Dismissed

M/S Shetty'S Construction Company Pvt. Ltd. v. the Managing Director

Karnataka HC25 Mar 2024MFA/2893/2019

Case brief

AI extract

What is this about?

A contractor appealed against rejection of its Section 30 objections to an umpire's award, having already received the awarded sum without protest or reservation. The High Court distinguished cited Supreme Court decisions and dismissed the appeal, holding acceptance without demur stripped the appellant of locus to challenge the award.

What the court decided

AI extract

M/S Shetty'S Construction Company Pvt. Ltd. Vs the Managing… — Arbitration | Karnataka HC (2024)

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NC: 2024:KHC:12250-DB MFA No. 2893 of 2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 25^TH DAY OF MARCH, 2024

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PRESENT

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THE HON'BLE MR JUSTICE K.SOMASHEKAR

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AND

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THE HON'BLE MR JUSTICE RAJESH RAI K MISCELLANEOUS FIRST APPEAL NO. 2893 OF 2019 (AA)

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BETWEEN:

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Digitally signed by HARIKRISHNA V Location: HIGH COURT OF KARNATAKA

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M/S SHETTY'S CONSTRUCTION COMPANY PVT LTD., ENGINEERS & COTRACTORS, 80, ASHOK NAGAR, HUBLI-580 032 NOW OFFICE SHIFTED TO FLAT NO.4C, "SHAMBHU APARTMENT, ADARSH NAGAR, HUBLI-580 032, REPRESENTED BY ITS MANAGING DIRECTOR, SRI. K. SHANKAR SHETTY …APPELLANT

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(BY SMT. PRIYA KALE, ADVOCATE FOR SRI. GEORGE JOSEPH, ADVOCATE)

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AND:

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THE MANAGING DIRECTOR M/S. KONKAN RAILWAY CORPORATION LTD., BELAPUR BHAVAN, SECTOR-11, C.B.D. BELAPUR, NAVI MUMBAI-400 614.

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THE CHIEF ENGINEER KONKAN RAILWAY CORPORATION LTD., UDUPI AND NOW REPRESENTED BY

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NC: 2024:KHC:12250-DB MFA No. 2893 of 2019

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THE DY.CHIEF ENGINEER (H.Q) K.R.C., BELAPUR BHAVAN, SECTOR-11 C.B.D., BELAPUR NAVI MUMBAI-400 614.

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…RESPONDENTS

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(BY SRI. SURAJ NAIK AND SRI. OMKAR KAMBI, ADVOCATES FOR R1 & R2)

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THIS MFA IS FILED U/S 39 OF ARBITRATION AND CONCILIATION ACT AGAINST THE JUDGMENT AND DECREE DATED 07.12.2018 PASSED IN AC. NO.01/2011 ON THE FILE OF THE PRL. SENIOR CIVIL JUDGE, UDUPI, DISMISSING THE PETITION FILED UNDER PETITIONER / APPELLANT UNDER SECTION 30 R/W 14 AND 15 OF THE ARBITRATION ACT 1940. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, RAJESH RAI K, J., DELIVERED THE FOLLOWING:

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JUDGMENT

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In this appeal under Section 39 of the Arbitration and Conciliation Act, 1940 (hereinafter referred to as the "Act" for the sake of brevity), the appellant has assailed the validity of the judgment dated 07.12.2018 passed by the trial Court by which objections preferred by the appellant under Section 30 of the Act, have been rejected.

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Facts giving rise to filing of this appeal briefly stated are that, the appellant is a Class I contractor and is engaged in the business of construction. The respondent No.2 and appellant entered into an agreement on 09.11.1990 for construction of Mangalore-Udupi New Broad Gauge Railway

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line-Earthwork in forming Banks and Cuttings and Construction of minor bridges between Chainage 62.500 and 68.280 in Reach VIII at Udupi. The appellant commenced the work. However, the same could not be completed within the stipulated time. The disputes arose between the parties. Therefore, the appellant demanded the respondents to appoint arbitrators, but the respondents failed to appoint the arbitrators. Hence, the appellant approached the Judicature of Bombay High Court and the Hon'ble Supreme Court. Thereafter, the Hon'ble Supreme Court directed the respondents to appoint the arbitrators. As per the direction of the Hon'ble Supreme Court, the respondents appointed two arbitrators, however, arbitrators were unable to deliver a common award.

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Therefore, the matter was referred to an umpire, who passed an award on 12.02.2002, by which the respondents were directed to pay a sum of Rs.88,87,934/- (Rupees eighty eight lakh eighty seven thousand nine hundred and thirty four only) to the appellant. It is pertinent to note that the aforesaid amount was paid on a request made by the appellant to its authorized representatives by way of a demand draft on

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07.03.2002. Thereafter the appellant filed a petition under Section 30 of the Act before the trial Court. The trial Court, vide judgment dated 07.12.2018, has rejected the objections preferred by the appellant on the ground that the amount awarded by the umpire was received by the appellant without any protest and having accepted the amount without any demur or without reserving any liberty. It was further held that the appellant has no locus to file objections under Section 30 of the Act. In the aforesaid factual background, this appeal has been filed.

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Learned counsel for the appellant submitted that even though the appellant had accepted the amount awarded by the umpire, however, it has not given any undertaking that it will not claim any further amount and therefore, the petition preferred by the appellant ought to have been adjudicated on merits. In support of the aforesaid submissions, reliance has been placed on the decision of the Hon'ble Supreme Court in

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R.I.Kalathia And Co. Vs. State of Gujarat AIR 2011 SC

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754 and Durga Charan Rautray Vs. State of Orissa & Anr. AIR 2012 SC 442 . On the other hand, learned counsel for the respondents has supported the judgment passed by the trial

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Court and has submitted that the appellant had sent a communication dated 06.03.2002 to the respondents, pursuant to which, payment was made in favour of the appellant, which was accepted by the appellant without any demur and therefore, it has rightly been held that the appellant has no locus to file objections under Section 30 of the Act.

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We have considered the submissions made by the leaned counsel for the parties. Admittedly, the appellant was entrusted the contract for construction of railway line. It is also not in dispute that on account of disputes between the parties arising out of the agreement, the appellant invoked arbitration clause and the arbitrators who were appointed were unable to render a common award. Thereafter, an umpire was appointed, who passed an award in favour of the appellant in a sum of Rs.88,87,934/-. Thereafter, the appellant sent a

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communication dated 06.03.2002, which was addressed to the Deputy Chief Engineer, which reads as under:

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"We deputing are our representative Mr.Y.R.Kuragodi, Accountant, who has been authorized to collect the Demand Draft from you towards the amount of Arbitration awards declared by the Umpire Sri.R.K.Sinha, Director/Finance, KRCL in respect of the above contract works and

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request you to kindly hand over the same to him and oblige.

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The specimen signature of our representative Mr.Y.R.Kuragodi is attested as below"

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From the perusal of the aforesaid communication

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dated 06.03.2002, it is evident that the appellant was ready and willing to receive the amount awarded by the arbitrator without any protest. Similarly, on 07.03.2002 in respect of work Reach VIII, the amount was received by the appellant without any protest or without reserving any liberty to challenge the award by way of filing petition under Section 30 of the Act. In other words, the appellant accepted the award which was passed by the umpire and received the amount awarded by him without any protest. Therefore, the trial Court has rightly held that the appellant has no locus to file objections under Section 30 of the Act.

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So far as the decisions relied by the learned counsel

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for the appellant in R.L.Kalathia and Co. supra is concerned, suffice to say the aforesaid decision deals with filing of the claim after furnishing no dues certificate. Similarly, the case of Durga Charan Rautray supra deals with the situation, where,

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while accepting payment, the contractor had not undertaken that he would not raise further claims. The aforesaid decisions relate to the situation where the award was not passed. In the instant case, the rights of the appellant were adjudicated by the umpire and thereafter, the appellant had received the amount without any protest. Therefore, the aforesaid decisions are of no assistance to the appellant in the fact situation of the

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case.

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In view of the proceeding analysis, we do not find any merit in the appeal and is hereby dismissed.

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Sd/JUDGE

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Sd/JUDGE

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VM List No.: 1 Sl No.: 14

M/S Shetty'S Construction Company Pvt. Ltd. v. the Managing Director

Case brief

What is this about?

What the court decided

M/S Shetty'S Construction Company Pvt. Ltd. v. the Managing Director

Case brief

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