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Nirod Baran Banerjee v. Dy. Commissioner Of Hazaribagh .
Factual and Procedural Background
The dispute originates from land acquisition proceedings involving 84.31 acres. The Collector awarded Rs 9,666.35 as compensation (total payout including solatium and charges: Rs 20,231.67) on 21 September 1960. Dissatisfied, the appellant claimed Rs 2,80,000 and sought a reference under Section 18 of the Land Acquisition Act on 11 October 1960. By mutual consent, the matter was referred on 20 December 1961 to a three-member Board of Arbitrators (one member chosen by the appellant). The Board’s award dated 22 May 1962 affirmed the Collector’s compensation.
The appellant moved the District Court to set aside the award; the application was dismissed by the Additional Sub-Judge. An appeal to the Patna High Court met the same fate on 13 May 1968. When seeking a certificate to appeal to the Supreme Court, the appellant—for the first time—contended that the arbitration agreement was void for non-compliance with Article 299 of the Constitution. The High Court granted the certificate, leading to the present Supreme Court appeal.
Legal Issues Presented
- Whether the arbitration agreement, embodied in a government resolution, was void for want of authentication in the manner prescribed by Article 299 of the Constitution of India.
- Whether a party may raise, for the first time at the stage of seeking a certificate of fitness (and before the Supreme Court), a plea requiring factual investigation that was never pleaded before the trial court or the High Court on merits.
Arguments of the Parties
Appellant's Arguments
- No separate written arbitration agreement existed; the government resolution constituted the agreement.
- The resolution was not executed or authenticated in conformity with Article 299; therefore, under the mandatory rule laid down in Mulamchand v. State of M.P. and allied cases, the agreement was void and incapable of founding a valid award.
- There can be no estoppel against constitutional requirements; consequently, participation in arbitration could not cure the defect.
Respondent's Arguments
- Compliance with Article 299 is a mixed question of fact and law; the record might have shown proper authentication had the issue been timely pleaded.
- The appellant never raised the Article 299 plea before the trial court or at the High Court stage on merits. Permitting it now offends Order VI Rule 8 and Order VIII Rule 2 of the Code of Civil Procedure, which bar parties from adducing evidence on un-pleaded issues.
- Reliance was placed on Kalyanpur Lime Works Ltd. v. State of Bihar, where the Supreme Court refused to entertain an un-pleaded Article 299 objection.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mulamchand v. State of M.P., AIR 1968 SC 1218 | Article 299 requirements are mandatory; non-compliant contracts are void; no estoppel or ratification possible. | Cited by appellant to support the contention that the arbitration agreement was void. |
| State of West Bengal v. B.K. Mondal and Sons, AIR 1962 SC 779 | Same mandatory character of Article 299 / Section 175(3). | Relied on by appellant to emphasise voidness of non-conforming contracts. |
| Bhikraj Jaipuria v. Union of India, AIR 1962 SC 113 | Further affirmation that non-compliance with Article 299 renders contracts void. | Part of appellant’s authorities on the void-contract doctrine. |
| Bihar Fishermen Society v. Sipahi Singh, (1977) 4 SCC 145 | Reiterates that constitutional formalities in government contracts are mandatory. | Cited by appellant in support of the same proposition. |
| Union of India v. A.L. Rallia Ram, AIR 1968 SC 1685 | Article 299 in the context of arbitration agreements. | Advanced by appellant to analogise the present arbitration clause. |
| Kalyanpur Lime Works Ltd. v. State of Bihar, AIR 1954 SC 165 | Un-pleaded Article 299 defence cannot be allowed at appellate stage; courts will not look at evidence absent pleadings. | Relied on by the Court to reject the appellant’s late Article 299 argument. |
Court's Reasoning and Analysis
The Supreme Court accepted that Article 299’s requirements are mandatory but held that whether those requirements were met is fact-dependent. Because the appellant never pleaded the Article 299 objection before the Additional Sub-Judge or during the High Court appeal, the respondent had no opportunity to produce evidence of compliance. Citing Kalyanpur Lime Works, the Court reiterated that issues not founded in the pleadings cannot be introduced for the first time on appeal, as Order VI Rule 8 and Order VIII Rule 2 CPC bar such a course. The appellant’s participation in arbitration and belated volte-face underscored the procedural impropriety. Consequently, the Court refused to entertain the Article 299 plea and found no other meritorious ground to disturb the award or the concurrent decisions below.
Holding and Implications
The appeal is dismissed. No order as to costs.
Immediate effect: the Board of Arbitrators’ award, upheld by the District Court and the Patna High Court, stands confirmed. Broader implication: the decision reinforces the principle that constitutional or statutory objections requiring factual inquiry must be specifically pleaded at the earliest stage; failure to do so precludes parties from raising them in higher appellate forums. No new substantive precedent was set on Article 299 itself; the ruling turns on procedural default.
S. Murtaza Fazal Ali, J.— This appeal by certificate is directed against a judgment of the Patna High Court dated May 13, 1968 dismissing the appeal filed by the appellant before the High Court.
2. The case arose out of land acquisition proceedings taken by the government in respect of the land in dispute which comprised 84.31 acres. On September 21, 1960 the Collector by his award allowed a compensation of Rs 9666.35 which along with solatium and other charges totalled to a sum of Rs 20,231,67. The appellant claimed Rs 2,80,000 as the market value of the land acquired. On October 11, 1960 a reference was made to the District Judge under Section 18 of the Land Acquisition Act. Before the District Judge could take up the proceedings for hearing, the matter was agreed by the parties, to be referred to a Board of Arbitrators consisting of three persons of whom one was appointed by the appellant. Accordingly, a joint petition for referring the case to the arbitrator was made on December 19, 1961 and on the next day, dated December 20, 1961 the case was referred for arbitration to the Board. On May 22, 1962, the Board gave an award confirming the compensation given by the Collector. Having thus lost his case before the Board, the appellant moved the District Court for setting aside the award. His application was dismissed by the Additional Sub-Judge to whom the case was transferred in the meantime and hence an appeal was filed by him before the High Court which was also dismissed. Thereafter the appellant approached the High Court for granting a certificate of fitness for appeal to this Court and it was at that stage that for the first time he raised the point that the arbitration agreement was not in accordance with the provisions of Article 299 of the Constitution and that thus there being no arbitration agreement in the eye of law, the award was invalid and liable to be set aside. The High Court appears to have been impressed by the point raised before it and granted leave as prayed for. Hence this appeal before us.
3. Dr Y.S Chitale, learned Counsel appearing for the appellant submitted that on the admitted facts there was no separate arbitration agreement, that the resolution of the Government incorporating the agreement of both the parties that the matter be referred to the Board of Arbitrators would be deemed to be the arbitration agreement, that the resolution not having been authenticated in accordance with the provisions of Article 299 of the Constitution of India was invalid and that therefore the award which followed it would also be invalid. In support of his argument the learned Counsel relied on a decision of this Court in the case of Mulamchand v. State of M.P AIR 1968 SC 1218, (1968) 3 SCR 214 where this Court while considering the scope and the ambit of Article 299 observed as follows:
“It was held by this Court that the provisions of Section 175(3) were mandatory and the contracts were therefore void and not binding on the Union of India which were not liable for damages for breach of the contracts. The same principle was reiterated by this Court in a later case — State of West Bengal v. B.K Mondal and Sons AIR 1962 SC 779, 1962 Supp 1 SCR 876. The principle is that the provision of Section 175(3) of the Government of India Act, 1935 or the corresponding provisions of Article 299(1) of the Constitution of India are mandatory in character and the contravention of these provisions nullifies the contracts and makes them void. There is no question of estoppel or ratification of such a case.”
4. It was argued by Dr Chitale that in view of the constitutional provisions of Article 299, this Court held that the agreement was void, and that there could be no estoppel against a statute or constitutional provisions. To the same effect are the decisions in Seth Bhikraj Jaipuria v. Union of India AIR 1962 SC 113, (1962) 2 SCR 880, (1962) 2 SCJ 479 and Bihar Fishermen Society v. Sipahi Singh (1977) 4 SCC 145, (1978) 1 SCR 375. Great reliance was placed by the counsel for the appellant on the decision of this Court in Union of India v. A.L Rallia Ram AIR 1968 SC 1685, (1964) 3 SCR 164 which was also a case of an arbitration agreement.
5. The Attorney-General while repelling the arguments of the appellant submitted that there can be no dispute with the propositions laid down by this Court regarding the interpretation of Article 299 of the Constitution of India but that the question whether or not there was an agreement which fulfilled the requirements of Article 299 is not a pure question of law but is a question which depends on investigation of facts. He added that as the appellant did not plead this point either before the trial court or before the High Court when the appeal was heard on merits the appellant cannot be allowed to raise it for the first time either in this Court or in his application given before the High Court for granting a certificate of fitness. It was argued by the Attorney-General that if the point had been pleaded at the initial stage, the respondent might have been in a position to show that an agreement conforming to the provisions of Article 299 of the Constitution of India existed. We are of the opinion that the contention raised by the Attorney-General is sound and must prevail. In the case of Kalyanpur Lime Works Ltd. v. State of Bihar AIR 1954 SC 165, 1954 SCR 958 a similar situation arose and this Court refused to entertain the point relating to the applicability of Section 30 of the Government of India Act, 1915 which corresponds to Article 299 of the Constitution or Section 175(3) of the Government of India Act, 1935 on the ground that the party concerned did not raise the same in their pleadings. In this connection this Court observed as follows:
“The first question which arises in this connection is whether the contract was to be executed by a formal document or whether it could be spelt out from the correspondence in which the negotiations were carried on by the parties. We do not think it necessary to go into this question, for assuming that a formal document was necessary, the plea of Section 30, it is to be noted, was not raised in the pleadings. Objection is taken on behalf of the appellant that the point not having been raised in the written statement, it was not incumbent upon the plaintiff to show that the contract was executed according to the provisions of Section 30, before it could be specifically enforced and reliance was placed upon the provisions of Order 6 Rule 8, and Order 8 Rule 2 of the Civil Procedure Code.”
6. This Court pointed out that in view of the provisions of Order VI, Rule 8, and Order 8, Rule 2 of the Code of Civil Procedure, the appellant would be debarred from raising the point for the first time before this Court or even before the High Court. The facts of the present case appear to be on all fours with facts of the case in the decision cited above. In the instant case also, the appellant contented himself by relying on the resolution by the Government, treated it as a valid arbitration agreement and never raised the question that the said resolution was hit by Article 299 of the Constitution of India. On the other hand, the appellant fully participated in the arbitration proceedings and having taken the benefit of a decision by the Board in his favour made a complete somersault only when the decision went against him, by taking the plea now under examination, which doubtless required investigation of facts. Even that plea too he took neither before the Additional Sub-Judge nor in the High Court when the appeal was heard on merits but only for the first time in the application which he gave for granting leave to appeal to this Court. In these circumstances it is manifest that if the appellant had raised the plea before the trial court that the arbitration agreement was not in consonance with Article 299 of the Constitution of India, the respondent may have been in a position to rebut the plea by producing evidence and circumstances to show that an agreement for arbitration was authenticated in the form required by Article 299 of the Constitution. It is well settled that no evidence can be looked into by the court for which there is no foundation in the pleadings. We cannot therefore allow the appellant to raise the plea for the first time in this Court and the High Court also ought not to have entertained it at the stage of the application for a certificate of fitness to be granted for leave to appeal to this Court. No other point was pleaded before us.
7. The appeal fails and is accordingly dismissed. In the circumstances of this case however, there will be no order as to costs.
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