Judgment:
R.K. Abichandani, J.
1. The Gujarat Housing Board has preferred this appeal against the judgment and order dated 27th October, 1988 passed by the learned Judge, City Civil Court No. 2, Ahmedabad in Civil Suit No. 3799 of 1981 directing the appellant to pay Rs. 6,50,691.00 with proportionate costs and interest at the rate of 12% perannum on the amount of Rs. 6,08,879.00 from the date of the suit till realisation.
2. The respondent-plaintiff, a registered partnership firm dealing in building construction activities, had submitted a tender for construction of a building for the Employees' State Insurance Corporation, at Ahmedabad. After negotiations, the appellant original defendant had accepted the tender on 17th August, 1973 and issued a work order to the respondent on 28th November, 1973, fixing the date of commencement of work on 1st December, 1973. According to the respondent, there was delay in issuing the work order due to the fact that the plans for construction had not been approved by the Ahmedabad Municipal Corporation and the commencement certificate was not granted till that date. Further more, the work was delayed due to the Board's inability to supply drawings of R.C.C. Pillars in time. It was averred in the plaint that there was nearly eight months' delay in supplying the drawings. While the work was being carried out according to the respondent, it had submitted an application to the Executive Engineer, as also to the Housing Commissioner contending that there was a most unusual increase in the rates of materials and labour, and as a result of the delay on the part of the officials of the Board, the respondent had to suffer a loss of nearly Rs. 6,00,000.00. It was also alleged that there was a delay in supply of cement and steel, which had also affected the pace of the progress of the work entrusted to the respondent. The respondent had completed the contract and as contemplated by Clause 30 of the agreement, had submitted a claim for enhanced rates to the Housing Commissioner. According to the respondent, this application was treated as a reference to the arbitration by the Housing Commissioner and a number of hearings were held commencing from 11th July, 1978 till 17th January, 1979, but no award was declared. The respondent gave notices on 11th Janunary, 1980 and 12th February, 1980 through its advocate requesting the Housing Commissioner to declare the award, but it was not declared. It was further averred that the respondent came to know that the Board had taken up a stand in some proceedings in the City Civil Court that Clause 30 of the agreement was not an arbitration clause. The respondent therefore concluded thatthe agreement between it and the defendant-Board did not have any arbitration clause and filed the suit. It was averred in paras 13(E) and 14 of the plaint that there was increase in the rates of the R.C.C. work which was included in the tender to the extent of Rs. 3,10,000.00. in respect of brick work to Rs. 57,800.00 for steel work to the extent of Rs. 85,300.00, for M. S. Steel and reinforcement to the extent of Rs. 26,250.00 and, for flush doors to the extent of Rs. 35,851.00. There was a further increase of Rs. 17,559.00 for the water supply and sanitary fittings and an increase of Rs. 76,129.00 for internal electrification. There was, thus, an additional cost of Rs. 6,08,879.00 incurred by the respondent over the tendered amount for the contract. According to the respondent, this increase was caused because it was prevented from carrying out the work in time by reason of the delays and defaults attributable to the Board and its officials. In para 16 of the plaint, it was contended that if the Board took up a stand that, under the terms of the agreement between the parties, the respondent was not entitled to claim any increase in rates, then in that event, the respondent was contending that the agreement between the parties was required to be signed by the Chairman of the Board, and that since the same was signed by the Executive Engineer, ft was per se illegal, and did not create any right in favour of the Board to raise such contention and that the respondent was therefore entitled to claim for the actual cost incurred by it on quantum meruit basis. It was admitted in para 16 of the plaint that the plaintiff had filed the suit more than three years after the work was completed and the amount became payable under the agreement between the parties. It was however contended that since the Housing Commissioner had started the arbitration proceedings under Clause 30 of the agreement, but did not give an award till the date of filing of the suit, those proceedings were deemed to be pending as arbitration proceedings and therefore, the cause of action continued in favour of the respondent and the suit was not barred by limitation. The plaintiff therefore prayed for a decree of Rs. 6,08,879.00 as the amount due to the plaintiff 'for carrying out the work of construction under the contract', Rs. 4,00,337.92 by way of interest at the rate of 18% per annum from 23-1-1978 till the date of the suit; and Rs. 300.00by way of notice charges, i.e. in all Rs. 10,09,516.92.
3. In its written statement Exh. 9, the appellant contested the suit and contended that the suit was barred by limitation and also under Section 71 of the Gujarat Housing Board Act. It was contended that the tender was accepted within its validity period after negotiations, on 17thAugust, 1978, and therefore, there was no delay in the matter of acceptance of the tender on the part of the Board. It was averred in para 5 of the written statement that the respondent did not complete the contract documents, income tax clearance certificate etc. and as soon as these requirements were completed, the work order dated 28-11-1973 was issued fixing the effective date of start of work to be 1-12-1973. It was contended that. before the completion of the requisite documents, no work order could have been issued. It was further contended that the question of drawings of R.C.C. pillars did not arise at the initial stage of excavation of the earth and that on receiving the soil test report in April 1974, the R.C.C. drawings were immediately given to the respondent. It is therefore denied that there was delay of about eight months in supplying the R.C.C. drawings to the respondent. It was stated that the original time limit was extended at the instance of the respondent without levy of any compensation by the Board. It was further stated that, considering the representations of the contractors, the Board adopted a liberal and humanitarian view and gave an ad hoc increase of 7.1/2% for the work done from 1-4-1974 up to 31-12-1974, even though the contract did not provide for price escalation on the fluctuation of the market rates. According to the appellant, the respondent had accepted this ad hoc increase. It was denied that there was any delay in supply of cement and steel affecting the progress of the work. It was denied that the respondent was entitled to any enhanced claim under the terms of the contract. It was averred that Clause 30 of the agreement was not an arbitration clause and was only a superintending clause as held by the Supreme Court. It was also denied that the market rates had increased from 25% to 100%, as alleged. Various amounts which were claimed towards the increase in costs said to have been incurred by the respondent, were denied, and it was contended that the respondent was boundby the terms and conditions of the agreement and that the claim of the respondent was false and frivolous.
4. The trial Court held that the suit was not barred by limitation or by the provision of Section 71 of the Housing Board Act. It was further held that there was no valid contract in the eye of law between the parties because the Chairman of the Board had not himself signed the contract. On this basis, it was held that the respondent was entitled to the suit claim on the principle of quantum meruit. It was also held that there was an unusual increase in the rates of tender items and the plaintiff had suffered a loss of Rs. 6,08,879.00, as detailed in para 14 of the plaint. It was also held that the agreement was one sided, but it was binding. As regards the claim for interest, it was held that the respondent was entitled to interest from 20th May, 1981.
5. It was contended by the learned Counsel for the appellant that the suit was barred by limitation and was not saved by the provision of Section 14 of the Limitation Act, as held by the trial Court. It was argued that the cause of action had arisen when the final bill was passed and the suit which was filed on 18th December, 1981 was on the face of !t barred by limitation even if Article 113 were to be invoked. It was further contended that the proceedings under Clause 30 of the agreement Exh. 104 were not arbitration proceedings in view of the decision of the Supreme Court in State of U. P. v. Tipper Chand, reported in : AIR1980SC1522 . It was contended that even if the proceedings under Clause 30 were to be treated as arbitration proceedings, the respondent was not entitled to the benefit of Section 14 of the Limitation Act, which did not apply in such cases. It was contended that the Housing Commissioner acting under Clause 30 of the agreement was not a Court and he did not have any trappings of a Court. Resorting to Section 14 by the trial Court was therefore erroneous. The learned Counsel further argued that the respondent could not have claimed any increase in the rates in view of the clear stipulation contained in Clause 10 of the contract Exh. 104, which debarred the contractor from putting up any claim for enhanced rate. It was also argued that there was no evidence adduced before the trial Court to prove any price rise or incurring of any extra expenditure and the photostat copies of the documents contained in the fileExh. 118 which was summoned were produced without leading any evidence or producing the original documents and proving their contents. It was further contended that the contract Exh. 104 was validly executed in accordance with the provisions prescribed for the manner and form of such contract.
5.1 in support of her contentions, the learned Counsel relied on the following decisions :
(a) The decision of the Supreme Court in the State of U. P. v. Tipper Chand, reported in : AIR1980SC1522 , was cited to point out that while construing the clause which was identical to the present Clause 30 of the agreement, the Supreme Court held that the clause merely conferred power on the Superintending Engineer to take decisions on his own, and that it did not authorise the parties to refer any matter to his arbitration. It was held that the clause did not contain any express arbitration agreement nor can such an agreement be spelled out from its terms by implication, there being no mention in it of any dispute, much less of a reference thereof. The purpose of the clause clearly appear to vest the Superintending Engineer with supervision of the execution of the work and administrative control over it from time to time.
(b) The decision of the Supreme Court in Bombay Housing Board v. Karbhase Naik and Co., reported in : [1975]3SCR407 , was cited for its proposition that failure to cancel the order where the Engineer in-charge did not agree to the rates would not result in an agreement as to the rate or rates claimed by the contractor.
(c) The decision of the Supreme Court in Alopi Prasad and Sons Ltd. v. Union of India, reported in : [1960]2SCR793 , was cited for the proposition that quantum meruit cannot be awarded where the contract provided for consideration payable in that behalf. The Supreme Court held that the compensation of quantum meruit is awarded for work done or services rendered where the price is not fixed by the contract.
(d) The decision of the Supreme Court in Union of India v. A. L. Rallia Ram, reported in : [1964]3SCR164 , was referred for the proposition that Section 175(3) of the Government of India Act did not in terms require that a formal document executed on behalf of the Dominion of India, and the other contracting party, alone is effective, andthat, in absence of any direction by the Governor General Under Section 175(3) of the Government of India Act prescribing the manner, a valid contract may result from correspondence if the requisite conditions are fulfilled. The Supreme Court held that though Section 175(3) used the expression 'executed', that by itself did not contemplate execution of a formal contract by the contracting parties. It was held that a tender for purchase of goods in pursuance of an invitation issued by or on behalf of the Governor General of India and acceptance in writing which is expressed to be made in the name of the Governor General and is executed on his behalf by a person authorised in that behalf would conform to the requirements of Section 175(3) of that Act.
(e) The decision in case of Davecos Garments Factory v. State of Rajasthan, reported in : AIR1971SC141 was cited to point out that where an agreement was signed by the Inspector General of Police without mentioning that it was executed on behalf of the Governor, that was sufficient compliance with Article 299 of the Constitution as the officer was authorised to execute it. The Supreme Court followed the ratio of its decision in Rallia Ram's case (supra).
(f) The decision of this Court in case of State of Gujarat v. Shirinbai Pirojshah Wadia, reported in (1976) 17 Guj LR 638, was cited for the proposition that it is only when the final bill is prepared and accepted by the State Government that it can be said that the work was satisfactorily completed. If there is any dispute as to the quality or the nature of the work, the contract document required that the contractor would re-execute the work. Therefore, till the final bill is prepared and accepted by the State Government, it cannot be said that the work is satisfactorily executed for which payment is due to the contractor. Article 18 of the Limitation Act of 1963 was therefore not attracted at all and the appropriate Article in the case would be Article 113.
6. The learned Counsel appearing for the respondent-plaintiff on the other hand argued that, admittedly there was an abnormal rise in the prices in the years 1973-1974. It was contended that the additional cost of material and labour had to be incurred by the respondent due to apparent delay in supplying the drawings of the R.C.C. work. The learned Counsel contended thatthe 7.1/2% increase in respect of the work done between 1-4-1974 and 31-12-1974 was granted by the Board to all the contractors and it was not any payment towards the satisfaction of the respondents claim. According to the learned Counsel, the respondent had putforth the claim for the enhanced rates in its letters at Exh. 89 and Exh. 90 and the correctness of the claim was not disputed and in fact, a recommendation was made for paying such enhanced rates. It was argued that the trial Court had considered all the relevant aspects, namely, justification for the increase, recommendation made by the officer, and admission of the price rise, and therefore, even if the documents, photo copies of which are contained in the file Exh. 118, were not proved, it was not necessary for the respondent to prove them in view of the admitted fact that there was a rise in the price of materials, and that the Board had on its own administration granted an increase of 7.1/2% for the work done from 1-4-1974 to 31-12-1974 to all the contractors. It was further argued that the respondent was entitled to the claim without reference to the contract, and that Clause 10 of the contract which prevented the contractor from putting up any claim for enhanced rate was not applicable as per the alternative plea of the respondent contained in para 16 of the plaint that the contract was not signed by the Chairman himself. It was contended that, in view of Section 21 of the said Act, the Chairman was required to sign the contract. Therefore, in absence of any valid contract, the respondent was entitled to claim the amount for the work done as compensation quantum meruit it was also argued that, in any event, Clause 10 which prevented a claim for enhanced rates by the contractor was arbitrary and unconscionable and therefore, could not be enforced against the respondent. The learned Counsel further argued that the suit was not barred by limitation because under Article 113 of the Schedule to the Limitation Act, the cause of action had arisen when the right to sue accrued on the respondent's giving the statutory notice Exh. 137dated 16th May, 1981. It was therefore contended that there was no need to resort to the provision of Section 14 of the Limitation Act, because the suit was filed within three years from the date of issuance of the said notice. It was then argued that if the cause of action is held to have arisen when the final bill was passed, on the au-thority of the decision of this Court in State of Gujarat v. Shirinbai Pirojshah Wadia (1976 (17) Guj LR 638) (supra), the proceedings under Clause 30 even if they were not treated as arbitration proceedings, should be treated as civil proceedings and the authority under Clause 30 should be treated as Court, and therefore, Section 14 of the Limitation Act applied to the case, bringing the suit within limitation by virtue of exclusion of time of pendency of the proceedings under Clause 30 before the Housing Commissioner. It was argued that the Board officials had not disagreed to the plaintiff's claim in letters Exhs. 89 and 90 and the proceedings under Clause 30 had admittedly commenced. There was therefore no need for the respondent to file a suit till 23-10-1980 when the proceedings under Clause 30 were alive. It was contended that the respondent had acted in good faith by carrying out the work under a bona fide belief that, at same, point of time in the course of the proceedings under Clause 30, the dispute will be resolved and the claim putforth by the respondent in its letters Exh.89 and Exh. 90 be paid. It was contended that if the Housing Commissioner had not undertaken the proceedings under Clause 30, then only the limitation would have started to run, but since the hearing was commenced and continued, there was no question of the limitation starting to run. It was contended that the claim of the respondent should be allowed under Section 70 of the Contract Act, and there was no contract executed. It was contended that the object underlying Section 70 was two fold, namely, to provide restitution and to prevent unjust enrichment. It was argued that the claim of the respondent has therefore been rightly decreed. It was also contended that the Appellate Court should not lightly interfere with the decision of the trial Court, which is based on the evidence on record.
6.1 The learned Counsel for the respondent, in support of his contentions, relied upon the following decisions :
(a) The decisions of the Supreme Court in State of West Bengal v. B. K. Mondal and Sons, reported in : AIR1962SC779 ; New Marine Coal Co. (Bengal) Pvt. Ltd. v. Union of India, reported in : [1964]2SCR859 , Mulamchand v. State of Madhya Pradesh, reported in : [1968]3SCR214 ; P. C.Wadhwa v. State of Punjab, reported in ; P. Hanumanthaiah and Company v. Union of India, reported in 1969 UJ SCJ 642; Mohamed Ebrahim Malla v. Commissioners for the Port of Chittagong, reported in : AIR1927Cal465 ; Ram Chand Lotia and Sons v. Municipal Committee, Lahore, reported in AIR 1933 Lahore 14; and Palaniswami Goundar v. English and Scottish Co-operative Wholesale Societies Ltd., reported in : AIR1933Mad145 ; were all relied upon in support of the contention that there was no conflict between the provision of Section 70 of the Contract Act and Section 175(3) of the Government of India Act, and that whenever a contract is found to be illegal, invalid or unenforceable at law on account of non-compliance of formalities prescribed under the Statute for its formation, the Government or Corporate Bodies are bound to pay for the work done by the other party under Section 70 of the Contract Act and compensation awardable would normally be the market price of the goods supplied or the work done. It was held in these decisions that if what was done in pursuance of the contract was for the benefit of the Government, and for their use and enjoyment or was otherwise legitimate and proper, Section 70 would step in and support the claim for compensation made by the contracting parties notwithstanding the fact that the contracts had not been made as required by Section 175(3) of the Government of India Act,
(b) The decision in the Madras Port Trust v. Hymanshu International, reported in : 1979(4)ELT396(SC) was cited to point out that plea of limitation was one which the Court always looked upon with disfavour.
(c) The decision of the Supreme Court in Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly reported in : (1986)IILLJ171SC , was cited for the proposition that the Courts will not enforce an unfair and unreasonable contract.
(d) The decision of the Supreme Court in Kumari Shrilekha Vidyarthi v. State of U. P., reported in : AIR1991SC537 , was cited for the proposition that state action can be reviewed under Article 14 of the Constitution even in contractual matters.
(e) The decision of the Supreme Court in Hyderabad Municipal Corporation v. M. Krishnaswami Mudaliar, reported in : AIR1985SC607 was cited to point out that where the contractor agreed to extension subject to extra payment on ac-count of increased rates, it was held that the contractor was entitled to increased rates. In that case, the contractor was requested by the Government itself to spread over the work for two years, and he had agreed to spread over the work for two years on a clear condition that extra payment will have to be made to him in view of increased rates of either material or wages. The Government did not intimate to the contractor that no extra payment on account of increased rates would be paid to him or that he will have to complete the work on the basis of the original rates. It was in this background that the Supreme Court held that the contractor was entitled to the increased rates.
(f) The decision of the Supreme Court in V. R. Subramanyam v. B. Thayappa reported in : [1961]3SCR663 , was cited for the proposition that where a building contractor made additional constructions on an oral agreement, he was entitled to receive compensation Under Section 70 of the Contract Act.
(g) The decision of the Supreme Court in V. R. Subramanyam v. B. Thayyappa, reported in : [1961]3SCR663 was cited for the proposition that where the additional work was not covered by an agreement, the plaintiff was entitled to recover compensation Under Section 70 of the Contract Act. The Supreme Court held that if a party to contract has rendered services to the other not intending it to be gratuitous and the other person has obtained the benefit, the former is entitled to compensation for the value of services rendered by him. It was held that since the respondent had made additional construction to the building not meaning the work to the gratuitous, he was entitled to receive compensation for the work done, which was not covered by the agreement.
(h) The decision of the Supreme Court in Gannon Dunkerley and Co. Ltd. v. Union of India, reported in : 1970CriLJ741 , was cited for the proposition that claim for enhanced rate which did not arise out of contract was not a claim for compensation for breach of contract, and therefore, was governed by Article 120 of the Limitation Act of 1908 (the present Article 113).
(i) The decision of the Supreme Court in Pilloo Dhunji Shaw Sidhwa v. Municipal Corporation of the City of Poona, reported in : [1970]3SCR415 , was cited for the proposition, that compensation Under Section 70 wouldnormally mean market price of goods and interest at 6%.
(j) The decision of the Calcutta High Court in case of Nanalal Madhavji Varma v. State of Andhra Pradesh, reported in : AIR1982Cal167 was cited for the proposition that where a contract was in contravention of Article 299(1) of the Constitution, claim for compensation would lie Under Section 70 of the Act.
(k) The decision of the Allahabad High Court in case of Union of India v. Sahab Singh, reported in : AIR1977All277 and the decision of the Patna High Court in case of Manoharlal Radhakrishna v. The Union of India, reported in : AIR1974Pat56 , were cited for the proposition that where the contract is not according to Article 299 of the Constitution, but benefits under the contracts are accepted, the plaintiff would be entitled to relief Under Section 70 of the Contract Act, which incorporated the twin principles of restitution and prevention of unjust enrichment.
(l) The decision of the Bombay High Court in Pallonjee Eduljee and Sons v. Lonavala City Municipality, reported in AIR 1937 Bom 417 was cited to point out that municipality was held liable to pay for the additional work done by the contractor Under Section 70 of the Contract Act.
(m) The decisions of the Calcutta High Court in Great Eastern Shipping Co. Ltd. v. Union of India, reported in : AIR1971Cal150 and Jadavendra Narayan Choudhury v. State of West Bengal, reported in : AIR1985Cal215 were cited in support of the contention that Article 113 of the Limitation Act apply to a suit for compensation Under Section 70 of the Contract Act.
7. The Gujarat Housing Board is Under Section 3(2) of the Gujarat Housing Board Act, 1961, a body corporate having perpetual succession and a common seal and is competent to contract and do all things necessary for the purposes of the Act. The Board by Section 20 of the Act is empowered to enter into and perform all contracts. Section 21 requires every such contract to be made on behalf of the Board by the Chairman. The Board is by Section 22 of the Act empowered, subject to any Rules which the State Government may make in this behalf, to delegate its powers to sanction contracts, to the Housing Commissioner or any other Officer. Under Section 23 of the Act, every contract by the Chairman on behalf of the Board is required to beentered into in the manner and form, as may be prescribed by the Rules. A contract not executed as provided by Section 23 and the Rules made thereunder, shall not bind the Board, as laid down in Sub-section (2) of Section 23.
7.1 The State Government is empowered to make Rules under Section 73 of the said Act and under Clause (c) of Sub-section (2) thareof, for the manner and form in which the contracts shall be entered into under Section 23 of the Act. At the relevant time, the Bombay Housing Board Rules, 1949 operated by virtue of Section 86(4) of the said Act. Rules 5 and 6 of those Rules which related to delegation of powers to sanction contracts and the manner and form of contract read as under :--
5. Delegation of povers to sanction contracts :-- The Board's powers to sanction contracts may be delegated to the Housing Commissioner or any other officers Under Section 21, subject to the following limits namely :--
(a) the maximum limit of ten lakhs of rupees for any contract where delegation of power is to the Housing Commissioner;
(b) the maximum limit of five lakh of rupees where delegation of power is to an Assistant Housing Commissioner;
(c) the maximum limit of one lakh of rupees where delegation of power is to an Executive Engineer;
(d) the maximum limit of ten thousand rupees where delegation of power is to a Deputy Engineer, and three thousand rupees where delegation of power is to an officiating Deputy Engineer.
6. Manner and form of contract-
(1) Every contract for the execution of any work or the supply of any materials or goods, which involves an expenditure exceeding one thousand rupees shall be in writing and shall be sealed.
(2) The common seal of the Board shall remain in the custody of the Secretary and shall not be affixed to any contract or other instrument except in the presence of a member (other than the Chairman) who shall attach his signature to the contract or instrument in token that the same was sealed in his presence.
(3) The signature of the said member shall be in addition to the signature of any witness to the execution of such contract or instrument.
(4) if forms for contracts are prescribed in the Bombay Public Works Department Manual, the said forms may, as far as practicable, be adopted for like contracts of the Board provided that the board shall have power to make additional conditions in the forms of contracts if the board desires to do so.
(5) in inviting tenders and entering into contracts of the execution of its works, the Board shall as far as possible, follow the principles laid down in the Bombay Public Works Department Manual.
7.2 Thus Board's power to sanction contracts up to a limited extent could be delegated to the Housing Commissioner and his subordinates. The manner and form of contract prescribed by Rule 6 requires; (i) that such contract should be in writing and should be sealed, (ii) the common seal of the Board shall be affixed to the contract in presence of a member of the Board who shall attach his signature to the contract in token of its being sealed, and (iii) the signature of that member shall be in addition to signature of any witness of the execution of such contract. It will be noticed that there is no requirement under the Act or the Rules that the Chairman should put his own signature in the contract. The contract is by the Board and the manner of execution of such contract by the Chairman on behalf of the Board Under Section 23 of the Act read with Rule 6 of the said Bombay Rules, which were applicable at the relevant time, only required that the contract should be writing with a seal of the Board duly affixed thereon with signature of the member of the Board in whose presence the seal is attached. The parent Act by Section 23 itself left it to the subordinate legislation by way of rules to prescribe the manner of execution of contracts. There is therefore no conflict between Rule 6 and Section 20 or 21 of the Act as was sought to be urged on behalf of the respondent.
7.3 The suit contract is reflected in the deed Exh. 104, entitled 'Percentage Rate Tender and Contract for Works' showing that the tender for works was accepted by the Executive Engineer on behalf of the Gujarat Housing Board. It bears the com-mon seal of the Gujarat Housing Board affixed in presence of a member of the Board whose name is mentioned in the seal affixed! which bears the signature of that member.The document also contains the signature of the respondent's partner Mr. K. B. Shah at several places and the signature of his witness. Thus, this written contract Exh. 104 which was executed on a deed affixed with the special adhesive stamps of Rs. 1,043.60 is a contract in writing bearing the common seal of the Gujarat Housing Board affixed in presence of a member of the Board who has attached his signature in token of its being sealed and therefore, it fully satisfies the requirements prescribed by the above Rule 6 as to the manner and form of contract.
7.4 The Board is by Section 74 of the Act, inter alia, empowered to make Regulations for regulating its procedure and disposal of business and under Section 75, it has power to make bye-laws for carrying out its duties and functions under the Act. The Board is bound to comply with the directions of the State Government, as laid down under Section 82 of the Act. The Bombay Housing Board, in the conduct of its business, provided in its regulations framed Under Section 67(d), a copy of which is at Exh. 134, at Clause 9 that the Housing Commissioner, Assistant Housing Commissioner, Chief Accounts Officer, Executive Engineer and Estate Manager of the Bombay Housing Board shall exercise respectively the powers as specified in Appendix 'I' thereto. Item 7 of Appendix 'I' refers to Rule 185 Sri. No. 24 of the Rules of financial powers and delegates powers to execute deeds, contracts and other instruments subject to limit fixed by the Board, to the Housing Commissioner, Assistant Commissioner, Executive Engineer and Chief Accountants. Under Rule 6(5) of the above Rules, the Board was required to follow as far as possible, the principles laid down in the Bombay P.W.D. Manual. This delegation to the officers including Executive Engineers was subsequently continued as reflected from Part III, Item 25 of the Circular dated 17th November, 1980 at Exh. 141 which refers to the revised delegation of powers under the Government Resolution dated 30th September, 1980. The Executive Engineer was thus duly authorised by the Board to sign the contract on behalf of the Board. In fact, the authority of the Executive Engineer to sign the documents on behalf of the Board was not challenged on the ground that the Executive Engineer was not delegated such powers, but the challenge of the respondent in para 16 of the plaint was that the Chairman alone can sign the contractand the power could not have been delegated to the Executive Engineer, As noted above, the statutorily prescribed manner and form of contract did not require the chairman himself to sign the contract when the contract is made by him for the Board and the only requirement was that it should be in writing and be sealed in the manner prescribed by Rule 6, which was duly satisfied in this case. The finding of the trial Court that there was no contract in the eye of law and the plaintiff was therefore entitled to claim for the work done on the principle of quantum meruit, it therefore, in our opinion, erroneous.
8. It has come in the evidence that the respondent plaintiff submitted his document late and paid security deposit only on 29-10-1973. The respondent executed the agreement on 22-11-1973. Thereafter, on 28-11-1973, the work order Exh. 88 was issued requesting the respondent to start the work and stating that the actual date of the start of work will be reckoned with effect from 1-12-1973. It is however clear from the evidence on record that the plaintiff had himself caused delay in submitting the required documents which he was asked to furnish by letters Exh. 92 dated 17th August, 1973 and Exh. 93 dated 1st October, 1973. The income-tax clearance certificate was produced by the respondent on 20th November, 1973, as admitted by its partner Mr. K. B. Shah in his statement before the Housing Commissioner Exh. 51 recorded on 11-7-1978. In para 9 of his deposition Exh. 87, he admitted that the work order could not have been issued to him before he signed the agreement which he did on 22-11-1973. In para 8, he admitted in his cross-examination that he had not supplied the documents mentioned in the Board's letter dated 1-10-1973, Exh. 93, which he was required to furnish. These were power of attorney, income-tax clearance certificate, surety bond and registration of the firm. The respondent was earlier asked to furnish the requisite documents by office letter Exh. 92 dated 17-8-1973 and it had in its reply dated 27-8-1978 stated that the documents will follow, but these documents were not sent, as recorded in the subsequent letter Exh. 93, dated 1-10-1973. These facts are also borne out from the deposition of the appellant's Executive Engineer Exh. 127, who has stated that the respondent had fully complied with the requirement of furnishing documentsasked for in the letter accepting the tender Exh. 92 dated 17-8-1973 only on 20-11-1973 . Therefore, the blame for the delay till the date when all the required documents were furnished by the respondent to the appellant squarely lay on the respondent. Thus, there was no delay in issuing the work order due to any fault of the appellant and the case of the respondent in para 3 of the plaint that : 'the reason for delay in giving the work order was mainly due to the fact that the plans for construction had not been approved by the Corporation and commencement certificate was not granted till that date', is only an afterthought and devoid of any truth.
8.1 As per the respondent's case as contained in para 4 of the plaint after receipt of the work order, the work was delayed due to the appellant's inability to supply drawings of R.C.C. pillars in time. It was alleged that there was nearly eight months delay in supplying the drawings. Delay in supply of cement and steel had also affected the pace of the work, as alleged in para 7 of the plaint. According to the respondent, there was increase in the rates of R. C. C. works (Rs. 3,10,000.00), brick works (Rs. 57 800.00), steel windows (Rs. 85,300.00), M.S. Steel reinforcement cement (Rs. 26,250,00), flush doors (Rs. 35,851.00), water supply and sanitary fittings (Rs. 17,549.00) and internal electricification (Rs. 76,129.00), i.e. in all, a cost of Rs. 6,08,879.00 was incurred by the respondent higher than the tendered amount.
8.2 in para 3 of his deposition Exh. 87, the respondent's partner - Mr. K.B. Shah has stated that time was extended as per the terms of the contract, and that in 1974 -1975, there was 100% increase in the price of all material and labour charges. He has admitted in para 11 of his deposition that whatever extra work was done, it was paid for at the contractual rates. It was admitted that as per the terms of the contract, extra work upto 33% of the contracted work was to be executed at the contractual rates. The condition No. 2 of the General Conditions Exh. 108 was admitted to be correct. In para 13 of his deposition, he admitted that the cement for plain cement tiles was to be procured by the respondent and that due to the scarcity of cement, the respondent had written letter exh. 103, dated 14-4-1975 to the Board for supplying it at the scheduled rates for making the tiles. The respondent'spartner in his statement Exh. 51 which was recorded on 11-7-1978, had admitted that his letter for extension of time was not conditional regarding increase in rates. He also stated that his letter dated 23-1-1975 (Exh. 90) regarding the claim was negatived by the Housing Commissioner. In answer to the question whether he had received any amount other than the tendered rates, he admitted thus :
'We have received escalation amounting to Rs. 20,865=00 for the work done upto 31-12-1974 as per the general resolution of the Gujarat Housing board extended to all the contractors.'
8.3 The appellant's witness - Executive Engineer Mr. R.M. Yadav in his deposition at Exh. 127 in terms stated without any effective cross-examination on the point that, the building plans were passed by the Municipal Corporation two months prior to the issuance of the work order, and that the plaintiff was handed over the designs for the R.C.C. work on 1-4-1974. The soil testing certificate was received in April 1974 and the work was completed in March 1976. He stated that there were no changes in the drawings and the designs after the soil testing certificate was received, the final bill was given by the plaintiff in September 1976 and the payment thereof was made in that very month. In his cross-examination, he maintained in para 8 of his deposition that when the work order was issued, the details of the building were ready and that the R.C.C. details were given to the respondent in April 1974. The R.C.C. work was admittedly commenced only after the foundation was done and earth work completed. The evidence shows (Exh. 109) that the work of excavation for foundation was completed in the end of March 1974 and its measurements were taken on 29-3-1974, as admitted by the respondent's witness Mr. K.B. Shah in para 11 of his deposition Exh.87.
8.4 The respondent had admittedly sought extension of time without reference to any escalation aspect and at no point of time, when the work was in progress during the contract period, did the respondent attribute delay to the appellant as a cause of escalation. The emphasis was on unusual price rise in 1974. The record in fact shows that the respondent was told by the appellant that the progress of work was poor. In the letter dated 7-10-1974, Exh. 99, the Deputy Engineer of the appellant had written to therespondent that the progress made for the project was very poor. It was stated:
'The work order to commence the work was given on 1-12-1973 to you and the details have been given to you on 20-3-1974 and regularly afterwards as required. The time limit for this work is 15 months and looking to this about 40% work is required to be completed after giving the details while uptil now you have completed only 21% of work. Looking to this fact, you are hereby again requested to speed up the work progress so that project work can be completed within time limit'.
8.5 The Executive Engineer also wrote to the respondent on 7-10-1974, letter Exh. 98 in the following terms :--
'In connection to above subject, I am to state that R.C.C. design is finalised upto first floor slab level. Cement and steel (are) available in bulk quantity on site and there is no reason to delay the work. At present, the progress of work is very poor. Only 20% of progress has been made. You are hereby requested to expedite progress of work so that time loss can be recouped. This work is required to be completed in stipulated time limit.'
8.6 Earlier also, by letter dated 19-6-1974, Exh. 100, the respondent was informed that the progress of work was extremely poor and only 8% progress was made instead of 40%. The respondent was asked for by the Executive Engineer to accelerate the work in the following words :-
'In connection to above subject, I am to state that structural drawing is already finalised upto plinth level. Progress of work is extremely poor. Only 8% progress has been made instead of 40% upto the month of May 1974. The monsoon is approaching, it would therefore (be) desirable to complete all foundation work upto top slab of under ground cellar. You are requested to accelerate the work so that the time lost is recouped. It would (be) desirable to complete the work in stipulated time limit.'
8.7 By letter dated 20th June, 1974 (Exh. 101), the respondent was asked by the deputy Engineer to accelerate the work as the progress was slow. The respondent was told that it was desirable to complete all foundation work upto top of slab of underground cellar before monsoon so that the structural feature of the building are safeguarded; andhe was requested to engage more labour for completing the work. Since the work could not be completed in time, extensions were sought by the respondent and were granted 'without prejudice to other rights and conditions of the contract' as stated in the extension letters dated 15-9-1975 and 3-7-1975 at Exh. 95 and Exh. 96 respectively.
8.8 The above documentary evidence clearly indicates that it was the respondent who did not keep up the required pace for completing the work and was often told by the appellant to accelerate the work. There was therefore no question of any delay being caused because of any fault on the part of the Board or its officials. In fact, while seeking upward revision of 62.1/2% in rates over the sanctioned rates, in letter dated 27-7-1974 at Exh. 89, on the ground that there was abnormal increase in rates in 1973-74, the respondent made it clear that the loss was caused 'in our contract, of course with no fault of ours or yours'.
8.9 The details for foundation were given on 1-4-1974 as mentioned in letter Exh. 90 written by the respondent to the appellant, in which increase of 33.1/2% of rates over the tendered rates quoted by the respondent was sought. There is no rational explanation for the discrepancy in the respondent's initial request for increase in rates by 62.1/2% and the subsequent one for increase of 33.1/2% over the quoted rates. The tenor of letters at Exh. 89 and Exh. 90 shows that the respondents, nearly a year prior to the completion of the work, had requested the appellant to consider revision of the rates upwards due to all-around rise in the prices of materials. In fact, the respondent had sent the rate analysis to the appellant even earlier on 11-5-1974 as stated in para 2 of the respondent's letter dated 29-5-1974, at Exh. 16. As mentioned therein, the respondent was, 'Informed by the Department that the Department is not able to sanction the rates based on market rates, as per the terms and conditions of the contract agreement.' Thus, admittedly the Department had taken up the stand that the increase in rates was not admissible under the terms and conditions of the contract. This had obvious reference to Clause 10 of the contract Exh. 104, which reads as under :--
'Under no circumstances, shall any contractor be entitled to claim enhanced rates for any items in this contract.'
The above statement in the letter Exh. 16 written by the respondent shows that the earlier version of the respondent's partner that the Housing Commissioner had negatived the claim contained in the respondent's letter dated 23-1-1975, at Exh. 90 ('.....my letter dated 23-1-1975 regarding my claim was negatived by the Housing Commissioner'), which he tried to retract in his subsequent statement, was correct. The respondent had in the above letter dated 29-5-1974, at Exh. 16 requested for a sympathetic view while seeking upward revision. This entreaty to sympathetically revise the quoted rates which were binding on the respondent is sought to be converted into a claim by the respondent after getting the final bill released and securing 7.1/2% increase for the work done in 1974.
8.10 in letter Exh.38 dated 5-7-1976, the respondent requested the Housing Commissioner for releasing half of the security deposit on the ground that the work was completed and the final bill was not paid. It appears from the respondent's letter dated 29-9-1976 Exh.40 that, after the final bill was paid, the respondent again requested for releasing the security deposit. In the acknowledgment issued by the respondent (a copy of which is at Exh. 42 collectively), the respondent had acknowledged the receipt of the remaining half of the security deposit being Rs.25,700.00. In Clause 4 of that acknowledgment which was signed by the partner of the respondent Mr. K.B. Shah for the firm, it was in terms mentioned that the payment was received in full and final settlement of all claim 'for this work and against this contract.' The respondent was thus paid for the entire work as per the rates quoted by it.
8.11 The respondent was also paid Rs. 20,447.00 by cheque dated 17-1-1977 for price escalation for civil works including electrical installation work for the period of 1-4-1974 to 31-12-1974. This is mentioned in the letter Exh. 49 dated 20-8-1977 of the Board to the respondent. It was also mentioned that, as per the decision taken by the competent authority, escalation cost amounting to Rs.358.81 ps. on account of electrical items of the work was not admissible as payment was approved for civil items only. The respondent was thereforeasked to refund that amount immediately. The respondent was again by letter dated 29-11-1977, at Exh. 50 required to pay back that amount. It will be seen from the Running Bills of the respondent at Exh. 109 that there is an endorsement dated 17th January, 1975 to the effect that ad hoc payment at 7.1/2% was made to the respondent. The Board had therefore paid to the respondent the price escalation it had decided to pay for the work done during the period from 1-4-1974 to 31-12-1974 to all the contractors and denied any liability to pay any further amount seeking refund of Rs.358.81 which according to it was overpaid to the respondent, as escalation cost was to be paid for civil work only and not for electrical work.
8.12 it is thus clear from the above evidence that the respondent soon after undertaking the work, attempted to get his quoted rates revised upwards right from 11-5-1974 as reflected from his letter Exh. 16 and by praying for a sympathetic consideration on account of the increase in prices of material, he could get escalation cost of Rs. 20,447.00 for the work done upto 31-12-1974 though he could not have claimed any escalation cost as a matter of right in face of the terms and conditions of the contract, especially Clause 10 thereof. The documentary evidence shows that the progress of work by the respondent was slow and as recorded in the letter dated 7-10-1974, at Exh.98, though the R.C.C. design was finalized upto first floor slab level, cement and steel were available in bulk quantity on site and there was no reason for causing delay, only 20% progress was made in the work by the respondent. It is clear that the respondent was dragging on with the work in his attempt to get upward revision of his quoted rates. This is evident from the last para of letter Exh. 89, dated 27-7-1974 of the respondent, in which while seeking upward revision of 62.1/2% over the quoted rates, the respondent had stated that the decision in this matter be given earlier for increasing the speed of progress of the work. Since the progress of the respondent's work was slow and much behind the schedule and the respondent sought extensions without reference to any price rise, the work was not delayed due to the designs being given on 1-4-1974. The delay in execution of the work seems to have resulted due to the respondent not doing the required work in time andpreferring excuses for getting the rates hiked over the quoted rates which were binding on the respondent.
9. Admittedly, the respondent was paid as per the agreed rates which were quoted by the respondent. It was also paid ad hoc . escalation though the oppellant was not bound to pay it under the contract. The respondent's partner in his deposition at Exh.87 has admitted in para 14 that the increase of 7.1/2% was given to the respondent keeping in view the price escalation. The respondent was bound by the terms of the contract which clearly stipulated in Clause 10 that, 'Under no circumstances, shall any contractor be entitled to claim enhanced rates for any items in this contract'. This was a clause against any claim for escalation and it is obvious therefore that the rates would have been quoted by any prudent tenderer keeping in view this stipulation. The respondent had tendered for the execution of the work at 14% above estimated rates entered in Schedule 'B' of the Contract at Exh. 104. For work done or services rendered pursuant to the terms of a contract, compensation quantum meruit cannot be awarded when the contract provides of the consideration payable in that behalf, as held by the Supreme Court in M/s. Alopi Prasad and Sons : [1960]2SCR793 (supra).
9.1 The entire claim for the amount of Rs. 6,08,879.00 prayed for in the prayer clause of the plaint is for 'carrying out the work of construction under the contract'. The plea contained in para 16 of the plaint that the Chairman is required to sign the contract on behalf of the Board and that, since the Executive Engineer had signed it, the agreement was per se illegal, and therefore, the respondent is entitled to claim for actual cost incurred by it on quantum meruit, is nothing but an ingeneous effort to get away from the specific stipulation in the contract under which the respondent was debarred from claiming any enhanced rates for any of the items in the contract. The hollowness of this stance of the respondent is evident from the fact that the respondent sought to resort to Clause 30 contained in the contract Exh. 104 itself for claiming the rise in rates over the quoted rates in Exh.90 dated 23-1-1975. The respondent was in effect seeking revision of his quoted rates rather than claiming any compensation quantum meruit when these very figures forthe items covered in paras 13(E) and 14 of the plaint, totalling Rs.6,08,879.00, reflected in the letter Exh.90 dated 23-1-1975 which contained the same statement sent in support of the request for upward revision of rates contained in the letter of the respondent Exh. 89 dated 27-7-1974. At that time, it could not have been the 'actual cost incurred' as it was more than one year prior to the completion of the work by the respondent in March 1976. The totality of the I evidence discussed above discloses that the claim for the enhanced rates on the basis of quantum meruit is made with a view to get the enhanced rates to which the respondent was admittedly not entitled to under the terms and conditions of the contract.
9.2 A person who seeks restitution under Section 70 of the Act has a duty to account to the defendant for what he has received in the transactionfrom which his right to restitution arises. In other words, accounting by the respondent is a condition of restitution from the appellant as held in Mulam Chand's case : [1968]3SCR214 (supra). In the present case, the respondent failed to give any evidence with regard to what he had received, nor has he proved the extent of excess of the market rates over the agreed rates, by leading any evidence. The photostat copies of various bills in the file at Exh. 118 which was got produced in the trial Court do not constitute valid documentary evidence as the originals were never produced by the respondent, nor were the contents of these copies admitted or proved in any manner before the trial Court. These photostat copies of bills at no point of time were admitted on behalf of the appellant ever since they were produced with the witness list Exh. 116, which does not bear any endorsement of their being admitted by the appellant. Therefore, the contention on behalf of the respondent that admitted facts need not to be proved is wholly misconceived in the context of these documents. They were required to be proved by producing the original bills and proving the contest thereof, which never was done by the respondent. Unfortunately, the trial Court missed, this important aspect of the matter and treated these photostat copies of the bills as if they were proved just because they were got produced under a witness list exh. 116 at the instance of the respondent's application exh. 111. These documents, in absence ofbeing proved, could never have constituted any basis for working out the difference of rates. It will be noticed that most of these bills were of the years 1973-1974. The increase due to rise in rates was paid by an ad-hoc payment of 7.1/2% on 17-1-1977, as reflected in letter exh. 49, dated 20-8-1977. This payment was made as a result of the policy decision to give such increase to all the contractors for the work done between 1-4-1974 and 31-12-1974 and this payment cannot create any right in favour of the respondent to claim increase for the work done prior to or after that period in view of the terms stipulated in the contract, which disentitled the contractor to claim any enhanced rates. The respondent therefore fails even on merits because-
(1) The respondent was not entitled to claim any increase of rates as per the terms of the contract; and
(2) Even assuming, for the sake of argument, that the respondent was entitled to claim enhanced rates, it did not prove that any higher cost was in fact incurred for the work done by it under the contract.
10. Even if it is assumed that the respondent could have put up such a claim, the present suit is hopelessly barred by limitation. According to the learned counsel for the respondent, the period of limitation for the suit of the present nature was three years from the date when the right to sue accrued as provided by Article 113 of the Schedule to the Limitation Act. He stated that the right to sue accrued two months after the notice exh. 137 dated 16-5-1981 was given to the Board under Section 71 of the Act. If this contention is accepted, then even in cases where right to sue has already accrued, the period of limitation will get governed by the issuance of such notice, and not by Article 113. Even in the plaint (para 16), the respondent had stated that, 'this suit is filed more than three years after the work was completed and the amount payable under the agreement between the parties' . According to the respondent, since the Housing Commissioner himself had started the arbitration proceedings under Clause 30 of the agreement and the award was not declared, this suit filed on 18-12-1981 was not barred by limitation. Even before the trial Court, resort was had to Section 14 of the Limitation Act and it was not the respondent's case that the suit was within time evenapart from Section 14 of the Act.
10.1. The final bill was submitted by the respondent on 18-9-1976. The respondent's final bill was already paid before 29-9-1976, as stated in the letter exh. 40 seeking refund of the security deposit. The remaining half of the security deposit was received by the respondent as per the acknowledgement at exh. 42, which contained the discharge clause that the payment was received in full and final settlement of all claim for the work and against the said contract. Thus, whatever payment was due under the final bill was already made and nothing remained due to be paid to the respondent under the terms and conditions of the contract. The work was completed and handed over on 31-3-1976, as stated in the respondent's letter dated 5-7-1976, as stated in the respondent's letter dated 5-7-1976 at exh. 38, therefore right to sue had already accrued in any event from the date when the final hill was accepted i.e. before 29-9-1976 on the authority of the decision of this Court in case of State of Gujarat v. Shirinbai Pirojshah Wadia (1976 (17) Guj. LR 638) (supra). The suit was therefore required to be filed in 1979 before the expiry of three years the date when the right to sue accrued.
10.2. Furthermore, the respondent had claimed on upward revision by letters at Exh.89 and Exh. 90 dated 27-7-1974 and 23-1-1975 respectively, and the respondent was paid Rs. 20,447.00 as ad hoc payment on 17-1-1977, as stated in the letter Exh. 49 dated 20-8-1977 for price escalation for the civil work for the period of 1-4-1974 to 31-12-1974. In fact, recovery of Rs. 358,81 for the ad hoc relief overpaid was being effected as per letter dated 29-11-1977. Therefore, so far as any claim to additional payment of higher rate not stipulated in the contract was concerned, that stood negatived beyond the amount of the ad hoc payment and the relief, if any, seeking any further payment not due under the contract could have been claimed in a suit filed within three years of the payment for price escalation. The respondent's partner in statement at Exh. 51 recorded on 11-7-1978 had admitted that his claim in letter (Exh. 90) dated 23-1-75 was negatived by the Housing Commissioner. Thus, even if the right to sue is stretched till the date when the price escalation was paid to the respondent by cheque dated 17-1-1977, the suit filed on 18-12-1981 wasclearly time barred.
10.3. This takes us to the aspect whether the proceedings under Clause 30 of the agreement at Exh. 104 was arbitration proceedings, and if so, whether the time taken in the inconclusive proceedings before the Housing Commissioner could be excluded Under Section 14 of the Limitation Act. Admittedly, no arbitration notice was given, nor any reference made of any dispute to any arbitrator in the present case.
10.4. A clause similar to Clause 30 was construed by the Supreme Court in State of U.P. v. Tipper Chand, reported in : AIR1980SC1522 , and it was held that the said clause was not an arbitration clause. As noted above, the trial Court though noticing that such clause was held by the Supreme Court not to be an arbitration clause, curiously decided that the respondent was entitled to the exclusion of the period spent bona fide in the proceedings before the Housing Commissioner under Clause 30 of the agreement. The trial Court came to this conclusion on the ground that, prior to the decision of the Supreme Court in Tipper Chand's case (supra), such clause was treated and acted upon as arbitration clause and when the respondent came to know about this judgment, which finally decided the question, it did not remain open to it to prosecute the proceedings before the Housing Commissioner as it was not an arbitration proceeding. The Supreme Court only declared what the clause meant. It, therefore, never was an arbitration clause. The time of pendency of the matter for consideration under Clause 30 could not therefore be excluded Under Section 14 of the Limitation Act. Reliance by the respondent on Clause 30 of the agreement claiming it to be an arbitration clause is rather incongruous in face of its plea that the contract was not validly executed and was per se illegal.
10.5. The provisions of Section 14(1) of the Limitation Act read as under :
'14. Exclusion of time of proceeding bona fide in Court without jurisdiction.
(i) in computing the period of limitation for any suit, the time during which the plaintiff has been prosecuting with due diligence and other 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 ingood faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.'
The respondent had sent letters at Exh. 89 and Exh. 90 dated 27-7-1974 and 23-1-1975 respectively for upward revision of rates. In the first letter, 62.1/2% increase was sought, while in the subsequent letter, 33.1/2% increase was prayed for. The Housing Commissioner, while considering such request for upward revision of the rates under Clause 30, was not acting as a Court and had no trappings of a Court. He was not acting as an arbitrator because Clause 30 was not an arbitration clause in view of the decision of the Supreme Court in Tipper Chand's case : AIR1980SC1522 (supra).
1O.6. A Division Bench of the Bombay High Court in Purshottamdas Hassaram Sabnani v. Impex (India) Ltd., reported in : AIR1954Bom309 , which was rendered in the context of Section 14(1) of the Limitation Act and Section 37(5) of the Arbitration Act held that expression 'the Court of first instance and Court of appeal' in Section 14(1) of the Limitation Act makes it amply clear that what the Legislature had in mind were judicial Courts, Courts established by law of the land, and not Courts in the wider sense of domestic forums or tribunals. In that binding decision rendered by Chief Justice Chagla for the Court, it was held that the time taken up in arbitration proceedings can undoubtedly be excluded, but that time can be excluded not under Section 14 of the Limitation Act, but under Section 37(5) of the Arbitration Act and in order to exclude time taken up in arbitration proceedings, the tests laid down by the Legislature in Section 37(5) must be applied and satisfied. The Court held that if the Legislature intended that Section 14 should apply and that all the time taken up in arbitration proceedings should be excluded, then there was no reason to enact Section 37(5) of the Arbitration Act. This decision of the Bombay High Court was referred to with approval by a three Judge Bench of the Supreme Court in Commissioner of Sales Tax, U.P. Lucknow v. Parson Tools & Plants, Kanpur, reported in : [1975]3SCR743 . The Supreme Court quoted the observation of Chagla, C.J. in Para 16 of its judgment describing them to be opposite. The Supreme Court held that Section 14(2)of the Limitation Act will apply only if -
(1) both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;
(2) the prior proceedings had been prosecuted with due diligence and in good faith;
(3) the failure of the prior proceedings was due to a defect of jurisdiction or other cause of a like nature;
(4) both the proceedings are proceedings in a Court.
It was held that the authorities, irrespective of whether they exercise original, appellate or revisional jurisdiction under the Sales Tax Act are not 'Courts' within the contemplation of Section 14(2) of the Limitation Act. They were merely administrative tribunals and 'not Courts'. It was held that Section 14 of the Limitation Act, therefore, does not, in terms apply to proceedings before such tribunals.
10.7. As the Housing Commissioner acting under Clause 30 has no trappings of the Court, reliance on the decision of the Supreme Court in P. Sarathy v. State Bank of India, reported in : (2000)IILLJ661SC is wholly misconceived. The respondent was, therefore, not entitled to the benefit of Section 14 of the Limitation Act, because, there was no civil proceeding prosecuted by him in any 'Court of first instance or of appeal or revision' relating to the same matter in issue. The finding of the trial Court on issue No. 2 that the suit was not barred by limitation is therefore, with respect, not correct and we hold that the suit was barred by limitation.
11. For the foregoing reasons, we areunable to accept the contentions raised on behalf of the respondent and the findings and conclusions reached by the trial Court for decreeing the suit. The suit is therefore liable to be dismissed, both on the ground being barred by limitation, and on merits as well. The appeal is therefore allowed and the impugned judgment and decree of the trial Court are therefore hereby set aside and the suit is dismissed with costs all throughout. In Civil Application No. 1469 of 1989, interim stay was granted on 30th June 1989 on the condition that the appellant deposits 50% of the decretal amount in the trial Court within eight weeks and the respondent was permitted to withdraw the same on furnishing the security to the satisfaction of the trialCourt. That amount was withdrawn, as stated by the learned counsel for the respondent. We direct that the amount deposited by the appellant and withdrawn by the respondent be forthwith refunded to the appellant by the respondent within four weeks from today.