UNION OF INDIA Vs. GANGADHAR MIMRAJ

JUDGEMENT

(1.) These two appeals involve common questions of law and have, therefore, been heard analogously, and this judgment will govern both.

(2.) The suit in which Second Appeal 1497 of 1957 arises was brought by the respondent for recovery from Union of of India a sum of Rs. 2500, being the amount of the security deposited by him with the Divisional Superintendent, Dinapur of the East Indian Railway (now the Eastern Railway) for due performance of a contract Shortly put, the facts are these. On 25th November 1947, the defendant (sic) entered into a contract with the Divisional Superintendent for supply of 340 maunds of Zira at the rate of Rs. 72/5/- per maund by 25th Pecembsr, 1947, at Dinapur Reserve Department. In respect of this contract, the plaintiff deposited with the Divisional Superintendent Rs. 2500 as security money. On 4th December 1947, the plaintiff hooked at Jumna Bridge station 340 maunds of Zira to be delivered at Dinapur. The wagon containing the Zira, however, was despatched through inadvertence to some other place, instead of Dinapur, with the result that the wagon could not reach Dinapur earlier than 3rd March 1948. In other words, the consignment reached Dinapur after the expiration of the stipulated date of delivery, i. e., after 25th December, 1947. The Divisional Superintendent declined to accept the consignment on the ground that there was considerable delay in the arrival of the consignment and that the Zira was not of the quality contracted for. He, therefore, forfeited the security money, which the plaintiff had deposited with him without notice. The plaintiff's demand for refund of the same was turned down. Acting on a supposed arbitration clause the plaintiff proposed to the Divisional Superintendent to refer the matter to the arbitration of Sri Babulal Mahansaria of Bhagalpur and called upon the General Manager, Eastern Railway, to concur in the appointment. The General Manager withheld concurrence on the ground that the purchase order (Ext. 1), which embodies the terms of the contract, contained no arbitration clause. In spite of this objection, Sri Babulal Mahansaria accepted to act as the sole arbitrator and fixed 20th November, 1950 for hearing. The Railway Department did not enter appearance. The said arbitrator proceeded ex parte and in due course made an award on 20th February, 1951, in favour of the plaintiff. A notice of the award dated 29th February, 1951, was served on the General Manager. The award was thereafter filed in Court under Section 14(2) of the Indian Arbitration Act, which was numbered as Title Suit 40 of 1951 of the Court of the 2nd Munsif, Patna. The Union of India resisted the claim substantially on the ground that the entire proceeding before the arbitrator was misconceived and illegal, as the contract did not provide for reference of the dispute to the arbitration of anybody. This defence prevailed, and the suit was dismissed on 23rd July, 1952, and an appeal by the plaintiff against the decree of the Munsif was dismissed for default on 25th August, 1954. An application by the plaintiff under Order 41, Rule 19, Code of Civil procedure, to set aside the order of dismissal and restore the appeal was also dismissed on 6th November, 1954. On 20th July, 1955, the plaintiff sent a notice under Section 80 of the Code of Civil Procedure to the authority concerned and instituted the present suit on 27th September, 1955.

(3.) The Union of India resisted the claim on two main grounds, first, that the forfeiture was legal and justified, and, second, that the suit was barred by limitation.