SUKUMAR CHAND JAIN Vs. DELHI DEVELOPMENT AUTHORITY

JUDGEMENT

(1.) Only a thumb-nail resume' of the facts needs to be given. The petitioner entered into a contract with the Delhi Development Authority with regard to the construction of 130 L.I.G. and 138 M.I.G. houses at Sarai Khalil. Soon enough disputes arose and the Delhi Development Authority rescinded the work alleging the failure on the part of the petitioner. This gave rise to various disputes leading to the invocation of the arbitration agreement and their reference to the arbitrator. However, what gave rise to the present set of litigation is a Memorandum dated May 29,1991 from the Delhi Development Authority. The operative part of it may profitably be reproduced. It runs as follows: "It is informed that the above mentioned work has been rescinded on account of complete failure of the agency i.e. M/s. Sukumar Chand Jain. The compensation under clause 2 and 14 has been levied upon this agency and balance work, rectification of defects is being taken at the risk and cost of this agency. About Rs.23.18 lacs is to be recovered from this agency under clause 25 of the agreement. It is, therefore, requested that the said amount may please be recovered from his dues and remit to the office of the undersigned. In case, nothing is due please send nil report at the (emphasis supplied) Aggrieved by this memorandum the petitioner instituted a suit for declaration and injunction Alongwith the suit was moved an application under Order 39 rules 1 and 2 for grant of adinterim injunction. It was claimed in the suit that in terms of clause 29 of the Agreement inter se the parties, the Delhi Development Authority could at the most "withhold" and have lien to retain such sum or sums as claimed pending finalisation of adjustment of any such claim but could not order that the amount claimed "be recovered from the dues." It was this order which was at the centre-storm and whose operation was sought tote stayed. The learned Subordinate Judge refused to grant the relief of ad-interim injunction. Aggrieved, the petitioner preferred an appeal. In the appeal too the present petitioner moved an application for the grant of exparte injunction. Mr.J.B.Goyal, the learned Additional District Judge, while deferring the final disposal of the main appeal refused to grant exparte injunction. Hence this petition.

(2.) The learned Additional District Judge has, while refusing exparte injunction, leaned solely on certain observations made by the Supreme Court in paragraph 30 of the report in Ms/. H.M.Kaluddin Ansari and Co. vs. Union of India, AIR 1984 SC 29. The said paragraph extracted from the judgment of the Supreme Court runs as follows: "We are clearly of the view that an injunction order restraining the respondents from withholding the amount due under other pending bills to contractor virtually amounts to a direction to pay the amount to the contractor-appellant. Such an order was clearly beyond the purview of clause (b) of Section 41 of the Arbitration Act. The Union of India has no objection to the granting of an injunction restraining it from recovering or appropriating the amount lying with it in respect of other claims of the contractor towards its claim for damages. But certainly Clause 18 of the standard contract confers ample power upon the Union of India to withhold the amount and no injunction order could be passed restraining the Union of India from withholding the amount." (emphasis supplied) After having reproduced that paragraph the learned Additional District Judge did not care to say as to how and in what manner the observations made by the Supreme Court in the said paragraph were applicable. The only observations made by him are, and I reproduce: "In the facts and circumstances no ground for exparte injunction or stay of the operation of the impugned direction contained in the letter dated 29th May, 1991 of the Executive Engineer concerned." Leaving aside the fact that the formation of the sentence leaves much to be desired, we are not even told as to what those "facts and circumstances" are. We are just left to grope in darkness. The learned Additional District Judge failed to notice that he had before him a civil suit for injunction and declaration and an application under Order 39 of the Code of Civil Procedure and not arbitration proceedings and as such his hands were not tied by the comparatively much limited scope of Section 41 of the Arbitration Act Even otherwise, a bare perusal of clause 29 of the agreement in question would have shown the right path. It states in clear and unambiguous terms that the Delhi Development Authority would be entitled only to "withholding" of and having "lien to retain such sums" and that lien over the sum so withheld would be "pending finalisation for adjustment of any such claims". Clearly it invests the Delhi Development Authority with no power or authority to recover or appropriate the amount The Supreme Court in paragraph 30 of the report on which the learned Additional District Judge has learned so heavily also dealt with a similar clause and held that though the Union of India could withhold the amount and no injunction could be passed restraining the Union of India from withholding the amount, "recovering" the amount was something different and that is why in that case even the Union of India had no objection to its being restrained from affecting recovery. What the Delhi Development Authority has done in the present case is that it has not passed orders for "withholding" of the amount claimed but for its recovery from the petitioner. This is beyond the scope of clause 29. It is not authorised. It is not permitted and this is precisely what the Supreme Court lays down in the judgment referred to above.

(3.) For the reasons as recorded by me above, I allow this petition and restrain the respondents from recovering from the petitioner or appropriating the amount as mentioned in the letter dated 29th May, 1991 till the final disposal of the appeal by the learned Additional District Judge. However, a word of caution. Whatever has been said in the order, shall not be taken as an expression of opinion on the merits of the case. No order as to costs.