M/S. P. Dasaratharama Reddy Complex vs Government Of Karnataka & Anr

3. For the sake of convenience, we shall notice the facts from the record of Civil Appeal No.1586 of 2004 - M/s. P. Dasaratharama Reddy Complex v. The Government of Karnataka and another because arguments were advanced with reference to that case.

4. The appellant is a contractor engaged in executing work contracts awarded by the Government of Karnataka and its instrumentalities. In 1996, the appellant was awarded contract for construction of bridge between Yethabadi-Buyyanadoddi across Shimsha river in Malavalli. The appellant did not complete the work by alleging lack of cooperation on the part of Chief Engineer, Communication and Building (South), Bangalore (respondent No.2) and then lodged claim for payment of the amount allegedly due to him. After some time, the appellant filed an application under Section 11(6) and (8) of the Arbitration and Conciliation Act, 1996 (for short, ‘the 1996 Act’) for appointment of an Arbitrator for adjudication of all the disputes pertaining to Contract No.5/96-97 dated 8.5.1996. The Chief Justice of the High Court assigned the application to the Designated Judge, who dismissed the same vide order dated 14.9.2001 by relying upon the judgment in Mysore Construction Company v. Karnataka Power Corporation Ltd. ILR 2000 KAR 4953. Paragraphs 5 and 6 of that order read as under:

Superintending Engineer, PWD, Gulbarga Circle was entrusted with the task of deciding the disputes. The parties filed their respective claims before the Superintending Engineer. He considered the same and passed an award. The appellant filed execution petition in the Court of Principal Civil Judge (Senior Division), Gulbarga. The respondent filed an objection petition under Section 47 of the CPC. The Executing Court rejected the objection. The University challenged the decision of the Executing Court and pleaded that the agreement on the basis of which the dispute was referred to the Superintending Engineer was not an arbitration agreement and, as such, award made by him cannot be treated as one made under the 1940 Act. The High Court accepted the plea of the University and set aside the order of the trial Court. Clause 30 of the agreement which came up for interpretation by this Court was as under:

Decision of the MD of the UPSIC on all other matters shall be final

2,85,000 towards reimbursement of overhead charges and another sum of Rs. 2,85,000 towards compensating loss of profits having regard to Clause 15(a) of the agreement.” The Division Bench referred to Section 16 and held:

29. In the result, Civil Appeal Nos. 1586, 1587, 1588, 4187, 5496, 6323, 6327 and 6328 of 2004; Civil Appeal Nos. 558-560 of 2006; Civil Appeals arising out of SLP(C) Nos. 16117, 17147, 24655 and 26073 of 2004; Civil Appeals arising out of SLP(C) Nos. 5951, 12552 and 12553 of 2006, Civil Appeal arising out of SLP(C) No. 8597 of 2009 and Civil Appeal arising out of SLP(C) No. 13528 of 2012 are dismissed. However, liberty is given to the appellants to avail appropriate legal remedy for recovery of the amount, if any, due from the respondents.

30. Civil Appeals arising out of SLP(C) Nos. 28087-28088, 28089, 29227- 29230 and 31975 of 2011 and Civil Appeal No.1374 of 2013 are allowed. The orders passed by the Designated Judge, which are subject matter of challenge in the five appeals are set aside. It is, however, made clear that the respondents shall be free to avail appropriate legal remedies for recovery of the amount, if any, payable to them in terms of their respective agreements.