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Case Name: Shivaraj Kamshetty v. The Managing Director, Karnataka State Agricultural Marketing Board & Ors 

Case No.: CIVIL MISC PETITION NO.200003 OF 2022 

Dated: April 19,2024 

Quorum: Hon’ble Justice C. M. Joshi 

 

FACTS OF THE CASE: 

Under Section 11 of the Arbitration and Conciliation Act, 1966, a petition has been submitted in order to appoint an arbitrator to mediate the disagreement that has arisen between the petitioner and the respondents. The responders had requested proposals for the work of building a building at Kalaburagi, and the petitioner claims he is a reputable Class-I Contractor with over 35 years of expertise.  

On August 22, 2011, the petitioner and the respondents entered into an agreement after the petitioner’s bid was accepted by the respondents. A sum of Rs. 109.00 lakhs was agreed upon to be paid for the completion of the work. In accordance with the specifications and drawings provided in the agreement, the petitioner successfully finished the contracted task.  

The respondents granted approval on March 25, 2014, for the petitioner to finish the excess work that was assigned to him. The total amount of work completed was Rs. 1,22,16,239/-as a result of additional work that was also approved by the responders on May 7, 2015. The respondents had a delay in responding to the final bill, which was submitted to them on September 28, 2015, as a result of their approval of the additional work. 

On March 25, 2014, the respondents gave the petitioner permission to complete the extra work that had been given to him. Because of additional work that was also allowed by the respondents on May 7, 2015, the total amount of work accomplished was Rs. 1,22,16,239/-. Due to their acceptance of the additional work, the responders took longer than expected to respond to the final bill, which was delivered to them on September 28, 2015. 

The petitioner had corresponded with the respondents on multiple occasions between 2011 and 2017, disputing various points, including the computation of the dues and the 10% margin of profit. In the end, the petitioner served a legal notice on May 16, 2020, demanding payment of Rs. 2,53,22,934/-, to which the respondents replied on June 16, 2020. 

The petitioner requested that the respondents designate a single arbitrator in accordance with Clause 4 of the Special Conditions of Contract Read With Clause 24 of the General Conditions of Contract. Since the respondents refused to agree to the arbitrator’s appointment, the petitioner was forced to file an application with this court pursuant to Section 11 of the Arbitration and Conciliation Act.  

CONTENTIONS OF THE PETITIONER: 

The petitioners’ counsel argued that Shivaraj Kamshetty was aboard a bus from Mangaluru to Udupi on December 27, 2009. Shivaraj’s bus was involved in a collision with another bus (registration number KA-01-F-8534) that was driven carelessly and rashly close to Pavanje village. Shivaraj suffered severe injuries as a result, and A.J. Hospital admitted him. 

The petitioner argues that the respondents had requested bids for the construction of a building at Kalaburagi, and he is a reputable Class-I Contractor with over 35 years of experience.  

In addition, the petitioner claims to be a businessman who makes Rs. 90,000 a month and that the accident prevented him from making money from his venture. He has also filed a claim suit under Section 166 of the Motor Vehicles Act, 1988, requesting payment to the owner and insurance company of the offending vehicle in the amount of Rs. 40,000,000. 

 

CONTENTIONS OF THE RESPONDENT: 

Speaking on behalf of the respondents, the learned attorney argued that the arbitration proceedings were unenforceable due to the petitioner’s claim being time-barred. He argues that even after the respondents had taken into account all of the petitioner’s arguments, the petitioner had made false accusations against them. As a result, the petition had no validity and could be rejected.  

It was contended by the respondents that the arbitrator has authority over the limiting question. The argument put forth was that the arbitrator ought to determine whether the claims are precluded by limitation.  

The ruling in a high court decision, which determined that the question of limitation is a combination of factual and legal inquiry, was cited by the respondents. As such, the arbitral tribunal ought to make that decision. Respondents stressed that Section 11 of the Arbitration and Conciliation Act (A&C Act) permits the court to reject arbitration only in cases where the claims are clearly barred by statute of limitations. 

 

 

LEGAL PROVISIONS: 

• Section 100 of Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966. Subject to the restrictions imposed by this Act or any other enactment, the Board will function as a body corporate with perpetual succession, a common seal, and the ability to sue or be sued in its corporate name. It will also be able to acquire, hold, and dispose of moveable and immovable property, enter into contracts, and carry out any other necessary, appropriate, or expedient actions for the purposes for which it was established. 
• Sections 111 & 112 of the K.A.P.M (R&D) Act, 1966. The major responsibilities of the Board are listed in these sections. Educating people about controlled marketing, supporting market committees that are struggling financially, encouraging the grading and standardisation of agricultural products, and enhancing infrastructure for the transportation and sale of agricultural products are a few of these duties. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The court determined that, in light of Clause-24 of the General Conditions of Contract, an arbitrator must be appointed to hear the disagreement that has arisen between the parties under these circumstances.  

In response to a request from this Court, all parties have agreed that Smt. Premavathi M. Manogoli, District Judge (Retd.), Plot No. 56, Teachers Colony, Near Jhanayogashram, Vijayapura, should be appointed as the only arbiter. 

The court held that the petition was allowed. The court noted that although the respondents contested the arbitration clause due to the claim’s limitation, they did not contest the existence of the arbitration agreement. According to this ruling, the arbitrator has the authority to decide the limitation problem since it is an integral part of the arbitrable point. 

The Supreme Court had previously ruled that the question of limitation is a mixed factual and legal matter that must be decided by an arbitral panel. The court relied on this ruling; The court also made it clear that Section 11 of the A&C Act permits it to reject arbitration only in cases where the claims are fundamentally precluded by statute. 

 

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Judgment reviewed by Riddhi S Bhora 

Click to view judgment.