The Chief Engineer v. Akabea Infrastructure Private Limited

IN THE HIGH COUR AT CALCUTTA

[ CIRCUIT BENCH AT PORT BLAIR] ...

MA/20/2021 IA No.CAN/1/2021 The Chief Engineer ... Appellant Vs.

Akabea Infrastructure Pvt. Ltd.

... Respondent Mr.Arul Prasanth, Advocate ... for the appellant Mr.G.Binnu Kumar, Advocate ... for the respondent September 09, 2021 [GNC] Item No.5 The instant appeal arises from a judgment and order dated 2nd August, 2021 by which the writ petition was disposed of directing the payment of legitimate dues of the respondent herein along with the interest @ 11% per annum.

At the very outset, a preliminary objection is taken by Mr.Binnu Kumar that the instant appeal is not maintainable against the impugned judgment and order as it was passed on consent.

After perusing the impugned judgment we do not find any consent having been given by the learned advocate appearing for the respondents and therefore the preliminary objection is unsustainable.

The appellant has impugned the judgment on twofold grounds; firstly, the writ jurisdiction cannot be invoked for the purpose of realization of the dues be it admitted or

otherwise and secondly, there is an existence of an arbitration clause in the agreement and therefore, the writ Court is denuded of its jurisdiction to entertain such claim. From the averments made in the instant application there is no dispute that the work contract was awarded to the respondent by the appellant and the same was executed and completed in all respect. The appellant is not in a position to say that the quality of the work or the work having not completed to the satisfaction of the appellant but the payment could not be made because of the financial crunch having faced because of the pandemic. Though feebly it is submitted by Mr.Prasanth that the said work was intended for social welfare department and since they have not made the payments to the public works department it is not an obligation of the public works department to make the payments.

It further appears from the record that the appellant have also taken a specific stand that the money which was reserved for payment has been diverted to combat the covid pandemic. There is no dispute on the contract having awarded by the appellant to the private respondent nor on the quality or the quantity of the work executed therein. The entire dispute centres around the withholding of the legitimate dues of the private respondent. The reliance can be safely made to the judgement of the Supreme Court rendered in case of ABL International Limited Vs. Export

Credit Guarantee Corporation of India Limited reported in (2004) 3 SCC 553 wherein the Court after considering the undisputed fact that despite supply of the goods the payment was not made by foreign buyer, held that there is no impediment on the part of the Court to entertain a monetary claim.

So far as the existence of arbitration clause is concerned our endeavour has failed to find out any objection having been taken at the time of admission of the writ petition or at the time when the writ petition was disposed of. A plea which has not taken before the Single Bench relating to an existence of arbitration agreement cannot be agitated for the first time before the Appellate Court. There is no absolute bar that because of the existence of an arbitration agreement the jurisdiction of the judicial authority is impliedly excluded. Section 4 of the Arbitration and Conciliation Act contemplates such situation and the freedom has been given to the parties to waive it. Even the provisions contained under section 8 makes it imperative on the part of the parties to raise such point before the submission of defence and having not done so there is no fetter on the part of the judicial authority in proceeding to decide the dispute.

However, we are unable to concur with the portion of the order by which the learned Single Judge has awarded the interest at the rate of 11% per annum. It is no doubt

true that the discretion lies with the Court to pass an order awarding interest as and by way of compensation if legitimate claim is unreasonably withheld without any justifiable cause. The quantum of interest varies and depends upon the nature of the contract and the specific terms incorporated therein. If the contact is silent on the rate of interest to be awarded by the Court, awarding an interest must reasonable in the attending facts and circumstances and not to be passed whimsically or capriciously.

The rate of interest at 11% per annum is too exorbitant even the Reserve Bank of India has not recommended such interest to be granted for a fixed term deposit or otherwise. We thus modify the impugned order to the extent that the appellant shall pay the interest within a period of four weeks from the date of communication of this order at the prime lending rate fixed by the Reserve Bank of India instead of 11% as directed by the learned Single Judge.

The appeal is disposed of. No order as to costs. In view of the disposal of the appeal itself all the connected application is also disposed of.

(Harish Tandon, J. ) ( Shivakant Prasad, J. )