Dismissed

Mr Bruno D Costa v. Mr Fr James Charlie

Karnataka HC2 Apr 2024MFA/802/2024

Case brief

AI extract

What is this about?

A contractor sought interim injunction under Section 9 of the Arbitration Act restraining a church from completing balance construction after a payment dispute over a demolition-renovation contract. The court upheld the Trial Court's refusal, holding the contract effectively terminated once arbitration was invoked and monetary compensation could be worked out before the arbitrator.

What did the court decide?

None granted; appeal dismissed and interlocutory applications disposed as not surviving.

Mr Bruno D Costa Vs Mr Fr James Charlie — Arbitration | Karnataka HC (2024)

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1 - NC: 2024:KHC:13438 MFA No. 802 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 2^ND DAY OF APRIL, 2024

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BEFORE

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THE HON'BLE MR JUSTICE R. NATARAJ MISCELLANEOUS FIRST APPEAL NO. 802 OF 2024 (AA)

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BETWEEN:

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MR. BRUNO D'COSTA S/O JOSEPH D'COSTA AGED ABOUT 38 YEARS R/AT VARTHEGUNDI TARIKERE TALUK CHIKMAGALURU DISTRICT PIN 577 134

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…APPELLANT

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(BY SRI. BALAGANGADHAR G.S., ADVOCATE)

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AND:

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MR. FR. JAMES CHARLIE SR. JOSEPH'S CHURCH AGED ABOUT 38 YEARS BASKAL VILLAGE CHIKKAMAGALURU DISTRICT PIN 577 134

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Digitally signed by MARKONAHALLI RAMU PRIYA Location: HIGH COURT OF KARNATAKA

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…RESPONDENT (BY SRI. H.N.MANJUNATH PRASAD, ADVOCATE FOR CAVEATOR RESPONDENT)

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THIS MFA IS FILED UNDER SECTION 37(1)(b) OF THE ARBITRATION AND CONCILIATION ACT, 1996, AGAINST THE ORDER DATED 04.01.2024 PASSED IN A.A.NO.05/2023 ON THE FILE OF THE II ADDITIONAL DISTRICT AND SESSIONS JUDGE, CHIKKAMAGALURU, REJECTING THE APPLICATION FILED UNDER SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996.

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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JUDGMENT

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The applicant in Arbitration Application No.5/2023 on the file of the II Additional District and Sessions Judge, Chikkamagaluru, (henceforth referred to as ‘the Trial Court’) has filed this appeal challenging the correctness of an order dated 04.01.2024 by which an application filed by him under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) was rejected.

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The parties shall henceforth be referred to as they were arrayed before the Trial Court.

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The applicant and the respondent had entered into an agreement dated 10.02.2021 for demolition and renovation of a Church building at Sy. No.96, Baskal village, Vasthare Hobli, Chikkamagaluru Taluk, Mangalore District. The estimated value of the contract was Rs.1,34,18,917/-. The agreement contemplated duties and responsibilities of both the parties and also provided for a dispute resolution mechanism, initially through mutual and amicable consultation and if consensus was not reached,

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to be referred to arbitration by a sole Arbitrator. The applicant claimed that after completing the 7^th stage of the work, the Engineer appointed by the Church Mr. John P. Marties and the Church committee measured the work and the bill was paid. After completing 8^th and 9^th stage work, the applicant had submitted a bill to the Priest on 09.08.2023. The priest called him on 12.08.2023 at about 9.30 a.m. and at such meeting, he informed the applicant that action would be initiated to make the payment. He claimed that the priest of the Church informed him that they had already paid excess amount to him and they would not pay any amount and that the construction would be completed by the Church itself. The applicant addressed a letter dated 09.08.2023 through email to the respondent informing them to permit the completion of the work as per the agreement and not to give any room for violation. He also had made a claim for Rs.19,79,031/-. The applicant apprehending that the respondent may undertake the remaining construction, filed an application under Section 9 of the Act of 1996 for an order of

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temporary injunction restraining the respondent from continuing the remaining construction work in the application schedule property till the disposal of the case. The Trial Court after hearing the applicant, had granted an ex parte order of injunction .

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This application was opposed by the respondent who claimed that a sum of Rs.1,22,08,796/- was already paid to the applicant and he had only achieved 40% of the work. He claimed that a message was sent through whatsapp on 30.08.2023 and the applicant was called for a meeting on 05.09.2023. However, on 01.09.2023, the applicant sent a message that he would not be available for the next 15 days as he had to go to Bengaluru for some other work. Thereafter, on 11.09.2023 a letter was addressed to the applicant to attend for a meeting on 21.09.2023 to discuss regarding the work turned out by the applicant and the payment he received. However, the applicant replied through his Advocate on 18.09.2023 demanding a further sum of Rs.19,00,000/-. The

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respondent contended that again on 20.09.2023, a

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message was sent by whatsapp and email calling upon the applicant to attend a meeting on 21.09.2023. He contended that even before the meeting dated 21.09.2023 was arranged, the applicant had filed the present application seeking for interim reliefs. He further contended that he never denied to make any payment, if the same was payable to the applicant after getting measurement of the work done by the applicant in his presence and the presence of the Building Committee and the Engineer. He, therefore, contended that it was the applicant who was irresponsible and did not take any steps for an amicable settlement. On the contrary, he abandoned the work and since the balance work had to be completed, the respondent had undertaken the construction. After the respondent entered appearance and filed his objection, the Trial Court in terms of the impugned order, rejected the application filed by the applicant on the ground that the applicant had not made any effort to get the dispute resolved amicably though

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several attempts were made by the respondent and that the applicant had failed to establish his bona fides in seeking the discretionary relief of interim injunction.

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Being aggrieved by the said order, the applicant has filed this appeal.

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Learned counsel for the applicant submitted that as per the agreement, if there is any dispute between the applicant and the respondent, it was incumbent upon them to appoint a conciliator and if the conciliation failed, the parties were at liberty to undertake the process of arbitration. He submits that there was no attempt on the part of the respondent to conciliate differences between the applicant and the respondent and the respondent unilaterally without even terminating the agreement, had refused to make any payment and had proposed to complete the balance work. He submits that so long as the agreement is in force, the applicant is entitled to restrain the respondent from completing the balance construction.

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In reply, the learned counsel for the respondent submitted that the applicant has already initiated proceedings for resolution of the dispute through arbitration by issuing a notice dated 18.09.2023 and therefore, it is deemed that the parties have terminated the contract. He submits that the attempts made by the respondent to consider the dispute was turned down by the applicant and hence, the respondent had no other option than to undertake the completion of the balance work. He submitted that the Trial Court in the circumstances felt that the grant of an order of injunction would affect the interest of the respondent and therefore, refused to grant interim relief sought for by the applicant. He further submits that though the applicant has caused a notice invoking arbitration clause, he has not taken any steps under Section 11 of the Act of 1996. He submits that it was always open for the applicant to invoke the provisions of Section 17 of the Act of 1996 before the Arbitrator.

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I have considered the submissions made by the

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learned counsel for the applicant and the learned counsel for the respondent.

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It is now well settled that while considering an application under Section 9 of the Act of 1996, the principles for grant of interim injunction adumbrated under Order XXXIX Rules 1 and 2 of CPC have to be applied, namely, whether the plaintiff has a prima facie case for grant of injunction and whether any hardship would be caused to the parties, if injunction is refused and in whose favour the balance of convenience lies in granting the order of injunction. The Court is also bound to consider whether the applicant can be compensated in terms of money instead of granting an order of injunction. In the case on hand, the applicant claims that he had constructed a substantial portion of the construction that was entrusted to him. He does not dispute the fact that the total estimated value of the contract was Rs.1,34,18,917/-. He also does not dispute the fact that

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he had received a sum of Rs.1,22,08,796/- from the respondent. The respondent claimed that he had paid a sum of Rs.1,22,08,796/- to the applicant. The documents placed on record indicate that apart from the amount allegedly paid by the respondent, the applicant had laid a claim for a sum of Rs.19,00,000/- in respect of 8^th stage of

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construction. This only meant that the applicant was claiming more than the agreement value entered into between him and the respondent. The applicant claims that certain works which were not initially agreed upon between the parties were incorporated in the contract and therefore, the value of the contract exceeded the initial contract value. However, no document in this regard is placed by the applicant either before the Trial Court or this Court. Nonetheless, these are questions which have to be considered before the Arbitrator. Having regard to the fact that the building that is sought to be constructed was a Church, if the applicant abandoned the work, the respondent cannot be tied down to the contract and cannot be restrained from completing the construction.

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10 - NC: 2024:KHC:13438 MFA No. 802 of 2024

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Moreover, the applicant has already commenced the arbitration proceedings by issuing a notice dated 18.09.2023 and hence, it can safely be held for the present that the agreement between the parties stood terminated. The grant of any order of injunction restraining the respondent from putting up the construction would unduly cause more hardship to the respondent than to the applicant. After all, the applicant is only concerned with the value of the work already executed and nothing more, which could be worked out in the arbitration proceedings. Since the applicant has not taken any steps for appointment of an arbitrator to adjudicate a dispute and has also not taken any steps for drawing up of an inventory of the work already done, granting an order of injunction to restrain the respondent from putting up any construction or complete the balance construction in the application schedule property would be more injurious to the respondent and hence, the Trial Court was justified in not granting an order of injunction. There is no error committed by the Trial Court warranting

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11 -

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NC: 2024:KHC:13438 MFA No. 802 of 2024

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interference by this Court. Any observation made in this order will not come in the way of the Arbitrator to decide the dispute on merits.

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Hence, the appeal is dismissed.

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I.A No.1/2024 for temporary injunction and I.A.

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No.2/2024 for production of documents do not survive for consideration and the same stand disposed off.

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Sd/JUDGE

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SMA

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List No.: 1 Sl No.: 42

Mr Bruno D Costa v. Mr Fr James Charlie

Case brief

What is this about?

What did the court decide?

Mr Bruno D Costa v. Mr Fr James Charlie

Case brief

What is this about?

What did the court decide?

What the court decided

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