Building Construction case full order of THE HONOURABLE JUSTICE MR.N.ANAND VENKATESH Application No.4793 of 2021 in C.S (Comm.Div.)No.108 of 2021 For Applicants : Mr.R.Ramanlal Additional Advocate General For Respondent : Mr.M.S.Krishnan Senior Counsel for Mr.S.Senthil
`IN THE HIGH COURT OF JUDICATURE AT MADRAS
ORDERS RESERVED ON : 25.01.2022
PRONOUNCING ORDERS ON : 28.01.2022
Coram:
THE HONOURABLE JUSTICE MR.N.ANAND VENKATESH
Application No.4793 of 2021
in C.S (Comm.Div.)No.108 of 2021
1.The Chairman
Tamil Nadu Urban Habitat Development Board
(Formerly Tamil Nadu Slum Clearance Board)
No.5, Kamarajar Salai
Chennai 600 005.
2.The Managing Director
Tamil Nadu Urban Habitat Development Board
No.5, Kamarajar Salai
Chennai 600 005.
3.The Superintending Engineer
Chennai North II Circle
Tamil Nadu Urban Habitat Development Board
(Formerly Tamil Nadu Slum Clearance Board)
No.5, Kamarajar Salai
Chennai 600 005.
4.The Executive Engineer, Division III
Tamil Nadu Urban Habitat Development Board
Vyasarpadi
Chennai 600 039.
..Applicants/Defendants
. Vs.
M/s.P.S.T.Engineering Construction
Represented by its Managing Partner
V.S.Thennarasu2/352, Vavipalayam, Kolaram(PO)
Paraathi Velur Taluk
Namakkal District-637 201.
.. Respondent/Plaintiff
Prayer in A.No.4793 of 2021: Judge’s Summons filed under Order XIV Rule 8 of the Original Side Rules read with Section 8 of the Arbitration and Conciliation Act, 1996 as amended.
(a) Why this application should not be treated as Urgent?
(b) Why this Hon’ble should be not pleased to refer the dispute arising ou out of the agreement dated: 06.12.2017 to Arbitration under the provisions of Arbitration and Conciliation Act, 1996 as amended;
(c) Why this Hon’ble Court should not be pleased to pass such further or other order or orders as may deem fit and proper in the circumstances of the case?
For Applicants : Mr.R.Ramanlal
Additional Advocate General
For Respondent : Mr.M.S.Krishnan
Senior Counsel
- for Mr.S.Senthil
Application No.4793 of 2021
in C.S (Comm.Div.)No.108 of 2021
- ANAND VENKATESH, J.
This application has been filed by the applicants/defendants under Section 8 of the Arbitration and Conciliation Act 1996 (hereinafter referred as “the Arbitration Act”) to refer the dispute arising out of the agreement dated 6.12.2017 to Arbitration.
- The respondent/plaintiff has filed the present suit challenging the show cause notice dated 08.10.2021 issued by the 3rd applicant/3rd defendant to the respondent and for a permanent injunction restraining the applicants/defendants from initiating steps to blacklist the respondent/plaintiff by cancelling or suspending the contractor registration dated 06.12.2017 and for a mandatory injunction directing the applicants to unlock the tenaments under lock and key and to enable the respondent to complete the balance works.
- The brief facts of the case :
3.1. The respondent had entered into a contract on 06.12.2017 with the Tamil Nadu Slum Clearance Board (presently called as “the Tamil Nadu Urban Habitat Development Board”) for the construction of 864 economically weaker section multi-storeyed tenaments. The agreement value was a sum of Rs. 91,81,63,852/- and the period of contract was for a period of 18 months starting from 19.1.2018. The case of the respondent is that the work was completed and it was handed over to the applicants on 10.05.2019. Thereafter, an inspection was conducted and completion certificate was also issued on 07.8.2019 and thereby the respondent claims that the completion of the building within the stipulated time was acknowledged and the quality of construction was also certified as good. The further case of the respondent/plaintiff is that a lot of subsequent development took place and the residential building was virtually converted into a hospital during the pandemic period to treat the patients. As a result, there were damages to the building and further damage was done to the property due to the trespass to the property by some miscreants.
3.2. A show cause notice came to be issued to the respondent on the ground that the construction was not upto standard. The second applicant proceeded to appoint an agency to make an inspection on the quality of the building and to recommend for the remedial measures. The agency also conducted an inspection and a report was also given. The respondent also gave their explanation for the report given by the agency. A notice was issued to the respondent on 04.10.2021 calling upon the respondent to submit an action plan to carry out the remedial measures as suggested by the agency and a further instruction was issued to the respondent to carry out all the remedial measures within 45 days and submit a detailed compliance report. Immediately thereafter through the impugned notice dated 08.10.2021, steps were initiated for suspension/cancellation of the contractor registration of the respondent. Aggrieved by the same, the present suit was filed by the respondent/plaintiff.
4.The applicants/defendants have filed the present application under Section 8 of the Arbitration Act on the ground that as per Clause 22 of the agreement dated 06.12.2017, there is a mechanism provided under the special condition for arriving at a settlement of disputes. According to the applicants, if there is any dispute of any kind whatsoever arising between the contractor and the Slum Clearance Board in connection with or arising out of the contract, an Arbitration clause has been provided. The further case of the applicants is that the Tamil Nadu Detailed Standard specification-general conditions which is otherwise called as the Works Code forms part and parcel of the agreement and the said works code specifically provides for cancellation of the contractors registration under Clause 11 of the Code under various circumstances. In fact, the respondent himself had issued a letter dated 25.11.2021 calling upon the applicants to refer the dispute to three named arbitrators and by concealing this letter, the present suit was filed before this court. Therefore, according to the applicants, the respondent has already commenced the arbitration proceedings under Section 21 of the Arbitration Act, with a request to refer the dispute to Arbitration and hence, the present suit cannot be maintained before this Court.
- It is further stated by the applicants that the respondent is trying to avoid the process of arbitration by taking a stand as if, the claim is of a value above Rs.50,000/- and this stand taken by the respondent is unsustainable since the respondent has not made any claim above Rs.50,000/- and the relief sought for in the present suit is not in the nature of claims and the valuation of the relief in the suit by the respondent by itself is not a ground to avoid the process of arbitration by projecting it to be a claim above Rs.50,000/-. Hence, the present application has been filed to refer the dispute to Arbitration.
6.The respondent/plaintiff has filed a counter affidavit. Apart from dealing with the merits of the case, the respondent has taken a categorical stand that the value of the claims far exceeds the prescribed limit of Rs.50,000/- and under the agreement dated 06.12.2017, all claims above Rs.50,000/- will only go before the jurisdictional Court at Chennai City. Hence, even though an Arbitration clause is available under the agreement, since the claim exceeds Rs.50,000/-, there is no scope for referring the dispute for Arbitration and consequently, the present suit is maintainable.
- Mr R. Raman Lal, learned Additional Advocate General appearing on behalf of the applicants/defendants made the following submissions:
- The respondent is not making any claims in the present suit and the suit has been filed only for the relief of declaration, permanent injunction and mandatory injunction and hence the dispute has to be necessarily referred to Arbitration under the agreement.
- The respondent cannot anticipate the value of the claims only based on the valuation of the reliefs sought for in this suit and that cannot be a ground to avoid the dispute being referred to Arbitration.
- The respondent has consciously concealed the fact of initiating the process of arbitration by letter dated 25.11.2021 and Section 21 of the Arbitration Act, specifically states that such initiation will be the starting point for the commencement of arbitral proceedings and once the arbitral proceedings commences, the respondent cannot be allowed to parallelly prosecute the present suit.
- The dispute in question is an arbitrable claim and Section 8 of the Arbitration Act mandates the Court to refer the parties to Arbitration if the action brought is the subject matter of an arbitration. While exercising jurisdiction under Section 8 of the Arbitration Act, it is enough if the Court is convinced that there is a valid arbitration agreement which provides for referring the parties to resolve the dispute through Arbitration. Even in a matter where there is a dispute with regard to the objection to the jurisdiction of the arbitrator, even such an issue can be gone into by the Arbitral tribunal under Section 16 of the Arbitration Act, where the Arbitral tribunal can rule on its own jurisdiction. Hence, prima facie there is an arbitration agreement governing the parties and the respondent has acknowledged the said fact by initiating arbitration proceedings through letter dated 25.11.2021 and the issue in question is an Arbitrable claim and hence, the dispute has to be referred to Arbitration.
- The learned Additional Advocate General to substantiate his submissions relied upon the following judgments
(a) SBP & Co .v Patel Engineering Ltd., and Another reported in 2005 8 SCC 618.
(b) A.Ayyasamy .v A.Paramasivam & Others reported in 2016 10 SCC 386.
(c) Rashtriya Ispat Nigam Ltd. v. Verma Transport Co., reported in 2006 7 SCC 275
(d) Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, reported in 2003 5 SCC 531
(e) Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums reported in 2003 6 SCC 503
- The learned Additional Advocate General concluded his arguments by bringing to the notice of this Court, a petition filed by the respondent before this Court under Section 11 (6) of the Arbitration Act, against the Public Works Department by relying upon a similar Arbitration clause, for appointment of an arbitrator and the said petition is pending in OP No.93 of 2021. While so, a different stand has been taken by the respondent in the present suit and the respondent cannot be allowed to approbate and reprobate to suit their convenience.
8.Per contra, Mr.M.S. Krishan, learned Senior Counsel appearing on behalf of the respondent made the following submissions:
- The impugned show cause notice issued by the applicants/defendants on 08.10.2021 is mala fide exercise of power and that is one of the reason for filing the present suit.
- The word “claims” does not merely denote a money claim and it includes within itself any legal remedy to which one asserts a right. To substantiate this submission, the learned Senior Counsel relies upon the meaning for the word “claims” as found in the Black’s Law Dictionary.
- The claims in the present case far exceeds Rs.50,000/- and hence it is only the Civil Court which can decide the dispute and the matter cannot be referred for Arbitration.
- The letter issued by the respondent on 25.11.2021 for appointment of arbitrator does not have any impact in the present case since the value of the claim exceeds Rs.50,000/-.
- Even though a petition was filed by the applicant under Section 11(6) of the Arbitration Act, for appointment of arbitrator in yet another dispute, a specific stand was taken by the authorities to the effect that the value of the dispute is over and above Rs.50,000/- and only a Civil Court is competent to deal with the dispute. Hence, the applicant/authorities cannot be permitted to take a stand that will suit their convenience.
- The non filing of the letter dated 25.11.2021 cannot be construed to be suppression since this letter even if it had been filed, could not have improved the case of the applicants and hence the non filing of the said letter does not vitiate the present suit.
- In the present case, any dispute/claim exceeding Rs. 50,000/- falls under the excepted matter and even if the matter is referred to the arbitrator, he will not have the jurisdiction to adjudicate upon the matter. To substantiate this submission, the learned Senior Counsel relied upon the following judgments:
(a) General Manager, Northern Railway and Another .v. Sarvesh Chopra reported in 2002 4 SCC 45
(b) Food Corporation of India .v Sreekanth Transport reported in
1999 4 SCC 491
- Once the claims exceeds Rs.50,000/-, it is only the Court of competent jurisdiction which can try the dispute and not an arbitrator. Hence, the present dispute cannot be referred for Arbitration. To substantiate this submission, the learned Senior counsel relied upon the following judgments:
(a) State of A.P. and Another .v Obulu Reddy reported in 2001 10 SCC 30
(b) Rajam Engineering Contractors .v The State of Tamil Nadu reported in
2006 (1) CTC 796
9.This Court has carefully considered the submissions made on either side and the materials available on record.
10.There is no dispute with regard to the fact that the parties are governed by agreement dated 06.12.2017. For proper appreciation, the relevant Arbitration clause available under the agreement is extracted hereunder:
SPECIAL CONDITION
As per the Government order the shrinkage period will be Two years from the date of completion in order to watch the effect of all seasons on the works. An amount at the rate of 5% of every RA Bill will be withheld as Retention amount. Accordingly after completion of work, a sum equivalent to 5% of the value of work done from the contractor’s bill will be retained for the above period for the due fulfilment of contract for all works. Further the contractor should furnish an indemnity Bond for a further period of three years to indemnify TNSCB for any defects noticed. After retaining as stipulated and stated above, the balance amount such as E.M.D. and A.S.D will be returned only after the expiry of six months from the date of handing over of completed project back to TNSCB. However the contractor can produce irrevocable bank guarantee for the value of withheld amount in the final bill till the completion of two years from the date of completion i.e., shrinkage period and get back the amount from Board.
ARBITRATION CLAUSE/SETTLEMENT OF DISPUTES:
If any dispute of difference of any kind whatsoever arises between the TNSCB and the Contractor in connection with, or arising out of the Contract, whether during the progress of the works or after their completion and whether before or after the termination, abandonment or breach of the Contract, it shall in the first place, be referred to and settled by the Engineer-in-Charge who shall, within a period of thirty days after being requested by the Contractor to do so, give written notice of his decision to the Contractor. Upon receipt of the written notice of the decision of the Engineer-in-Charge the Contractor shall promptly proceed without delay to comply with such notice of decision.
If the Engineer-in-Charge fails to give notice of his decision in writing within a period of thirty days after being requested or if the Contractor is dissatisfied with the notice of the decision of the Engineer-in-charge, the Contractor may within thirty days after receiving the notice of decision appeal to the TNSCB who shall offer an opportunity to the contractor to be heard and to offer evidence in support of his appeal, the TNSCB shall give notice of his decision within a period of thirty days after the Contractor has given the said evidence in support of his appeal, subject to arbitration, as hereinafter provided. Such decision of the TNSCB in respect of every matter so referred shall be final and binding upon the Contractor and shall forthwith be given effect to by the Contractor, who shall proceed with the execution of the works with all due diligence whether he requires arbitration as herein after provided, or not. If the TNSCB has given written notice of his decision to the Contractor within a period of thirty days from receipt of such notice the said decision shall remain final and binding upon the contractor. If the TNSCB fails to give notice of his decision, as aforesaid within a period of thirty days after being requested as aforesaid, or if the contractor be dissatisfied with any such decision, then and in any such case the contractor within thirty days after the expiration of the first named period of thirty days as the case may be, require that the matter or matters in dispute be referred to arbitration as detailed below:-
ARBITRATION CLAUSE
The arbitration for fulfilling the duties set forth in the arbitration clause of the standard preliminary specification shall be
Claims upto Rs.10,000/- Superintending Engineer,
Chennai Circle -III of TNSCB
Claims upto Rs. 50,000/- Chief Engineer, TNSCB
Claims above Rs.50,000/- Court of Law under jurisdiction of
Chennai City
11.The above Arbitration clause uses the expression “claims”. It is therefore necessary to understand the purport of this expression. Black’s Law Dictionary defines the word “claims” as follows:
claim, n. (13c) 1. A statement that something yet to be proved is true <claims of torture>.2. The assertion of an existing right; any right to payment or to an equitable remedy, even if contingent or provisional < the spouse’s claim to half of the lottery winnings>. 3. A demand for money, property, or a legal remedy to which one asserts a right; esp., the part of a complaint in a civil action specifying what relief the plaintiff asks for. — Also termed claim for relief (1808).
- The expression “claims” cannot be literally construed as a mere money claim and it will also take within its fold any legal remedy to which one asserts a right. Hence, the nature of reliefs sought for by the respondent in the above suit will also fall within the scope of the expression “claims”. Insofar as the value of the claims is concerned, this Court has to necessarily go by the value of the contract which runs to nearly rupees 92 crores and this Court also must take into consideration the valuation of the reliefs by the respondent in the suit which runs to nearly rupees 1.25 crores. It is quite obvious that the claims that are involved in the present case far exceeds Rs.50,000/- and the Arbitration clause makes it clear that claims above Rs.50,000/- will go only before the jurisdictional Court at Chennai City.
13.The issue as to whether the applicants/defendants can proceed further to blacklist the respondent/plaintiff or whether the show cause notice itself is attended with mala fides or whether the plaintiff without answering the show cause notice has rushed to this Court and instituted a prematured litigation, are all matters which are not germane to decide the present application. While deciding an application under Section 8 of the Arbitration Act, the judgments cited by the learned Additional Advocate General categorically states that where the parties are bound by an Arbitration agreement and prima facie the matter which has been brought before the Court is the subject of the Arbitration agreement or it comes within the ambit of the Arbitration agreement and the dispute in question is an arbitrable dispute, the Court has no other option except to refer the parties to Arbitration. Even if any of the party questions the jurisdiction of the arbitral tribunal, the same should not be decided by the Court while deciding an application under Section 8 of the Arbitration Act and such question must also be left open to be decided by the arbitral tribunal since Section 16 of the Arbitration Act vests such a jurisdiction to the arbitral tribunal to rule on its own jurisdiction including ruling on any objections with respect to the existence or validity of the arbitration agreement. Since the law on this issue is well settled, this Court does not want to burden this order by extracting all the judgments cited by the learned Additional Advocate General.
14.If the Arbitration clause had not restricted the value of the claims, without any hesitation, this Court would have allowed this application and referred the parties for Arbitration. However, the Arbitration clause itself stipulates that for claims above Rs.50,000/- it is only the jurisdictional Civil Court at Chennai City, which will have the jurisdiction to decide the dispute. While considering the scope of the Arbitration clause, this Court deems it fit to refer to two of the judgments relied upon by the learned Senior Counsel appearing on behalf of the respondent. The first judgment is the judgment of the Apex Court in Obulu Reddy case referred supra. The relevant portion in the judgment is extracted hereunder:
5.In the earlier case, Devender Reddy case [(1993) 2 Scale 732 : (1999) 9 SCC 571] the claim was for more than Rs 50,000 and the point for consideration before this Court was whether the second notification issued by the State of Andhra Pradesh, namely, GOMs No. 160 is prospective or applies to the pending case before the issuance of the said notification. This Court came to the conclusion that the second notification is prospective in nature and there is no dispute over the same. But, the question whether the second notification is merely a clarificatory one or carves out a new forum was not for consideration. In the second case Vishakapatnam Urban Dev. Authority v. V. Narayana Raju [(1995) 2 Scale 234 : (1999) 9 SCC 572] this Court examined the earlier GOMs No. 430 dated 24-10-1983 and came to the conclusion that under the said GOMs the arbitration is provided for only in respect of the claims up to Rs 50,000 and not above, making it clear, therefore, that the claims above Rs 50,000 are to be adjudicated upon by a court of competent jurisdiction by filing a regular suit. It is true that while deciding Vishakapatnam case [(1995) 2 Scale 234 : (1999) 9 SCC 572] the earlier judgment of this Court in Devender Reddy case [(1993) 2 Scale 732 : (1999) 9 SCC 571] was not brought to the notice. But having examined GOMs No. 430 we have no hesitation to agree with the conclusions arrived at in Vishakapatnam case [(1995) 2 Scale 234 : (1999) 9 SCC 572] and hold that under the said GOMs question of deciding claims above Rs 50,000 by way of arbitration does not arise. It merely provided that disposal of claims up to Rs 50,000 by way of arbitration indicating as to who would be the arbitrator depending upon the claims and all claims above Rs 50,000 are to be filed before the civil court of competent jurisdiction. This being the position, the second GOMs No. 160 is nothing but a clarificatory one and was required to be issued because of the confusion arising in the minds of some of the claimants as well as the civil court, inasmuch as the civil court did entertain application under Section 8 and appoint arbitrator in respect of claims above Rs 50,000. The earlier judgment of this Court in D. Reddy case [(1993) 2 Scale 732 : (1999) 9 SCC 571] has interpreted GOMs No. 430 in a manner which is not the correct interpretation according to us. The orders appointing arbitrator under Section 8 in the two appeals filed by the State are set aside. The appeals filed by the State are allowed.
15.The next judgment relied upon by the learned Senior Counsel is the judgment in Rajam Engineering contractors referred supra. The relevant portions in the judgment are extracted hereunder:
- Having given anxious thought to the rival arguments made at the Bar, I am of the view that the interpretation suggested by the petitioners cannot be accepted and the petitions are liable to be dismissed. What is contemplated by the Governmental Order is that the existing system of referring the disputes between the contractors and the department to the arbitrator may be continued. The claims upto the value of Rs. 2 lakhs may be referred to the departmental arbitration and claims above the value of Rs. 2 lakhs will be referred to Court. The contention of the petitioners is that the words ‘be referred to Court’ means referred to the Court for appointment of the arbitrator where the value of contract is more than Rs. 2 lakhs. In other words even claims of more than Rs. 2 lakhs should be referred to arbitration through Court. In my opinion, the interpretation suggested by the petitioner’s counsel is wholly impermissible. The term ‘be referred’ to Court could only mean that the party may be referred/directed to Court for adjudication. Learned Advocate General is right in contending that Section 20 of the old Act contemplates an application to be filed in a Court to file an arbitration agreement and then reference would be made by the Court to an arbitrator under Section 23 of the said Act. Therefore, the words reference to the Court cannot mean reference to the Court under Section 20 of the old Act. In any event, the existence of arbitration agreement must be decided on the basis of the terms of the arbitration agreement and on a plain reading of arbitration clause it is clear that the claim should be filed before the Court having jurisdiction for decision and only with regard to claims less than Rs. 2 lakhs the matter should be referred to departmental arbitrator, who shall be the Superintending Engineer.
10.In State of A.P. v. Obulu Reday (supra) a similar Governmental Order of the Andhra Pradesh High Court came up for consideration before the Supreme Court. The relevant portion of the said Governmental Order runs as follows:-
____________________________________________________________
Value of Amount Panel of Arbitration
____________________________________________________________
- Claims upto Rs. 10,000/- 1. Superintending Engineer
and above of another circle in the
same department ”
____________________________________________________________
- Claims above Rs. 10,000/- 1. Another CE of the same
upto Rs. 50,000/- department
- where there is only one
CE in the department, CE
will submit proposals to
Government in the Admi-
nistrative Department for
nomination of another CE
as arbitrator by Government.
____________________________________________________________
- Claims above Rs. 50,000/- Court of competent
jurisdiction.
____________________________________________________________
To avoid ambiguity ,a clarification was issued subsequent, which is as follows:
“All claims above Rs. 50,000/- shall be. decided by a Civil Court of competent jurisdiction of regular suit”.
- When the matter was referred to three Judge Bench of the Supreme Court, the Bench took the view that the question of resort to arbitration would not arise if the claim was above Rs. 50,000/-. The earlier decision of the Supreme Court in Vishakapatnam Urban Development Authority v. V. Narayana Raju was approved and the relevant portion in paragraph-5 of the said decision runs as follows:
Having perused G.O.Ms. No. 430 dated 24.10.1983 we have no doubt that it clearly provides for arbitration in respect of claims only up to Rs. 50,000/- and not above that amount, making it clear in para 2 that the claims above Rs. 50,000 are to be adjudicated by the Court of competent jurisdiction. No doubt the expression ‘Court of competent ‘jurisdiction’ is mentioned under the head ‘panel of arbitrators’ since the same para deals with ‘claims up to Rs. 10,000/- and up to Rs. 50,000/-. That is, however, an inartistic drafting of the GOMs but it cannot be construed to mean that claims above Rs. 50,000 are to be adjudicated by arbitration in which the Judge presiding over the Court of competent jurisdiction is to act as the arbitrator. It would be absurd to make such a construction of that part of the GOMs which would oblige the Judge to act as an arbitrator. The subsequent G.O. Ms. No. 160 dated 01.06.1987 merely clarifies this fact on account of an attempt by some contractors to misconstrue the earlier GOMs as clearly stated in the subsequent GOMs. The contention of the respondent is wholly untenable.
- In the present case, the petitioners seek to rely upon Clauses (i) to (iii) of the Governmental Order wherein it is stated that the existing system of referring the dispute between the contractor and the Department to the Arbitrator would continue and if the value is less than Rs. 2 lakhs it would be referred to the departmental arbitration and if the value is more than Rs. 2 lakhs the matter should be referred to Court, which according to the petitioners mean reference to Court for arbitration. If this interpretation is accepted it will mean that the Court should also function as an arbitrator. This interpretation is clearly impermissible and disapproved by the Supreme Court. The only interpretation which can be applied to this clause is that the parties are free to approach Court having competent jurisdiction for adjudicating all their claims of above Rs.2 lakhs.
16.A careful reading of the above two judgments makes it clear that there was a similar clause that was available in the agreement which restricted reference to Arbitration only those disputes upto Rs.50,000/- and Rs.2 Lakhs respectively; and for claims above the said value, it had to be adjudicated only by the Court of competent jurisdiction. While dealing with this issue, it was held that the existence of an Arbitration agreement must be decided on the basis of the terms of the Arbitration agreement and on a plain reading of the Arbitration clause and if the Arbitration clause restricts the value of the claim which can be referred to the arbitrator, only those claims which falls within the value can be referred for adjudication by the arbitrator and beyond the fixed value, the dispute can only go before the competent jurisdictional Court. The above two judgments will squarely cover the issue that is involved in the present case. Even in the present case, the Arbitration clause specifically provides that claims above Rs.50,000/- can be decided only before the jurisdictional Court at Chennai City. This Court has already held that the claims involved in the present case far exceeds Rs.50,000/-.
17.It is true that the respondent did not file the letter dated 25.11.2021. The question would be as to whether the non filing of this letter will have any bearing while deciding this application and whether it can be construed as a vital suppression. An omission will get the status of suppression only if it has been done deliberately and such omission has resulted in the party getting an undue advantage. In other words, the party would not have been granted a relief by the Court if the material suppressed had been brought to the notice of the Court. Only if the omission results with such a consequence, it will be taken as a suppression and the party has to necessarily face the consequences for such suppression. In the present case, even if the letter dated 25.11.2021 had been filed by the respondent at the time of filing the suit, it would not have put the respondent in a disadvantageous position and inspite of this letter, the respondent could have still maintained the present suit. This Court therefore holds that the non filing of the letter dated 25.11.2021 does not have any bearing while deciding this application.
18.Insofar as yet another petition filed by the respondent/plaintiff under Section 11(6) of the Arbitration Act, for appointment of an arbitrator wherein a similar Arbitration clause is found by restricting the value, the authorities therein have taken a stand that only the Civil Court has jurisdiction. Therefore, it is clear that both the sides are taking different stands to suit their convenience and this Court will not decide the application merely based on such a stand taken by the parties and the decision will be taken by considering the facts of the case and applying it to the agreement which provides for an Arbitration clause.
19.In view of the above discussion, this Court has absolutely no hesitation to hold that the dispute involved in the present case cannot be referred to Arbitration since it has a value of more than Rs.50,000/- and as a result, this application is dismissed. Considering the facts and circumstances of the case, there shall be no order as to costs.
20.Before drawing the curtains, this Court wants to impress upon the authorities to revamp the entire Arbitration clause. Obviously, there is a total non application of mind on the part of the authorities which is apparent from the general conditions of contract which forms part of the agreement and it continues to make reference to the provisions of Arbitration Act 1940. This Act has been replaced by Arbitration and Conciliation Act 1996 which came into effect on 22.08.1996. Inspite of the same, for an agreement entered into in the year 2017, reference is made to the 1940 Act. The fixation of the value of the claims upto Rs.50,000/- to refer the dispute to Arbitration has absolutely no meaning in the present day scenario and such a clause has become archaic. The authorities will have to blame themselves for there own disadvantageous position. If the authorities had applied their mind and had not acted in a mechanical fashion, they would not have fixed the value as ridiculous as Rs.50,000/- and this dispute would not have landed in this Court. This Court wanted to add this footnote to this order with a fond hope that the authorities will wake up to the reality and immediately take steps to revamp the entire Arbitration clause in all their agreements. In order to take effective steps, there shall be a direction to mark a copy of this order to the Chief Secretary of the Government of Tamil Nadu, who will instruct all the departments to act upon the directions issued in this order.
28.01.2022
KP
Internet: Yes
Index: Yes
.
Copy To
The Chief Secretary,
Government of Tamil Nadu.
N.ANAND VENKATESH, J.
KP
Pre-Delivery Order in
Application No.4793 of 2021
in C.S (Comm.Div.)No.108 of 2021
28.01.2022
