - ADVOCATE) AND:
1. S V ENGINEERS AND CONTRACTORS HAVING ITS REGISTERED OFFICE AT: C/O SARDAR ELECTRIC HOUSE S V LANE, CHICKPET BENGALURU – 560 053 REP. BY ITS PROPRIETOR MR. SANTHOSH S DHAKAD.
2. SRI. S ANANTHAMURTHY DISTRICT JUDGE(RETD.,) 2 ARBITRATOR RESIDING AT:NO.565/1 7TH B MAIN ROAD HAL II – STAGE BENGALURU – 560 008. …RESPONDENTS (BY SRI. B RAJA SUBRAMANYA BHAT - ADVOCATE FOR RESPONDENT NO.1; VIDE COURT
ORDERDATED2510.2019, NOTICE TO RESPONDENT NO.2 IS DISPENSED WITH) THIS MFA FILED UNDER SECTION371)(C) OF THE ARBITRATION AND CONCILIATION ACT, 1956, PRAYING TO SET ASIDE THE AWARD DATED0412.2010 PASSED BY THE2D RESPONDENT; ALLOW THIS APPEAL BY SETTING ASIDE THE
JUDGMENTDATED3007.2018 IN AS250012011 AND IN THE EVENT AFORESAID PRAYER BEING REJECTED, THIS HON’BLE COURT MAY BE PLEASED TO WAIVE THE EXORBITANT INTEREST SET OUT IN THE AWARD DATED0412.2010 PASSED BY THE2D RESPONDENT. IN MFA NO.9429/2018 BETWEEN: MYSORE LAMP WORKS LIMITED GOVERNMENT OF KARNATAKA COMPANY HAVING ITS REGISTERED OFFICE AT: P.B.NO.5551, OLD TUMKUR ROAD MALLESHWARAM WEST BENGALURU – 560 055 REP. BY MANAGING DIRECTOR MR. ANIL UPPIN. …APPELLANT (BY SRI. SAJI P JOHN - ADVOCATE) AND:
1. S V ENGINEERS AND CONTRACTORS HAVING ITS REGISTERED OFFICE AT:
3. C/O SARDAR ELECTRIC HOUSE, S V LANE CHICKPET, BENGALURU – 560 053 REP. BY ITS PROPRIETOR MR. SANTHOSH S DHAKAD.
2. SRI. S ANANTHAMURTHY DISTRICT JUDGE(RETD.,) ARBITRATOR RESIDING AT:NO.565/1 7TH B MAIN ROAD HAL II – STAGE BENGALURU – 560 008. …RESPONDENTS (BY SRI. B RAJASUBRAMANYA BHAT - ADVOCATE FOR RESPONDENT NO.1; VIDE COURT
ORDERDATED2510.2019, NOTICE TO RESPONDENT NO.2 IS DISPENSED WITH) THIS MFA FILED UNDER SECTION371)(C) OF THE ARBITRATION AND CONCILIATION ACT, 1956, PRAYING TO SET ASIDE THE AWARD DATED1410.2004 PASSED BY THE2D RESPONDENT; ALLOW THIS APPEAL BY SETTING ASIDE THE
JUDGMENTDATED3007.2018 IN AS150012005 BEFORE IV-ADDL. CITY CIVIL AND SESSIONS JUDGE, MAYO HALL UNIT, BENGALURU AND IN THE EVENT AFORESAID PRAYER BEING REJECTED, THIS HON’BLE COURT MAY BE PLEASED TO WAIVE THE EXORBITANT INTEREST SET OUT IN THE AWARD DATED1410.2004 PASSED BY THE2D RESPONDENT. THESE MFAs’, HAVING BEEN FURTHER HEARD AND RESERVED FOR
JUDGMENTON2207.2024 COMING ON FOR PRONOUNCEMENT THIS DAY, K. SOMASHEKAR .J, DELIVERED THE FOLLOWING: CORAM: THE HON'BLE MR JUSTICE K.SOMASHEKAR AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA4CAV
JUDGMENT(PER: THE HON'BLE MR JUSTICE K.SOMASHEKAR) MFA No.9429/2018 is filed by the appellant challenging the judgment and award rendered by the IV Addl.City Civil and Sessions Judge at Mayo Hall Unit, Bengaluru in A.S.No.15001/2005 dated 30.07.2018 wherein the suit filed under Section 37 of the Arbitration and Conciliation Act, 1996 came to be dismissed and consequently, Award passed by the sole Arbitrator in CMP No.76/2001 dated 14.10.2004 was confirmed.
2. MFA No.9430/2018 is filed by the appellant challenging the judgment and award rendered by the IV Addl.City Civil and Sessions Judge at Mayo Hall Unit, Bengaluru in A.S.No.25001/2011 dated 30.07.2018 wherein the suit filed under Section 34 of the Arbitration and Conciliation Act, 1996 came to be dismissed and consequently, Award passed by the sole Arbitrator in CMP No.21/2003 dated 04.12.2010 was confirmed.
3. Heard Sri Saji P.John, learned counsel for the appellant and Sri B.Raja Subramanya Bhat, learned counsel for respondent No.1 in both these appeals. Notice to respondent No.2 is dispensed with vide order dated 25.10.2019. Perused the 5 impugned judgment rendered by the Court below and so also, award rendered by the sole Arbitrator in both these appeals. 4.These appeals are heard together and disposed of through this common judgment since the issues arise out of similar claim but two CMP proceedings.
5. The brief facts of the case is that the appellant – The Mysore Lamp Works Limited is a company incorporated under the Indian Companies Act, 1913 and engaged in providing lighting solutions and manufacturing and selling of bulbs, tube-lights etc. The then Karnataka Electricity Board (KEB) had entrusted the project sub-station at Yelahanka for providing lighting installation to ancillary units to its DG Plant project. Similarly, the Karnataka Power Transmission Corporation Limited (KPTCL) entrusted the project at Raichur Thermal Power Station. Respondent No.1 – S.V.Engineers and Contractors was entrusted with sub-contract by the appellant for supply of material and installation and erecting electric post etc. This proceeding is an extended proceeding held by respondent No.2 subsequent to disposal of the original arbitration proceedings. Whereas the original arbitration proceedings arose out of an agreement for providing certain materials and lighting services by the respondent at two different location as a subcontract to the appellant. It is stated that there 6 are two projects, one at Yelahanka and another at Raichur which were handled by Appellant and the lighting installation work and materials, procurements was sub-contracted to Respondent No.1. It is stated that the transactions of Yelahanka project pertained to period commencing from November 1991 and finally concluded in December 1997. Similarly, Raichur project was during the period of August 1993 to December 1997. The claim of Respondent No.1 was that the appellant made an ad-hoc payment on 04.12.1997 in respect of Yelahanka Project. Thereafter, a claim was made with the General Manager Administration who was named as the Arbitrator on 04.12.2000 and on 23.07.2001 respectively. Since, no proceeding was initiated, respondent No.1 filed CMP No.76/2001 before this Court. At that juncture the claim amount was Rs.25,90,843/-. The said petition came to be disposed of vide order dated 18.08.2001 directing the General Manager Administration to proceed with the matter and to decide the disputes in between the parties. In the meanwhile, since the appellant company became sick company, all its employees were offered with VRS and thus, the post of General Manager Administration stood vacated. Thus, the earlier order dated 18.08.2001 came to be modified vide order dated 07.06.2002 and Respondent No.2 was appointed as Sole Arbitrator. Due to non- 7 receipt of entire payment of the bills such as non-repayment of the retention amount, IT etc, Respondent No.1 initiated the arbitration proceeding before the Sole Arbitrator initially for a total consolidated amount of Rs.1,29,78,847/- along with interest. Later the claim petition was amended and the claim was limited to an amount of Rs.25,90,843/- along with interest of 24% which was compoundable quarterly from 04.12.2000 along with cost. This claim was again further limited by the claimant to Rs.16,41,352/- by filing the written arguments. However, Respondent No.1 once again approached this Court during the pendency of the original arbitration proceedings by filing another petition in CMP No.21/2003 for considering additional disputes in regard to the final bill and to refer the matter to an Arbitrator. The case of Respondent No.1 was that the first CMP and the pending proceedings were in respect of recovery of certain deduction such as retention amount and IT deposits etc. The said petition was allowed on 13.06.2003 referring for arbitration to Respondent No.2 who was already appointed as Arbitrator and was empowered to consider the additional disputes and the petitioner was permitted to raise additional disputes. The matter came to be disposed of insofar as the claim that existed vide award dated 14.10.2004. The claim of Respondent No.1 came to 8 be allowed in part by the sole Arbitrator whereby the appellant was directed to return part of the deductions in terms of the retention money of Rs.5,61,186/- along with interest @ 18% from 04.12.2000 within one month from the date of order along with cost of Rs.20,000/-. The appellant challenged the same by filing A.S.No.15001/2005. The sole Arbitrator continued to proceed with the Arbitration proceedings and vide award dated 04.12.2010 directed the appellant to pay Rs.43,13,770/- including retention money as on 04.12.1997 along with interest at 18% on the amount from 04.12.1997 to 31.07.2002 and thereupon to deduct money in the earlier proceeding i.e. Rs.25,90,843/- or the balance where 18% interest was directed to be paid from 31.07.2002 to 4.12.2010 or till the date of actual payment. Aggrieved by the said award, appellant/plaintiff filed A.S.No.25001/2011 before the IV Addl.City Civil and Sessions Judge, Bengaluru under Section 34 of the Arbitration and Conciliation Act, 1996. The Court below having gone through the materials available on record, rendered the impugned judgment dismissing the suit in A.S.No.25001/2011 and confirmed the award passed by the sole Arbitrator in CMP No.21/2003 dated 04.12.2010 and so also, dismissed the suit in A.S.No.15001/2005 and confirmed the award passed by the sole Arbitrator in CMP9No.76/2001 dated 14.10.2004. Hence, MFA No.9430/2018 and MFA No.9429/2018 are filed by the appellant challenging the judgments rendered by the Court below in AS No.25001/2011 dated 30.07.2018 and AS No.15001/2005 dated 30.07.2018 by urging various grounds.
6. Learned counsel Sri Saji P.John for the appellant contends that the Arbitration Award is neither maintainable in law or on facts. The claim petition for arbitration was originally made by respondent No.1 with a claim of Rs.1,29,78,847/- on 31.07.2002 which was claimed against the difference between the pending bills and payment received. Thereafter the claim petition was amended and the claim was limited to an extent of Rs.25,90,843/- without taking the final bill into consideration. The amendment was sought for vide application dated 25.10.2002. Thereafter the evidence was recorded on 16.08.2003. Further, as noted by the arbitrator, the claim amount was limited to Rs.16,41,352/-. During the pendency of the arbitration another CMP was filed before this Court in CMP No.21/2003 which came to be allowed on 13.06.2003 permitting respondent No.1 to make additional claim before respondent No.2 – sole Arbitrator with liberty to the appellant to file its objection. Thereafter without considering the second claim which was part and parcel of the 10 original claim, the sole Arbitrator passed the award dated 14.10.2004. Thereafter, the sole Arbitrator proceeded with the revised petition filed with him, with the claim of Rs.1,32,19,535/-. The said claim came to be allowed in part on 04.12.2010. There was no fresh evidence recorded but only earlier evidence was considered. The claims which were specifically rejected vide award dated 14.10.2004 came to be re-adjudicated and allowed. Therefore, the Award passed by the Arbitral Tribunal is perverse, illegal and opposed to law, facts and probability of the case.
7. It is further contended that the Arbitrator was not eligible to hold the office, once the Award was being passed. The office of the arbitrator becomes functus officio. Further, the agreement/order placed by the appellant only provided for arbitration of any dispute that may arise but there was no scope of revision of award by the arbitrator. By passing the second impugned award, respondent No.2 has exercised power beyond the scope of his office. It is his further contention that pursuant to the order passed in CMP No.21/2003, when this Court permitted respondent No.1 to put forth the additional claim, the arbitrator had to adjudicate the entire claim of Rs.1,29,78,847/- rather than solely adjudging the amended claim of Rs.25 lakhs since the claim of Rs.1.29 crores included the deductions made by 11 the appellant. The sole arbitrator on the contrary jumped the sum by issuing an award dated 14.10.2004 and thereafter re- adjudicating the matter once again and passed impugned order.
8. Further, it is contended that the claim towards KST, IT, Cess on IT, retention amount etc,. were only the difference that was subject matter of entire arbitration. It was not the case of respondent No.1 that some work was done to which bill was raised and the same was not honoured. The grievance of respondent No.1 is that the bills which was raised by him was partly paid and that he was eligible for balance amount also. That was the original subject matter of the case which was later limited to IT deductions and retention amount. It is further contended that once an award is passed in arbitration proceeding, the Arbitrator become functus officio and he cannot proceed with the matter. The award thus made is without jurisdiction and not binding on the parties. Further, the Arbitral Tribunal erred in entertaining the claim of respondent No.1 as the claim is barred under Order II Rule 2 of CPC and further erred in observing that the appellant has no where submitted that the terms of the Arbitration agreement do not provide reference of the dispute on hand for arbitrator completely ignoring that it is not the case of the appellant that there is no arbitration clause. However, it is 12 the specific case that the claim made now has already been referred to resolution in CMP No.76/2001 and respondent No.1 having made the claim which includes the present claim, withdraw portion of the claim and had no liberty to make any claim on the same cause of action.
9. It is further contended that the Arbitrator had to analyse as to whatever he could re-adjudicate a claim in respect of which he had already adjourned upon. Whereas he has considered regarding the scope of 11(5) of the Act. A claim of Rs.1.29 Crores was made in the first place and respondent No.1 abandoned the same and limited his claim to Rs.25 lakhs and later Rs.16 lakhs. That being so, he should not have been permitted to once again reclaim what he had earlier abandoned with his sound mind. Since Respondent No.1 keeps changing its goal post, the Arbitrator had to restrict him in the spirit of Order II Rule 2 of CPC. There is no reasoning provided as to why respondent No.1 was permitted to change his claim not just once, but thrice. On this sole ground itself the proceedings are liable to be quashed.
10. Further, counsel for appellant contends that when the sole Arbitrator was well aware that the proceedings were pending and respondent No.1 filed its claim, without considering the same, the first award came to be passed by virtue of the same, he is 13 discharged of his duties and power, he could not have re- adjudicated the same cause of action i.e., the receipt of differential payments. There was no scope to consider the issue of limitation and completion of work as there was lack of jurisdiction. Though the plea proceedings before the BIFR was brought to the knowledge of the Arbitrator, the same was ignored. This is contradiction to the earlier award where it is said that there was acknowledgement of debt and the arbitration commenced when matter was referred to the General Manager Administration. Further, regarding the claim of Rs.1.32 Crores, the Arbitrator generally concluded that respondent No.1 was entitled for Rs.43.13 lakhs without making proper computation and there is no clarity regarding determination of amount/calculation.
11. Further, it is contended that the Arbitral Tribunal ought to have noticed that the claim now made was part of the claim pursuant to appointment of Arbitral Tribunal in CMP No.76/2001 and not an additional claim. Therefore, there is no question of raising a dispute for the same claim for the second time. The Arbitral Tribunal erred in coming to the conclusion that Respondent No.1 has neither abandoned his present claim in the earlier proceedings nor the present proceedings was filed after 14 having noticed that the present claim was included in the earlier proceedings and restricted his claim to only retention money. The Arbitral Tribunal ought to have noticed that merely because respondent No.1 has restricted his claim to retention money because of the objection of the appellant will not permit him to make a same claim again without any liberty reserved to him. The Arbitral Tribunal failed to notice that there was no contract for payment of interest @ 18% and inspite of it has awarded the same even though it was appraised about the fact that the appellant company was a sick industry and subsequently directed to be wound up. But without considering the same, 18% interest has been imposed. The said finding is liable to be set-aside.
12. Further, the Arbitrator has imposed interest on Pendente Lite, which was unreasonable. The arbitration was initiated with the General Manager on 04.12.2000 and the award was passed on 14.10.2004 thereafter an appeal was preferred in A.S.No.25001/2011 which finally came to be dismissed on 30.07.2018. Therefore, the appellant is liable to pay a sum of Rs.22.81 lakhs as on the date of filing the appeal. These are all the grounds urged by the counsel for the appellant seeking to set-aside the impugned award. 15
13. In support of his arguments, learned counsel for the appellant has facilitated reliance of the Hon’ble Supreme Court in Special Leave Appeal(c) No.10722/2022 dated 15.07.2022 wherein it is held that there cannot be two arbitration proceedings with respect to same contract or transactions and upheld the order of the Calcutta High Court in AP No.353/2020 dated 16.09.2021.
14. In the case of The Project Director, National Highways vs. M.Hakeem reported in SCC2021SC473 the Hon’ble Supreme Court contemplated on the question of the power of the Court under Section 34 of the Arbitration Act, in its findings, the Court reached the conclusion that the provision provided extremely limited grounds on which an arbitral award could be set aside. Moreover, the Court also considered the marginal note of Section 34, as per which “recourse” to a court against an arbitral award could only be made by an application for setting aside the award. Thus, the Court held that considering the limited grounds of challenge provided under Section 34(2) and (3), an application could only be made to set aside the award. Referring to the above case, counsel for the appellant submits that passing of the second award is an act that was beyond the scope of jurisdiction of respondent No.2. Once the 16 arbitrator has passed the final award, he becomes functus officio. The element of finality necessitates there be no suppression.
15. Counsel for the appellant also relied on the reliance of the Hon’ble Supreme Court in the case of Satwant Singh v. State of Punjab (1993) 3 SCC487 From the verbatim of the first award, it is clear that the complete amount in contention during the first arbitral proceeding was clear in the mind of the arbitrator. Furthermore, from the verbatim of the second award, where respondent No.2 has stated that the further proceedings are a result of some additional factors and proceedings that had been later presented by Respondent No.1, it is indeed believable to state that the probability of such an extension was not in the mind of the arbitrator while passing of the 1st award.
16. In Juggilal Kamlapat v. Khardah Co.Ltd. [1962 Supp (2) SCR101 wherein at para 9, it is observed that “we have already said that generally speaking, the arbitrator becomes functus officio after he has given the award; but that does not in our opinion mean that in no circumstances can there be further arbitration proceedings where an award is set aside or that the same arbitrator can never have anything to do with the award with respect to the same dispute. Section 13(d), for example, gives power to the arbitrator to correct in an award any clerical 17 mistake or error arising from any accidental slip or omission. Further Section 16 gives power to the court to remit the award to the arbitrator for reconsideration. Therefore, when it is said that the arbitrator is generally functus officio after he has made the award, it only means that he cannot change that award in any matter of substance himself. But that does not take away the court’s power to remit the award for reconsideration under Section 16 or to refuse to supersede the reference even though the award is set aside leaving it to the parties to take such further action under the arbitration agreement for further arbitration if it is possible so to do under the terms of a particular arbitration agreement. We are therefore of opinion that whatever may be the position in the absence of a provision similar to Section 19 of the Act there can be no doubt that Section 19 gives power to the court not to supersede the reference and so leave the arbitration agreement effective even when it set aside the award and thereupon it will depend upon the terms of the arbitration agreement whether arbitration proceedings can go on with respect to the same dispute or with respect to some other disputes arising under the arbitration agreement.
17. By referring to the aforesaid reliances, learned counsel for the appellant contends that the Arbitrator had no role soon as 18 he had passed the original Award, without any authority, he proceeded to hear the matter further and pass the second award. Further the earlier award was also not in the nature of interim award, that being the case, the second award is bad in law since the constitution of the Arbitration Tribunal was bad in law. On all these grounds learned counsel for the appellant in both these appeals sought allowing the appeals by setting aside the Award passed by the Sole Arbitrator and consequently, to set-aside the judgment rendered by the Court below.
18. Per contra, learned counsel Sri B.Raja Subramanya Bhat for respondent No.1 countering to the arguments addressed by the counsel for the appellant submits the appellant Mysore lamp Works issued two work orders one in the year 1991 and the 2nd one is in the year 1993 in favour of the respondent. The terms were similar to both the works. The respondent has promptly completed the works both for Yelahanka Project and Raichur Project. Further, it is made clear that those two claims were pertaining to different Districts. One arbitration is for retention money and second arbitration is for the balance money. The same is evident from the reference order dated 18.08.2001 in CMP No.76/2001 wherein in page No.3 of the order it is sated that amount is Rs.25,90,843.40. The appellant taking this amount 19 objected for the amendments sought before the Arbitral Tribunal. The same necessitated the respondent to approach this Court in CMP No.21/2003 which was filed for the balance amount.
19. It is his further contention that thereafter the amendment was allowed restricting the first one only in respect of the retention money and the second one for the balance claim amount. The same has been observed in the order sheet maintained in Arbitration Proceeding No.76/2001 dated 03.01.2003 and 29.11.2003. It is further contended that since there were two separately adjudicated matters due to the objections raised by the appellant before the Arbitrator, the second reference had to be initiated. Therefore, this Court reserved liberty to the appellant to contest the same before the Arbitrator.
20. He further contends that the first arbitration was not proved as required in the second arbitration to raise the ground before this Court. Therefore, the judgment rendered by the Constitution Bench of the Hon’ble Supreme Court in the year 1964 was relied and the award was passed. It is contended that the Court below while deciding A.S.No.25001/2011 relied on the reliance of the Hon’ble Supreme Court reported in AIR1964SC1810and (2017) 13 SCC403and held that the appellant has 20 failed to establish and prove his case as required by law. The judgments relied on by the appellant is not applicable to the case on hand now.
21. It is his further contention that the sole contention of the appellant is that the claim is one and the same to both the arbitration proceedings which has been answered negatively. Therefore, there is no scope to reverse the impugned judgment.
22. The contention with regard to Section 11 of the Arbitration Act and Section 10 and Order 2 Rule 2 of CPC was not established and the Arbitrator has reasonably answered the said issues in the Award and issue No.4 in respect of limitation aspect while referring the BIFR and AAIFR proceedings is held in favour of the claimant. Therefore, the contentions taken by the appellants does not hold any justification.
23. The finding of sole Arbitrator is based on the evidence on record and therefore, the award do not suffer from any illegality and the Court below rightly dismissed the suit of the appellant/plaintiff by confirming the award passed by the sole Arbitrator. He contends that when there are two suits and if the defendant going to file a evidence in the previous suit and thereby proves to the court the identity of the cause of action in 21 two suits; the cause of action in the previous suit would be the facts which the action in the two suits.
24. In support of his arguments, learned counsel for respondent No.1 has placed reliance of the Hon’ble Supreme Court in the case of Gurbux Singh vs. Bhooralal reported in AIR1964SC1810wherein it is observed that “in order that a plea of a bar under Order 2 Rule 2(3), CPC should succeed the defendant who raises the plea must make out (1) that the second suit was in respect of the same cause of action as that on which the previous suit was based; (2) that in respect of that cause of action the plaintiff was entitled to more than one relief; (3) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed. From this analysis it would be seen that the defendant would have to establish primarily and to start with, the precise cause of action upon which the previous suit was filed, for unless there is identity between the cause of action on which the earlier suit was filed and that on which the claim in the later suit is based there would be no scope for the application of the bar. No doubt, a relief which is sought in a plaint could ordinarily be traceable to a particular cause of action but this might, by no means, be the universal rule. As the plea is 22 a technical bar it has to be established satisfactorily and cannot be presumed merely on basis of inferential reasoning. It is for this reason that we consider that a plea of a bar under Order 2 Rule 2, Civil Procedure Code can be established only if the defendant files in evidence the pleadings in the previous suit and thereby proves to the Court the identity of the cause of action in the two suits. The cause of action would be the facts which the plaintiff had then alleged to support the right to the relief that he claimed. Without placing before the Court the plaint in which those facts were alleged, the defendant cannot invite the Court to speculate or infer by a process of deduction what those facts might be with reference to the reliefs which were then claimed. It is not impossible that reliefs were claimed without the necessary averments to justify their grant. From the mere use of the words `mesne profits' therefore one need not necessarily infer that the possession of the defendant was alleged to be wrongful. It is also possible that the expression 'mesne profits' has been used in the present plaint without a proper appreciation of its significance in law. What matters is not the characterisation of the particular sum demanded but what in substance is the allegation on which the claim to the sum was based and as regards the legal relationship on the basis of which that relief was sought. If it is 23 because of these reasons that we consider that a plea based on the existence of a former pleading cannot be entertained when the pleading on which it rests has not been produced.
25. He further relied on the decision of the Hon’ble Supreme Court in the case of Jayantilal Chimanlal Patel v. Vadilal Purushottamdas Patel reported in (2017) 13 SCC409wherein it is held that to maintain plea of bar under Order 2 Rule 2, plaint of earlier suit must be exhibited as evidence.
26. He also relies on the judgment rendered by the Hon’ble Supreme Court in H.J.Baker and Brothers Inc. vs. Minerals and Metals Trade Corporation Limited (MMTC) reported in (2023) 9 SCC424wherein it is held “Arbitration and Conciliation Act, 1996 – Section 34 and 37 – Award on quantum of damages and mitigation of losses – interference with – when not warranted – concurrent affirmation by Courts below – none of the grounds for interference with arbitral award made out.
27. Counsel for respondent No.1 has relied on a judgment rendered by the Hon’ble Supreme Court in Civil Appeal No.8067/2019 between S.V.Samudram v. State of Karnataka and another. In para 46 of the judgment it is observed that “keeping in view the aforesaid observations of this Court, it cannot be doubted that the claimant-appellant is entitled to 24 interest. We find that the learned Arbitrator, as hitherto observed, has awarded 18% interest and the same stood reduced by the Courts below to 9% without any legal basis therefore. In exercise of the powers under Article 142, we deem it appropriate to, in order to ensure substantial justice, inter se the parties, of awarding interest @ 9% p.a. from the date of award pendant lite and further, till date of payment. On all these grounds, learned counsel for respondent No.1 seeks for dismissal of the appeals.
28. It is in this background of the contentions made by learned counsel for the appellant respectively in both the appeals as well as the counter arguments advanced by counsel for respondent in the rank of the parties are concerned, the Arbitrator in respect of A.S.No.25001/2011 while answering issue no.1 has given a finding that terms of the contract do provide for reference to arbitration the dispute or disputes if any arising between the parties in respect of each of the two contracts. In respect of issue no.2 whether the appointment of the Arbitrator is bad for want of notice as per Section 11 of the Act, the sole Arbitrator has held that as per the then existing procedure there was no requirement that the claimant should have given notice as per Section 11(5) of the Act before filing CMP No.21/2003 since what transpired was the post of the named Arbitrator had been 25 wound up and therefore, the High Court had to be approached to have a different Arbitrator and the said issue was answered in favour of the claimant/respondent No.1 herein.
29. In respect of maintainability of the claim it is observed that what has been described as additional written arguments and also in oral arguments reiterating that the final bills were submitted on 20.10.1996 and the last payment by the respondent was dated 04.12.1997. He has referred to the BIFR registering the proceedings in No.605/1996. The date of that registration being not available it may be assumed that the last date of that year ie. 31.12.1996 was that date and the BIFR and AIFR proceedings got terminated on 18.07.2001. Even assuming that the date of filing of the final bill alone has to be taken into consideration i.e. 20.10.1996 as per Ex.P28 which was considered by the Arbitration, the time occupied by the proceedings before the BIFR and AIFR i.e. from 31.12.1996 to 18.07.2001 has to be excluded having regard to Section 22(5) of SIC Act. Ex.P28 relates both to Yelahanka and Raichur Works and the same is genuine since as admitted by RW.1 K.Manohar bears the seal of the respondent and the initial of the official of the respondent who is stated to have received the original of Ex.P28. The said official has endorsed on it that the original was received by him and it 26 establishes that the bills were being submitted separately and not consolidatedly in respect of these works. On verification of the exhibited documents on both sides, Ex.P40, Ex.P62, Ex.P77(1), Ex.D1 to D47. It was concluded that reference to Ex.P28 itself is sufficient to answer the issue. It was held that the present claim in respect of the works at Yelahanka and at Raichur is not barred by time at all. Finding was also given that merely because Ex.P28 to 41 have not been referred to at all before their production in evidence they are all fabricated. On this ground alone it cannot be concluded that they are all fabricated and answered issue no.4 in favour of the claimant/respondent No.1 herein.
30. In respect of issue No.5 in the cross-examination of Sri K.Manohar he has disclosed that KPCL has paid to the respondent to the extent mentioned in Ex.D.22 in respect of Raichur works, though he was not able to say if payment has been received in respect of all the orders placed by KPCL. He was confronted with Ex.P.79(a) to (q) but he did not admit or deny the suggestion that as evidenced by them the respondent has received a sum of Rs.50,40,989/- from the KPCL, Raichur. The sole Arbitrator held that claimant had completed both the works on hand and handed 27 them over to the respondent and answered the said issue in favour of the claimant.
31. Insofar as issue No.6 the Arbitrator observed that it is undisputed that the total amount to be paid in respect of the works at Yelahanka and Raichur was Rs.92,53,191/- and the claimant has satisfactorily established that he is entitled to the balance amount of Rs.44,12,202/- along with interest. However, the Arbitrator on consideration of the oral and documentary evidence on both side held that the claimant satisfactorily established that as on 04.12.1997 after deducting the adhoc payment of Rs.1,00,000/- the balance amount due to him was Rs.43,13,770/- While making the calculation in the claim statement, the retention money amount to Rs.25,90,843/- claimed in the earlier arbitration has been deducted though as per the award passed in the previous, his entitlement is found to be Rs.5,61,186/- only. On this amount interest at 18% p.a. from the date the arbitration sought in that case viz., 04.12.2000 and upto the date of payment has been ordered. The said award has been challenged by the respondent before the Court below in A.S.No.15001/2005. Accordingly, respondent was directed to pay to the claimant within three months the sum calculated – balance amount including retention money as on 04.12.1997 viz., 28 Rs.43,13,770/-. To calculate the interest @ 18% p.a. on this amount from 04.12.1997 to 31.07.2002. Further to deduct the retention money claimed in the earlier proceedings viz,. Rs.25,90,843/- after totaling the amounts as above. On the balance amount interest @ 18% p.a. shall paid from 31.07.2002 to the date of this award and if the amount so awarded is not paid within three months from today, interest of 18% p.a. shall be continued to be paid till it is so paid. Accordingly, the claim statement came to be allowed.
32. However, counsel for the appellant contends relating to proceedings in A.S.No.25001/2011 in respect of MFA No.9430/2018 but the sole Arbitrator cannot dispose of two different contracts of Raichur and Yelahanka basing upon different cause of action and including the question of the award and the said respondent is entitled against the plaintiff is perverse and arbitrary. However, the citations which is facilitated by the respondent is of the year 2017 which has been quoted to consideration by the said citations even though taken into consideration and wherein it is made observant that the citations filed are different with the facts of the arbitration suits and the same is not applicable and helpful to the case of plaintiff. 29
33. It is relevant to refer the claim petition for arbitration which was originally made by respondent No.1 with a claim of Rs.1,29,78,847/- on 31.07.2002. The same was claimed against the difference between the pending bills and payment received. Thereafter the claim petition came to be amended and the claim was limited to an extent of Rs.25,90,843/- without taking the final bill into consideration. An application came to be filed on 25.10.2002 seeking amendment and the evidence was recorded on 16.08.2003. The claim amount was limited to Rs.16,41,352/- as noted by the Arbitrator. However, during the pendency of arbitration, another CMP came to be filed before this Court in CMP No.21/2003. The said petition came to be allowed on 13.06.2003 permitting petitioner therein i.e. respondent No.1 herein to make additional claim before respondent No.2 with a liberty to the appellant herein to file objection. However, the sole arbitrator without considering the second claim which was part and parcel of the original claim passed the impugned award dated 14.10.2004. Thereafter the sole arbitrator proceeded with the revised petition filed before him for a claim of Rs.1,32,19,535/-. The said claim came to be allowed in part on 04.12.2010. However, no fresh evidence was recorded but the earlier evidence was only considered. As contended by the counsel for the appellant, the 30 claims which were specifically rejected vide award dated 14.10.2004 came to be re-adjudicated and allowed.
34. The further contention of the appellant is that the Arbitrator was not eligible to hold the office when once the Award was passed and officer of the arbitrator become functus officio. The agreement / order placed by the appellant only provided for arbitration of any dispute that may arise and hence there was no scope of revision of award by the Arbitrator. Therefore, the Arbitrator by passing the second impugned award has exercised the power beyond the scope. In this regard it is relevant to refer the reliance of the Hon’ble Supreme Court in the case of Satwant Singh v. State of Punjab (1993) 3 SCC487it is held that that Section 27 – interim award whether an interim award is final to the extent it goes or only till final award delivered – held, depends on the form the award – if an interim award is intended to finally determine the rights of the parties, it will have the force of a complete award and will continue to have effect even after the final award is delivered – the arbitrator thus becomes functus officio as regards the claims covered in such an award and such claims cannot be re-determined – however, if an interim award is clearly intended to have effect only so long as the final award is not delivered it will have the force of an interim award and will 31 cease to have effect once the final award is made – held on facts, High Court erred in reversing the finding of the trial court and holding that the first award was not final and stood superseded by the second award.
35. In the instant case, the Arbitrator had no role soon as he had passed the original award, without any authority, he proceeded to hear the matter further and pass the second award. The former award was also not in the nature of interim award, that being the case, the Second award is bad in law since the constitution of the Arbitration tribunal was bad in law as contended.
36. In pursuant to the order in CMP No.21/2003 where the petitioner therein respondent No.1 herein was permitted to raise additional disputes before the sole Arbitrator who is already seized of the existing disputes, reserving liberty to the respondent to raise all contentions in regard to such before the Arbitrator, the Arbitrator had to adjudicate the entire claim of Rs.1,29,78,847/- rather than only adjudging the amended claim of Rs.25 lakhs since the claim of Rs.1.29 Crores included the deductions made by the appellant. However, it is contended that the sole arbitrator passed the impugned award dated 14.10.2004 which is contrary to law. 32
37. It was not the case of respondent No.1 that he had done work to which bill was raised and the same was not honoured. The claim towards KST, IT, Cess on IT, retention amount etc., was only the difference that was the subject matter of entire arbitration. The grievance of the respondent No.1 is that the bills raised by him was partly paid and was eligible for balance amount also. Further, the arbitral Tribunal erred in entertaining the claim of respondent No.1 as the claim is barred under Order II Rule 2 of the CPC. The sole arbitrator has not taken note of that it is not the case of the appellant that there is no arbitration clause, however, it is the specific case that the claim made now is already been referred to resolution in CMP No.76/2001 and respondent No.1 having made the claim includes the present claim, withdraw portion of the claim and no liberty was reserved to make any claim on the same cause of action. Therefore, the claim is barred under Order II Rule 2 of CPC. It is relevant to refer Order II Rule 2 of CPC which reads as under:
2. Suit to include the whole claim. (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. (2) Relinquishment of part of claim- Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim he shall not afterwards sue in respect of the portion so omitted or relinquished. 33 (3) Omission to sue for one of several reliefs- A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
38. It is also pertinent to note that the Arbitrator has considered the scope of Section 11(5) of the Act. At the first instance, a claim of Rs.1.29 Crores was made and the first respondent abandoned the same and limited the claim to Rs.25 lakhs and later Rs.16 lakhs. That being so, the first respondent should not have been permitted to reclaim once again what he had earlier abandoned. Therefore, the Arbitrator keeping in view the scope of Order II Rule 2 of CPC should have restricted the same. But however, there is no reasoning provided as to why respondent No.1 was permitted to change his claim. The sole arbitrator was aware that the proceedings were pending, without considering the same, the first award came to be passed by virtue of the same, he is discharged of his duties and power, and he could not have re-adjudicated the same cause of action i.e., the receipt of differential payments.
39. It is contended by the appellant that regarding the claim of Rs.1.32 Crores it consists of various factors such as discount, TDS, cess on TDS, retention amount, KST, amount with KEB etc. All these facts were to be independently analysed. 34 However, CW.1 admitted and the order also indicated that there was discount provided. Whereas, the arbitrator generally concluded that respondent No.1 was entitled for Rs.43.13 lakhs without making proper computation and there is no clarity regarding determination of amount. Further, the Arbitral Tribunal failed to notice that the claim now made was part of the claim pursuant to the appointment of Arbitrator in CMP No.76/2001 and not an additional claim and there is no question of raising a dispute for the same claim for second time. Merely because the respondent No.1 has restricted his claim to retention money due the objection made by appellant, will not permit to make same claim again without there being any liberty reserved to him. Further, there is no notice as required under Section 11 of the Arbitration and Conciliation Act appointing the Arbitrator.
40. The appellant company was a sick industry and subsequently directed to be wound up. The Arbitral Tribunal without considering the same imposed 18% interest which is not justifiable and the matter is pending for 13 long years. Even the interest imposed on pendent lite is also not justifiable since the arbitration was initiated with the General Manager on 04.12.2000 and the award was passed on 14.10.2004 and thereafter the appeal which was preferred came to be dismissed on 30.07.2018 35 as contended by learned counsel for the appellant by urging various grounds by referring to citations.
41. In the instant appeal matters, it is relevant to note that CMP No.76/2001 was initiated under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint a sole arbitrator to adjudicate the dispute that has arisen between the petitioner and the respondent. The said petition came to be disposed on 18.08.2001 recording the submission of both the parties that second respondent – General Manager, Administration, Mysore Lamp Works Limited will be the sole arbitrator to decide the disputes between the parties.
42. Subsequently, the Mysore Lamp Works Ltd became sick industry and the post of General Manager (Administration) came to be abolished. Therefore, an interlocutory application came to be filed by the petitioner – S.V.Engineers and Contractors, represented by its Proprietor – Sri Santosh S.Dhakad under Section 11(3) and 4(p) and 6(a) and (b) of Arbitration and Conciliation Act, 1996, to appoint an independent Arbitrator as the sole arbitrator in place of General Manager (Administration). This Court vide order dated 07.06.2002 appointed Sri S.Ananthahmurthy, retired District Judge as a sole Arbitrator in 36 place of General Manager (Administration), Mysore Lamp Works to adjudicate the disputes emerged in between the parties.
43. Subsequent to appointment of the sole arbitrator, petitioner – S.V.Engineers and Contractors, represented by its Proprietor Sri Santosh S Dhakad filed proceedings in CMP No.21/2003 under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint sole arbitrator for settling certain claims of the petitioner relating to unauthorised deduction and other items and that certain subsequent disputes have arisen in regard to the final bill. This Court vide order dated 13.06.2003 allowed the petition and permitted the petitioner to raise additional disputes before Sri S.Ananthamurthy, retired District Judge who was already seized of the existing disputes, reserving liberty to the respondent to raise all contentions in regard to such disputes before the Arbitrator.
44. However, in respect of disputes that arose in between the appellant and respondent No.1 it requires for addressing the issues relating to the grounds urged in these appeals. Therefore, it is relevant to refer Annexure-I in respect of bills submitted, date of payment received and deductions. The same is extracted for the purpose of reference. 37 BILLS DATE OF PAYMENT DEDUCTIONS SUBMITTED RECEIVED976,650.00
17.03.92 8,21,704.25 1,54,945.75 13,95,550.00
18.04.92 10,09,361.00 1,82,189.00 4,44,789.00
19.05.93 3,76,141.75 68,647.25 1,11,337.00
01.10.93 94,011.00 25,885.00 1,00,162.00
08.10.93 84,761.20 15,400.80 3,73,940.00
25.02.94 2,82,353.00 91,387.00 3,51,000.00
25.02.94 2,65,173.00 85,827.00 3,97,120.00
25.02.94 3,00,016.00 97,104.00 4,08,986.00
24.03.94 3,41,940.00 67,046.00 6,99,000.00
04.05.94 5,28,080.00 1,70,920.00 59,850.00
14.07.94 50,109.00 9,741.00 4,33,355.00
15.07.94 3,27,833.00 1,05,522.00
22.07.94 47,240.00
27.07.94 39,552.00 7,688.00 2,63,740.00
30.08.94 1,21,049.00 1,42,691.00 82,243.00
21.09.94 68,858.00 13,385.00 3,27,600.00
08.12.94 2,78,919.00 48,681.00 - 22.07.95 49,500.00 - 04.12.97 1,00,000.00 29,80,569.00 51,39,361.00 (final bill) 94,53,131.00 Bal.due 43,13,770.00 Add Int. @ 24% P.A. compounded quarterly 86,65,077.00 Total due as on 31/7/2002 1,29,78,847.00 Less amount claimed in the earlier arbitration 0,25,90,843.40 Amount due as on 31/7/2002 1, 03,88,003.60 Interest on Rs.1,03,88,003.60 from 31/7/2002 to this day 10/8/2003 28,31,528.49 1,32,19,539.09 38 45. However, learned counsel for respondent vehemently submitted for consideration of the claim made by respondent No.1 by completion of his work. It is contended that since there were two separately adjudicated matters due to the objections raised by the appellant before the sole arbitrator, the second reference had to be initiated. The contention of the appellant that the claim is one and the same to both arbitration proceeding has been answered by the Court below and there is no scope to reverse the impugned judgment. Therefore, in this appeal even though various contentions has been taken by the learned counsel for the appellant also by placing reliances and by referring to materials available on record, but the contentious contentions taken by the counsel for the appellant does not have any substance to interfere with the judgment rendered by the Court below dismissing the suits in A.S.No.15001/2005 dated 30.07.2018 and A.S.No.25001/2011 dated 30.07.2018 and confirming the award passed by the Sole Arbitrator in CMP No.76/2001 dated 14.10.2004 and CMP No.21/2003 dated 04.12.2010. Having gone through the contentious contentions taken by the counsel for the parties in these appeal matters, it is found that there are no infirmities, absurdity or illegality committed by the Court below in dismissing the arbitration suits 39 filed by the plaintiff. The reasons assigned by the Sole Arbitrator while passing the award are found be justifiable and also reasonable. For the aforesaid reasons and findings, we proceed to pass the following:
ORDERThe appeals filed by the appellants in MFA No.9429/2018 and MFA No.9430/2018 are hereby dismissed. The judgment rendered by the IV Addl.City Civil and Sessions Judge, Mayohall Unit, Bengaluru in A.S.No.15001/2005 dated 30.07.2018 relating to the award passed by the Sole Arbitrator in CMP No.76/2001 dated 14.10.2004 and A.S.No.25001/2011 dated 30.07.2018 relating to CMP No.21/2003 dated 04.12.2010 is hereby confirmed. Sd/- (K.SOMASHEKAR) JUDGE Sd/- (DR.CHILLAKUR SUMALATHA) JUDGE DKB