BAKHTAWAR SINGH BAL KISHAN Vs. UNION OF INDIA

JUDGEMENT

(1.) The appellant is a contractor who entered into a construction contract with the M.E.S. (Military Engineering Services) for making some additional construction in the ordnance factory at Muradnagar in the State of Uttar Pradesh. The contract was entered into at Bareilly in Uttar Pradesh. A dispute arose in regard to the execution of the contract between the contractor and the respondent, Union of India. An Arbitrator was appointed who in due course rendered an award in favour of the contractor. The contractor instead of instituting an appropriate proceeding in Uttar Pradesh where the contract was executed and the work was carried out, instituted a proceeding on the original side of the Delhi High Court. By this proceeding the contractor prayed for making the award a rule of the Court under Ss. 14 and 17 of the Indian Arbitration Act, 1940. The respondent raised a plea to the effect that the Delhi High Court had no jurisdiction inasmuch as the cause of action had arisen at a place in Uttar Pradesh and that the contract was also executed at Bareilly in Uttar Pradesh. The learned single Judge negatived this plea. The respondent Union of India preferred a letters patent appeal to the Division Bench of Delhi High Court which allowed the appeal and set aside the order of the learned single Judge upon reaching the conclusion that the Delhi High Court had no jurisdiction. This view was taken having regard to the fact that in the opinion of the Division Bench of the High Court the Union of India was not carrying on any "business" in Delhi so as to attract S. 201 of the Code of Civil Procedure which inter alia provides that a suit may be instituted where the defendant "carries on business or works for gain", as contended by the appellant contractor. In forming this opinion the High Court placed reliance on its earlier decision in Binani Bros. Ltd. v. Union of India, ILR (1975) 2 Delhi 196.

(2.) Learned counsel for the appellant has contended that the view taken in Binani Bros. case is not correct. Having given our anxious consideration to the submission urged on behalf of the appellant, and having perused carefully the judgment in Binani Bros. case, we are of the view that the Delhi High Court was prefectly justified in reaching this conclusion. We do not propose to reiterate the same reasoning in our own words, more so as Delhi High Court has discussed the matter in an admirable manner and the reasoning which has appealed to the High Court is unexceptionable. Under the circumstance we can do no better than to quote from the judgment of the Delhi High Court the relevant passages :-

(3.) We are in full agreement with the reasoning and conclusion of the Delhi High Court reflected in the aforesaid passages. Learned counsel for the appellant has urged that the Delhi High Court has not properly appreciated the ratio of the decision of this Court in Union of India v. Ladu Lal Jain, (1964) 3 SCR 624: (AIR 1963 SC 1681). We are unable to accede to this argument. We concur with the view of the High Court that the decision in Ladu Lal Jain's is inapplicable in the backdrop of the facts of the present matter. In Ladu Lal Jain's case the Court was concerned with the activity carried on by the Railway Administration which was held to be "business" activity. The Supreme Court has drawn distinction between the commercial activities of the State on the one hand and the discharge of the sovereign functions of the State on the other. The decision in that matter has been rendered in the context of business activity carried on by the Union of India namely running of the Railways and not in the context of a sovereign activity carried on by the Union of India. In the present case the contract pertained to construction of an ordnance factory for the Military Engineering Services of the Armed Forces (Modernisation and augmentation of the ordnance factory). Maintaining the armed forces is part of the sovereign activity of the State. It is an activity which is undertaken by the Central Government for ensuring the, security of India which is a sovereign function of the State. It is spacious to contend that it is a 'business activity' with an eye on profits. Under the circumstances, the view taken by the Delhi High Court cannot be taken exception to. The appeal must accordingly fail. It will be open to the appellant to institute a fresh petition for making the award a rule of the Court in an appropriate court in Uttar Pradesh within ninety days from today. In case such an application is instituted it will be treated as having been instituted within time. The appeal is disposed of accordingly. There will be no order regarding costs.