KURIACHAN Vs. KSEB

JUDGEMENT

(1.) This appeal arises from the order of the Subordinate Judge, Trichur, in I.A. No. 886 of 1976 in O.S. No. 136 of 1976. The learned Judge dismissed an application tiled by the appellant (defendant in the suit) under S.34 of the Arbitration Act, 1940.

(2.) The suit was tiled by the Kerala State Electricity Board to recover from the defendant a sum of Rs. 65,950.13 with future interest by way of damages for breach of contract. It is alleged in the plaint that an agreement was entered into between the plaintiff and the defendant on 7-8-1973 for the construction of temporary buildings at Mukkali in connection with the Silent Valley Hydro Electric Project. The agreement provided that the contract work was to be completed on or before 9-7-1973 and that all unused materials supplied by the plaintiff to the defendant had to be returned to the plaintiff, failing which the cost of such materials was recoverable from the defendant at a penal rate as stipulated under the contract. It is alleged that the defendant, contrary to the provisions of the contract, failed to complete the work within the stipulated time and furtively removed from the site the unused materials. When the plaintiff came to know of the clandestine removal of materials, a complaint was lodged with the Augali police and Crime No. 16/75 was registered. Augali police investigated into the matter, but sent a final report to the Magistrate of the I Class at Mannarghat to refer the case as a mistake of fact. In the circumstances the plaintiff tiled the suit for recovery of amounts as per the contract.

(3.) The defendant filed an application under S.34 of the Arbitration Act, 1940, to stay the legal proceedings on the ground that the subject matter of the suit was covered by an arbitration agreement and the matter was therefore liable to be referred to the arbitrator.