Rajkamal Builders Vs.
Ahmedabad Municipal Corpn. & Ors. [2008] INSC 1583 (17 September 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.5728 OF 2008 (arising out
of SLP(C)No.7222 of 2006) RAJKAMAL BUILDERS ... APPELLANT VERSUS ORDER Leave
granted. Heard learned counsel for the parties.
1.
The
Ahmedabad Municipal Corporation (AMC for short) decided to construct a bridge
across the river Sabarmati. In that behalf AMC sought financial contribution
from Ahmedabad Electricity Company (AEC), Oil & Natural Gas Commission
(ONGC) and Gujarat State Road Transport Corporation (GSRTC). As the cost was
estimated to be Rs.11 crores, it was agreed that AMC, AEC, ONGC and GSRTC will
bear the cost in the ratio of Rs.4 crores, Rs.1 crore, Rs.2 crores and Rs.4
crores respectively. According to AMC, it was further agreed that in the event
of the cost exceeding Rs.11 crores, the excess to the extent of Rs.1 crore
would be borne by ONGC and AEC in the proportion of 2:1. AMC appointed AEC as
its agent for construction of the bridge. The work was entrusted to the
appellant for execution. The cost of construction turned out to be
Rs.11,38,06,000/-. It is stated that the additional cost of Rs.38,06,000/- was borne
by ONGC and AEC in the ratio of 2:1 as per the earlier understanding.
2.
Thereafter,
the contractor raised certain disputes in regard to its claims aggregating to
Rs.1,33,36,200/-. The said disputes were referred to arbitration. AMC, AEC,
ONGC and GSRTC were made respondents in the arbitration proceedings.
The Arbitrator by
award dated 15.6.1999, awarded a sum of Rs.20,14,860/- to the appellant
contractor and directed that AMC and AEC shall pay the said amount with
interest at the rate of 12% per annum from the date of award till date of
realisation (in the manner set out in para 24 of the award). Feeling aggrieved
by the award, AEC filed an application before the City Civil Court, Ahmedabad
under Section 34 of the Arbitration and Conciliation Act, 1996 ('Act' for
short). The City Civil Court by its judgment dated 15.9.2003 upheld the award
directing the payment of Rs.20,14,860/- with interest at the rate of 12% per
annum to the contractor.
However, the trial
court held that AMC was not liable to pay any amount. It held that AEC was
liable to pay one-third of the award amount and ONGC was liable to pay
two-third of the award amount. Consequently it directed AEC to pay
RS.6,71,620/- plus interest and ONGC to pay Rs.13,43,240/- plus interest to the
contractor.
3.
Feeling
aggrieved by the modification of the award, ONGC filed an appeal before the
High Court of Gujarat. ONGC contended that having regard to the scope of
Section 34 of the Act, the Court ought not to have shifted the liability from
AMC to ONGC. On the other hand AMC supported the order of the trial court. The
High Court by its judgment dated 27.9.2005 allowed the appeal. It held that the
ONGC could not have been made liable to pay Rs.13,43,240/- with interest in
modification of the award of the Arbitrator. The High Court was of the view
that having regard to the nature of jurisdiction exercised under Section 34 of
the Act, and as the provisions 3 of Section 96 and Order 41 Rule 33 of CPC
were inapplicable, the trial court could not have shifted the liability from
AMC to ONGC. Therefore, the High Court set aside the decision of the trial
court to the extent it held that ONGC was liable to pay Rs.13,43,240/- with
interest.
4.
Feeling
aggrieved the contractor has filed this appeal by special leave.The contractor
submits that it is not concerned whether the AMC pays or ONGC pays, so long as
some one pays the award amount to it.The grievance of the contractor is that
the High Court while setting aside the liability of ONGC, ought to have issued
a specific direction to AMC to pay the amount or ought to have stated that the
award of the Arbitrator stood restored in full. The contractor apprehends that
the judgment of the High Court may be so interpreted that AMC may dispute its
liability to pay Rs.13,43,240/- with interest on the ground that there is no
specific direction to them by the High Court to pay the said sum.
5.
On
a careful consideration of the judgment, we are of the view that there is no
basis for the apprehension of the contractor-appellant. The entire judgment
when read as a whole, makes it clear that all that the High Court intended was
to shift back the liability from ONGC in regard to Rs.13,43,240/- with interest
and not to reduce the amount due to the appellant. In short the effect of the
decision of the High Court is to restore the award to its original position. It
therefore follows that the sum of Rs.13,43,240/- with interest thereon will
have to be paid in terms of the award.
6.
However,
this leaves us with the dispute between AMC and ONGC as to who should bear the
said liability. As observed above, the appellant contractor is not concerned
with this dispute. It is unfortunate that even though the liability towards 4
the contractor for the sum of Rs.20,14,860/- with interest awarded by the Arbitrator
was not under challenge, the contractor has not been able to get the amount due
to it for nearly a decade because of the inter-se dispute in regard to
liability between the AMC and the ONGC.
7.
AMC
is a statutory body established under the Ahmadabad Municipal Corporation Act
and ONGC is a statutory Corporation established under the Oil & Natural Gas
Commission Act, 1959. In regard to disputes between Government departments and
public sector Undertakings, there is a mechanism for amicable resolution of disputes
by mutual negotiations or through good offices of the High Powered Committee
constituted by the Central Government, before parties approach a court. (See:
ONGC vs. CCE-1995 Supp(4) SCC 541). Though the dispute between AMC and ONGC may
not strictly fall under the category of disputes referable to the High Powered
Committee, there is no reason why an attempt should not be made by AMC and ONGC
to sort out the dispute between them by mutual negotiations or through the High
Powered Committee, before the issue is considered by the court.
There is also no
reason why the appellant contractor should wait for payment till the issue is
decided as between AMC and ONGC.
8.
Therefore
in exercise of power under Article 142 of the Constitution, we direct that the
amount admittedly due as per the award (the sum of Rs.13,43,240/- with interest
thereon) shall be paid equally (50% each by AMC and ONGC) to the
appellant-contractor within three months from today. AMC and the ONGC shall
also pay a sum of Rs.10,000/- as costs to the appellant contractor. The appeal
is disposed 5 of accordingly in so far as the appellant is concerned.
9.
Such
payment will be without prejudice to the rights and contentions inter se
between themselves. AMC and ONGC shall endeavour to sort out the dispute
between themselves as to who is liable, in the manner stated above. In the
event of failure, this Court will consider the question. List the matter after
six months to enable AMC and ONGC to report about the results of their efforts
of negotiated settlement.
............................J.
( R.V. RAVEENDRAN )
............................J.
( LOKESHWAR SINGH PANTA)
NEW
DELHI,
SEPTEMBER
17, 2008.
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