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Madhya Pradesh High Court · body

2000 DIGILAW 1317 (MP)

BHATIYA INTERNATIONAL v. BULK TRADING S. A.

2000-12-08

J.G.CHITRA

body2000
J. G. CHITRE, J. ( 1 ) AS indicated by the writ Petition Memo, the petitioner is taking exception to the order which has been passed by 3rd Addl. District Judge, Indore, on 1-2-2000 in view of provision of Article 227 of the Constitution of India. The said order decides an application moved by the petitioner before the said court for challenging the maintainability of the application moved by respondent No. 1 for seeking interim relief in view of provisions of Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the New Arbitration Act' for convenience ). ( 2 ) AS the submissions indicated, there was an agreement between petitioner and respondent No. 1 in respect of a commercial transaction. There arose a dispute between the said parties and an application was moved before the International Court of Arbitration by respondent No. 1 on 23-10-97 and in view of that an arbitration proceeding is pending before the Arbitrator. The petitioner is carrying business at Indore. An application was moved for getting an interim relief by respondent No. 1 in District Court of Indore. Presently that matter is being heard by the 3rd Addl. Distt. Judge, Indore bearing Misc. Arbitration Case No. 39/ 99. An objection was raised by the petitioner in view of provisions of Order 7 Rule 11 of C. P. C. and provisions of Section 2 of the New Arbitration Act. A Revision Petition was filed by Respondent No. 2 challenging the present order. The said Revision petition has been dismissed. ( 3 ) THE controversy is mainly revolving around the provisions of Section 2 of the New Arbitration Act prominently around sub-section (2) of it as well as sub-section (5) of it. Shri A. M. Mathur and Shri B. L. Pavecha placed the interpretation of these two provisions in the way which they found better and proper for pushing the case of their respective clients. In that context not only-the judgments of Calcutta High Court (S. B.), but three judgments of Delhi High Court (S. B.) were referred to, so also the provisions of English Arbitration Act, UNCITRAL Geneva Convention and Article 370 of Indian Constitution were referred to. In that context not only-the judgments of Calcutta High Court (S. B.), but three judgments of Delhi High Court (S. B.) were referred to, so also the provisions of English Arbitration Act, UNCITRAL Geneva Convention and Article 370 of Indian Constitution were referred to. The submissions were advanced for the purpose of unfolding the structure of enacted provisions of the New Arbitration Act and that takes this court to the various aspects of the submissions advanced by the counsel appearing for contesting rival parties. ( 4 ) SHRI Mathur pointed out provisions of sub-section (2) of Section 2 of New Arbitration Act and contended that the said provision consoles the remaining provisions of sub-sections of section 2 and forbids the respondent No. 1 from seeking an interim relief from the District Court of Indore. However, according to the submssions of Shri Pavecha, sub-section (5) of Section 2 has independent existence and that has to be read independently and that is not restricted by provisions of subsection (2) of Section 2 of New Arbitration Act. That necessitates mentioning of provisions of Section 2 from sub-section (2) onwards as mentioned hereunder:" (2) This part shall apply where the place of arbitration is in India. (3) This part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. (4) This part excepts sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder. (5) Subject to the provisions of sub-section (4) and save insofar as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this part shall apply to all arbitrations and to all proceedings relating thereto. (5) Subject to the provisions of sub-section (4) and save insofar as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this part shall apply to all arbitrations and to all proceedings relating thereto. " ( 5 ) AS this matter touches some provisions of Geneva convention it necessitates mentioning of Sections 55, 56, 57 and 58 of new Arbitration Act, more pertinently the provisions of Section 58 of the New Act which provide that when the court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of the Court. In this context the preamble of the New Arbitration Act also needs to be quoted. which reads as mentioned here-under:-"whereas the United Nations commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model law on International Commercial Arbitration in 1985; and WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice; and WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980; and WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation; and WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising ininternational commercial. relations; and whereas it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules; be IT enacted by Parliament in the Forty-seventh Year of the Republic of India as follows. . . . . . " ( 6 ) WHILE demonstrating the effect of provisions of sub-section (2) of Section 2, Shri Mathur pointed out the provisions of English Arbitration Law of 1950 as well as of 1996; more particularly sub-section (2) of Section 2 of it. Shri Mathur submitted that by that provision, the English Law has expressly provided that the awards passed by foreign arbitrators are enforceable in English Courts. Shri Mathur submitted that by that provision, the English Law has expressly provided that the awards passed by foreign arbitrators are enforceable in English Courts. He made the submissions to this effect while dealing with paragraphs 59 and 60 of the judgment of delhi High Court in the matter of O/ex Focas Pvt. Ltd. and another v. Skodaexport Co. Ltd. and another. This submission leads the focusing to the another judgment of Delhi High Court in the matter of Dominant Offset Put. Ltd. v. Adamouske Strojirny A. S.- because the Single Bench of Delhi High Court while delivering the judgment in the matter of Olex Focas Pvt. Ltd. (supra) followed this judgment of Delhi High Court (Single Bench ). Single Bench of Delhi High Court has also dealt with the same point in the matter of Naval Gent Maritime Ltd. v. M/s. Shivnath Rai Harnarain (I) Ltd. , when the judgment has been pronounced by Delhi High Court (S. B.) on 8-3-2000. This point has also been dealt with by the Single Bench of Calcutta High Court in the matter of East Coast Shipping Ltd. v. M. J. Scrap Pvt. Ltd. Shri Mathur has placed reliance on the judgment of the Calcutta High Court mainly to substantiate his argument in addition to his argument which is in tune with the judgment of the Delhi High Court in the matter of O/ex Focas Pvt. Ltd. (supra ). ( 7 ) THE judgment of Single Bench of Calcutta High Court Indicates a tune that provisions of sub-section (2) Section 2 of New Arbitration Act, exclude the powers of Indian Courts to pass any order may be interim or having the nature of final order, if the arbitration proceeding is to be held in foreign country or is in progress in foreign country. The judgment of Delhi High Cqurt (S. B.) in the matter of Kitechnology, N. V. v. Unicor Gumbh Rahn Plastmaschiner and others; is in tune with the view taken by the Single Bench of the Calcutta High Court. The judgment of Single Bench of Delhi High Court in the matter of O/ex Focas Pot. Ltd. (supra) is in tune with judgment of Single Bench of Delhi High Court in the matter of Dominant Offset Pvt. Ltd. (supra ). The judgment of Single Bench of Delhi High Court in the matter of O/ex Focas Pot. Ltd. (supra) is in tune with judgment of Single Bench of Delhi High Court in the matter of Dominant Offset Pvt. Ltd. (supra ). These two judgments of Delhi High Court indicate by holding that the provisions of Sub-section (5) of Section 2 has to be given independent effect and by that, the Indian Courts are not precluded from passing orders in respect of the matters wherein the arbitration is to be held in foreign country or is in progress in foreign country for granting or refusing interim relief from passing the final order. ( 8 ) IN the matter of Olex Focas Pvt. Ltd. (supra) the Single Bench of Delhi High Court has considered number of cases for the purpose of coming to the conclusion which is the result of the judgment. Even the judgment of Single Bench in the matter of Kitechno/ogy N. V. (supra) has been considered. It has been pointed out that in that case, both the parties were governed by German Law and the place of arbitration was not in India. In that judgment, provisions of sub-section (2) of Section 2 of English Arbitration Act, 1996 has been also considered. It has been pointed out that by the said provision exclusion part has been cleared of and English Courts are empowered to deal with such situation. The English Courts have been vested with the jurisdiction and powers to grant interim relief. ( 9 ) SHRI Mathur submitted that the old English Law in that context pertaining to Year 1950 has been repealed and a provision has been made expressively or vested in English Courts with such power. He submitted that intention of the legislature has to be understood by keeping in view the attempts made by the legislature enacting the provisions of Sub-section (2) of Section 2 of the New Arbitration Act, 1996. Shri Mathur pointed out while making a sub-mission that so far as the New Arbitration Act is concerned it has been provided that the operation of New Arbitration Act extends to whole of India. However, provided that Part I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or as the case may be, international commercial conciliation. However, provided that Part I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or as the case may be, international commercial conciliation. He made a reference in this context to Article 370 of Indian Constitution which provides for temporary provisions with respect to the State of Jammu and Kashmir. Article 370 starts with sub-article (1) which provides that Notwithstanding anything in this Constitution, (a) the provisions of article 238 shall not apply in relation to the State of Jammu and Kashmir; (b) the power of Parliament to make laws for the said State shall be limited to :- (i) those matters in the Union List and the Concurrent List which in consultation with the Government of the State, are declared by the President to correspond to matters specified in the Instrument of Accession governing the accession of the State to the Dominion of India as the matters with respect to which the Dominion Legislature may make laws for that State; and (ii) such other matters in the said Lists as, with the concurrence of the Government of the State, the President may by order specify. Shri Mathur submitted that the Legislative Assembly of Jammu and Kashmir State enacted a separate Arbitration Act for the purpose of satisfying the need of the persons residing in the State of Jammu and Kashmir. He submitted that the courts in India are not empowered to deal with the Arbitration Proceedings which are to be held in the State of Jammu and Kash-mir or which are in progress in the said State. The Constitution of India has taken care of dealing with the state of Jammu and Kashmir in a different way because that was a subject matter of accession of the said State in India. The Constitution and the Government of India is taking care of such matters in view of the situation which had arisen since the accession of the State of Jammu and Kashmir in republic of India; that is totally an aspect different altogether. That would not be supporting the stand of the petitioner so far as the prayer made in the present case is concerned. ( 10 ) IN the matter of Sundram Finance Ltd. v. NBPC India Ltd. Supreme Court indicated the guidance as to how the statutory provisions are to be interpreted. That would not be supporting the stand of the petitioner so far as the prayer made in the present case is concerned. ( 10 ) IN the matter of Sundram Finance Ltd. v. NBPC India Ltd. Supreme Court indicated the guidance as to how the statutory provisions are to be interpreted. In Richpal Singh v. Dalip, the Supreme Court observed:"where there is an express bar of the jurisdiction of the court, on examination the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the Civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the Inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability shall be determined by the Tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not. " ( 11 ) IN Smt. Bismillah v. Janeshwar Prasad, the Supreme Court observed :"it is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred, but that such exelusion must either be explicitly expressed or clearly implied. The provisions of a law which seek to oust the jurisdiction of Civil Court need to be strictly of Civil Court need to be strictly construed. " ( 12 ) IN the matter of Dhutabhai v. State of Madhya Pradesh, the Supreme Court held that:"where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the Civil Court. " ( 13 ) IN the matter of State of Tamil Nadu v. K. L. M. Ramamurthy; the Supreme Court held that:"having regard to the principles stated by this court while enunciating the first proposition in Dhulabhai case it is clear that even where the statute has given finality to the orders of the special Tribunal the Civil Court's jurisdiction can be regarded as having been excluded if there is adequate remedy to do what the Civil Court would normally do in a suit. In other words, even where finality is accorded to the orders passed by the special Tribunal one will have to see whether such special Tribunal has powers to grant reliefs which Civil Court would normally grant in a suit and if the answer is in the negative it would be difficult to imply or infer exclusion of Civil Court's jurisdiction. " ( 14 ) THEREFORE, the scheme which has been demonstrated by New Arbitration Act will have to be seen and, therefore, provisions of Section 58 become relevant for the Inquiry and occupies significant importance. It provides that when the Court is satisfied (Civil Courts in India)that the foreign award is enforceable under this Chapter, the Award shall be deemed to be a decree of the Court. ( 15 ) SHRI Pavecha submitted that the provisions of New Arbitration Act do not make the Indian Courts powerless for the purpose of entertaining the prayers made by the parties residing in India in respect of a commercial transaction in which other party involved is residing in foreign country. He pointed out that provisions of Section 58 makes it possible to conclude that the jurisdiction of Civil Court in dealing with such matters is not ousted. For the purpose of gathering the intendment, the preamble to the New Arbitration Act will have to be seen prominently and carefully. It indicates that this Arbitration Act has been enacted by the Parliament for the purpose of achieving the pace with modern development for modern commercial transactions at international level. For the purpose of gathering the intendment, the preamble to the New Arbitration Act will have to be seen prominently and carefully. It indicates that this Arbitration Act has been enacted by the Parliament for the purpose of achieving the pace with modern development for modern commercial transactions at international level. In view of the modern law for international commercial arbitration enacted by UNCITRAL for the purpose of keeping pace with the recommendations of General Assembly of United Nations for the purpose of securing tune with UNCITRAL Conciliation Rules and for the purpose of securing uniformity of the provisions of international Commercial Arbitration, this Act has been enacted by our Parliament as I find. ( 16 ) WHEN that is the intendment of the Parliament for enacting this Act more particularly Section 2, the provisions of sub-sections (2), (3), (4) and (5) will have to be read carefully and appropriately. It is the submission of Shri Mathur that provisions of sub-section (2) oust the jurisdiction of Indian Courts so far as Part1 of New Arbitration Act is concerned. However, Shri Pavecha submitted that these provisions make out three categories and for meeting the need of those three categories, the Parliament has enacted provisions of sub-sections (3), (4) and (5 ). He submitted that the provisions have to be interpreted independently and they are to be given effect independently in view of the intendment of the Parliament for enacting those sub-sections. ( 17 ) SUB- section (2) provides that this part shall apply where the place of arbitration is in India. When that was so enacted, what was the need of enacting further sub-sections (3), (4), (5) and that indicates the intendment. By providing sub-section (3) the legislature provided that this part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. Sub-section (4) provides that this part except sub-section (1) of Section 40,sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except insofar as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder. Sub-Section (5) provides that subject to the provisions of sub-section (4) and save insofar as otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto. ( 18 ) SHRI B. L. Pavecha further submitted that this aspect pertains to three categories which have been contemplated: (I) Where the Arbitration has been provided by agreements entered into bi-parte; (ii) Where the Arbitration has been provided by statutory provisions; and (iii) Where the place of Arbitration is out-side of India. Keeping in view the chronological order of these provisions the words used therein and the total frame-work of the enactment and the scheme provided, I find substance in the submissions advanced by respondent No. 1, by Shri Pavecha because if a party resides in India and other party reside in foreign country and if the party residing in India is not permitted to seek an interim relief from Indian Courts, the Award passed later on by the Arbitrator after completing the arbitration proceeding in foreign country would be made nugatory. Whether the enactment accepts this? Certainly the answer would be 'no'. Whether the enactment accepts the Indian Courts to be powerless ? The answer would be obviously 'no'. The enactment which has been brought into existence for the purpose of keeping pace with the norms recommended by General Assembly of United Nations Organisation, norms indicated by UNCITRAL and Geneva Convention would not make Indian Courts powerless. In addition to that, if that was the intendment, there was no necessity of enacting Section 9 which provides for interim relief. Whether a party residing in India is not entitled to seek a relief for the purpose of getting interim relief or seizing the property of adversary; whether the party residing in India is not entitled to get a relief from the Indian Courts for the purpose of securing its interest in the event of getting the Award in Arbitration proceedings in its favour and for the purpose and for meeting other eventualities, Section 9 has been brought to existence. ( 19 ) THOUGH Shri Mathur submitted that a special care has been taken by English Arbitration Act Section 2 for the purpose of empowering English Courts for entertaining such matters wherein the Award is to be held for foreign country and where the Arbitration proceeding is in progress in foreign country. That may be the intendment of the English Legislative Body. But by itself that does not spell out the intention otherwise as indicated by the submissions advanced by Shri. Mathur. By reading the provisions of the New Arbitration Act as a whole and by reading the provisions of Section 2 sub-sections (2) (3) (4) and (5),this court does not find that Section 2 is restricting the application of Part I of New Arbitration Act, so far as Indian Civil Courts are concerned. ( 20 ) THE judgment of Single Bench of Delhi High Court in the matter of Olex Focas Put. Ltd. (supra) - has considered all facets which it found relevant to be considered. But that is not so, so far as the judgment of Single Bench of Calcutta High Court in the matter of East Coast Shipping Ltd. (supra) is concerned. Therefore, this court respectfully disagree with the view taken by the Calcutta High Court (S. B.) in the matter of East Coast Shipping Ltd. (supra ). This court concurs with the view taken by the Single Bench of the Delhi High Court in the matter of Dominant O//set Ltd. (supra) and Olex Focas Put. Ltd. (supra ). ( 21 ) BESIDES this, the learned 3rd Addl. Distt. Judge has considered all necessary facets of the matter while passing the order which has been challenged by this petition. Shri Mathur submitted that the petitioner is invoking the powers of this court in view of Article 226 of the Constitution but conspicuously the Writ Petition Memo does not indicate so. It has conspicuously mentioned that the petitioner is invoking the powers of this court in view of Article 227 of the Constitution and prays for a Writ to be issued in view of that. Therefore, the submission of Shri Mathur so far as Article 226 is concerned will have to be discarded. This Court would be examining the order put to challenge in view of Article 227 and with the view of supervision. Therefore, the submission of Shri Mathur so far as Article 226 is concerned will have to be discarded. This Court would be examining the order put to challenge in view of Article 227 and with the view of supervision. This court would think whether a writ of Certiorari is necessary to be issued or not. This court would see whether the court of 3rd Addl. Distt. Judge has committed the error of illegality. This court would be examining whether the judgment and order which is being assailed is suffering from the infirmity of perversity and inconsistency with the facts on record. The answer from all corners would be only one and that is "no". Thus, the order which is assailed stands undented by dismissal of this writ petition. ( 22 ) SHRI Mathur submitted that in view of Article 133 of the Constitution of India a leave be granted as the matter involves a substantial question which is to be decided in view of its general importance. This court does not find any necessity of doing so because the present judgment and judgments of Delhi High Court are sufficiently giving a guideline to the courts below for dealing with the situation. In addition to that, this court has also taken care to examine all relevant facets. Thus, the prayer is dismissed. ( 23 ) SHRI Mathur further prayed that the operation of this judgment and order be stayed for the purpose of protecting the interest of the petitioner in view of interim order which has been passed by this court. This court does not find any necessity for doing so because the respondent No 2 has challenged the same order by filing a Revision Petition and as Shri Pavecha submitted the petitioner has not taken care of filing a reply to the application which has been submitted by respondent No. 1 in view of provisions of Section 9 of New Arbitration Act. At this stage it is pertinent to note that the office address of petitioner and respondent No 2 is the same. It is by itself eloquent. Petition dismissed. .