Dismissed

Ms R K Construction Co. v. State of Hp

Himachal Pradesh HC8 Dec 2022RSA/351/2016

Case brief

AI extract

What is this about?

Orders limitation not barred despite delay due to arbitration proceedings lack of jurisdiction. Dismisses contract claim for price escalation due to failure to prove material cost increases and submission to competent authority.

What did the court decide?

Appeal dismissed; judgment and decree of Lower Appellate Court affirmed subject to reversal of findings on limitation issue.

Ms R K Construction Co. Vs State… — Contract and Commercial Disputes | Himachal Pradesh HC (2022)

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

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RSA No. 351 of 2016 Reserved on: 23.11.2022 Decided on: 08.12.2022.

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M/s R.K. Construction Co.

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......Appellant.

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Versus

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The State of H.P. and another .......Respondents.

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Coram

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The Hon’ble Mr. Satyen Vaidya, Judge

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Whether approved for reporting?¹ Yes

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For the appellant: Mr.J.S. Bhogal, Senior Advocate, with Mr. T.S. Bhogal, Advocate.

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For the respondents: Mr. Desh Raj Thakur, Additional Advocate General.

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Satyen Vaidya, Judge

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By way of instant Regular Second Appeal,

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judgment and decree dated 03.03.2016, passed by learned Additional District Judge (II), Shimla, H.P. in Civil Appeal No.16-S/13 of 2015 affirming judgment and decree dated 28.06.2014 passed by learned Civil Judge (Senior Division), Shimla, H.P. in Civil Suit No. 31/1 of 2011/2009, has been assailed.

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On 10.08.2016, the appeal was admitted for

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hearing on following substantial questions of law:

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1 Whether reporters of print and electronic media may be allowed to see the order?

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(i) Whether the findings of the learned Courts below are perverse and without considering the provisions of taking preliminary objections at the initial stage and limitation?

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(ii) Whether the learned Courts below have failed to appreciate the arbitration agreement in its true perspective and the conclusions arrived at by the learned Courts below are perverse?

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The parties hereinafter shall be referred to by the

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same status as they held before the learned trial Court. The appellant herein was the plaintiff and the respondents herein were the defendants.

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Plaintiff sued defendants for recovery of

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Rs.9,00,000/- with interest pendente lite and future at the rate of 24% per annum. The suit was filed on the premise that plaintiff had executed the work of construction of new MLA Hostel at Vidhan Sabha “Block-P”, in pursuance to contract awarded to him by the defendants. Though the completion of work was delayed, but the defendants had acquiesced by allowing extension of time. Plaintiff had raised

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certain claims against the defendants and had invoked the arbitration clause of the work contract. The Arbitrator had passed an award in his favour under various heads including a sum of Rs.3,80,217/- on account of price escalation under clause 10-C of the agreement. The respondents had preferred objections, under Section 34 of the Arbitration and Conciliation Act, 1996, before this Court. All other claims of plaintiff were upheld except the aforesaid claim of Rs. 3,80,217/- on the ground that Clause 10-C of the agreement between the parties was outside the scope of the Arbitrator’s jurisdiction.

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Plaintiff, thus filed the suit for the above stated amount of Rs.3,80,217/- alongwith interest at the rate of Rs.24% per annum. The suit amount was, accordingly, calculated at Rs.9,00,000/-

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The suit was contested by the defendants on the grounds that the claim under Clause 10-C of the agreement, submitted by the plaintiff, could not be entertained and admitted by the defendants as the claim had been preferred by the plaintiff without any detailed documentary evidence.

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Learned trial Court framed the following issues:-

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Whether the plaintiff is entitled for the recovery of suit amount as alleged? OPP

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Whether the suit of the plaintiff is not maintainable? OPD

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Whether the suit of the plaintiff is time barred? OPD

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Relief.

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Issue No.1 was decided in negative and all other

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issues were decided in affirmative. The suit of the plaintiff was accordingly dismissed. Learned trial Court held that the plaintiff had failed to prove the facts necessary for supporting his claim under Clause 10-C of agreement. In addition, the claim of the plaintiff was held to be barred by limitation.

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The case of plaintiff met the same fate in first appeal. Learned lower appellate Court dismissed the appeal vide impugned judgment and decree. It was concurrently held that the plaintiff had failed to establish his claim under Clause 10-C of the agreement.

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I have heard learned counsel for the parties and have also gone through the records of the case carefully.

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It is not in dispute that the completion of work got delayed, however, the extension of time was allowed by the defendants. Plaintiff preferred a claim, before the Arbitrator, on account of price escalation under Clause 10-C of the agreement. The Arbitrator awarded a sum of Rs.3,80,217/for price escalation. Since, learned Single Judge of this Court had set-aside the award passed by the Arbitrator to the extent it allowed the claim of price escalation, plaintiff claimed the said amount alongwith interest by way of an independent suit for recovery.

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Learned Senior Advocate representing plaintiff contended that the findings returned by courts below on issue number 3, as framed by learned trial court, were perverse being against the facts established on record. The contention so raised is not without substance.

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Plaintiff had specifically averred that cause of action had also arisen in its favour after the claim under clause 10-C of agreement was held by this Court to be outside Arbitrator’s jurisdiction. It had further been submitted that since plaintiff had been bonafide pursuing the remedy before the arbitral tribunal, as such the period

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spent between date of commencement of arbitration proceedings till the date of passing of judgment by learned Single Judge of this Court was liable to be excluded while computing the period of limitation. The defendants did not specifically or by implication respond to such a plea raised by the plaintiff.

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Learned Courts below while deciding issue No.3, completely ignored the plea so raised by the plaintiff. The fact of the matter is that issue No.3 was decided against plaintiff by learned trial Court without detailing any reason whatsoever. Similarly, learned appellate Court had also affirmed the findings on issue No.3 without any discussion.

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Section 14 of the Limitation Act, reads as under:

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“ 14 . Exclusion of time of proceeding bona fide in court without jurisdiction. —

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(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

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(2) In computing the period of limitation for any application, the time during which the applicant

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has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

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(3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature.

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Explanation.—For the purposes of this section,—

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(a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted;

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(b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;

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(c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.”

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Sub Section (1) of Section 14 of the Limitation Act,

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provides for exclusion of time in computing the period of limitation for any suit, which the plaintiff has spent in prosecuting, with due diligence, another civil proceeding.

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Provided, however, such proceedings relate to the same matter in issue and is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

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It is not in dispute that the plaintiff in the first instance had raised the claim, with respect to same subject matter which is in issue in the instant case, before the Arbitrator. Such claim of the plaintiff, though, was allowed by the Arbitrator, but the Arbitrator’s award to that extent was set aside vide judgment dated 31.07.2008 passed by learned Single Judge of this Court in Arbitration Case No. 21 of 2004 on the ground that Arbitrator lacked jurisdiction to decide claim under clause 10-C of the agreement. As noticed above, the averments, with respect to due diligence and good faith, made in the plaint had remained uncontroverted. Thus, all the ingredients for application of sub section (1) of Section 14 of the Indian Limitation Act were available and the plaintiff was clearly entitled to the benefit of the said provision of law. In these circumstances, the suit of plaintiff could not be held to be barred by limitation. The first substantial question of law is decided accordingly.

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The claim of plaintiff for suit amount was based on

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the alleged entitlement of plaintiff for additional amount on account of escalation in costs as per Clause 10-C of the agreement. Both the Courts below after taking notice of Clause 10-C of agreement and have rightly rejected the claim of plaintiff on merits. In order to succeed in claim under Clause 10-C of the agreement certain pre-requisites are required to be fulfilled and proved. It is required to be proved that during the progress of the works, price of material(s) incorporated in the works and liable to be purchased by the contractor and/or the wages of labour increased and such increase exceeded 10% of the price and/or wages prevailing at the time of acceptance of the tender and further the contractor thereupon had paid the increased costs of material and/or wages etc. to the labour.

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Reverting to the facts of the case, the plaintiff had miserably failed to plead and prove aforesaid necessary ingredients. There was no proof regarding the enhancement of the costs of material and/or the labour wages. The plaintiff also failed to place on record any material to prove that he in fact had incurred enhanced costs. Further, there was no

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proof that the plaintiff had submitted his claim under Section 10-C of the agreement to the competent authority, who could decide on the issue of grant of increased amount to the contractor.

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Thus, the concurrent findings of fact recorded by both the Courts below cannot be faulted with. Rather, such findings are borne from the material on record.

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Learned Senior Counsel representing the plaintiff had further contended that defendants had admitted before the Arbitrator that the amount of enhanced costs was Rs.4,03,200/-. The contention so raised on behalf of the plaintiff also deserves to be rejected for the reason that no such admission has been proved on record by bringing necessary evidence to such effect. Moreover, the plaintiff cannot draw any advantage of the alleged admission as the award, if any, based on such admission, has been set-aside by learned Single Judge of this Court by holding the claim under Clause 10-C to be not arbitrable. Substantial question of law No.2 is decided accordingly.

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In result, the instant appeal fails. Judgment and decree dated 03.03.2016, passed by learned Additional

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District Judge (II), Shimla, H.P. in Civil Appeal No.16-S/13 of 2015 affirming judgment and decree dated 28.06.2014 passed by learned Civil Judge (Senior Division), Shimla, H.P. in Civil Suit No. 31/1 of 2011/2009, is further affirmed, subject, however, to the reversal of findings on issue No.3.

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The appeal and all pending miscellaneous

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application(s), if any, are accordingly disposed of.

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8^th December, 2022 ( Satyen Vaidya) (GR) Judge

Ms R K Construction Co. v. State of Hp

Case brief

What is this about?

What did the court decide?

Ms R K Construction Co. v. State of Hp

Case brief

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