pvr １ a505-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.505 OF 2009 IN ARBITRATION PETITION NO.495 OF 2006 The Maharashtra Agro-Industries Development Corporation Ltd. ...Appellant vs. M/s.Gupta & Company. ...Respondent --- Ms.Rajani Iyer, Sr.Advocate @ Mr.N.N.Bhadrashete, for Appellant. Mr.Devvrat Singh Dhankar @ Parag Sharma i/b. S.S.Phadke, for Respondent. --- CORAM: D.K.DESHMUKH & ANOOP V. MOHTA, JJ. DATED: 29th November,2011. pvr ２ a505-09 P.C.:- 1. By this appeal, the appellant challenges the order passed by the learned Single Judge of this Court dated 17.9.2009 in Arbitration Petition no.495 of 2006. That petition was filed by the present appellant challenging the Award made by the Arbitral Tribunal dated 30.8.2006 directing payment of certain amounts to the respondent. The appellant awarded a contract accepting the offer made by the respondent for construction of flower auction market at Goregaon, Mumbai. The price of the contract was Rs.4,59,24,281.20. It is common ground that except construction of site office, no work of actual construction of the flower open market was carried out. Ultimately, the contract was terminated by the appellant. The respondent raised certain claims in relation to which there were disputes between the parties. As a result, pvr ３ a505-09 an application was moved in this Court under the provisions of the Arbitration and Conciliation Act. The Arbitral Tribunal was constituted and the disputes were referred to the Arbitral Tribunal. The Arbitral Tribunal, as observed above, made an Award in favour of respondent and against the appellant. Perusal of the Award made by the Arbitral Tribunal shows that an objection was raised on behalf of the appellant that the claim made by the respondent which is a partnership form is not tenable in view of the provisions of Section 69 of the Indian Partnership Act because according to the appellant, the partnership was not registered. That objection has been rejected by the Arbitral Tribunal. Before the Arbitral Tribunal, it was also claimed that in view of what is contained in Clause 44 of the Special Conditions of contract, the reference is barred by time provided in that clause. The Arbitral Tribunal has rejected that contention also. The Arbitral Tribunal then pvr ４ a505-09 considered various claims made by the claimant and has made Award in favour of the claimant only in relation to two claims. The Arbitral Tribunal has directed payment of Rs.45,92,428/- on account of loss of profit and has also directed payment of Rs.65,000/- as compensation for the work which was actually carried out by the respondent. The Arbitral Tribunal also directed refund of security deposit of Rs.4,60,000/-. A petition under Section 34 of the Arbitration and Conciliation Act being Arbitration Petition no. 495 of 2006 was filed by the appellant before the learned Single Judge. The findings recorded by the Arbitral Tribunal rejecting two contentions raised on behalf of the Corporation before the Arbitral Tribunal viz. maintainability of the reference on the ground that the claimant-firm is not registered and that in view of Clause 44 of the Special Conditions of Contract the reference is time barred as also the Award of the learned Arbitrator awarding amount for loss of profit on pvr ５ a505-09 the ground that such a claim is barred by clause 6(b) of the Special Conditions of contract and clause 15 of the General Conditions of Contract were argued. The learned Single Judge has recorded in his order that the finding of the Arbitral Tribunal that the termination of contract by the appellant was wrongful, unlawful and unjustified, was not challenged before him. The learned Single Judge dismissed the petition. The appellant is thus in appeal against the Award of the Arbitral Tribunal and the order of the learned Single Judge. 2. We have heard the learned Counsel appearing for both the sides in detail. First we propose to take up for consideration the contention urged on behalf of the appellant that in view of recitals in Clause 44 of the Special Conditions of the Contract between the parties, the present reference is barred by the period of limitation provided in Clause 44. The objection pvr ６ a505-09 raised on behalf of the appellant who was respondent before the Arbitral Tribunal, has been dealt with by the learned Arbitral Tribunal in the following manner:- The Respondents while arguing cited letter dated 18.10.2003 (Exhibit C-24) from the Claimants addressed to the Architects giving 15 days time. According to the Respondents, this letter dated 18.10.2003 was received by the Architects on 22.10.2003 and the 15 days notice period expired on 7.11.2003 and therefore, the 28 days period under Clause 44 ended on 5.12.2003. It is the Respondents case that the claim if any ought to have been referred to arbitration on or before 5.12.2003, whereas the reference to arbitration by the Claimants was on 10.1.2004. In this view, the Respondents contended that the reference is barred by limitation. According to the Respondents, once the period commences, it cannot be pvr ７ a505-09 revived by Claimants issuing of a subsequent notice dated 27.11.2003 (Exhibit C-25) and consequently the reference is barred by limitation. Clause 44 of the Special Conditions of Contract on which reliance is placed reads as under:- Clause 44 - SETTLEMENT OF DISPUTE:- ARBITRATION: All disputes and differences of any kind whatever arising out of or in connection with the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the termination, abandonment or breach of the contract) shall be referred to and settled by the Architect who shall state his decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with respect of any of the expected pvr ８ a505-09 matters shall be final and without appeal. But if either the Employer or the Contractor be dissatisfied with the decision of the Architect on any matter, question or dispute of any kind (except any of the excepted matters) or as to the with- holding by the Architect of any certificate to which the contractor may claim to be entitled, then and in any such case either party (the employee or the contractor) may within twenty eight days after receiving notice of such decision give a written notice to the other party through the Architect requiring that such matters in dispute be arbitrated upon. Such written notice specify the matters which are in dispute and such dispute and difference of which such written notice has been given and no other shall be and is hereby referred to the arbitration and final decision of a single Arbitrator being a fellow of the Indian Institute of Architects to be agreed upon and appointed by both pvr ９ a505-09 the parties or in case of disagreement as to the appointment of single Arbitrator to the Arbitration of two Arbitrators both being fellows of the Indian Institute of Architects, one appointed by each party which arbitrators shall before taking upon themselves the burden of reference appoint an umpire.(emphasis supplied) The Arbitral Tribunal has held that in order that the limitation period of 28 days provided by Clause 44 commences, there has to be actual decision in writing by the Architect either withholding the decision or giving decision on the claim which is referred to him, and therefore, in the present case it cannot be said that the reference is barred by the provisions of Clause 44 because there is admittedly no decision in writing by the Architect. It is possible to contend in this situation that if for the pvr １０ a505-09 limitation period mentioned in clause 44 to commence, actual decision by the Architect in writing is necessary then no cause of action accrues to the claimant to make his claim. But that contention does not appear to have been raised by the appellants either before the Arbitral Tribunal or before the learned Single Judge. In the appeal also that contention has not been raised. Therefore, in our opinion, it will not be appropriate for us to consider that aspect of the matter for the first time in the appeal. But so far as the finding of the Arbitral Tribunal and the learned Single Judge that the reference is not barred by the limitation period which is mentioned in clause 44 of the contract, in our opinion, cannot be faulted because bare reading of clause 44 shows that what is contemplated by clause 44 is actual decision in writing of the Architect and not any deemed or implied decision. In our opinion, therefore, no exception can be taken to the finding recorded by pvr １１ a505-09 the Arbitral Tribunal and the learned Single Judge on this aspect of the matter. 3. Now so far as the next contention that the Award for damages for loss of profit could not have been made because of what is contained in Clause 6(b) of the Special Conditions of the Contract and Clause 15 of the General Conditions of the Contract is concerned, in our opinion, the judgment of the Supreme Court in the case of G.Ramchandra Reddy and Company Vs. Union of India & Another, (2009)6 Supreme Court Cases 414 is relevant. Perusal of that judgment of the Supreme Court shows that in that case the Arbitrator had awarded damages on account of wrongful termination of the contract. The defendant contended before the Supreme Court that in view of clause 11(c) of the General Conditions of the contract in that case, no damages were payable. The Supreme Court with reference to this challenge raised before it has observed that the pvr １２ a505-09 question as to whether damages are payable for illegal termination of contract, cannot be a subject matter of the contract. What is observed by the Supreme Court in paragraphs 35 and 36, in our opinion, is decisive. Paragraphs 35 and 36 read as under:- 35. The award of the arbitrator in respect of Claim 4 has been accepted by the Division Bench. Mr.B.B.Singh has drawn our attention to Clause 11(c) of the general conditions of the contract to contend that in terms thereof, no damages were payable. 36. The question as to whether damages were payable for illegal termination of contract cannot be a subject-matter of contract. The learned arbitrator has categorically held that not only was the termination of contract illegal, the same was mala fide. Furthermore, the contention raised before us by pvr １３ a505-09 Mr.Singh has not been raised before the High Court. The Supreme Court has, thus, laid it down as law that when a contract is terminated illegally and wrongfully and in consequence of wrongful termination of the contract, the party suffers loss or damages, his right to be compensated for the loss he has suffered because of illegal termination of the contract arises independently and irrespective of what is contained in the contract. The learned Single Judge has dealt with in detail in his order in so far as what is contained in clause 15 of the General Conditions of contract and clause 6(b) of the Special Conditions of contract is concerned. The learned Single Judge, in our opinion, has rightly held that those clauses dis-entitle the contractor to be compensated for any loss suffered on account of delay in commencing or executing the work, whatever may be the cause of delay and the pvr １４ a505-09 contractor cannot claim any compensation whatsoever by reason of or in pursuance of any notice on account of any suspension, stoppage or curtailment, except the stoppage and curtailment which are specified in the notice. In the present case, it is an admitted position that except for construction of site office which was erected for the purpose of carrying out the work, no actual work ever commenced, and thereafter the contract was terminated much after expiry of the contract period. So far as the finding recorded by the Arbitral Tribunal that the termination of the contract by the appellant is wrongful and illegal is concerned, the learned Single Judge in paragraph 43 of his order has categorically observed the findings of the Arbitral Tribunal regarding the termination being wrongful, unlawful and unjustified was not challenged before me. The termination dated 23rd June,2004 was much after the expiry of the contract period. As the finding of the Arbitral Tribunal pvr １５ a505-09 that the termination of contract was unlawful and illegal was not challenged, in view of the law laid down by the Supreme Court in its judgment in the case G.Ramchandra Reddy & Co. Vs. Union of India & Anr. referred to above, in our opinion, it cannot now be contended that because of some clauses in the contract, the respondent is not entitled to damages which it had suffered because of wrongful termination of the contract. 4. The last objection to be considered is that as the partnership firm is not registered, the reference is not competent in view of the provisions of Section 69 of the Indian Partnership Act. In the present case, it appears that after the parties led evidence, at the stage of arguments a copy of registration certificate was submitted by the respondent and relying on that copy of registration certificate, the learned Arbitral Tribunal rejected the objection that in view of the provisions of Section 69 of pvr １６ a505-09 the Indian Partnership Act the reference is not competent because the firm is not registered. The submission of the learned Counsel appearing for appellant is that the copy of registration certificate which has been relied upon by the Arbitral Tribunal for rejecting the objection, was never admitted in evidence and was never proved. No doubt, there is substance in the contention urged on behalf of the learned Counsel appearing for appellant that as what was produced before the Arbitral Tribunal at the stage of argument was only a copy of the registration certificate, it was required to be proved that it was a copy of original registration certificate but that was not done. In our opinion, however, the appropriate stage for raising the dispute in respect of non-registration of the partnership was when an application under Section 11 of the Arbitration and Conciliation Act was made in this Court. That application was made on behalf of the respondent-firm for constitution of Arbitral pvr １７ a505-09 Tribunal under Section 11 of the Arbitration and Conciliation Act. At that stage no objection was raised on behalf of the appellant on the ground that because the firm is not registered, the application is not maintainable. We also find from the judgment of the Division Bench of this Court in the case Masood Mohammed Husain Vs. Gulam Rasul Mohammedali & Ors, 2007(2) Bom.C.R. 291 that the Division Bench relying on the observations of the Supreme Court in its judgment in the case Firm Ashok Traders & Anr. Vs. Gurumukh Das Saluja & Ors., (2004)3 Supreme Court Cases 155 , has held that an application made under Section 9 of the Arbitration and Conciliation Act to the Court by a partner of unregistered firm obviously for enforcing rights of the firm is maintainable. Therefore, in our opinion, in the absence of any objection raised by the appellant to the application made under Section 11 of the Arbitration and Conciliation Act at the stage of reference, the appellant was pvr １８ a505-09 not justified in raising objection to the maintainability of the arbitral proceeding on the ground that the firm is not registered. In our opinion, therefore, it cannot be said that the arbitration was not maintainable before the Arbitral Tribunal even assuming that the respondent-firm is not registered. It is also to be noted that there is concurrent finding of fact recorded that the respondent-partnership firm is registered. Thus, taking overall view of the matter, we do not find any substance in the appeal. The appeal is therefore, disposed of. 5. By consent of parties, it is directed that the respondent be permitted to withdraw the amount which has been deposited by the appellant with accrued interest thereon, after expiry of period of six weeks from today. (D.K.DESHMUKH, J.) (ANOOP V.MOHTA, J.)