Supreme Court pulls up Bihar Legal department for filing non maintainable suit against Arbitration Award

The respondent was awarded the contract for the work of widening and strengthening of Miraganj Bhagipati Samaur Road in pursuance to a valid tender and post bid negotiations.

It is alleged that the work was not completed because the appropriate permissions were not granted by the petitioner resulting in dispute.The case was referred to sole arbitrator Justice U.P. Singh, the retired Chief Justice of the Kerala High Court who passed the final order for Rs.2,05,78,644/-.

This amount was to be paid within a period of 60 days from the date of receipt of the award, but on failure to do so, the post award interest had to be paid as per law.Petitioner aggrieved by the judgement filed an SLP.

The court found the case meritless. If the petitioner was aggrieved by the award, logically he should have filed proceedings under Section 34 of the Arbitration and Conciliation Act, 1996.Not only this, the title suit continued from 2005 till 2012 and after 7 years, it appears that the petitioner realized its mistake, at least this is the argument put forth by learned counsel for the petitioner, it is at that stage that an endeavour was made to convert the suit into a petition under Section 34 of the Arbitration and Conciliation Act, 1996 by taking recourse to Section 151 of the CPC.

This endeavour was naturally unsuccessful and the suit was dismissed on 15.04.2015 on the preliminary issue relating to maintainability of the suit.Court stated that “We are shocked and surprised to note that the legal department of the State of Bihar misadventured into a completely non-maintainable remedy when the Arbitration Act is a Code by itself and on top of that took 7 years to realize this mistake.

If the petitioner has suffered losses on account of this misadventure, it is for it to recover the same from the officers concerned who were so legally ignorant, despite being part of the legal department.”SLP was dismissed with.

Cost of Rs. 15000/- (consideration being shown to the fact that a young lawyer is representing the petitioner) payable to the respondent within four weeks.

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