Antony Waste Handling Cell Ltd vs Bhiwandi Nizampur City Municipal Corporation

Heard learned Counsel for the parties.

This interim application is moved in two commercial arbitration petitions. The commercial arbitration petitions are under Section 34 of the

Arbitration and Conciliation Act, 1996 (“Actâ€). They are in the nature of cross-challenges by the parties to an arbitral award made by a sole

arbitrator.

The disputes between the parties arose out of a contract for collection and transportation of municipal solid waste, the Respondent in Commercial

Arbitration Petition 1600 of 2019 being the employer and the Petitioner the contractor. The Petitioner, who was the claimant before the learned

arbitrator, claimed collection and transportation charges and damages on various counts. The Respondent defended the claim and also filed a counter-

claim. There were in all nine claims of the Petitioner, referred to as Claim Nos. (A) to (I). The learned arbitrator, in his impugned award, awarded

Claim No. (A) in the sum of Rs.4,27,82,376/- (towards pending bills), Claim No.(F) in the sum of Rs.2.29 lakhs (on account of damages for idling of

assets due to premature termination of the contract and failure to take over assets in accordance with the provisions of Clause 3 of Chapter V of the

contract) and costs quantified at Rs.32,50,000/-. The learned arbitrator also awarded interest on this amount at Rs.15.5 % p.a. upto the date of the

award and thereafter at the rate of 16.5% p.a. till payment of realisation. The total claim awarded by the learned arbitrator in favour of the Petitioner

along with interest amounted to Rs.15,46,06,143/- as of 21 January 2020. Insofar as the Respondent’s counter claims are concerned, the same

were rejected in toto by the learned arbitrator. The award has been challenged both by the Petitioner and the Respondent. Whereas the Petitioner has

been aggrieved by rejection of its other claims, the Respondent Corporation has taken exception to the three claims awarded by the arbitrator, which

have been referred to above, and rejection of its counter-claim.

During the pendency of these petitions, the parties were in talks for a settlement. Towards that end, the matter was referred by the Respondent

Corporation to a Senior Advocate of this Court for his opinion on the prospective settlement. The learned Senior Advocate inter alia opined that if the

matter were to reach upto the Supreme Court, and if there were to be adverse decision, then the Corporation was likely to be saddled with huge

financial liabilities. Learned Counsel also observed that there were no legal obstacles for the Municipal Corporation in taking a decision on the proposal

of compromise made by the Petitioner contractor, though any such decision would have to be with the approval of the Corporation’s standing

committee. Taking this opinion into account, the Commissioner of the Respondent Corporation submitted the Petitioner's compromise proposal,

proposing a sum of Rs.15 crores in full and final settlement of the impugned award, for a decision of the standing committee of the Respondent

Corporation in accordance with Section 481(1)(h) of the Maharashtra Municipal Corporations Act (“MMC Actâ€). The standing committee, vide

its Resolution No.190 of 2020, dated 18 February 2020, after deliberating upon the matter, sanctioned the compromise on terms and conditions set out

in the resolution. The terms and conditions included the following :

“1. The contractor, M/s. Antony Waste Handling Cell Ltd., accepts the said dispute amount of Rs.15,00,00,000/- as full and final settlement.

Both the parties will withdraw the commercial arbitration petitions filed in the Hon’ble High Court and in future they will not make any Court

claim or demand in this matter.

In accordance to the compromise, the agreement in this regard is being cancelled by mutual consent. It will not be treated as default of the

contractor.

Approval of the Hon’ble High Court will be taken for these terms and conditions.â€​

The standing committee inter alia made it clear that the decision reflected in its resolution would come into effect at the earliest, without even waiting

for confirmation of the minutes.

It is the Petitioner’s case that though, in pursuance of the aforesaid resolution, consent terms in the nature of minutes of order were finalised

between the parties, the same could not be filed before this Court, since this Court was taking up only extremely urgent matters as a result of the

outbreak of Covid-19 pandemic. On 1 June 2020, the Petitioner, through its Advocate, requested the Commissioner of the Respondent Corporation to

conclude the compromise by consent minutes. The request was made purportedly on the basis that the Petitioner, who was running essential services,

was gravely effected in revenue and and the proposed compromise would help the Petitioner overcome the difficulties due to the lock-down. Since,

around 2 June 2020, this Court started taking up regular admission matters for the year 2019-2020, on or about 11 June 2020, a praecipe was moved

by the advocates of the Petitioner requesting this Court to take up the petitions on 12 June 2020 for filing of consent terms in the nature of minutes of

order. The praecipe included a draft of those consent minutes, which the parties had agreed to sign and execute. This Court required the parties to

move the Court with signed compromise. The consent minutes were, accordingly, circulated between the parties. On or around 16/17 June 2020, the

Commissioner of the Respondent Corporation signed the consent minutes of order, which minutes were, thereafter, forwarded to the Petitioner and

the respective Advocates of the parties for their signatures. On 20 June 2020, the consent minutes were duly signed by all parties and advocates. A

circulation was thereupon sought for disposal of the commercial arbitration petitions in terms of the minutes on 23 June 2020, which was a scheduled

date for urgent hearings through video conferencing in the particular week. Since the matter could not be taken up on that date, a request was made to

the Court to take up the matter on the following date, i.e. on 26 June 2020. The matter was, accordingly, listed before this Court on 26 June 2020. On

that date, learned Counsel for the Respondent Corporation sought time to take instructions from the Respondent Corporation's new Commissioner.

(On 20 June 2020, in the afternoon, after the matter of signing of consent minutes of orders was duly concluded by the parties, the then Commissioner

of the Respondent Corporation had handed over the charge of his office to the new Commissioner.) This Court, by its order dated 26 June 2020, noted

learned Counsel’s request concerning approval of the new Municipal Commissioner for the settlement to go through. The Court was of the view

that the request was highly curious. The Court noted that the settlement had been arrived at the level of the standing committee of the Respondent

Corporation and after passing of a resolution by the standing committee, which resolution was signed and also counter signed by the Municipal

Commissioner; and that it was difficult to see how the Municipal Commissioner could reconsider this entire settlement and choose to overturn it if he

so desired. Though the Court was prima facie of the view that the Municipal Commissioner could not wriggle out of a binding contract between the

parties, in view of the fact that learned Counsel for the Respondent Corporation was unable to get in touch with the newly appointed Municipal

Commissioner, purely by way of indulgence, the matter was stood over to the following date. On the following date, i.e. 30 June 2020, when the Court

took up the matter, it was kept back for instructions of the Municipal Commissioner. Learned Counsel for the Respondent Corporation, after taking

instructions from the Municipal Commissioner, informed the Court that the Commissioner was not inclined to proceed with the consent terms.

Considering the fact that the compromise of the pending petitions had become a subject matter of controversy, this Court stood over the matter to

today’s date to enable the Petitioner contractor to take out an appropriate application under Order 23 Rule 1 of the Code of Civil Procedure for

recording of the compromise.

The Petitioner has now moved its application for recording of the compromise. The Respondent Corporation has filed its reply. The parties have

been fully heard on the application through video conferencing.

It is pertinent to note that compromise by or on behalf of the Respondent Corporation is governed by Section 481(1)(f),(h) and (i) of the MMC Act.

Clause (f) of sub-section (1) of Section 481 authorises the Commissioner to withdraw or compromise any claim of the Corporation for a sum not

exceeding five hundred rupees or, with the approval of the Standing Committee, if such claim were to exceed five hundred rupees. So also, under

Clause (h) the Commissioner is authorised to admit or compromise any claim or legal proceeding brought against the Corporation or the Commissioner

or a municipal officer or servant, in respect of anything done or omitted in pursuance of a contract entered into with the Corporation. Likewise, under

Clause (i) the Commissioner can institute or prosecute any suit or withdraw from or compromise any suit or claim, other than a claim of the

description specified in clause (f), which has been instituted or made in the name of the Corporation or of the Commissioner. This scheme of Section

481(1)(f), (h) and (i) makes it clear that any claim made by the Corporation against any person for any sum exceeding five hundred rupees or any suit

or claim or legal proceeding brought against the Corporation by any person can be compromised by the Municipal Commissioner with the approval of

the standing committee.

The Respondent Corporation in the present case has not disputed the Petitioner's case that the compromise proposed by the Petitioner was

approved by the standing committee and after approval of the standing committee was duly signed by the then Municipal Commissioner, the Petitioner

contractor and the respective Advocates of the parties by 20 June 2020. The only ground on which the compromise is opposed before this Court (in its

reply dated 2 July 2020) is that on and after 23 June 2020, that is to say, on the dates, when the consent minutes of order were moved before this

Court and the matter was listed for settlement, the Municipal Commissioner, who had signed the consent minutes of the order, was no longer holding

the charge of Municipal Commissioner. The fact that the Municipal Commissioner had ceased to be of a Commissioner by the time the petitions were

taken up for recording of the compromise between the parties is neither here nor there. Under Order 23 Rules 1 and 3 of the Code of Civil Procedure,

all that this Court has to consider is whether it is proved to its satisfaction that the suit or claim has been adjusted wholly or in part by any lawful

agreement or compromise in writing signed by the parties. If the Court finds such lawful agreement or compromise to its satisfaction, it must order

such agreement or compromise to be recorded and pass a decree or order in accordance therewith so far it relates to the parties to such suit or claim.

The proviso to Rule 3 of Order 23 requires the Court to decide whether such adjustment has been arrived at, whenever such adjustment is alleged by

one party and denied by the other. This scheme of Order 23 Rules 1 and 3 envisages the Court’s mandate to decide whether or not a lawful

compromise has been arrived at between the parties. As we have noted above, the original compromise proposed by the Petitioner found favour with

the Commissioner of the Municipal Corporation, who mooted a proposal for its approval by the standing committee of the Corporation; the standing

committee, after seeking an opinion of a Senior Advocate of this Court, and after deliberating upon the matter, duly passed a resolution accepting the

compromise subject to terms and conditions stated therein; the terms and conditions of the compromise have been duly reflected in the consent

minutes of the parties; the consent minutes have been duly signed by the parties through their authorised signatories (by the Petitioner through its

representative authorised by a duly passed resolution and by the Respondent Corporation through its Commissioner) and also by their respective

Advocates. The compromise was, thus, already a concluded contract as of 20 June 2020 before the then Municipal Commissioner handed over his

charge to the new Commissioner. The earliest that the matter could thereafter have been moved was on 23 June 2020, which was the immediately

next scheduled date of hearings in this Court through video conferencing. Due to abundance of matters on that date, the matter was circulated on the

following available date, i.e. 26 June 2020. If on this date, the new Commissioner, who had been placed in charge of the Corporation in place of the

earlier, did not “wish to proceed further with proposed settlementâ€, that does not in any way reflect on the factum of a concluded adjustment of

the pending matter as noted above.

A Division Bench of this Court, in the case of Dattatray s/o Anandgir Giri vs. The Aurangabad Municipal Corporation1 (para 11), inter alia noted

that a decision by the standing committee of the municipal corporation in that case in a similar situation having already attained finality, the same could

not have been turned down by the municipal commissioner, particularly when there was no specific challenge to the said decision by the Corporation

or the Commissioner. The Court particularly observed that standing committee of a municipal corporation stood on a higher footing in hierarchy; its

status was on higher pedestal compared to the municipal corporation; it was a higher authority recognised under the MMC Act. The Court, in the

premises, noted that the decision of the standing committee could not have been reversed by a new incumbent Commissioner; it could be, if at all,

reversed/varied/set aside only by the standing committee who had approved the decision.

In Y. Sleebachen vs. State of Tamil Nadu2, the Supreme Court (in para 15) accepted the authority of the Government Pleader to enter into a

settlement on behalf of the Government. What was alleged in that case before the Supreme Court was that no compromise was recorded or agreed

upon before the court, which was contrary to the record of the court, which considered the ground of challenge as impermissible. The Court noted that

there was not even an iota of pleading explaining as to how the Government Pleader was not authorised to record a consent or that he in any manner

was lacking in authority or that he had acted improperly.

These authorities clearly support the Petitioner’s case on compromise in these petitions. The compromise here is by a Standing Committee of

the Corporation, an authority higher to the Commissioner. The resolution of the standing committee has been acted upon. The then Municipal

Commissioner as well as the Corporation’s advocate has signed the consent minutes of order. Nothing is shown before this Court to imply that

resolution of the Standing Committee was not efficacious or that the then Commissioner or the Corporation's advocate either had no authority to sign

the minutes or acted improperly in doing so.

As we have noted above, the dispute between the parties forming the present arbitration petitions was duly compromised by the parties after

following due process of law. The compromise was duly signed by and on behalf of the respective parties and their Advocates. The matter was, thus,

adjusted wholly by a lawful agreement or compromise in writing, which was signed by the parties, and there is no way the present Municipal

Commissioner can back out of the compromise or oppose the application for recording the same.

In the premises, the interim application filed by the Petitioner is allowed in terms of prayer clause (a). In view of the compromise recorded today,

there will be an order in terms of the consent minutes of order dated 20 June 2020 and the arbitration petitions are disposed of in terms thereof. The

impugned award of the learned arbitrator is, accordingly, substituted by this order in terms of consent minutes. It is made clear that none of the

observations of the arbitrator concerning either the Petitioner or the Respondent survives any longer.

This judgment will be digitally signed by the Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally

signed copy of this judgment.