Dismissed

State of Kerala v. Kuriakose Chennakkadan

Kerala HC24 Nov 2022WA/1867/2012

Case brief

AI extract

What is this about?

The High Court, Ernakulam dismissed a writ appeal by the State against a lower court order. The lower court had quashed recovery notices, declaring respondents bound by a 1986 arbitration award that the Supreme Court had held binding despite not being filed as a decree. The bench concluded there was no error warranting interference.

What did the court decide?

Writ appeal dismissed; pending interlocutory applications closed.

State of Kerala Vs Kuriakose Chennakkadan — Contract and Commercial Disputes | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR &

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY THURSDAY, THE 24^TH DAY OF NOVEMBER 2022 / 3RD AGRAHAYANA, 1944 WA NO. 1867 OF 2012 AGAINST THE JUDGMENT IN WPC 6849/2007 OF HIGH COURT OF KERALA DATED 23.5.2012

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APPELLANTS / RESPONDENTS IN WPC:

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1 STATE OF KERALA , REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT WATER RESOURCES (MP) DEPARTMENT, SECRETARIAT,THIRUVANANTHAPURAM.

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2 THE SUPERINTENDING ENGINEER, PROJECT CIRCLE PIRAVOM.

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3 THE EXECUTIVE ENGINEER PVIP DIVISION NO.2 ALUVA.

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4 THE DEPUTY TAHSILDAR REVENUE RECOVERY TALUK OFFICE, KUNNATHUNADU, PERUMBAVOOR.

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5 THE VILLAGE OFFICER, AIKKARANADU NORTH VILLAGE KOLENCHERY.

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BY SRI. V.TEKCHAND SR. GOVERNMENT PLEADER

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RESPONDENTS / PETITIONERS IN WPC:

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1 KURIAKOSE CHENNAKKADAN(Legal Heir)

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P.W.D.CONTRACTOR, KOLENCHERY P.O., ERNAKULAM DISTRICT – 682311

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2 PRADEEP K., S/O KURIAKOSE CHENNAKKADAN, CHENNAKKADAN HOUSE, KOLENCHERY P.O.-682311

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ADDL.3 MARIAMMA KURIAKOSE, CHENNAKKATTU HOUSE, PERINGOLE KARA, KOLENCHERY-682 311

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4 PREETHY GEORGE, W/O. DR. GEORGE NOBIL, MOSC MEDICAL COLLEGE QTR.NO.406L, KOLENCHERY-682 311

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5 PRAMOD K. DEN, CHENNAKKATTU HOUSE, PERINGOLE KARA, KOLENCHERY-682 311

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6 DR. PREM KURIAKOSE, CHENNAKKATTU HOUSE, PERINGOLE KARA, KOLENCHERY-682 311

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7 PREETHA BIJI, W/O. DR. BIJU P. BABU, PANAKKAL HOUSE, KOZHIKODE ROAD, KUNNAMKULAM

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[LEGAL HEIRS OF THE DECEASED 1ST RESPONDENT ARE IMPLEADED
AS ADDL. RESPONDENTS 3 TO 7 AS PR ORDER DATED 29.3.2019
IN I.A. NO.378/2016 IN WA.1867/12]

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BY ADV SRI.B.ASHOK SHENOY

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
24.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A.1867/2012

J U D G M E N T

Dated this the 24^th day of November, 2022

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S. Manikumar, CJ.

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Before the writ court, petitioner has sought for the following reliefs:

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“(a) Call for the records and files leading to Ext.P2 issued by 2^nd respondent as also Exts.P4 and PS notices issued by 4^th respondent and quash Exts.P2, P4 and P5 by issuance of a writ in the nature of certiorari or any other appropriate writ, order or direction.”

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Short facts leading to filing of the writ petition are as under:

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2.1. Petitioner is a P.W.D. Contractor. Petitioner was

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awarded the work of constructing Kolenchery Branch Canal from ch. 14167m to 14880m including C.D. works, in respect of Periyar Valley Irrigation Project, by respondents nos.1 to 3. He did not complete the work. The contract was terminated and rearranged at the risk and cost of the petitioner. The petitioner raised a dispute in respect of the same. The dispute was referred for arbitration.

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W.A.1867/2012

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2.2. A sole arbitrator was nominated by the Subordinate Judge's Court in O.S (Arb.) No. 458 of 1982. The arbitrator passed Ext.P1 award, wherein the termination of the contract with the forfeiture of security deposited was upheld. But it was held that the re-arrangement of the work shall not be at the risk and cost of the claimant. He seeks to file this Writ Petition (Civil) challenging the action of the respondents in seeking to recover from petitioner, a sum of Rs.5,37,099/- claimed towards risk and cost liability following rearrangement of the contract work awarded to petitioner on 25.5.1980, which claim of respondents stood negatived by Ext.P1 Arbitral Award dated 17.2.1986 passed by the Sole Arbitrator nominated by the Hon'ble Subordinate Judge's Court, Emakulam in OS.(Arb) No.458 of 1982, to which respondents are parties and which is binding on respondents.

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Exhibits P2, P4 and P5 are challenged before the writ

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court. It was by Exhibit P2 communication dated 25.9.2006, the Superintending Engineer, Project Circle/2^nd respondent therein informed the writ petitioner that on account of breach of contract by the petitioner, the respondents suffered damages to the tune of Rs.5,37,099/- and the petitioner was called upon to

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W.A.1867/2012

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pay the same. Exhibits P4 and P5 are the revenue recovery notices dated 7.2.2007, issued to the petitioner by the Deputy Tahsildar (RR), Kunnathunadu Taluk.

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Considering the rival submissions and taking note of the decisions of the Hon’ble Supreme Court in Sathish Kumar and others v. Surinder Kumar and others , reported in AIR 1970 SC 833 and Satwant Singh Sodhi v. State of Punjab and others , reported in (1999) 3 SCC 487 , writ court, vide judgment dated 23.5.2012 in W.P(C).No.6849 of 2007, quashed Exhibits P2, P4 and P5 and accordingly ordered thus:

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“5. The question as to whether an arbitration award binds the parties to the award notwithstanding the fact that it has not been filed in court and made into a decree is no more res integra, insofar as the Supreme Court has finally spoken on that issue as early as in 1970, in the decision of Sathish Kumar and others v. Surinder Kumar and others , reported in AIR 1970 SC 833. In that case, after considering the effect of Section 14 of the Arbitration Act, 1940 read with Section 3 and Rule 7 of the First Schedule to the Act, the Supreme Court held that the award is final and binding on the parties as soon as the same is signed by the arbitrator, notwithstanding the fact that it has not been made a rule of the court. The same is a three bench decision. Two of the Hon'ble Judges wrote one judgment and the third Judge wrote a separate judgment, agreeing with the other two Judges, but

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W.A.1867/2012

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adding a few words by his own in support of the judgment of the other two Judges which makes a legal position explicitly clear. It is held thus therein:

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“19. HEDGE, J. I agree. But I would like to add few words. Arbitration proceedings, broadly speaking may be divided into two stages. The first stage commences with arbitration agreement and ends with the making of the award. And the second stage relates to the enforcement of the award. Paragraph 7 of the First Schedule to the Arbitration Act lays down that “the award shall be final and binding on the parties and persons claiming under them respectively.” Therefore, it is not possible to agree with the Full Bench decisions of the Patna High Court and that of the Pujab and Haryana High Court that an award which is not made a decree of the Court has no existence in law. The learned Judges who decided those cases appear to have proceeded on the basis that an award which cannot be enforced is not a valid award and the same does not create any rights in the property which is the subject matter of the award. This in my opinion is not a correct approach. The award does create rights in that property but those rights cannot be enforced until the award is made a degree of the Court. It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps. . . . . .”

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The same position of law was reiterated by the

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Supreme Court in Satwant Singh Sodhi v. State of Punjab and others , (1999) 3 SCC 487, wherein also it has been categorically held that delivery, pronouncement or filing in court are not necessary for making an arbitration award complete and that once the arbitrator signs the same, it becomes binding on the parties to the award. That being so, I do not find any merit in the contention of the respondents that Ext.P1 award would become binding on the respondents only when it is made into a decree by filing the same in court. In Ext.P1 award, it has

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W.A.1867/2012

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been specifically held that the re-arrangement of the work shall not be at the risk and cost of the petitioner. The respondents have not chosen to challenge that award and therefore it has become final and binding on the respondents. If that be so, the respondents cannot now recover the alleged damages on the ground that the petitioner has committed breach of contract consequent to which the respondents have suffered loss in the matter of re-arrangement of the work.

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I find merit in the second contention of the petitioner as well. The Supreme Court and this Court have finally settled the law on the subject in various decisions. It has been categorically held that a party to a contract, even that party is the Government, cannot unilaterally decide that there is breach of contract by the other party and unilaterally assess damages for such breach of contract. Here, Government is a party to the contract with the petitioner. Therefore, going by the law laid down by courts, the Government cannot unilaterally decide the question as to whether the petitioner has committed breach of contract and quantify the alleged damages arising therefrom, especially when the petitioner categorically disputes that there is any fault on his part in not completing the work. Therefore, on both counts, the petitioner is entitled to succeed.

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Accordingly, the writ petition is allowed. Exts. P2, P4 and P5 are quashed. It is declared that the respondents are not entitled to recover any amount as damages for the alleged breach of contract from the petitioner in view of Ext.P1 award.”

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Being aggrieved, instant writ appeal is filed.

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W.A.1867/2012

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Though Mr.V. Tekchand, learned Senior Government Pleader made an attempt to distinguish between the judgments reported in Sathish Kumar and others case referred in paragraph No.5 of the judgment, Mr. B. Ashok Shenoy, learned counsel for the respondents, by referring to paragraph No.13 of the judgment, submitted that the award has not been made as a decree in terms of the provisions of the then Arbitration Act, 1940.

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That apart, attention of learned Senior Government Pleader is also invited to paragraph 9 of the judgment, wherein the Hon’ble Supreme Court has made it clear that an award is not a waste paper and it is bindings between the parties.

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The decision of the Hon’ble Supreme Court in Satwant Singh Sodhi v. State of Punjab and others , reported in (1999) 3 SCC 487 squarely applies to the case where the award has not been made as a rule of the Court and consequentially, a decree.

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That apart, Exhibit P1 award is dated 17.2.1986, wherein after considering the issues of disputes, the Arbitrator has ordered thus:

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W.A.1867/2012

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“Issues i & ii The termination of the contract with the forfeiture of security deposit is upheld. The rearrangement of the work shall not be at the risk and cost of the Claimant.”

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When the said award has not been made as a decree, in

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terms of the provisions of the then Arbitration Act, 1940 and inasmuch as the judgments of the Hon’ble Supreme Court applies to the case on hand, we do not find any error warranting interference. Accordingly writ appeal is dismissed.

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Pending interlocutory applications, if any, shall stand closed.

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Sd/S. Manikumar, Chief Justice

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Sd/Shaji P. Chaly, Judge

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sou.

State of Kerala v. Kuriakose Chennakkadan

Case brief

What is this about?

What did the court decide?

State of Kerala v. Kuriakose Chennakkadan

Case brief

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