Case: M.P. HOUSING AND INFRASTRUCTURE DEVELOPMENT  BOARD &amp; ANR Vs. K.P. DWIVEDI

2. As common question of law and facts arise in these group of appeals, all these appeals are decided and disposed of together by this common judgment and order.For the sake of convenience Civil Appeal No.6768 of 2021 arising out of Special Leave Petition No.32557 of 2018 arising out of the impugned judgment and order passed by the High Court of Madhya Pradesh in Arbitration Revision No.13 of 2017 is treated and considered as the lead matter and the facts in the said appeal are narrated which in nutshell are as under:2.1 Appellants floated a tender for construction of houses at Riviera Town, Near MANIT Square, Bhopal. Contract was awarded to the respondent herein. An agreement dated 15.07.2005 was executed between the appellants and the respondent. In the year 2008, the disputes arose between the parties. According to the appellants, the respondent was supposed to complete the work within 18 months. However, despite granting repeated extensions, the contractor failed to complete the work, on account of which, appellants rescinded the contract by invoking clause 3 of the contract agreement. Aggrieved by the order dated 30.06.2008, rescinding the contract, the respondent - contractor by invoking clause 29 of the contract agreement filed a claim petition along with granting extension of time upto 31.03.2009 before the Deputy Housing Commissioner, Bhopal. The respondent - contractor also filed a writ petition before the High Court seeking direction to permit him to complete the work. High Court vide Order dated 20.08.2008 disposed of the said petition on a joint consensus of the parties that the dispute shall be decided by the arbitrator i.e., Housing Commissioner, M.P. Housing Board within the stipulated period. The respondent - contractor thereafter filed a modified claim before the Office of the Housing Commissioner along with prayer for grant of extension of time. Thus, the respondent - contractor participated in the arbitration proceedings before the Housing Commissioner, M.P. Housing Board. That the learned Arbitrator passed an award on 07.11.2008 rejecting the claim of the respondent - contractor and granting some relief in favour of the appellants. Instead of challenging the said award by way of an application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Arbitration Act, 1996), the respondent filed a fresh Reference Petition before the Madhya Pradesh Arbitration Tribunal under Section 7 of the Madhya Pradesh Madhyastham Adhikaran, Vindhyachal, Bhopal, (hereinafter referred to as the 1983 Act). The appellants filed their written statements on various grounds along with preliminary objections including that the dispute has already been decided by the Arbitrator vide award dated 07.11.2008 which was duly constituted by the High Court and therefore, the fresh claim petition for the same claim before the M.P. Arbitration Tribunal, Bhopal was not maintainable. It was also submitted that the award passed by the Arbitrator had already achieved finality and therefore, the dispute for the said claim cannot be entertained by the Tribunal subsequently. Vide order dated 27.02.2017 the learned M.P. Arbitration Tribunal, Bhopal dismissed the said claim/reference as not maintainable since claim made by the respondent had already been decided by the Arbitrator appointed by the High Court and the award passed by the learned Arbitrator had achieved finality and so the dispute for the said claim could not be entertained by the learned Tribunal subsequently.3. Having realized that the earlier order dated 20.08.2008 passed in W.P. No.9131 of 2008 by which the dispute was referred for arbitration to the Housing Commissioner would come in his way, as an afterthought, the respondent - contractor filed a review petition in the month of May, 2017 seeking clarification of the order dated 20.08.2008 passed in W.P. No.9131 of 2008 to the extent that by directing the adjudication of the dispute by the Housing Commissioner, it did not take away the jurisdiction of learned Arbitral Tribunal constituted under the 1983 Act. It appears that in the mean time the full Bench of the High Court of Madhya Pradesh vide judgment and order dated 05.05.2017 held that if an agreement falls within the definition of works contract then the dispute arising from such an agreement shall be adjudicated by the Tribunal under the 1983 Act. The review application was opposed by the appellants. Vide order dated 07.09.2017, the High Court dismissed the review petition by observing that the case did not fall within the review jurisdiction of the Court under Order 47 Rule 1, CPC.3.1 That after the dismissal of the review petition, the respondent - contractor filed the present Arbitration Revision Petition before the High Court under Section 19 of the 1983 Act challenging the order passed by the learned Tribunal dated 27.02.2017 dismissing the claim/reference as not maintainable. By the impugned judgment and order the High Court has allowed the said revision and has quashed and set aside the order passed by the learned Tribunal dated 27.02.2017 and has directed the learned Arbitral Tribunal constituted under the 1983 Act to decide the reference/claim on merits and in accordance with law.4. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court, M.P. Housing and Infrastructure Development Board has preferred the present appeal.It is the case on behalf of the respondent – contractor that as the contract was a works contract and therefore, the dispute between the appellants and the respondent – contractor could only be decided by the learned Arbitral Tribunal constituted under the 1983 Act, therefore, the Housing Commissioner had no authority to act as an arbitrator and decide the dispute between the parties and the award passed by the Arbitrator - Housing Commissioner can be said to be non-est and wholly without jurisdiction.11. While considering the aforesaid issue and the submissions made by the learned counsel of the respective parties, first of all the reliefs which were prayed by the respondent – contractor in Writ Petition No.9131 of 2008 and the respective claims made by the respondent – contractor before the High Court in Writ Petition No. 9131 of 2008, before the Arbitrator – Housing Commissioner and before the learned Arbitral Tribunal are required to be referred to and considered.11.1 In the Writ Petition No.9131 of 2008 the respondent – contractor prayed for the following reliefs:(a) To direct the Respondents to complete the arbitration proceedings.(b) To direct the Respondents not to cancel the agreement and be permitted the Petitioner to complete the work and quash the order of tender dated 20.07.2008 (Annexure P/22) and dated 27.07.2008 Annexure P/23).(c) Set aside the order dated 30.06.2007 (Annexure P/19) passed by the Executive Engineer.(d) To direct the Respondents to pay the amount of outstanding dues of Rs. 17835925.00 with interest and compensation of ten crores.(e) To direct the Respondents not to award the contract to any other person and also direct the Respondents to decide the arbitration, after affording the proper opportunity to the Petitioner.(f) To call the relevant records(g) Any other order/ orders, directions which this Honble Court deems fit and proper may kindly be also granted.11.2 That thereafter the High Court passed the following order dated 20.08.2008:Shri Sameer Seth, Counsel for the Petitioner.Shri T.S. Ruprah, Sr. Counsel with Shri Harmeet Singh, Counsel for Respondents/ M.P. Housing Board.Learned counsel for the Petitioner fairly stated that the arbitration clause in the agreement has been invoked by submitting reference vide Annexure P20. He drew attention of this Court to the prayer for interim relief regarding restraining from inviting tender for the remaining work. He stated at Bar that no order has been passed on the prayer for interim relief.This being so, this petition is disposed of with a joint consensus of the learned Counsel for the parties in the following manner:-(i) The arbitrator i.e. Housing Commissioner, M.P. Housing Board would decide the dispute in arbitration within the period stipulated in the agreement.(ii) A decision on the interim prayer made on the interim page-25 of the reference (Annexure P20) would be taken within a period of one week from today.(iii) Till then no work order be issued pursuant to the fresh tender.(iv) Petitioner would also be at liberty to move a separate application within three days with regard to the relief granted vide interim order dated 07.08.2008. A decision on such application, if filed, would be taken in an expeditious manner preferably within a week. Interim order dated 07.08.2008 shall continue to operate till a decision on such interim application is taken.Petition, accordingly stands disposed of with an observation that the aggrieved party, in case of grievance against the final outcome, shall have a right to approach the Court of law.11.3 Thereafter it was the respondent – contractor who himself submitted the claim before the Arbitrator – Housing Commissioner. The Arbitrator - Housing Commissioner issued notice upon the respondent – contractor. However, after submitting the claims, the respondent – contractor did not appear before the learned Arbitrator – Housing Commissioner and consequently on appreciation of evidence and considering the submissions made on behalf of the appellant, the learned Arbitrator – Housing Commissioner passed an award dated 07.11.2008. Subsequently, respondent – contractor filed a reference before the learned Arbitral Tribunal constituted under the provisions of 1983 Act making the very claims which were made before the High Court in Writ Petition No.9131 of 2008 as well as made before the learned Arbitrator– Housing Commissioner.At this stage, it is required to be noted that in the Reference Petition there was no reference to the order passed by the High Court in Writ Petition No.9131 of 2008 referring the disputes between the parties to the Arbitrator – Housing Commissioner and thereafter submitting the claims before the Housing Commissioner and the award passed by the learned Arbitrator – Housing Commissioner dated 07.11.2008. A detailed written statement was filed. The relevant extracts of the written statement are as under:1. The claim was also filed by the petitioner to the Housing Commissioner of Respondents which was duly decided complying with the directions of the Honble High Court of M.P.2. The Honble High Court by Order dated 20.08.2008 in Writ Petition No. 9131/2008 directed the Commissioner of M.P. Housing Board to decide the application of interim stay filed by the Contractor before re-tendering of the works. The Directions were also issued for final hearing under clause 29 of the agreement with in the provision of agreement. The Honble Commissioner had fully complied with the directions of the Honble High Court and the Contractor was duly notice but even than the Contractor did not take any pains even to see the order of Commissioner dt. 07.11.08, which was passed by him in compliance with the directions of the Honble High Court.3. The petitioner is not entitled to claim any relief as he has not come before this Honble M.P. Arbitration Tribunal with clean hands and the facts of paramount importance have been deliberately suppressed by the petitioner in the said petition.4. That as per the directions order by Hon. High Court, the matter has already been decided and award has already been passed and duly acknowledged by the petitioner hence the petition filed before the Honble MP Arbitration Tribunal deserved to be dismissed, no relief can be claimed.5. That the petitioner has duly accepted the award as it evident from his action that he has accepted the payment so ordered by the Arbitrator the Housing Commissioner in the said award. In compliance with the award dated 07.11.2008 passed by the Commissioner the petitioner has already received the payment as per award as is evident from the letter dated 02.11.2009 the award so received is Rs. 3,57,000/- in total through cheque dated 02.01.2009.6. That from the action and reactions of petitioner it is evident that the petitioner has accepted the award without challenging it before the appropriate court prior to accepting the payments awarded by the Arbitrator in the light of orders of Honble High Court has been accepted and agreed by the Petitioner. Keeping in view of this legal proceedings, this petition of the Petitioner does not even deserves for admission as the final adjudication was complete by the Order of the Commissioner, M.P. Housing Board, issued under the directions of the Honble High Court.11.4 That the appellants filed I.A. No.1 raising preliminary issues with respect to maintainability of the reference before the learned Tribunal. The learned Arbitral Tribunal framed the following preliminary issues:(i) Whether the Petitioner has complied with provisions of clause 29 before approaching this Tribunal?(ii) Whether the Petitioner has no locus standi to file the petition when the appointed arbitrator by the Honble High Court with consent passed the award dated 07.11.2008 and acted upon?11.5 That by a detailed order and considering the order passed by the High Court dated 20.08.2008 referring the disputes between the parties to the Arbitrator – Housing Commissioner; the claims made before the High Court as well as before the learned Tribunal dismissed the reference by holding that the Reference Petition is not maintainable. While dismissing the Reference Petition as not maintainable in para 18, the learned Arbitral Tribunal observed as under:On perusal of the order dated 20.08.2008 (Ex. D/18) passed by the Honble High Court it seems that the said order was passed with the consent of both the parties. The order indicates that the Housing Commissioner was appointed as arbitrator to decide the dispute between the parties. The contention of the learned Counsel of the Petitioner that the Housing Commissioner was directed to decide the Petitioners quantified claim by invoking clause 29 as competent authority does not appear to be acceptable because the Housing Commissioner has been designated in the order as the Arbitrator. Moreover, the Housing Commissioner was not directed to decide the dispute as competent authority. Apart from this, under clause 29 there are only two competent authorities, first, is Dy. Housing Commissioner and if he fails to decide the dispute within 60 days second is Additional Housing Commissioner. There is no provision to decide the quantified claim by the 3rd competent authority. Besides it, Honble High Court has no power to create/ appoint a third competent authority by invoking the power clause 29 of the agreement, but Honble High Court has the power to appoint an arbitrator under Section 11 (6) of the Act, 1996. Therefore, keeping in view the aforesaid facts, it can only be inferred that the Honble High Court exercising the power vested in it under Article 227 of the Constitution of India appointed the Housing Commissioner as Arbitrator to decide the dispute. The submission of the learned Counsel for the Petitioner that appointment of Arbitrator is without jurisdiction and the said order dated 20.08.2008 does not have over riding effect on the provisions of the Act, 1983 and the said order being per incurium has no force appears to be sound but this Tribunal has no power to say that the order dated 20.08.2008 passed by the Honble High Court in writ jurisdiction is without jurisdiction and has effect of nullity because this Tribunal is subordinate of the Honble High Court which has supervisory power over it under Article 227 of Constitution of India. Moreover, the award passed by this Tribunal is challengeable before the Honble High Court under Section 19 of the Act, 1983 by the Civil Revision. If the Petitioner was not satisfied with the order dated 20.08.2008 passed by the Honble High Court, the propriety and the legality of the said order ought to have been challenged by the Petitioner before the competent forum but it was not done so. Moreover, the said order was passed with the consent of both the parties. In the said circumstances, this Tribunal is bound to accept the order passed by the Honble High Court. On the basis of the aforesaid facts and circumstances of the case, it can be safely inferred that Housing Commissioner was appointed by the Honble High Court to decide the dispute between the parties as the Arbitrator who decided the same vide award dated 07.11.2008. The legality and the propriety of the said award could have been challenged by filing appeal under Section 34 of the Act, 1996 but the Petitioner failed to do so, consequently, the said award had achieved finality before filing the reference petition. Once the dispute between the parties had already been decided by the competent Arbitrator, the same dispute cannot be reagitated before this Tribunal by the Petitioner. the Honble High Court in the case of Ditya (supra) elaborately discussing in para 12 has held that even a wrong decisions are taken which is contrary to the law is binding upon the parties unless and until it is set aside in the appeal or by the other remedy provided under the clause.12. After the aforesaid order dated 27.02.2017 passed by the learned Tribunal holding that the reference petition was not maintainable in view of the earlier order passed by the High Court dated 20.08.2008 passed in Writ Petition No.9131 of 2008 directing the adjudication of the dispute by the Arbitrator – Housing Commissioner, the respondent – contractor filed a review petition before the High Court, having realized that the order dated 20.08.2008 passed in the Writ Petition No.9131 of 2008 will come in his way in pursuing the reference petition before the learned Arbitral Tribunal, seeking clarification of the order passed in W.P. No.9131 of 2008 to the extent that by directing the adjudication of the dispute by the Housing Commissioner, it does not take away the jurisdiction of the learned Arbitral Tribunal constituted under the Act 1983. The said review petition was opposed by the appellants. Vide order dated 07.09.2017 the High Court dismissed the said review petition. Thereafter the respondent – contractor filed the revision application before the High Court under Section 19 of the 1983 Act being Arbitration Revision No.13 of 2017 challenging the order dated 27.02.2017 passed by the learned Arbitral Tribunal dismissing the reference petition as not maintainable. By the impugned judgment and order, the High Court, relying upon the subsequent decision of the full Bench has set aside the order passed by the learned Tribunal on 27.02.2017 and has directed the learned Arbitral Tribunal to decide the reference on merit. The impugned judgment and order passed by the High Court in A.R. No.13 of 2017 is the subject matter of present appeal.13. At the outset, it is required to be noted that as such the earlier order passed by the High Court in Writ Petition No.9131 of 2008, by which the dispute between the parties was referred to the Arbitrator – Housing Commissioner was a consent order. It was the respondent – contractor who filed the Writ Petition No.9131 of 2008 submitting that he has invoked the arbitration clause. Thereafter the respondent – contractor submitted the claim before the Arbitrator – Housing Commissioner who passed an award. The respondent – contractor did not challenge the award passed by the Arbitrator – Housing Commissioner and therefore, as such the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008 has attained finality.

Reasoning: 14. The case of the respondent – contractor that the earlier order passed by the High Court dated 20.08.2008 passed in Writ Petition No.9131 of 2008, referring the dispute between the parties for adjudication to the Arbitrator – Housing Commissioner and thereafter the award declared by the Arbitrator – Housing Commissioner dated 07.11.2008 are non- est and void and therefore, it was open for the contractor to file a fresh reference petition before the learned Arbitral Tribunal under Section 7 of the 1983 Act, cannot be accepted for the following reasons:(i) It was the respondent – contractor who approached the High Court by filing Writ Petition No.9131 of 2008 submitting that he has invoked the arbitration clause;(ii) The order passed by the High Court dated 20.08.2008 passed in Writ Petition No.9131 of 2008 referring the dispute between the parties to the Arbitrator – Housing Commissioner was a consent order;(iii) Thereafter the respondent – contractor submitted the claims before the learned Arbitrator – Housing Commissioner;(iv) The learned Arbitrator – Housing Commissioner passed an award which has attained the finality;(v) That the review petition filed by the contractor for clarification of the order dated 20.08.2008 passed in Writ Petition No.9131 of 2008 to clarify the aforesaid order to the extent that it did not take away the right of the contractor to file the reference petition before the learned Arbitral Tribunal under the 1983 Act came to be rejected and the same also attained finality;(vi) The claims submitted before the Arbitrator – Housing Commissioner; before the High Court in Writ Petition No.9131 of 2008; and the claim submitted in Reference Petition before the learned Arbitral Tribunal under the 1983 Act are the same without any change;(vii) In the subsequent reference petition before the learned Arbitral Tribunal under the 1983 Act there was no reference to the earlier order passed by the High Court in Writ Petition No.9131 of 2008 referring the dispute between the parties for adjudication to Arbitrator – Housing Commissioner and the award passed by the Arbitrator – Housing Commissioner. Thus, there was a suppression on the part of the respondent – contractor;(viii) The order passed by the High Court dated 20.08.2008 passed in Writ Petition No.9131 of 2008 referring the dispute between the parties for adjudication to the Arbitrator – Housing Commissioner as such was a consent order and thereafter the contractor participated in the arbitration proceedings before the Arbitrator – Housing Commissioner by submitting the claim is binding between the parties on the ground of issue estoppel.15. In the case of Bhanu Kumar Jain (supra) it is observed and held that a cause of action estoppel arises where in two different proceedings identical issues are raised, in which event, the latter proceedings between the same parties shall be dealt with similarly as was done in the previous proceedings. In such an event, the bar is absolute in relation to all points decided save and except allegation of fraud and collusion.16. Apart from the fact that the award declared by the Arbitrator – Housing Commissioner was not challenged by the respondent – contractor, even, so long as the said award is not challenged before the higher forum the same is binding between the parties. Even the award or a nullity order has to be challenged before the appropriate forum/higher forum. In the present case it cannot be said that there was a total lack of jurisdiction of the Arbitrator – Housing Commissioner in passing the award as it was the High Court who passed the order with consent referring the dispute between the parties for the adjudication to the Arbitrator – Housing Commissioner. Therefore, unless and until it was challenged by the contractor before the higher forum, the respondent – contractor cannot be permitted to ignore and/or to avoid the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008.17. Even otherwise, it is required to be noted that what was filed before the High Court was the revision application filed by the contractor under Section 19 of the 1983 Act rejecting the reference petition as not maintainable.Therefore, as per Section 19 of the 1983 Act, Revision Application to the High Court shall be maintainable only against the award passed by the learned Arbitral Tribunal. Therefore, prima facie it appears that as such the order passed by the learned Arbitral Tribunal rejecting the reference petition was not maintainable as by order dated 27.02.2017, no award was passed by the Tribunal. However, as no such objection was raised before the High Court and no submission has been made by the parties, we rest the matter there.18. Even otherwise it is required to be noted that while passing the impugned judgment and order, the High Court has not set aside the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008. Therefore, technically speaking the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008 stands even today. It is binding between the parties. So long as the award passed by the Arbitrator – Housing Commissioner dated 07.11.2008 stands, there cannot be any subsequent fresh proceeding with respect to the same claims which were considered and adjudicated by the Arbitrator – Housing Commissioner while passing the award dated 07.11.2008. So long as the said award stands it is binding between the parties.19. Even otherwise it is required to be noted that no objection was raised by the respondent – contractor before the Arbitrator – Housing Commissioner on the jurisdiction of the Housing Commissioner to act as an Arbitrator. On the contrary as observed hereinabove the order passed by the High Court referring the dispute between the parties for adjudication to the Arbitrator – Housing Commissioner was a consent order and the respondent - contractor conceded to and accepted the said order and submitted his claim before the Arbitrator – Housing Commissioner. The Arbitrator – Housing Commissioner also passed an award on the said claim. Therefore, as no objections were raised by the respondent – contractor at the appropriate stage, the award cannot be annulled subsequently. At the cost of repetition, it is observed that at no point of time the respondent – contractor had challenged the award passed by the Arbitrator – Housing Commissioner and as observed and held hereinabove even no court has set aside the award declared by the Arbitrator – Housing Commissioner dated 07.11.2008 and the same has attained finality. Therefore, the same is binding between the parties. Hence, the subsequent fresh reference petition before the learned Arbitral Tribunal under the 1983 Act for the very same claims which were raised before the Arbitrator – Housing Commissioner would not be maintainable at all. We agree with the view taken by the Arbitral Tribunal.