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Friday, August 28, 2015

The petitioner, a Constable in the Central Reserve Police Force (CRPF), was subjected to disciplinary proceedings in connection with an accident which occurred while he was driving a vehicle on 28.10.1992. He was imposed with the punishment of removal from service under order dated 10.08.1993. Aggrieved thereby, he preferred an appeal to the Deputy Inspector General of Police, CRPF. The appellate authority allowed the appeal by order dated 10.12.1993, directing reinstatement of the petitioner in service but ordering that he should be placed under suspension after such reinstatement till completion of a fresh departmental enquiry for misconduct. =To begin with, the Special Director General, Southern Sector, CRPF, Hyderabad, had no jurisdiction to exercise power under Rule 29(d) of the Rules of 1955 in the year 1997, and therefore, his action in issuing a show-cause notice and thereafter enhancing the punishment imposed upon the petitioner was without legal sanction. Further, even if the said exercise of power is assumed to be valid for any reason, the same was not within a reasonable time and such belated exercise of suo motu power cannot be sustained on facts and in law.The writ petition is therefore allowed setting aside the order dated 29.10.1997 passed by the Special Director General, Southern Sector, CRPF, Hyderabad, and the order dated 14.05.1998 of the Director General of Police, CRPF, New Delhi, confirming the same in appeal. The petitioner shall be reinstated in service but as he remained out of uniformed service for all these years, he would be entitled to continuity of service only with notional attendant benefits. He shall not be entitled to any monetary benefits for the period that he remained out of service. Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. There shall be no order as to costs.

THE HONBLE SRI JUSTICE SANJAY KUMAR        

WRIT PETITION NO.4173 OF 2005    
       
17-08-2015


Balbir Singh .. Petitioner.. Petitioner

The Director General of Police, Central Reserve    Police Force, C.G.O.
Complex, Lodhi Road,  New Delhi and others .. Respondents



Counsel for petitioner  : Sri M. Jeevan Reddy
                                               
Counsel for respondents:  Sri Raghavender, learned counsel
                           representing Sri B. Narayana Reddy,
                           learned Assistant Solicitor General
                           for India
               
<Gist:

>Head Note:    

? CASES REFERRED:    

1. W.P.NO.26172 OF 2001 dated 08.11.2012  
2. AIR 1969 SC 1297
3. (1997) 6 SCC 71
4. (2007) 11 SCC 363
5. (2009) 9 SCC 352
6. 1996(3) ALT 887


THE HONBLE SRI JUSTICE SANJAY KUMAR        

WRIT PETITION NO.4173 OF 2005    

O R D E R
      The petitioner, a Constable in the Central Reserve Police Force
(CRPF), was subjected to disciplinary proceedings in connection with
an accident which occurred while he was driving a vehicle on
28.10.1992.  He was imposed with the punishment of removal from
service under order dated 10.08.1993.  Aggrieved thereby, he
preferred an appeal to the Deputy Inspector General of Police, CRPF.
The appellate authority allowed the appeal by order dated
10.12.1993, directing reinstatement of the petitioner in service but
ordering that he should be placed under suspension after such
reinstatement till completion of a fresh departmental enquiry for
misconduct.
      Thereupon, a fresh departmental enquiry was instituted and
pursuant thereto, final order dated 21.11.1994 was passed by the
Commandant, 83 Battalion, CRPF, imposing upon the petitioner the
punishment of stoppage of an annual increment for a period of one
year with cumulative effect.  The disciplinary authority further
directed that the cost of repair charges of the affected vehicle
amounting to Rs.487/- should be recovered from his pay and
allowances.  His suspension period was also directed to be
regularized.  The petitioner accepted this punishment without demur
and it was duly implemented.
      While so, the Special Director General, Southern Sector, CRPF,
issued show-cause notice dated 24.04.1997 invoking Rule 29(d) of
the Central Reserve Police Force Rules, 1955 (for brevity, the Rules of
1955) proposing to enhance the punishment imposed upon the
petitioner to removal from service.  The petitioner submitted his reply
thereto pointing out that the proposed exercise of power under the
said Rule was with a delay of more than two and half years and the
fact that he had already undergone the punishment imposed under
the order dated 21.11.1994.  By order dated 29.10.1997, the Special
Director General, Southern Sector, CRPF, declared that after careful
consideration of the whole case, the punishment imposed upon the
petitioner was enhanced to removal from service.  Aggrieved thereby,
the petitioner preferred an appeal to the Director General of Police,
CRPF.  The appeal was rejected by order dated 14.05.1998.
      The petitioner thereupon approached the High Court of
Himachal Pradesh at Simla by way of Civil Writ Petition No.746 of
1998 challenging his removal from service.  The writ petition was
dismissed by the Himachal Pradesh High Court by order dated
12.11.2003 on the ground that it had no territorial jurisdiction as the
departmental enquiry against the petitioner was held at Hyderabad.
The petitioner therefore approached this Court by way of this writ
petition assailing the order dated 29.10.1997 passed by the Special
Director General, Southern Sector, CRPF, and the order dated
14.05.1998 of the Director General, CRPF, confirming the same.
      Heard Sri M. Jeevan Reddy, learned counsel for the petitioner,
and Sri Raghavender, learned counsel representing the learned
Assistant Solicitor General for India, for the respondents.
      Sri Raghavender, learned counsel, would contend that the
delay on the part of the petitioner in approaching this Court would
disentitle him from seeking relief.  The facts on record reflect that
after passing of the order dated 14.05.1998 by the Director General,
CRPF, the petitioner lost no time in approaching the Himachal
Pradesh High Court by way of Civil Writ Petition No.746 of 1998.
However, the said writ petition was dismissed on the ground of
territorial jurisdiction in August, 2003, and the petitioner approached
this Court thereafter in February, 2005.  The delay on his part, if at
all, would be between these two dates.  No doubt, the petitioner did
not put forth any reason to explain his failure in approaching this
Court immediately after dismissal of his writ petition by the Himachal
Pradesh High Court,  but this Court is of the opinion that the delay
on his part, which would perhaps be about a year, is not sufficient to
disentitle him from claiming relief.  Given the fact that the Special
Director General, Southern Sector, CRPF, chose to exercise suo motu
power after a lapse of nearly three years, it is not open to the
respondents to make much of this one year delay on the part of the
petitioner in approaching this Court.  The so called delay on the part
of the petitioner is therefore not fatal to his case.
      In so far as the merits of the case are concerned, two issues fall
for consideration:
(1)     Whether the Special Director General, Southern
Sector, CRPF, had jurisdiction to exercise powers
under Rule 29(d) of the Rules of 1955?
and;
(2)     if so, whether such powers were exercised within a
reasonable time?

      The petitioner specifically raised a contention in para 12(g) of
his writ affidavit that the Special Director General, Southern Sector,
CRPF, did not have the authority to exercise power under Rule 29(d)
of the Rules of 1955.  The counter-affidavit filed by the Additional
Deputy Inspector General of Police, CRPF, Hyderabad, however did
not advert to this ground specifically and skirted the issue in para 15
as follows:
      In reply to Ground (g) in Para-12 of the Affidavit, it is
submitted that contents (sic contention) of Petitioner in this
Para is not acceptable.  As already quoted in the preceding
paras, the post of Inspector General of Police, Southern Sector,
CRPF, Hyderabad was upgraded to that of Special Director
General and he was vested with all the powers of the IGP.
       
       
        Though reference was made to upgradation of the post of
Inspector General of Police, Southern Sector, CRPF, to that of Special
Director General, no material has been placed before this Court in
that regard or to justify the exercise of power by the Special Director
General, Southern Sector, CRPF, in the instant case. The first issue
would therefore turn on whether Rule 29(d) of the Rules of 1955 as it
stood in April, 1997, authorized the Special Director General,
Southern Sector, CRPF, to exercise power thereunder. This Rule
reads as under:
      29(d)  [The Director General  [or  [Special Director-
General or the Additional Director-General heading the Zone]]
or the Inspector-General] or the Deputy Inspector General may
call for the records of award of any punishment and confirm,
enhance, modify or annul the same, or make or direct further
investigation to be made before passing such orders:

      It is clear from a bare reading of the above Rule that the words
Special Director General were inserted therein only with effect from
21.02.2012.  Prior to the insertion of these words, the power
exercisable under Rule 29(d) of the Rules of 1955 was only by the
Director General or the Additional Director General or the Inspector
General or the Deputy Inspector General.  Thus, at the point of time
the show-cause notice was issued in April, 1997 by the Special
Director General, Southern Sector, CRPF, he was not vested with
power under Rule 29(d) of the Rules of 1955.  Though the counter-
affidavit states that the post of Inspector General of Police, Southern
Sector, CRPF, was upgraded to that of Special Director General, the
specific insertion of the words Special Director General in the Rule
only in the year 2012 manifests that the rule-making authority
deemed it necessary to include the said officer separately only at that
stage and there can be no implied vesting of such power in a Special
Director General before the said date. The alleged upgradation of the
post of Inspector General to that of Special Director General is
therefore of no avail.  Had it been so, it would not have been
necessary to amend the Rule in 2012 and include the words Special
Director General.
      In the light of the aforestated amendment and given the fact
that the respondents have no answer to this ground of attack by the
petitioner, this Court necessarily has to hold that at the time the
Special Director General, Southern Sector, CRPF, exercised power
under this Rule and issued a show-cause notice to the petitioner in
April, 1997 and thereafter enhanced the punishment imposed on him
in October, 1997, he had no power to do so.  The writ petition
therefore deserves to be allowed on this ground but as arguments
were also advanced on the second issue with regard to delay, this
Court deems it appropriate to deal with the same.
        The admitted facts reflect that the petitioner suffered the
punishment imposed upon him by the Commandant, 83 Battalion,  
CRPF, under order dated 21.11.1994 and the said punishment was
duly implemented.  The show-cause notice seeking to suo motu
enhance the said punishment was issued nearly two and half years
thereafter and acting thereupon, the punishment was enhanced
nearly three years later.  The question that arises is whether such
exercise can be said to be within a reasonable time.
      This Court had occasion to consider an identical issue in
V.JAYARAM V/s. FOOD CORPORATION OF INDIA .  A copy of the        
order passed by this Court in the said case is placed on record.  That
was also a case where the punishment was enhanced by exercise of
suo motu power more than four years later.  Such exercise was under
Regulation 74 of the Food Corporation of India (Staff) Regulations,
1971.  Dealing with the issue, this Court stated as under:
      It is no doubt true that the regulation states to the effect
that the Board may at any time, either on its own motion or
otherwise, review any order made under the regulations.  The
power in this regard, having been delegated to the Zonal
Manager under Regulation 74(4), had to be exercised within a
reasonable time notwithstanding the fact that no embargo was
stipulated in the regulation as to any temporal restrictions.
Trite to state, even if no limitation is prescribed for exercise of a
power vested in an authority, such power can be exercised only
within a reasonable time depending on the facts of the case.
(State of Gurajat V. Patil Raghav Natha , Mohd. Amin V.
Fatma Bai Ibrahim , State of Punjab V. Bhatinda Dist.
Coop. Milk Producers Union Ltd.,  and Santoshkumar
Shivgonda Patil V. Balasaheb Tukaram Shevale ).  Though
these cases pertained to exercise of revisional power, the ratio
laid down therein is equally applicable to exercise of review
power.  In the present case, the punishment order dated
03.04.1996 had been acted upon and there is no explanation
for the 4 years delay in exercise of suo motu review power.  The
matter stood settled by then, as the petitioner abided by the
order dated 03.04.1996 and did not even choose to challenge it.
The exercise of suo motu review powers by the Zonal Manager
(South), FCI, Chennai, therefore suffers incurably on the
ground of unreasonable delay.

      In the present case, enhancement of the punishment imposed
upon the petitioner was nearly three years after passing of the initial
order imposing a lesser punishment.  The petitioner had not only
accepted the lesser punishment without protest but, in the
meanwhile, the authorities had also implemented the same.
Generally, an employee would be lawfully entitled to assume that a
punishment imposed upon him and duly implemented by the  
authorities has attained finality.  Exercise of suo motu power to
enhance such punishment must therefore be within a reasonable
time so as not to impinge upon the aforestated right of the employee.
      Sri Raghavender, learned counsel, relied on BIJAY KUMAR
SHARMA V/s. THE INSPECTOR GENERAL OF POLICE, C.R.P.F.,          
SOUTHERN SECTOR, HYDERABAD .  However, perusal of the said      
decision reflects that the punishment imposed in that case was on
09.05.1989 and enhancement thereof was sought to be effected by
issuing a show-cause notice on 05.07.1990.  In such circumstances,
this Court held that exercise of suo motu power to enhance the
punishment was within a reasonable time.  The case on hand is
altogether different on facts as the petitioner had suffered the
punishment of removal from service in the first instance in August,
1993, which order was set aside in appeal and upon remand and a
fresh disciplinary enquiry, he was visited with a lesser punishment
under order dated 21.11.1994.  Enhancement of the said
punishment nearly three years thereafter can hardly be said to be
within a reasonable time!
      On the above analysis, this Court holds that the petitioner
must succeed on both grounds.  To begin with, the Special Director
General, Southern Sector, CRPF, Hyderabad, had no jurisdiction to
exercise power under Rule 29(d) of the Rules of 1955 in the year
1997, and therefore, his action in issuing a show-cause notice and
thereafter enhancing the punishment imposed upon the petitioner
was without legal sanction.  Further, even if the said exercise of
power is assumed to be valid for any reason, the same was not within
a reasonable time and such belated exercise of suo motu power
cannot be sustained on facts and in law.
        The writ petition is therefore allowed setting aside the order
dated 29.10.1997 passed by the Special Director General, Southern
Sector, CRPF, Hyderabad, and the order dated 14.05.1998 of the
Director General of Police, CRPF, New Delhi, confirming the same in
appeal. The petitioner shall be reinstated in service but as he
remained out of uniformed service for all these years, he would be
entitled to continuity of service only with notional attendant benefits.
He shall not be entitled to any monetary benefits for the period that
he remained out of service. Pending miscellaneous petitions, if any,
shall stand closed in the light of this final order. There shall be no
order as to costs.


______________________  
 SANJAY KUMAR, J  
17th AUGUST, 2015  

unauthorized illegal constructions made by the other party in violation of mandate of Hyderabad Municipal Corporation Act, 1955 (for short, Act, 1955), Rules made there under and the building permissions granted in their favour. =ordinarily certificate of posting cannot amount to effective service of notice. However, in a given case, it is permissible to the Court to presume service of notice sent by certificate of posting by looking into surrounding facts.= i) Since the petitioners are now in receipt of intimation notice dated 12.11.2008, petitioners shall submit the required documents and penalization charges as demanded in the said intimation notice within a period of three weeks from this date and on furnishing of such documents and payment of charges, if the authorities are satisfied that the required documents are furnished, the building regularization application of the petitioners shall be considered and appropriate orders be passed as warranted by law within further period of three weeks. Till the orders are passed, as directed above, the notice issued under Section 636 of the Act shall be kept in abeyance and no coercive action shall be taken against petitioners.

THE HONBLE SRI JUSTICE  P.NAVEEN RAO        

WRIT PETITION NOs.1470 of 2015  

14-08-2015

Shri Ratan Kumar,  s/o. Raghunath, Aged 48 years, Occu: Business, r/o. H.No.15-
1-91/2, Old Feelkhana, Hyderabad and two others.  Petitioners

Greater Hyderabad Municipal Corporation, rep.by its Commissioner, Tank Bund
Road, Hyderabad and others. . Respondents  

Counsel for the petitioners :  Sri V.M.M.Chary,  counsel for          
                                petitioners in WP Nos.1470 and
                                16690 of 2015;
                                Sri A.K.Kishore Reddy counsel for
                                Petitioners in WP No.4306 of 2015

Counsel  for the:Sri N.Ashok Kumar, standing Respondents:counsel for R1 to R3,
                                               Sri. A.K.Kishore Reddy counsel
                                               for R4 to R6 in W.P.No.1470 of
2015;
                                       
                                               Sri N.Ashok Kumar, standing counsel
                                               for R1 and R2,
                                               Sri V.M.M.Chary, counsel for R3 & R4
                                               in W.P.No.4306 of 2015;
                                       
                                              Sri N.Ashok Kumar, standing
counsel
                                              for R1 to R3 in WP No.16690 of
2015.

<Gist :

>Head Note:

? Cases referred:

1.(1981) 3 sCC 317
2.2004 (9) SCC 204
3.AIR 2010 SC 3817

HONBLE SRI JUSTICE P.NAVEEN RAO      

WRIT PETITION NOs.1470, 4306 and 16690 of 2015  

COMMON ORDER:    

        These three writ petitions concern subject matter of adjacent
properties belonging to rival groups.  Both of them allege
unauthorized illegal constructions made by the other party in
violation of mandate of Hyderabad Municipal Corporation Act,
1955 (for short, Act, 1955), Rules made there under and the
building permissions granted in their favour.   Having regard to the
same, all these three writ petitions are disposed of by this common
order.

2.      Heard learned counsel for the petitioners and learned
standing counsel for GHMC.

3.      W.P.No.1470 of 2015 is filed alleging inaction of the
respondents 1 to 3 in not discharging their statutory duties by
initiating action for removal of illegal and unauthorized
constructions undertaken by the respondents 4 to 6 in house
bearing No.15-1-91/7, Old Feelkhana, Hyderabad in violation of
sanctioned plan dated 12.02.2013, without leaving the setbacks
and encroaching the petitioners property.

4.      As a counterblast, W.P.No.4306 of 2015 is filed by the
building owners bearing Municipal No.15-1-91/7, alleging inaction
on the complaint given by the petitioners on 27.01.2015 regarding
removal of unauthorized construction raised by the respondents 3
and 4 therein by deviating from the sanctioned plan accorded to
them in the year 2002 and seeking consequential direction to
respondents 1 and 2 therein to take necessary action upon the
complaint given by the petitioners.

5.      As a consequence to the complaint given by the petitioners
in W.P.No.4306 of 2015, notices under Section 452(1) and 461 (1)
of the Act were issued on 10.03.2015 to the petitioners in
W.P.No.1470 of 2015 followed by notice under Section 452 (2) of
the Act on 06.06.2015  and notice under Section 636 of the Act
dated 08.06.2015. Challenging these notices, petitioners in
W.P.No.1470 of 2015 have instituted W.P.No.16690 of 2015.

6.      For convenience sake, parties are referred to as arrayed in
W.P.No.1470 of 2015.

7.      According to the petitioners, petitioners and three brothers
of first petitioner are the owners of property bearing house no.15-
15-1-91/2, Old Feelkhana, Hyderabad.  In order to accommodate
the growing family needs, owners of the building have applied for
building permission for construction of ground floor plus two
upper floors and permission was granted by the municipal
corporation on 17.08.2002.  However, in deviation of the said plan,
petitioners have constructed Cellar plus two additional upper
floors and pent house than the original permission granted to
them.  However, Government formulated a scheme of
regularization and penalization of unauthorized constructions
made in the urban areas and notified Rules in G.O.Ms.No.901
dated 31.12.2007.  Taking advantage of the said Rules, petitioners
have applied for regularization of unauthorized constructions made
by them on 28.04.2005 by enclosing relevant documents.
Petitioners have submitted four separate applications and paid
Rs.80,000/- as initial amount payable in accordance with the
Rules.  According to the petitioners, said building regularization
application is pending consideration by the respondent
corporation.  While so, petitioners having noticed that their
neighbours of property bearing house No.15-1-91/7 in deviation of
the sanctioned plan, undertaking construction of cellar, ground
floor and five upper floors and as a commercial building, that
they have not observed setbacks in all four sides and encroached
into the land of petitioners, complained to the respondent
corporation.  Since there was no action on the part of the
respondent corporation and the construction is proceeding at brisk
pace, petitioners filed W.P.No.1470 of 2015.  This Court directed
the officials of the respondent corporation, by order dated
29.01.2015, to ensure that no constructions are made by the party
respondents in deviation of the permissions granted to them.

8.      As a counterblast, the said neighbours (party respondents)
complained against the petitioners alleging that illegal
constructions were made by the petitioners.  They have also
instituted W.P.No.4306 of 2015 alleging illegal constructions made
by the petitioners.   Notice before admission was ordered in the
said writ petition.

9.      On 10.03.2015 respondent corporation issued notice under
Sections 452(1) and 461(1) alleging that illegal constructions are
made by the petitioners in deviation of the sanctioned plan and
that the said constructions are in violation of Rules notified vide
G.O.Ms.No.168 dated 07.04.2012. Petitioners claim to have
submitted their representation on 13.05.2015 alleging that they
have submitted four building regularization applications in
accordance with the Rules notified vide G.O.Ms.No.901 dated
31.12.2007  and the said  applications were not disposed of and,
therefore, the question of taking penal action on the allegation of
unauthorized constructions made is not valid.  It is also contended
that there cannot be a common notice under Sections 452 and 461
of the Act and the same is illegal.  On 06.06.2015, notice under
Section 452(2) of the Act, 1955 was issued.  Petitioners were told
that their building regularization application was rejected due to
non-submission of shortfalls as notified on 12.11.2008 and,
therefore, petitioners were informed that further action would be
taken as per Section 636 of the Act.   Accordingly, notice under
Section 636 was issued on 08.06.2015 directing the petitioners to
remove the unauthorized constructions made.  Challenging the
said notice, W.P.No.16690 of 2015 is filed.

10.     The party-respondents were served notice dated 28.12.2013
by the respondent corporation alleging that party respondents have
constructed cellar against sanctioned ground and first floor for
residential purpose and the aforesaid constructions are in violation
of Rules notified under G.O.Ms.No.168 dated 07.04.2012.  They
were served further notice dated 18.12.2014 under Section 452(1)
and 461(1).  In the notice, it is alleged that party respondents have
constructed cellar, four upper floors and pent house against
sanctioned ground and first floor for residential purpose, that they
have not maintained all round setbacks and that four floors are in
violation of Rules notified vide G.O.Ms.No.168 dated 07.04.2014.
Alleging that illegal interference and obstruction to undertake
construction of the building as proposed, party respondents
instituted O.S.No.2326 of 2014 on the file of VI Junior Civil Judge,
City Civil Courts at Hyderabad praying to grant permanent
injunction restraining the respondents corporation and its
employees etc., from interfering with the construction work or
demolishing any part of the suit properties either in whole or in
part.   By order dated 29.12.2014 made in I.A.No.827 of 2015 in
the above suit, learned VI Junior Civil Judge, directed the parties
to maintain status quo until filing of the counter by the respondent
corporation.  As informed by the learned counsel for party
respondents and learned standing counsel for respondent
corporation, the said suit is pending.

11.     Learned counsel for petitioners contends that the petitioners
were granted building permission as early as on 17.08.2002.
Petitioners have constructed two upper floors and pent house in
addition to the permission granted to them, but on account of
scheme formulated by the Government in the year 2007, they have
applied for regularization of unauthorized constructions made in
deviation of the sanctioned plan strictly in accordance with rules
notified in G.O.Ms.No.901 dated 31.12.2007 by enclosing the
relevant documents as well as requisite fee. Said building
application is still pending and without disposing of the building
regularization application, no coercive action can be taken against
the petitioners.   Learned counsel strenuously denies the stand of
the respondent corporation that their building regularization
application was rejected.   He submits that copy of notice dated
12.11.2008 was not served on the petitioners.  He submits that
sending the notices by way of certificate of posting is not valid in
law and no credence can be given to such procedure and it is
deemed that no notice was served on the petitioners.  Unless
appropriate notice is served on the effected party, no coercive
action can be taken.    In support of his contention that sending
notice by way of certificate of posting is not valid, learned counsel
placed reliance on the decision of the Supreme Court in the cases
of Msr.L.M.S. Ummu Saleema vs. Shri B.B.Gujaral and another
and M.S.Madhusoodhanan and another v. Kerala Kaumudi (P)  
Ltd., and others .  He, therefore, submitted that the regularisation
of building application is deemed to be pending and unless and
until such application is rejected, no further coercive steps can be
taken and, therefore, the impugned notices are null and void and
liable to be set aside.

12.     He strenuously denies the stand of the respondent
corporation that building regularization scheme has come to an
end on 31.05.2013 and that since regularization was not granted
before that date, it is deemed that regularization application is
rejected.  He further submits that there is no deeming clause.
Several regularization applications are still pending with the
corporation and even now respondent corporation is granting
regularization of illegal and unauthorised constructions made.
13.     He further submits that if only the intimation was served on
them, they would have availed remedy of appeal as provided under
Rule 11 of the Rules notified in G.O.Ms.No.901.   Since the Rules
vests substantive  right in the petitioners to avail remedy of appeal
against any decision of the original authority on the issue of
regularization of unauthorized construction claim, no such right
can be denied on mere assumption that notices sent by certificate
of posting were deemed to have been served long ago.

14.     Learned counsel appearing for party respondents submits
that the petitioners are only unnecessarily harassing and
humiliating the party respondents.   He further submits that party
respondents have not encroached into the property of the
petitioners and only to harass and humiliate them, false complaint
is generated against party respondents and under the guise of the
orders of this Court, petitioners are interfering with the day to day
construction activity even though party respondents are making
constructions within the building  already constructed.

15.     Learned counsel for the party respondents opposes the claim
of the petitioners that their building application is pending and,
therefore, no coercive steps can be taken against them.  He
submits that  section 27 of the General Clauses Act clearly infers
presumption of service of notice once it is sent and therefore as
municipal corporation has sent the notices to the petitioners by
endorsement dated 12.11.2008 that notice is deemed to have
served on them and therefore the action taken by the respondent
corporation which resulted in issuing impugned notices which are
challenged in W.P.No.16690 of 2015, which action initiated at the
instance of the party respondents is legal and valid and since the
petitioners have made illegal constructions in deviation of the
sanctioned plan, such  constructions have to be removed.
16.     Learned counsel further submitted that aggrieved by the
notices issued against party respondents, they have moved
VI Junior Civil Judge Court in O.S.No.2326 of 2014 and the
learned Judge granted order of status quo and, therefore, no
coercive action can be taken against the party respondents during
the pendency of the said suit and, therefore, W.P.No.1470 of 2015
filed by the petitioners is not maintainable and is liable to be
dismissed.

17.     Learned standing counsel submitted that petitioners as well
as party respondents have admittedly made illegal constructions in
deviation of the respective sanctioned plans.   Both have made
complaints against each other alleging such illegal constructions.
On due verification of the respective complaints, appropriate action
was initiated against the respective parties.  Insofar as petitioners
are concerned, Section 636 notice was issued on 08.06.2015 for
removal of unauthorized constructions made, but on account of
orders passed by this Court, during pendency of these writ
petitions, no further action can be taken.  He further submits that
action was properly initiated by the respondent corporation to
remove unauthorized and illegal constructions made.

18.     He contended that the only defence put up by the petitioners
is that they have submitted applications for building regularization
in the year 2008.  But, as seen from the record of the municipal
corporation, the said applications were scrutinized and petitioners
were directed to comply with the objections noticed therein. By way
of endorsement dated 12.11.2008, the same was communicated to  
them.   Since petitioners have not submitted the documents as
required under the said endorsement, it is deemed that no such
building permission is pending and, therefore, coercive action is
taken against the petitioners is legal and valid.  He further
submitted that according to the records of the municipal
corporation, the said endorsement was sent by way of certificate of
posting and the certificate of posting is obtained from the postal
department, which is filed before this Court, which shows that the
said endorsements were sent to the petitioners and it is deemed
that it is served on them.   If the petitioners are really sincere
about pursuing the building regularization application, they ought
to have pursued the matter further at least thereafter.  But, until
the notices were issued by the respondent corporation, which are
impugned in the writ petition No.16690 of 2015, they kept quiet.
It is significant that the petitioners are aware of the rejection of the
endorsement dated 12.11.2008 and kept quiet without submitting
the relevant documents.   In support of his contention that notice
sent to the petitioners by way of posting is valid, he placed reliance
on the decision of the Supreme Court in Greater Mohali Area
Development Authorities and Others vs. Manju Jain and
Others .      
19.     Learned standing counsel further submitted that though
notices were issued to party respondents against illegal
constructions made, no further action could be taken in view of the
pendency of  O.S.No.2326 of 2014 on the file of VI Junior Civil
Judge and the order of status quo granted by the said court on
29.12.2014.    The municipal corporation is pursuing the matter
before the said Court.

20.     Insofar as taking penal action against party respondents is
concerned, as admitted by the learned standing counsel, the party
respondents have filed O.S.No.2326 of 2014, which is pending on
the file of VI Junior Civil Judge, City Civil Courts at Hyderabad
and in I.A.No.827 of 2015, learned Junior Civil Judge passed
orders on 29.12.2014 directing the parties to maintain status quo
and the said order is in force till date.    In view of the fact that the
matter is ceased by VI Junior Civil Judge, no direction can be
given for removal of alleged illegal and unauthorized construction
undertaken by the respondents 4 to 6 as alleged in W.P.No.1470 of
2015 at this stage.    Thus, the Writ Petition No.1470 of 2015 is
liable to be dismissed and is accordingly dismissed.

21.     Admittedly, petitioners have made constructions in deviation
of the sanctioned plan and, therefore, there is no illegality in taking
action for removal of such constructions. However, taking
advantage of the regulation/penalisation scheme formulated by the
State, petitioners have applied for regularization of illegal
construction made by them by paying appropriate fee. If
applications for regularization of illegal construction are pending,
no coercive action can be taken, more particularly, in view of the
provision contained in Sections 455-A and 455-AA of the Act and
Rules made there under.

22.     In the facts of this case, therefore, the question for
consideration is whether the petitioners applications for
regularization were rejected as claimed by the respondent
municipal corporation ?

23.     Learned standing counsel placed reliance on the proceedings
dated 12.11.2008, where under intimation notices were issued to
the individual petitioners informing them certain deficiencies in the
application filed for regularization, directing them to comply with
the said objections.  In the said notices, they were informed that
applications cannot be taken up for scrutiny unless information as
indicted is submitted by the applicants. Learned standing counsel
stated that these notices were sent to the petitioners under
certificate of posting.  The copies of notices along with xerox copies
of proof of sending notices by certificate of posting are furnished to
the counsel for the petitioners and circulated to this Court.   The
notices disclose the addressees and sending of the notices by
certificate of posting. On the above submission, there was
extensive debate.

24.     The plea taken by the learned counsel for the petitioners is
sending the notices by certificate of posting does not amount to
valid service of notice and, therefore, it is deemed that no such
notice is sent.   In support of the said contention, learned counsel
placed reliance of two decisions referred to above.

25.     In Mst. L.M.S. Ummu Saleema (supra 1), reliance was
placed in defence of the stand by the detenu  that he retracted  the
earlier statement long  before the order of detention was made  and
the fact of such retraction was not considered by the detention
authority before making the order of detention.  The said
contention was denied.  The detenu contended that after his
release on bail, he addressed a letter to the Assistant Collector of
Customs, Cuddalore, retracting his former statement and same
was sent under certificate of posting.   There was denial of receipt
of such statement by Customs Authorities.  Supreme Court
rejected the said contention.  Supreme Court held as under:

6.  The certificate of posting might lead to a presumption
that a letter  addressed to the Assistant Collector of Customs was
posted on August 14, 1980 and in due course reached the
addressee.   But, that is only a permissible and not an inevitabe
presumption.   Neither Section 16 nor section 114 of the Evidence
Act compels the court to draw a presumption.   The presumption
may or may not be drawn.   On the facts and circumstances of a
case, the court may refuse to draw the presumption.  On the
other hand the presumption may be drawn initially but on a
consideration of the evidence the court may hold the presumption
rebutted and may arrive at the conclusion that no letter was
received by the addressee or that no letter was ever despatched as
claimed.   After all, there have been cases in the past, though
rate, where postal certificates and postal seals have been
manufactured.

26.     In M.S.Madhusoodhanan (supra 2), similar issue has arisen
for consideration.   Supreme Court rejected the stand of sending
notice by way of certificate of posting as valid notice.  Matter arisen
under the provisions of the Companies Act.    Supreme Court held
as under:
       
    124. In the present case, the certificate of posting is suspect.
Assuming that such suspicion is unfounded, it does not in any
event amount to conclusive proof of service of the notice on
Madhusoodhanan or on any of the other addressees mentioned in
the certificate as held by the Division Bench. Except for
producing the dispatch register and the certificate of posting, no
one on behalf of the respondents came forward to vouch that they
had personally sent the notice through the post to
Madhusoodhanan and his group. Madhusoodhanan had written  
two letters contemporaneously dated 4-8-1986 and 8-8-1986
(Ext. P-24 and Ext. P-35) to Srinivasan, the General Manager of
Kerala Kaumudi and to Madhavi complaining that he was not
receiving any mail at all. These letters were admittedly received
but not replied to by the respondents. It is also apparent from a
perusal of those letters that Madhusoodhanan had no knowledge
whatsoever of the notice for application for allotment of additional
shares. Had there been such notice it is improbable that
Madhusoodhanan who was fighting for retaining his control over
Kerala Kaumudi, would have risked losing such control by
abstaining from applying for the additional shares.

    125. In the circumstances, we hold that Madhusoodhanan
and his group were not served with the notice dated 1-8-1986. It
is, therefore, unnecessary to decide whether the period prescribed
in the notice to apply for the shares was too short or contrary to
the Articles of Association of Kerala Kaumudi.

27.     Provision in Section 27 of General Clauses Act read with
Section 114 of Indian Evidence Act, gives rise to presumption of
service of notice if it is sent to correct address by registered post.
As seen from the provision in Section 27 of General Clauses Act to
draw presumption of service of notice,  notice must be sent by
registered post and to the correct address.  In this case, the
primary  requirement to attract provision in Section 27 of General
Clauses Act is not fulfilled.  Admittedly, in this case, notice was
sent by certificate of posting.

28.     Learned standing counsel contended that even assuming
that the notice sent by way of certificate of posting was not
acknowledged by the petitioners, the fact that petitioners kept
quiet for so long is deemed that petitioners were aware of rejection
of their application by the respondent corporation.   Their silence
for such a long time, denies their claim that no such notice was
served on them and in the circumstances and by the conduct of
the petitioners, it is deemed that the petitioners were aware of the
decision of the corporation as communicated in the intimation
notice dated 12.11.2008.   In support of the said contention,
learned standing counsel placed reliance on decision of the
Supreme Court in  Greater Mohali Area Development Authority
(supra 3).

29.     The decision relied upon by the learned standing counsel is
distinguishable on facts. As noticed from the judgment, respondent
therein applied for allotment of a flat under a hire purchase
scheme.   After conducting draw of lots, respondent was informed
of allotment by letter dated 19.11.1997.   The contents of the said
letter would disclose that she was required to pay the amount for
the flat.  Letter of allotment was issued on 09.03.1999, which
indicated the price of flat to be paid and the mode of payment.
The letter describes six days time from the date of issue of the
allotment letter to make the payment.  Respondent did not deposit
any amount.  On enquiry made by the respondent, she was
informed that since amount was not paid within the time granted,
allotment made was cancelled.   This was challenged before the
Appellate Authority as well as Revisional Authority and on
dismissal of revision, writ petition was filed.   The W.P. was allowed
on the ground that allotment letter was not sent to the correct
person to the correct address by relying on the receipt and
despatch register of the authority.   No opportunity of hearing was
afforded to the authority.

30.     It appears from the reading of the judgment that the
allotment letter was sent by registered post.  There was no reply of
acceptance of allotment nor amount was deposited.   From the
record of Revisional Authority, Supreme Court also noticed that in
the ground raised before the Revisional Authority, the respondent
contended that due to some financial difficulties, she could not
arrange the huge sum of Rs.1,19,800/- to be paid within the
stipulated period, that she also approached banks for loan, but
loan was not granted and that since funds are now arranged, she
is willing and ready to make the payment.   Having noted the above
grounds, Supreme Court held that the said statement clearly
implies that the respondent was aware of the allotment letter in the
time schedule prescribed and due to personal reasons only the
amount was not paid.  Supreme Court also noticed that the
contention of non-receipt of letter of allotment was raised for the
first time before the High Court, whereas no such contention was
raised before the Appellate Authority and the Revisional Authority.
In the facts of said case, Supreme Court observed that in view of
the grounds raised before the Revisional Authority and that the
respondent kept quiet for more than four years and because of her
own faults, there was no  concluded contract between the parties,
the question of handing over the possession of flat did not arise.
The Supreme Court held that respondent therein had knowledge of
the intimation given by appellant and subsequent conduct of the
respondent disentitles the respondent to the relief as granted by
the High Court.

31.     In the two decisions relied by learned counsel for petitioner,
Supreme Court held that ordinarily certificate of posting cannot
amount to effective service of notice.  However, in a given case, it is
permissible to the Court to presume service of notice sent by
certificate of posting by looking into surrounding facts. The learned
counsel for the respondents contended that the fact that
petitioners kept quit for long time would show that they were
aware of such intimation. Thus, learned standing counsel was
specifically asked as to whether any despatch register was
maintained by the respondent municipal corporation and whether
there was any proof of despatch of intimation notice dated
12.11.2008.   Learned standing counsel, on instructions, informed
the Court that no despatch register is available and there is no
other proof of sending the notices.  Except copy of intimation
letters and the stamp paper of certificate of posting, there is no
other material available on record to show that letters were
despatched and served.

32.     As seen from the intimation letter, it is not a rejection.  On
scrutiny of the application submitted for regularization, scrutiny
authority found certain documents were not filed and necessary fee
was not paid.  Therefore, petitioners were asked to submit those
documents and necessary penal charges. If the same was received,
probably the petitioners could have submitted the documents
required by the respondent corporation or could have asked for
some other time or offered some explanation. They could have gone
in appeal also. Such a course cannot be ruled out.  Thus, it cannot
be presumed, in the light of the contents of the said intimation
notice that the petitioners deliberately kept quiet.

33.     As fairly submitted by the learned standing counsel, several
regularization applications submitted during the same period are
yet to be disposed of for various administrative reasons and the
scheme has not come to an end by 31.05.2013.    Having regard to
the peculiar facts of this case, it cannot be presumed that
intimation notice dated 12.11.2008 were deemed to have been
served and that the petitioners were aware of such intimation,
more particularly, when the consequence of such presumption are
grave and result in demolishing the constructions so made.   As no
intimation was given to petitioners on objections to process their
building regularization applications, it is deemed that such
applications submitted by the petitioners are pending.   Since their
building regularization applications are pending, no coercive action
can be taken against them.

34.     Having regard to the same the relief sought by the
respondents 4 to 6 in W.P.No.4306 of 2015 cannot be granted and
the same is liable to be dismissed.

35.     W.P.No.16690 of 2015 is disposed of with the following
directions:
        i)  Since the petitioners are now in receipt of intimation
notice dated 12.11.2008, petitioners shall  submit the required
documents and penalization charges as demanded in the said
intimation notice within a period of three weeks from this date  and
on furnishing of such documents and payment of charges,  if the
authorities are satisfied that the required documents are
furnished, the building regularization application of the petitioners
shall be considered and appropriate orders be passed as warranted
by law within further period of three weeks.   Till the orders are
passed, as directed above, the notice issued under Section 636 of
the Act shall be kept in abeyance and no coercive action shall be
taken against petitioners.

36.     Thus, W.P.Nos.1470 and 4306 of 2015 are dismissed and  
W.P.No.16690 of 2015 is disposed of accordingly.   There shall be
no order as to costs.

        Miscellaneous petitions if any pending in these writ petitions
shall stand closed.
__________________________  
JUSTICE P.NAVEEN RAO    
Date : 14.08.2015

refusing to refer the dispute to the arbitration.=when there is reference to a document in a contract, the Court has to consider whether the reference to the document is with the intention of incorporating the contents of that document in entirety into the contract, or with the intention of adopting or borrowing specific portions of the said document for application to the contract, we would like to infer the intention of the parties in incorporating the words you are deemed to have full knowledge of the terms and conditions stipulated in the main contract between the employer and us and such terms and conditions, shall apply to you in so far as it is applicable occurring in clause 6 of the sub-contract between the parties.Admittedly, dispute resolution mechanism has been separately incorporated by the parties in clause 17 of the sub-contract. Even a dispute resolution mechanism is provided in the main contract between the employer and the contractor in sub clauses 1 to 4 of clause 67, as extracted in the above.The very fact that a distinct dispute resolution mechanism has been incorporated by the parties in clause 17 of the sub-contract reflects the intention of the parties that they never inclined to adopt the dispute resolution mechanism contained in clause 67 of GCC. When viewed in that perspective, certainly, the words mentioned in clause 6 of the sub-contract afore extracted, in our view, definitely indicate the intention of the parties that only the terms and conditions of the main contract relating to execution of the work were adopted as part of the sub-contract between the parties herein and not the contract in its entirety. Thus, clause 17 of the sub-contract would completely exclude the invocation of arbitration clause contained in sub clause 4 of clause 67 of the main contract between the employer and the respondent. the respondent did not deny the specific reference made to arbitration agreement contained in the main contract in the letters, dated 18-10-2012 and 24-06-2013, we are of the considered view, that the said circumstance does not improve the case of the revision petitioners for the reason that there has been distinct sub-contract between the revision petitioners and the respondent, more particularly, incorporation of clause 17 in relation to a distinct dispute resolution mechanism. Therefore, we are not convinced with the argument of the learned counsel for the revision petitioners in that regard. In view of the foregoing discussion, we find no merit in the instant revision petition, and the same stands dismissed. We make no order as to costs.

HONBLE SRI JUSTICE R. SUBHASH REDDY AND HONBLE SRI JUSTICE A. SHANKAR                

CIVIL REVISION PETITION No.1394 OF 2015    

17-08-2015

M/s Lakshmi Sai Constructions Company & another.. Petitioners

M/s IJM Corporation, Berhard.. Respondent

Counsel for the Petitioners:Sri S. Rajan,

Counsel for Respondent:Sri N.V. Sumanth
                        M/s Indus Law Firm.
<GIST:
       
>HEAD NOTE:  

?  CASES REFERRED:    

1. 2009 (3) Arb. L.R. 1 (SC)

 HONBLE SRI JUSTICE R. SUBHASH REDDY        
 AND
 HONBLE SRI JUSTICE A. SHANKAR NARAYANA        

CIVIL REVISION PETITION No.1394 OF 2015    


ORDER:(Per Honble Sri Justice A. Shankar Narayana)



        Assailing the order, dated 13-02-2015, in I.A. No.660 of 2014
in O.S. No.1265 of 2013, passed by the learned III Additional District
Judge, Ranga Reddy District at L.B. Nagar, the instant appeal is
preferred by the revision petitioners.

        2.  By the aforesaid order, the Court below dismissed I.A.
No.660 of 2014 filed by the revision petitioners herein in O.S.
No.1265 of 2013 under Section 8 of the Arbitration and Conciliation
Act, 1996 (for brevity the Act, 1996) refusing to refer the dispute to
the arbitration.

        3.  The respondent herein is the plaintiff  M/s IJM
Corporation, Berhadin O.S. No.1265 of 2013, while the revision
petitioners herein are the defendants  M/s Lakshmi Sai Construction
Company, Hyderabad and its proprietor Gunturu Venkata Bhaskara  
Raju.
                4.  The respondent instituted the above suit for recovery of
Rs.94,22,889/- from the revision petitioners consisting of
Rs.79,85,499/- towards excess payment made to the defendants and  
Rs.14,37,390/- towards interest calculated at 24% per annum from 19-
12-2012 to 19-09-2013 concerning the sub-contracts given to the
revision petitioners.
        5.  The relevant facts, for adjudication of the instant revision,
are as under:
        i)  The respondent has been engaged in the business of
infrastructure and property development.  National Highways
Authority of India (hereinafter referred to as NHAI) had awarded
contract relating to Rehabilitation and Up-gradation to Four Laning of
Jhansi  Lakhnadon Section from Km 132 - 187.8 (up to start of Sagar
Bypass) on National Highway - 26 in the State of Madhya Pradesh,
under contract package ADB-II/C-4 by entering into contract
agreement on 19-04-2006.
        a)  Clause 4.1 of the General Conditions of Contract empowers
the respondent herein to sub-contract any portion of the awarded
works.  The revision petitioners approached the respondent expressing
its incling in executing the said work.  After due deliberations and
negotiations, the respondent agreed to sub-contract certain portions of
the work, i.e., awarding three separate contracts to construct Culverts,
Bridges and Underpasses from chainage 132.28 to 160, package  I
including construction of Open Cross-Drains.  The respondent herein
elaborated the details in Table -A incorporated in paragraph No.4of
the plaint.  To resolve site related issues, an amendment was
introduced to the Letter of Award (for brevity LOA) relating to the
first two items, being construction of bridges and underpasses and for
construction of culverts, which details have been mentioned in Table
B in paragraph No.5 of the plaint.  Further amendment was made
pursuant to the instructions/requirements of NHAI to the LOAs, dated
02-11-2007, which details have been mentioned in Table - C in
paragraph No.6 of the plaint pertaining to construction of bridges,
underpasses and culverts covered by LOAs. Certain other details have
been mentioned in Table - D pertaining to supply of material, such
as cement, reinforcement steel etc.
        b)  The respondent herein has also referred to relevant clauses,
which are clause - 2 relating to scope of subcontract work; clause - 5
relating to construction of culverts covered by LOAs.  Finally, the
respondent incorporated the material supplied by it to the revision
petitioners as per the sub-contract agreement in table - G, the cost of
which is also shown.  Likewise, certain other details have been
mentioned in Table -H showing various amounts relating to the
material supplied by the respondent towards other recoveries.  The
respondent then incorporated the materials procured by the revision
petitioners and the amounts reimbursed by it in Table - I.  The gist
of the entire transactions and the payments details between the parties
have been shown in Table - J and, thus, claimed the aforesaid
amount from the revision petitioners.
        ii)  Since it appears at that stage there was no necessity for the
respondent to refer to the dispute resolution mechanism between
them, the relevant clauses touching the sub-contract agreement were
not projected in the plaint.  Only, when the revision petitioners made
their appearance and filed I.A. No.660 of 2014, the respondent has
come up with pertinent clauses touching the dispute resolution
mechanism between them.  
        iii)  The revision petitioners admit accepting and execution of
sub-contracts relating to the works entrusted to it by the respondent
covered by LOAs.1, 2 and 3.  But, according to it, the suit is liable to
be dismissed in limini, as there has been a valid and subsisting
arbitration agreement between them which applies to the subject
matter of the present suit and the respondent has given a go-by to it
and instituted the instant suit.
        a)  According to the revision petitioners, when certain disputes
have arisen, both the parties had personal discussions in the office of
the respondent at Kuala Lumpur on 27-09-2012 to settle the claims
refused by the respondent and, therefore, addressed a detailed letter,
dated 18-10-2012, enlisting all their pending claims with the
respondent under the subject sub-contracts and requested for early
settlement.  The respondent, asked through its letter dated31-10-2012,
requiring the revision petitioners to submit certain documents, which
were duly furnished through their letter, dated 07-11-2012.
Subsequently, as per the desire of the respondent expressed through
the letter, dated 23-11-2012, requiring the presence of the revision
petitioners on 27-11-2012 for valuation of the work, the officials of
the respondent and the revision petitioners sat in a meeting and the
officials of the respondent required the revision petitioners to sign on
a set of papers agreeing to the quantities and the rates indicated
therein promising to settle their claims as notified on 18-10-2012.
The Officials of the revision petitioners signed therein without
prejudice to their claim.  It is, according to the revision petitioners,
that later, the respondent strangely has come up with the theory of
excess payments said to have made to it to a tune of Rs.79,85,499/-.
        b)  It is also according to the revision petitioners that they have
addressed a letter of final claim, dated 24-06-2013, reiterating earlier
claims referred to in the letter, dated 18-10-2012, and thereby
contends that in their letters, dated 18-10-2012 and 24-06-2013, they
asserted that there has been an arbitration agreement in the subject
sub-contracts which were not denied by the respondent.
        c)  The revision petitioner also state that as per clause 6 of the
LOA, dated 02-11-2007, the terms and conditions of the main contract
of the respondent with NHAI, will apply even to the sub-contracts in
so far as they are applicable.  The revision petitioners further state that
clause 17 of the subject sub-contracts also deals with a dispute
resolution mechanism, to resolve the dispute and differences sought to
be referred to the heads of the contracting parties for mutual
settlement.  The revision petitioners even state that clause 67.3 of the
Conditions of Particular Application (for brevity COPA) as
contained in the main agreement deals with amicable settlement, and
clause 67.4 thereof provides for arbitration contemplating that the
disputes on which there is no mutual settlement shall be settled by
arbitration of three arbitrators, one each to be appointed by each of the
contracted parties and the third, presiding arbitrator to be appointed by
the two arbitrators.
        d)  It is the case of the revision petitioners that in terms of
clause 67.4 of COPA read with Clauses 6 and 17 of the sub- contracts,
it has invoked the arbitration vide their letter, dated 05-04-2014 and
appointed a former Judge of this Court as their nominee-arbitrator and
called upon the respondent to appoint their nominee - arbitrator.
Thus, according to the revision petitioners, a conjoint reading of
clauses 6 and 17 of the subject LOA, dated 02-11-2007 read with
clause 17 thereof and sub-clauses 67.3 and 67.4 of the main
agreement would explicitly reveal that there is a binding arbitration
agreement between the parties, and more so, the conduct of the
respondent in not denying when the existence of the said arbitration
agreement was asserted by them in their letters dated 18-10-2012 and
24-06-2013.  Therefore, a request was made to refer the respondent to
arbitration for its suit claim under Section 8 of the Act, 1996.
        iv)  Respondent- Plaintiff has strongly resisted the request.
Having referred to the details relating to the sub-contracts and the
relevant clauses touching the terms and conditions of the sub-
contracts between the parties, which, we have afore-referred to in
brief, comes up with the stand that clause 17 of the contract/work
orders/LOAs entered into between them provide that any dispute or
differences which shall arise either during the progress or on the
completion of the sub-contract work shall be referred to the respective
Chief Executive Officer/Managing Director of the parties to the
contract/work orders/LOAs to mutually agree and resolve the dispute
or differences, and except the said clause, there is no other clause
which deals with resolution of dispute that would arise between the
parties.
        a)  It is according to the respondent, as per the said dispute
resolution mechanism, its C.E.O. and, the C.E.O. of the revision
petitioners met on 27-09-2012 in Malaysia and discussed the issue at
length, but the same proved abortive and, thereafter, it has got issued
demand notice to the revision petitioners on
19-12-2012 demanding to pay Rs.79,85,449/- which was not obliged
by the revision petitioners.  Having left with no other option except to
seek redressal, the instant suit was instituted.
        b)  Touching invocation of arbitration clause, it is according to
the respondent that the reliance placed by the revision petitioners on
clause 6 of the contract/work order is totally misconceived, in view of
the fact that clause 6 refers to full knowledge of the terms and
conditions stipulated in the main contract and they shall apply to the
present contract/work orders in so far as it is applicable indicating that
it relates to quality and quantity of the work to be executed and that
cannot be stretched beyond the same.  It is also according to the
respondent that the emphasis laid on clause 67 of the main contract by
the revision petitioners is totally misconceived for the reason that the
said mechanism is exclusive to NHAI and cannot be substituted
anywhere else.  The respondent has extracted sub-clause 67.1 dealing
with disputes adjudication board; sub-clause 67.2 dealing with
procedure for obtaining the boards decision; sub-clause 67.3 dealing
with amicable settlement; sub-clause 67.4 dealing with arbitration;
sub-clause 67.5 dealing with failure to comply with the boards
decision; and sub-clause 67.6 which provides expiry of the boards
appointment and contends that alternative dispute resolution
mechanism provided in clause 67 is exclusive to NHAI and cannot be
relied on by the revision petitioners, more particularly, when it is not
 a signatory to the said contract, and even if it is to be accepted that
clause 67 of the main contract can be operated upon by the revision
petitioners, still, the same cannot be done in a piecemeal manner and
has to be operated in its entirety, and unless sub-clauses 1 to 3 of
clause 67 are invoked or exhausted, sub-clause 67.4 cannot be
operated upon as the same is not independent of sub-clauses 1 to 3  of
clause 67 and, therefore, reliance on clause 67.4 is misconceived.
        c)  Concerning the notice, dated 05-04-2014, got issued by the
revision petitioners seeking to invoke the arbitration clause and to
appoint an arbitrator, the respondent states that it has given reply
dated 25-04-2014, emphasizing the absence of arbitration agreement
between them as contemplated under the Act, 1996 and, as such, the
question of appointing arbitrator for adjudication/ resolving the
purported dispute cannot be countenanced. Therefore, it sought to
reject the request.
        6.      The Court below observing that sub-contract agreement
between the respondent and the revision petitioners does not contain
an arbitration clause and placing reliance on the decision relied on by
both parties in M.R. Engineers & Contractors Pvt. Ltd., v. Som
Datt Builders Ltd. , holding that the main agreement between the
respondent and NHAI is not applicable to the sub-contract agreement
between the parties herein and does not bind them, rejected the
request and dismissed the application.
        7.  It is the aforesaid order which drove the defendants -
revision petitioners to approach this Court requesting to set aside the
order under challenge contending that in the process of settlement of
dispute amicably, which ultimately proved abortive, the respondent
herein has not denied when the revision petitioners notified reference
to arbitration through its letter, dated 18-10-2012 and reiterated in the
letter, dated 24-06-2013, for resolving the dispute in terms of the
contract conditions, which, inter alia, includes the arbitration
agreement.
        i)  It is also stated that clause 6 of the LOAs in question, since
provides that the terms and conditions of the parent contract shall
apply to the revision petitioners in so far as it is applicable, the
arbitration clause as contained in sub clause 67.4 shall also apply to
the disputes arising out of the subject matter of the LOAs, which the
Court below has, somehow, side-lined.
        ii)  It is also stated that the Honble Supreme Court in M.R.
Engineers Case (Supra), held that where contract refers to
a document and it has been agreed that the contract is governed by the
provisions of the said document, then the terms and conditions of the
said document in entirety will get bodily lifted and incorporated into
the contract and, therefore, the order under challenge suffers from the
vice of non-application of mind and liable to be set aside.
        iii)  It is stated that the Court below, somehow, went wrong in
applying the last paragraph of the judgment in M.R. Engineers Case
(Supra), in as much as it has failed to apply the well-settled legal
principle that  a judgment is only an authority for what it decides and
not what can be logically deduced there from.
        iv)  Lastly, it is stated that while the main agreement
contemplates resolution of disputes by Dispute Board, the terms of the
Letter of Award provides for a separate mechanism through mutual
discussions, but that itself would not make the arbitration agreement
in sub-clause 67.4 inapplicable between the parties herein, especially
when clause 6 of the LOAs uses the expression in so far as
applicable which the Court below has completely overlooked. Thus,
the revision petitioners sought to set aside the impugned order.
        8.  Heard Sri S. Rajan, learned counsel for the revision
petitioners, and Sri N.V. Sumanth of M/s Indus Law Firm, learned
counsel for the respondent.
        9.  Learned counsel for the revision petitioners would submit
that sub-clause 67.4 of the General Conditions of Contract (for brevity
GCC) entered into between the respondent and NHAI gets
incorporated in the contract between the parties herein in view of sub-
clause 6 of the LOA and, hence, the same constitutes an arbitration
agreement as defined under section 7 of the Act, 1996 and, therefore,
rejection of request by the Court below amounts to improper exercise
of jurisdiction requiring the revision of the order under challenge.
        i)  He would further submit that non-denial by the respondent
herein when the petitioner asserts arbitration agreement through its
letters, dated 18-10-2012 and 24-06-2013, would suffice to cull out
acceptance of arbitration agreement between the parties by virtue of
the main contract between the principal employer and the respondent.
        ii)  He would further submit that the law laid down by the
Honble Supreme Court in M.R. Engineers Case (Supra) that where a
contract refers to a document and it has been agreed that the contract
is governed by the provisions of the said document, then the terms and
conditions of the said document in its entirety will get bodily lifted
and incorporated into the contract and, therefore, the order under
challenge is unsustainable.  Hence, requests to set aside the order
under challenge and refer the respondent to arbitration for the suit
claim.
        10.  Learned counsel for the respondent would submit that
clause 6 of the LOAs, since refers to the full knowledge of the terms
and conditions stipulated in the main contract, they shall apply to the
sub-contract in so far as it is applicable indicating that the terms
stipulated in the main contract between the principal employer and the
contractor in so far as it relates to quality and quantity of the work to
be executed and cannot be stretched beyond the same.
        i) He would further submit that the dispute resolution
mechanism contained in clause 67 of the main contract is exclusive to
NHAI and cannot be a substitute any-where else.  He would further
submit that mere non-denial of reference to arbitration alleged to have
made in the letters, dated 18-10-2012 and 24-06-2013, cannot be
brought within the purview of clause 7 (4) (c) of the Act, 1996, since
there has been an independent contract in existence between the
revision petitioners and the respondent herein.
        ii)  He would further submit that the fact-situation occurring in
the instant case, and the fact-situation occurring in M.R. Engineers
Case (Supra), are identical and, therefore, the law laid down therein
would not render any assistance to the revision petitioners.
        11.  In the light of the pleas put-forth by the respective parties
and the arguments advanced by their respective counsel, the question
that arises for consideration is:
     Whether the provision of arbitration contained in
the main agreement between the respondent and the
NHAI, was incorporated by reference in the sub-
contract agreement between the respondent and the
revision petitioners?

        12.  For proper appreciation of matter in controversy between
the parties, it would be apt to refer to the relevant clauses of Section 7
of the Act, 1996, which read thus:
7.  Arbitration Agreement:
        (1)  In this Part, arbitration agreement means
an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not.
(2)  xxxx
(3)  xxxx
(4)  An arbitration agreement is in writing if it is
contained in,-
  (a)  xxxx
  (b)  xxxx
                 (c)  an exchange of statements of claim and defence
in which the existence of the agreement is alleged by
one party and not denied by the other.
   (5)  The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration
clause part of the contract.

        13.  To examine whether the sub-contract agreement between
the parties herein can be brought within the ambit of sub-section 5 of
section 7 of the Act, 1996, it is indispensable to refer to clauses 6 and
17 of the sub-contract and sub-clauses 67.1 to 67.4 of the main
contract between the principal employer and the contractor.
        All the three LOAs are replica to one another, by which, the
respondent entrusted the work to the revision petitioners for
execution.  Clause 6, on which the revision petitioners mainly
resting, deals with main contract between the parties.  It reads thus:
6.  Main Contract
     You are deemed to have full knowledge of the
terms and conditions stipulated in the Main Contract
between the Employer and us and such terms and  
conditions shall apply to you in so far as it is
applicable.

Clause 17 thereof which deals with Dispute Resolution, is thus:
17.  Dispute Resolution
If any dispute or difference shall arise between you
and us, either during the progress or after the
completion or abandonment of the Subcontract
Works, then either party may forthwith give to the
other party a notice in writing of such dispute or
difference and such dispute or difference shall be
referred to the respective chief executive officer /
managing director of the parties for them to mutually
agree and resolve the dispute or difference.

Sub-clause 67.1 of GCC deals with disputes adjudication board and
relevant sub-clauses are thus:
Sub-clause 67.1:  Disputes Adjudication Board
Delete the text of Clause 67 and substitute with the
following:
If a dispute of any kind whatsoever arises between
the Employer and the Contractor in connection with
or arising out of the contract or the execution of the
Works, including any dispute as to any opinion,
instruction, determination, certificate or valuation of
the Engineer, the dispute shall initially be referred in
writing to the Disputes Adjudication Board (the
Board) for its decision.  Such reference shall state
that it is made under this Sub-clause, unless the
member or members of the Board have been  
previously mutually agreed upon by the parties and
named in the Contract, the parties shall within 90
days of the Commencement Date, jointly ensure the
appointment of the Board.  The Board shall comprise
suitably qualified persons as members, the number of
members being one or three, as stated in the
Appendix to Bid.  If the Board is to comprise three
members, each party shall nominate one member for
the approval of the other party and the parties shall
mutually agree upon and appoint the third member
(who shall act as Chairman).
     The terms of appointment of the Board shall:
                a)   x xxx    
b)      x xxx
c)  x xxx
d)  x xxx
67.2   x xxx
67.3 Amicable Settlement
Where notice of dissatisfaction has been given under
Sub-clause 67.2, the parties shall attempt to settle
such dispute amicably before the commencement of
arbitration. Provided that unless the parties agree
otherwise, arbitration may be commenced on or after
the fifty-sixth day after the day on which notice of
dissatisfaction was given, even if no attempt at
amicable settlement has been made.
Sub-clause 67.4 deals with Arbitration, which is thus:
Sub-clause 67.4: Arbitration
Any dispute in respect of which:
  (a)  the decision, if any, of the Board has not become
 final and binding pursuant to Sub-Clause 67.2, and
           (b) Amicable settlement has not been reached:
   shall be finally settled as set forth below:
(i)       (1)  In the case of dispute arising between
the Employer and a domestic Contractor or
between the Employer and a foreign
Contractor who opts for the application of the
Indian Arbitration and Conciliation Act,
1996 related to any matter arising out of or
connected with this Contract, such dispute
shall be referred to the Arbitral Tribunal
consisting of 3 (three) arbitrators, one each to
be appointed by the Employer and
Contractor, the third arbitrator shall be
chosen by the two arbitrators so appointed by
the parties and shall act as Presiding
Arbitrator. In case of failure of the two
arbitrators, appointed by the parties to reach
upon a consensus within a period of 30 days
from the appointment of the arbitrators
subsequently appointed then upon the request
of either or both parties, the Presiding
arbitrator shall be appointed by the President,
Indian Road Congress.  The Indian
Arbitration and Conciliation Act, 1996 the
rules there under and any statutory
modification of re-enactment thereof, shall
apply to these arbitration proceedings.

        14.  Now, turning to the submissions of the learned counsel for
the revision petitioners that the conjoint reading of clauses 6 and 17 of
the LOAs read with clause 17 and sub-clauses 67.3 and 67.4 of the
main agreement would indicate in definite terms that there is
a binding arbitration agreement between the parties, and that the law
laid down by the Honble Supreme Court in M.R. Engineers Case
(Supra), that where a contract refers to a document and it has been
agreed that the contract is governed by the provisions of the said
document, the terms and conditions thereof in entirety will get bodily
lifted and incorporated into the contract, in our considered view, it is
difficult to agree with the said submission, for the reasons hereinafter
we indicate.
        15.  What was agreed between the parties herein under clause
6 of the contract is that the revision petitioners deemed to have full
knowledge of the terms and conditions stipulated in the main contract
between the employer and the contractor - respondent and, such terms
and conditions shall apply to the revision petitioners in so far as it is
applicable.  In the case of M.R. Engineers (Supra), somewhat, similar
terms were mentioned in the sub-contract stating that the said sub-
contract would be carried out on the terms and conditions as
applicable to main contract, unless otherwise mentioned in the work
order letter.  The learned counsel for the revision petitioners relying
on sub-section 5 of Section 7 of the Act, 1996, drawn our attention to
the observations of the Honble Supreme Court contained in
paragraph No.9 in M.R. Engineers Case (Supra), to fortify his
submission that sub-clause 67.4 contained in the main agreement
between the employer and the respondent herein binds the parties
herein and with such intention, clause 6 of the sub-contract has been
incorporated.  The learned counsel for the respondent, on the other
hand, placed reliance on the observations of the Honble Supreme
Court contained in paragraph Nos.8, 13 and 16 of the very same
decision.  We have extracted sub-section 5 of section 7 of the Act,
1996, in the above.  The observations of the Honble Supreme Court
in M.R. Engineers Case (Supra) contained in paragraph No.9 are
thus:
9.  If a contract refers to a document and provides
that the said document shall form part and parcel of
the contract, or that all terms and conditions of the
said document shall be read or treated as a part of the
contract, or that the contract will be governed by the
provisions of the said document, or that the terms and
conditions of the said document shall be incorporated
into the contract, the terms and conditions of the
document in entirety will get bodily lifted and
incorporated into the contract.  When there is such
incorporation of the terms and conditions of a
document, every term of such document (except to
the extent it is inconsistent with any specific
provision in the contract) will apply to the contract.
If the document so incorporated contains a provision
for settlement of disputes by arbitration, the said
arbitration clause also will apply to the contract.

The Honble Supreme Court while explaining the difference between
the reference to another document in a contract and incorporation of
another document in a contract by reference held in paragraph No.8
thus:
8.  There is a difference between reference to
another document in a contract and incorporation of
another document in a contract, by reference.  In the
first case, the parties intend to adopt only specific
portions or part of the referred document for the
purposes of the contract.  In the second case, the
parties intend to incorporate the referred document in
entirety, into the contract.  Therefore, when there is a
reference to a document in a contract, the court has to
consider whether the reference to the document is
with the intention of incorporating the contents of
that document in entirety into the contract, or with the
intention of adopting or borrowing specific portions
of the said document for application to the contract.
We will give a few instances of incorporation and
mere reference to explain the position (illustrative
and not exhaustive).

The scope and intent of sub-section 5 of Section 7 of the Act, 1996
was summarized by the Honble Supreme Court in sub-paragraph  
Nos.(iv) and (v) of paragraph No.13.  We are inclined to extract sub
paragraph Nos.(iv) and (v) of paragraph No.13, which are thus:
 (iv)  Where the contract provides that the standard
form of terms and conditions of an independent trade
or professional institution (as for example the
standard terms and conditions of a trade association
or architects association) will bind them or apply to
the contract, such standard form of terms and
conditions including any provision for arbitration in
such standard terms and conditions, shall be deemed
to be incorporated by reference.  Sometimes the
contract may also say that the parties are familiar
with those terms and conditions or that the parties
have read and understood the said terms and
conditions.
(v)  Where the contract between the parties stipulates
that the conditions of contract of one of the parties to
the contract shall form a part of their contract (as for
example the general conditions of contract of the
government where government is a party), the
arbitration clause forming part of such general
conditions of contract will apply to the contract
between the parties.

While culling out the intention of the parties from the use of the words
this sub-contract shall be carried out on the terms and conditions as
applicable to main contract in relation to sub-contract therein, the
Honble Supreme Court in paragraph no.15 held that the work order
therein would indicate the intention that only the terms and conditions
in the main contract relating to the execution of the work were
adopted as a part of sub-contract between respondent and appellant,
and not the parts of the main contract which did not relate to
execution of the work.  The Honble Supreme Court held in paragraph
No.16 relied on by the learned counsel for the respondent thus:
16.  Even assuming that the arbitration clause from
the main contract had been incorporated into the sub-
contract by reference, we are of the view that the
appellant could not have claimed the benefit of the
arbitration clause.  This is in view of the principle
that if the document to which a general reference is
made, contains an arbitration clause whose provisions
are clearly inapt or inapplicable with reference to the
contract between the parties, it would be assumed or
inferred that there was no intention to incorporate the
arbitration clause from the referred document.  In this
case the wording of the arbitration clause in the main
contract between the PW Department and contractor
makes it clear that it cannot be applied to the sub-
contract between the contractor and the sub-
contractor.  The arbitration clause in the main
contract states that the disputes which are to be
referred to the committee of three arbitrators under
Clause 67.3 are disputes in regard to which the
decision of the Engineer (Engineer refers to person
appointed by State of Kerala to act as Engineer for
the purpose of the contract between PW Department
and the respondent) has not become final and binding
pursuant to sub-clause 67.1 or disputes in regard to
which amicable settlement has not been reached
between the State of Kerala and the respondent
within the period stated in sub-clause 67.2.
Obviously, neither sub-clause 67.1 nor sub-clause
67.2 will apply as the question of Engineer issuing
any decision in a dispute between the contractor and
sub-contractor, or any negotiations being held with
the Engineer in regard to the disputes between the
contractor and sub-contractor does not arise.  The
position would have been quite different if the
arbitration clause had used the words all disputes
arising between the parties or all disputes arising
under this contract.  Secondly, the arbitration clause
contemplates a committee of three arbitrators, one
each to be appointed by the State of Kerala and the
respondent and the third (Chairman) to be nominated
by the Director-General (Road Development),
Ministry of Surface Transport, Roads Wing,
Government of India.  There is no question of such
nomination in the case of a dispute between the
contractor and sub-contractor.  It is thus seen that the
entire arbitration agreement contained in the main
contract between the employer and the contractor was
tailor-made to meet the requirements of the contract
between the employer and the contractor and is
wholly inapt and inapplicable in the context of a
dispute between the contractor and the sub-
contractor.  This makes it clear that the arbitration
clause contained in the main contract would not apply
to the disputes arising with reference to the sub-
contract.

        16.  Keeping in view, the guiding factor emphasized in
paragraph No.8 by the Honble Supreme Court, when there is
reference to a document in a contract, the Court has to consider
whether the reference to the document is with the intention of
incorporating the contents of that document in entirety into the
contract, or with the intention of adopting or borrowing specific
portions of the said document for application to the contract, we
would like to infer the intention of the parties in incorporating the
words you are deemed to have full knowledge of the terms and
conditions stipulated in the main contract between the employer and
us and such terms and conditions, shall apply to you in so far as it is
applicable occurring in clause 6 of the sub-contract between the
parties.
        17.  Admittedly, dispute resolution mechanism has been
separately incorporated by the parties in clause 17 of the sub-contract.
Even a dispute resolution mechanism is provided in the main contract
between the employer and the contractor in sub clauses 1 to 4 of
clause 67, as extracted in the above.  The very fact that a distinct
dispute resolution mechanism has been incorporated by the parties in
clause 17 of the sub-contract reflects the intention of the parties that
they never inclined to adopt the dispute resolution mechanism
contained in clause 67 of GCC.  When viewed in that perspective,
certainly, the words mentioned in clause 6 of the sub-contract afore
extracted, in our view, definitely indicate the intention of the parties
that only the terms and conditions of the main contract relating to
execution of the work were adopted as part of the sub-contract
between the parties herein and not the contract in its entirety.  Thus,
clause 17 of the sub-contract would completely exclude the invocation
of arbitration clause contained in sub clause 4 of clause 67 of the main
contract between the employer and the respondent.  Thus, the
principle enunciated by the Honble Supreme Court in M.R.
Engineers Case (Supra), would not render any assistance to the
revision petitioners to interpret clause 6 of the sub-contract in the
manner in which it intends to, while rendering complete assistance to
the stand taken by the respondent.
        18.  Adverting to clause (c) of sub-section 4 of Section 7 of the
Act, 1996, in relation to the submission of the learned counsel for the
revision petitioners that the respondent did not deny the specific
reference made to arbitration agreement contained in the main
contract in the letters, dated 18-10-2012 and 24-06-2013, we are of
the considered view, that the said circumstance does not improve the
case of the revision petitioners for the reason that there has been
distinct sub-contract between the revision petitioners and the
respondent, more particularly, incorporation of clause 17 in relation to
a distinct dispute resolution mechanism.  Therefore, we are not
convinced with the argument of the learned counsel for the revision
petitioners in that regard.
        19.  In view of the foregoing discussion, we find no merit in
the instant revision petition, and the same stands dismissed.  We make
no order as to costs.
        20.  As a sequel thereto, miscellaneous petitions, if any,
pending in the revision, stand disposed of.

__________________________  
R. SUBHASH REDDY, J    
A. SHANKAR NARAYANA, J    
August 17, 2015. 

Thursday, August 27, 2015

M.V.Act - allowing the deceased to travel in the goods vehicle as a gratuitous/unauthorized passenger is concerned, learned counsel argued the Tribunal has not at all answered this issue and ultimately held that Insurance Company is liable. She thus prayed to allow the appeal and exonerate the Insurance Company from its liability.= Then, coming to second violation admittedly, the vehicle in question is a goods carriage vehicle and the deceased boarded on it as a midway unauthorized passenger. A perusal of Ex.B1policy shows that no premium was paid by R1 to give coverage to gratuitous/unauthorized passengers in the goods carriage vehicle. Under Section 147 of MV Act the risk of unauthorized/gratuitous passengers need not be covered unless extra premium is paid. The Apex Court clarified this fact in the case of New India Assurance Co. Ltd. v. Asha Rani which was followed in subsequent decisions also. By this fact also the Insurance Company cannot be fastened with liability. Unfortunately, the Tribunal has not addressed this issue. So, I find considerable force in the contention of learned counsel for appellant/Insurance Company. 9) In the result: a) This MACMA filed by the Insurance Company is allowed and the appellant/Insurance Company is exempted from its liability and it is directed that the first respondent/insured shall pay the compensation to the claimants as awarded by the Tribunal. b) If, pending appeal, the Insurance Company paid any compensation, it shall recover the same from the first respondent/insured. c) No costs in the appeal. As a sequel, miscellaneous petitions pending, if any, shall stand closed.

THE HONBLE SRI JUSTICE U. DURGA PRASAD RAO          

MACMA No.1198 of 2009  

12-08-2015

National Insurance Company Limited, rep. by its Divisional manager,
Visakhapatnam.... Appellant
       
Chintapalli Ankayamma and others  Respondents  

Counsel for Appellant : Smt. SAV Ratnam

Counsel for Respondents 1 to 3   : Sri T.Nageswara Rao
Counsel for respondents 6 & 7 : Sri C.Appaiah Sharma

<Gist:

>Head Note:

?Cases referred:
1)2008 ACJ 721 (SC)
2)2003 ACJ 1 (SC)

THE HONOURABLE SRI JUSTICE U.DURGA PRASAD RAO            

M.A.C.M.A.No.1198 of 2009

JUDGMENT:  
        Aggrieved by the Award dated 10.10.2008 in M.V.O.P.No.450 of
2005 passed by the Chairman, MACT-cum-District Judge, Vizianagaram  
(for short the Tribunal), the 2nd respondent in the OP preferred the instant
appeal.
2)      The factual matrix of the case is thus:
a)      The case of the claimants is that on 04.09.2004 when the deceased
Appala Naidu boarded van bearing No.AP 31 W 9210 at 12 noon at Kosta  
village junction to go to Golgam village and when it reached near
Poosapatirega village at about 1.45 PM, the van driver drove the same in a
rash and negligent manner and at high speed and dashed against the
opposite coming RTC bus bearing No.AP 11Z 962 and thereby, the
deceased received bleeding injuries all over the body.  Immediately he was
shifted to Government Hospital, Vizianagaram where he succumbed to
injuries on the same day at about 8.20 PM. It is averred that the accident
was occurred due to the fault of drivers of both the vehicles. On these
pleas, the claimants filed M.V.O.P.No.450 of 2005 under Section 166 of
Motor Vehicles Act (for short MV Act) and claimed Rs.4,00,000/- as
compensation against respondents 1 and 2, who are the owner and insurer
of van and respondents 3 to 5driver and  APSRTC.
b)      R3/driver of RTC bus remained ex-parte.
c)      R1/owner-cum-driver of the van filed counter denying all the
material allegations made in the claim petition and urged to put the
claimants to strict proof of the same. He submitted that there is no fault on
his part and he was driving the van on the extreme left side of the road and
bus driver suddenly turned the bus to the right side without blowing horn
and caused the accident. He also submitted that as the vehicle in question
was insured with R2/Insurance Company, it is liable to pay the
compensation.
d)      R2/Insurance Company filed counter and opposed the claim denying
all the material averments made in the petition. R2 disowned its liability on
the ground that driver of the van was not having valid and effective driving
licence on the date of accident and that the vehicle was used violating the
terms of policy and compensation claimed was highly excessive and
exorbitant and thus prayed to dismiss the O.P.
e)      R5APSRTC filed its counter contending that driver of the bus was
not at fault and van driver drove the vehicle in a rash and negligent manner
and at high speed and without following traffic rules came and hit the
stationed bus on the front portion and caused the accident and hence van
driver was at fault.
f)      R4 filed a memo adopting the counter of R5.
g)      During trial, PWs.1 and 2 were examined and Exs.A1 to A5 were
marked on behalf of claimants. RWs.1 and 2 were examined and Exs.B1 to  
B4 were marked on behalf of respondents.
h)      The Tribunal considering the oral and documentary evidence held
that driver of the offending van was responsible for the accident.
Compensation is concerned, the Tribunal awarded Rs.82,000/- with
proportionate costs and interest at 9% p.a. against R1 and R2, who are the
owner and insurer of offending van and dismissed the claim against
respondents 3 to 5, as below:
     Loss of dependency                     Rs.     80,000-00
     Funeral expenses                           Rs.      2,000-00
                                                                 ---------------------
                                  Total:                     Rs.     82,000-00
                                                           ---------------------
     Hence, the appeal by Insurance Company.
3)      The parties in this appeal are referred as they stood before the
Tribunal.
4)      Heard arguments of Smt. SAV Ratnam, learned counsel for
appellant/Insurance Company; Sri Taddi Nageswara Rao, learned counsel
for respondents 1 to 3/claimants and Sri C.Appaiah Sharma, learned
counsel for R6 and R7/APSRTC.  Notice sent to R4/owner of the van was
served but no representation hence, treated as heard. R5/driver of RTC bus
was not necessary party as per cause title.
5)      Fulminating the award fixing liability on the Insurance Company,
learned counsel for appellant/Insurance Company vehemently argued that
in this case the first respondent who is the owner-cum-driver of the van,
has committed two severe violations of terms of policy inasmuch as he
himself drove the van without having a valid and effective driving licence
and further, he allowed the deceased to travel in the van which is a goods
carriage vehicle as a gratuitous passenger therein and in view of gross
infraction of terms of policy, the Tribunal ought to have exonerated the
Insurance Company from its liability.  However, the Tribunal committed
grave mistake in appreciation of facts and law.
a)      The first violation touching the driving licence issue is concerned,
the Tribunal misread the judgment of the Honourable Apex Court in
National Insurance Company Limited v. Annappa Irappa Nesaria  and
held as if the first respondent had valid driving licence to drive the van in
question. She argued that the vehicle in question is a goods carriage vehicle
which is a transport vehicle, whereas R1 had licence to drive only Light
Motor Vehicle (non-transport) driving licence during the relevant period
and he was not authorized to drive the transport vehicle like the crime
vehicle.
b)      The second violation i.e. allowing the deceased to travel in the goods
vehicle as a gratuitous/unauthorized passenger is concerned, learned
counsel argued the Tribunal has not at all answered this issue and
ultimately held that Insurance Company is liable.  She thus prayed to allow
the appeal and exonerate the Insurance Company from its liability.
6)      Per contra, learned counsel for respondents 1 to 3/claimants
supported the award and prayed for dismissal of appeal.
7)      In the light of above rival arguments, the point for determination in
this appeal is:
Whether the Tribunal erred in fastening liability on the
appellant/Insurance Company?
8a) POINT:   On a careful perusal of oral and documentary evidence on
record, I find justification in the argument of learned counsel for
appellant/Insurance Company. The contention of Insurance Company as
can be seen from its counter and evidence of RW1 is two fold.  Firstly that
R1 who is the owner-cum-driver of the vehicle had no valid and effective
driving licence to drive the crime van which is a goods carriage vehicle and
secondly that he allowed the deceased to travel in the goods vehicle as an
unauthorised/gratuitous passenger in violation of terms of the policy.
b)      Be that it may, a perusal of the award shows that the Tribunal basing
on the judgment of the Apex Court in Annappa Irappa Nesarias case
(1 supra) opined that the driver who had a valid licence to drive Light
Motor Vehicle is authorized to drive goods vehicle as well therefore, R1
had valid and effective driving licence at the relevant time. I am
constrained to say this finding is incorrect on the face of the facts and law.
Ex.B2RC extract of crime van bearing No.AP 31 W 9210 shows that it is
a goods carriage Medium Motor Vehicle since its gross weight is 8,800
Kgs. Ex.B3permit of the vehicle also reveals the same facts. Then
Ex.B4driving licence extract of R1 viz. P.Satyanarayana shows he was
authorized to drive the following vehicles:
      LMV                                  Non-Transport
             01.10.2003
                MCWG                    Non-Transport                   01.10.2003        
       LMV                      Transport                       21.02.2005
        So, as on the date of accident he was holding driving licence to drive
LMV of non-transport type whereas the vehicle in question is a Medium
Motor Vehicle and it was a goods carrying vehicle i.e. transport vehicle.  It
is, in this context, useful to refer SO 1248(E) dated 05.11.2004 whereunder
the Central Government classified the transport and non-transport vehicles
as per which, goods carrier trucks, tankers, mail carriers (N1N3
category) are regarded as transport vehicles. So, the evidence on record
clearly depicts that the vehicle is a Medium Motor Vehicle and a transport
vehicle, whereas the driver had driving licence to drive a Light Motor
Vehicle of non-transport type. Hence, he had no effective driving licence to
drive the type of vehicle involved in the accident.
c)      Coming to the judgment of Apex Court in Annappa Irappa
Nesarias case (1 supra) what was observed by the Apex Court in that
decision is that a Light Motor Vehicle takes within its umbrage, both a
transport vehicle and a non-transport vehicle. It further observed that a
driver who had valid driving licence to drive a Light Motor Vehicle,
therefore, was authorized to drive a light goods vehicle as well.  Thus, the
observation of Honourable Apex Court is that a Light Motor Vehicle
includes both a transport and a non-transport vehicle. There is no demur in
it. In that case, it appears, the driving licence of the concerned driver only
revealed as Light Motor Vehicle without further confining the said driving
licence to either transport or non-transport type of vehicles. Since a Light
Motor Vehicle includes both transport and non-transport type vehicles, it
was held he was having valid driving licence in that case.  However, in the
instant case the facts are different. R1driver authorized to drive Light
Motor Vehicle but his licence is confined to non-transport type of vehicles
only. So, at the first instance, he cannot take advantage from the above
judgment of Apex Court. Further, the vehicle involved in this case is a
Medium Motor Vehicle but not a Light Motor Vehicle. On that ground also
it must be said that R1 was not holding effective driving licence. So, in any
view of the matter, the Tribunal was not right in holding that R1 had valid
driving licence.
d)      Then, coming to second violation admittedly, the vehicle in question
is a goods carriage vehicle and the deceased boarded on it as a midway
unauthorized passenger. A perusal of Ex.B1policy shows that no
premium was paid by R1 to give coverage to gratuitous/unauthorized
passengers in the goods carriage vehicle. Under Section 147 of MV Act the
risk of unauthorized/gratuitous passengers need not be covered unless extra
premium is paid. The Apex Court clarified this fact in the case of New
India Assurance Co. Ltd. v. Asha Rani  which was followed in subsequent
decisions also. By this fact also the Insurance Company cannot be fastened
with liability. Unfortunately, the Tribunal has not addressed this issue. So, I
find considerable force in the contention of learned counsel for
appellant/Insurance Company.

9)      In the result:
a)      This MACMA filed by the Insurance Company is
allowed and the appellant/Insurance Company is exempted
from its liability and it is directed that the first
respondent/insured shall pay the compensation to the
claimants as awarded by the Tribunal.
b)      If, pending appeal, the Insurance Company paid any
compensation, it shall recover the same from the first
respondent/insured.
c)      No costs in the appeal.
     As a sequel, miscellaneous petitions pending, if any, shall stand
closed.
_________________________  
U.DURGA PRASAD RAO, J    
Date: 12.08.2015