1 HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT AT JABALPUR 1 Civil Revision No.1343/2003 Sanjay Dubey ..................................... Applicant Versus State of Madhya Pradesh and another. Respondents For the applicant:Shri Vivek Rusia and Shri Shekhar Sharma , Advocates For the respondents: Shri Kumaresh Pathak, Deputy Advocate General 2. Civil Revision No.640/2005 M/s.Pratibha Construction Co........... Applicant Versus State of Madhya Pradesh and another. Respondents For the applicant: Shri N.Jauhari, Advocate For the respondents: Shri Kumaresh Pathak, Deputy Advocate General 3. Civil Revision No.481/2006 Arjun Kumar...................................... Applicant Versus State of Madhya Pradesh and another. Respondents For the applicant: Shri Vivek Rusia, Advocate For the respondents: Shri Kumaresh Pathak, Deputy Advocate General 4. Civil Revision No.178/2008 Mohd.Shakir Ansari............................ Applicant Versus State of Madhya Pradesh and another. Respondents For the applicant: Shri K.B.Bhatnagar, Advocate For the respondents: Shri Kumaresh Pathak, Deputy Advocate Genera”
5. Civil Revision No.179/2008 Mohd.Shakir Ansari............................Applicant Versus State of Madhya Pradesh and another. Respondents For the applicant: Shri K.B.Bhatnagar, Advocate For the respondents: Shri Kumaresh Pathak, Deputy Advocate General ==================================== Present:Hon'ble The Acting Chief Justice Mr.Sushil Harkauli Hon'ble Mr.Justice Alok Aradhe Hon'ble Mrs.Justice Vimla Jain Hon'ble Mr.Justice M.A.Siddiqui Hon'ble Mr.Justice T.K.Kaushal ----------------------------------------------------------------------------------- ORDER
(17/09/2012) As per Alok Aradhe,J.In this batch of civil revisions the orders passed by the Madhya Pradesh Arbitration Tribunal, Bhopal (hereinafter referred to as the 'Tribunal') have been challenged by which the Tribunal has dismissed the reference petitions on the ground that petitions have been presented beyond the period of three years from the date of accrual of cause of action, which is barred by limitation as provided under Article 113 of the Indian Limitation Act, 1963. A Division Bench of this Court vide order dated 3.8.2007 passed in C.R.No.1343/2003 expressed the doubt with regard to correctness of the view taken by another Division Bench in the case of M/s.Sermen (India) Road Makers Pvt. Ltd. vs. State of M.P. and others, 2005 (3) MPHT 29 (DB). The Division Bench thereafter referred five questions for consideration before the Full Bench. The Full Bench vide order dated 27.10.2009 while answering the aforesaid questions, doubted the correctness of the view taken by another Full Bench in the case of State of 3 M.P. and another vs. Kamal Kishore Sharma, 2006 (1) MPHT 56 (FB) and was of the opinion that decision in Kamal Kishore Sharma (supra) requires consideration by the larger Bench as in the aforesaid case the Full Bench has not taken note of the decision of Supreme Court in the case of State of M.P. and another vs. K.K.Shukla and Co., (2001) 10 SCC 19.and has not scanned clause 29 in its entirety. It was further held that Full Bench has not adverted to a case where the agreement does not contain a clause like Clause 29. In the aforesaid factual background the matter has come up before this Bench.
2. Learned counsel for the applicants submitted that in the case of Kamal Kishore Sharma (supra), the Full Bench has not considered Clause 29 of the Agreement in its entirety as well as the effect of Section 28 of the Contract Act, 1872. It was further submitted that the time limit prescribed in Clause 29 for approaching the Superintending Engineer as well as Chief Engineer is administrative in nature and cannot be treated as mandatory and even if an aggrieved person does not approach either Superintending Engineer or Chief Engineer, as stipulated in Clause 29 of the agreement, he can still approach the Tribunal under section 7 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam (hereinafter referred to as the 'Act'). It was also submitted that in view of Section 2-A of Section 7-B of the Act, an aggrieved person can approach the Tribunal within a period of three years without approaching the authorities mentioned in the works contract. It was also urged on behalf of the applicants that provisions of Limitation Act, 1963 would apply to the authorities mentioned in Clause 29 i.e. Superintending Engineer and Chief Engineer and, 4 therefore, an aggrieved person can approach the Superintending Engineer as well as Chief Engineer within a period of three years as provided under Article 113 of the Limitation Act. Learned counsel for the applicants in support of the aforesaid submissions has placed reliance on the decisions rendered in the cases of National Insurance Co.Ltd. vs. Sujir Ganesh Nayak & Co. and another, (1997) 4 SCC 36.and P.C.Rajput vs. State of M.P., 1994 MPLJ 387
3. On the other hand, learned Deputy Advocate General for the State has submitted that under section 7-B(2A) of the Act, as amended with effect from 29.8.2005, an aggrieved person has to approach the Tribunal within a period of three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when the dispute arises during the pendency of the works contract.
4. We have considered the respective submissions made by learned counsel for the parties. The precise issue involved in view of the order of reference dated 27.10.2009 passed by the Full Bench is about the period within which a reference can be made by an aggrieved person before the Tribunal constituted under the Act. The relevant extract of Section 7-B(1) of the Act as it stand at present, after its amendment w.e.f. 29.8.2005 reads as follows:- “7-B (1) The Tribunal shall not admit a reference petition unless- (a) the dispute is first referred for the decision of the final authority under the terms of the works contract; and (b) the petition to the Tribunal is made within one year from the date of 5 communication of the decision of the final authority: Provided that if the final authority fails to decide the dispute within a period of six months from the date of reference to it, the petition to the tribunal shall be made within one year of the expiry of the said period of six months.”
. “(2-A) Notwithstanding anything contained in sub-section (1), the Tribunal shall not admit a reference petition unless it is made within three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. Provided that if a reference petition is filed by the State Government such period shall be thirty years.”
5. Clause 29 of the agreement reads as under:- “Arbitration Clause 29:- Except as otherwise provided in this contract all question and dispute relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, concerning the works, or the execution or failure to executive the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the Superintending Engineer in writing for his decision, within a period of 30 days of such occurrence. Thereupon the Superintending Engineer shall give his written instructions and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of the parties. Upon receipt of written instructions or decisions, the parties shall promptly proceed without delay to comply such instructions or 6 decisions. If the Superintending Engineer fails to give his instructions or decisions in writing within a period of 60 days or mutually agreed time after being requested if the parties are aggrieved against the decision of S.E. the parties may within 30 days prefer from appeal to the Chief Engineer who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal. The chief Engineer will give his decision within 90 days. If any party is not satisfied with the decisions of the Chief Engineer, he can refer such disputes for arbitration by an Arbitration Board to be constituted by the State Government which shall consist of three members of whom one shall be chosen from among the officers belonging to the department not below the rank of S.E. one retired Chief Engineer of any Technical Department, and one serving officer not below the rank of S.E. belonging to another Technical Department. The following are also the terms of this contract namely: (a) No person other than the aforesaid Arbitration Board constituted by the Government (to handle cases of all Technical Department) shall act as Arbitrator and if for any reason that is not possible the matter shall not be referred to Arbitration at all. (b) The State Government may at any time effect any change in the personnel of the Board and the new members of members appointed to the arbitration Board shall be entitled to proceed with the reference from the stage at which it was left by his or their predecessors. (c) The party invoking arbitration shall specify the dispute or disputes to be referred to Arbitration under this clause together within the amount or amounts claimed in respect of each such dispute(s). (d) Where the party invoking arbitration is the contractor, no reference for arbitration shall be maintainable, unless the contractor 7 furnishes a security deposit of a sum determined according to the table given below, and sum so deposited shall on the determination of Arbitration proceedings be adjusted against the cost if any awarded by the Board against the party and the balance remaining after such adjustment or in the absence of the such cost being awarded the whole of the sum shall be refunded to him within one month from the date of award. Amount of Claim Rate of Security Deposits For claims below Rs.10,000/- 5% of the amount claimed For claims of Rs.10,000 & above3% of the amount claimed but below Rs.1,00,000/- subject to minimum of 500/- For claims of Rs.1,00,000 2% of the amount claimed and above subject to a minimum Rs.3,000/-. (e) If the contractor does not make any demand for arbitration in respect of any demand for arbitration in respect of any claim(s) in writing within 90 days on receiving intimation from the Executive Engineer that the final bill is ready for payment the claim of the contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged or released of all liabilities under the contract in respect of such claims. (f) The Arbitration Board may from time to time, with the consent of the parties extend the time for making the award. (g) A reference to the Arbitration Board shall be no ground for not continuing the work on the part of the contractor and payment as per terms and conditions of the agreement shall be continued by the Department. (h) Except where otherwise provided in this contract, the provisions of the Arbitration Act, 1940 and the rules made there under for the time being in force, shall apply to the arbitration proceedings under this clause.”
”
6. The Tribunal gets the jurisdiction to adjudicate the dispute under the Act, but for the Act, it would have no jurisdiction to adjudicate the dispute in relation to works contract. It is well settled in law that where a tribunal derives its jurisdiction from the statute that creates it and that statute also defines the conditions under which the tribunal can function, it goes without saying that before that tribunal assumes jurisdiction in a matter, it must be satisfied that the conditions requisite for its acquiring seisin of that matter have in fact arisen. Wherever jurisdiction is given to a court by an Act of Legislature and such jurisdiction is only given upon certain specified terms contained in that Act it is a universal principle that these terms must be complied with, in order to create and raise the jurisdiction for if they be not complied with, the jurisdiction does not arise. [See: Mohammed Hasnuddin vs. State of Maharashtra, AIR 197.SC 404].. In view of aforesaid enunciation of law, it is apparent that in case where an agreement provides for clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the authority as provided under the terms of the work contract. Section 7-B(1) in express terms provides that the Tribunal shall not admit a reference petition unless the dispute is first referred for decision of the final authority under the terms of the contract and that the petition to the Tribunal is made within one year from the date of communication of the decision of the final authority. The proviso to sub-section (1) of Section 7-B provides that if the final authority fails to decide the dispute within the period of six months from the date of reference to it, the petition to the Tribunal shall be made within one year of the expiry of said period of six months. Thus, it is necessary for an person aggrieved to approach 9 the authority under the terms of the work contract before filing the reference petition. On fulfillment of the conditions mentioned in the terms of the works contract alone as provided in section 7-B(1) of the Act, the jurisdiction of the Tribunal can be invoked by filing a reference petition.
7. There may be cases where the works contract may not contain any provision for dispute redressal like the one provided in Clause 29 of the Agreement. In such a case, sub-section 2-A of Section 7-B of the Act will apply and an aggrieved person can approach the Tribunal within three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. It is pertinent to note that Section 7-B(2-A) as it exists today has come into force w.e.f. 29.8.2005. The aforesaid provisions does not have retrospective operation as the language employed therein does not even remotely suggest so, as has been held by the Full Bench in its order dated 27.10.2009.
8. There may be disputes under the agreements which do not contain a clause like Clause 29 in the agreement which may have arisen prior to coming into force of Section 7-B(2-A). In such a case, the claimant has to approach the Tribunal within a period of three years from the date of accrual of cause of action. The Supreme Court in the case of State of M.P. Vs. Anshuman Shukla, (2008) 7 SCC 487.while disagreeing with the view taken by another Bench of equal strength in the case of Nagar Palika Parishad, Morena Vs. Agrawal Construction, (2004) 2 M.P.J.R. 374 has referred the issue with regard to applicability of Section 5 of the Limitation Act, 1963 to the 10 proceedings before the Tribunal for consideration by the larger Bench. The Supreme Court while referring the matter has held that the Tribunal under the Act has to determine a lis. There are two parties before it. It has power to summon records and to record evidence. It's award is executable as a decree of Court. Its proceedings are judicial proceedings subject to the revisional order which may be passed by the High Court. Thus for all intents and purposes, the Tribunal under the Act is a Court. Though we are conscious that the aforesaid matter has been referred to a larger Bench, yet the reference has not been answered. In view of the finding recorded by the Division Bench of the Supreme Court in Anshuman Shukla (supra) that Tribunal under the Act is the Court, which of course is subject to final adjudication by the Supreme Court, the fixation of the time limit for approaching the Tribunal as three years in such cases would also be in conformity with Article 113 of the Limitation Act, 1963.
9. The first part of Clause 29 of the agreement provides for a dispute resolution mechanism. It provides that the dispute has to be referred to the Superintending Engineer in writing for decision within a period of 30 days from such occurrence. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of 60 days of such request. If the Superintending Engineer fails to give his instructions in writing within a period of 60 days or mutually agreed time after being requested of, an aggrieved party may file an appeal to the Chief Engineer within 30 days and shall give his decision within a period of 90 days. Thereafter, an aggrieved person can approach the Tribunal within one year from the date of communication of decision of the final authority. If the 11 final authority fails to decide the dispute within a period of six months from the date of reference to it, the petition to the Tribunal shall be made within one year of the expiry period of six months. The contention made on behalf of the applicants that in view of sub-section (2-A) of Section 7-B, an aggrieved person can approach the Tribunal directly without approaching the authorities mentioned in Clause 29 of the agreement, cannot be accepted as the same would obliterate the provisions of sub-section (1) of Section 7-B and would render the same otiose as it is well settled legal proposition that it is incumbent on the Court to avoid a construction if reasonably permissible on the language which would render part of the statute devoid of any meaning or application. [See: Rao Shiv Bahadur Singh vs. State of U.P., AIR 195.SC 394].
10. If the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, the claim for damages for breach of contract. Secondly, the claim with regard to payment of the amount of the final bill before recission of the contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared.
11. It was also submitted on behalf of the petitioners that the time limit prescribed in Clause 29 is not mandatory and therefore, the same need not be adhered to strictly. We are not inclined to accept the aforesaid submission as non-submission of timely claims is likely to result in disappearance or destruction of the evidence. A person 12 cannot be permitted to approach the authority at any time which he chooses. It is also relevant to mention here that the applicants have entered into an agreement with the State Government with open eyes and they cannot be permitted not to contend that it is not necessary to adhere to the time schedule provided for redressal of their grievances under clause 29 of the agreement. Similarly, the contention that aggrieved person can approach the Superintending Engineer as well as the Chief Engineer within a period of three years as provided in Article 113 of the Limitation Act also cannot be accepted as it is well settled in law that provisions of Limitation Act apply to Courts only and the authorities under the agreement are admittedly not the Courts. [See: State of Jharkhand and others vs. Shivam Coke Industries, Dhanbad and others, (2011) 8 SCC 656].. For yet another reason, this submission cannot be accepted, as the Division Bench decision in M/s.Sermen India Road Makers Pvt. Ltd., Vs. State of M.P., 2005 (3) M.P.H.T. 292 has been over- ruled by the Full Bench vide order dated 27.10.2009 and it has been held that it would not be correct to say that the claimant can raise the dispute within three years before the final authority from the date of accrual of cause of action.
12. not we may advert to the impact of Section 28 of the Indian Contract Act, 1872 on clause 29 of the agreement. It is not open to the parties to reduce or enlarge the limitation prescribed by the statute for initiation of legal proceedings but it is open to the parties to agree that by some agreed act or omission by one party to an agreement within the time stipulated in the agreement, the rights of that party under the agreement shall stand extinguished. However, in view of sub-section 13 (b) of Section 28 of the Indian Contract Act, 1872, as amended w.e.f. 8.1.1997 such extinguishment of right cannot be made dependent on mere lapse of a party by prescribing limitation lesser than the limitation prescribed by the statute for the simple reason that what cannot be done directly i.e. reduction of statutory period of limitation cannot be allowed to be done indirectly.
13. In view of the preceding analysis, we proceed to state our conclusions as under: - (i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as provided under the terms of the works contract. (ii) However, subject to final adjudication of the issue by the Supreme Court as to whether Tribunal under the Act is a Court or not, in case where the dispute has arisen under an agreement prior to coming into force of Section 7-B(2- A) of the Act which does not contain a clause like Clause 29, an aggrieved person has to approach the Tribunal within a period of three years from the date of accrual of cause of action. (iii) Where the works contract does not contain any provision like Clause 29 and the dispute has arisen after coming into force of Section 7-B(2-A) of the Act, in such a case, sub-section (2-A) of Section 7-B of the Act will apply and an aggrieved person can approach the Tribunal within a period of three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. 14 (iv) In a case where the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, claim for damages for breach of contract. Secondly, the claim with regard to payment of amount of the final bill before recission of the contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared. (v) The dispute under Clause 29 has to be submitted within the time limit which has been prescribed in the clause. The dispute cannot be submitted to the Authorities mentioned in Clause 29 of the Agreement within a period of three years as the provisions of Limitation Act do not apply to the Authorities under the Agreement as they are not the Courts. (vi) Clause 29 of the Agreement is not violative of Section 28(b) of the Indian Contract Act, 1872.
14. Various decisions were brought to our notice namely, P.C.Rajput (supra), M/s.Sermen India Road Makers Pvt. Ltd. (supra), M/s.Swan Construction (India) Vs. Executive Engineer, PHE Division, Shajapur [Civil Revision No.240/2012 decided on 26.7.2012]. Lachmandas vs. State of M.P. and another, 2000 (3) MPLJ 2 and Rajawat & Co., Vs. State of M.P. 2005(4) MPLJ 16 however, it is not necessary for us to refer to the same as we hold that the aforesaid judgments including the judgment in the case of K.K. Sharma (supra), in so far 15 as they contain any observations or findings which are inconsistent with the conclusions referred to supra, stand overruled. The reference is answered accordingly.
15. Let the matters be placed before the appropriate Bench for orders. (Sushil Harkauli) (Alok Aradhe) (Mrs.Vimla Jain) (M.A.Siddiqui) (T.K. Kaushal) Acting Chief Justice Judge Judge Judge Judge a/rm