Steel Authority of India Ltd. v. Shamon Galva Colortck Pvt. Ltd.
2001-10-17
P.K.Samanta
body2001
DigiLaw.ai
JUDGMENT P. K. Samanta, J.: This is an application by the Steel Authority of India (SAIL) under Article 227 of the Constitution of India against judgement and order dated 20th April, 2001 passed on it's application under section 115A of the Code of Civil Procedure. The said application under section 115A was filed against the order dated 20th July, 1999 passed in Misc. Case No.4 of 1999 by the trial court. By the said order the trial court made the award a rule of court ex parte by allowing the Misc. case which was initiated on the application purportedly made under section 17 of the Arbitration Act, 1940. The said order was challenged by the SAIL in it's petition under section 115A of the Code, which was affirmed by the impugned order dated 20th April, 2001. 2. In this court the said order was challenged mainly on two grounds. First, both the courts below acted illegally and with material irregularity in its exercise of jurisdiction by making the award a rule of court ex parte as no notice under section 14 of the Arbitration Act was served upon the parties to the arbitration agreement. Second, the trial court at Alipore had no territorial jurisdiction to pass a decree in terms of the award inasmuch as the contract between the parties took place at Ranchi, the work was required to be done as per the contract at Ranchi and the office of the respondent is also situated at Ranchi. 3. Shorn of all unnecessary details, the salient features of this case may be stated as hereunder; "There was a written contract between the respondent/company and SAIL in which there was a clause that in case of a dispute between the parties, the same shall be referred to arbitrator. There being a dispute, the matter was referred to the sole arbitration of one Sri. V. Ranganathan who after hearing the parties passed an award and also authorised one Sri Avijit Chatterjee of the respondent/company to file the same. By the said award SAIL was directed to refund to the claimant respondent/company the amount of Rs. 26.20 lacs encashed by SAIL out of the bank guarantee furnished for security deposit of similar amount, with further stipulation that the SAIL shall pay an interest @ 13% per annum from the date of issue of award dated 1.12.1997.
By the said award SAIL was directed to refund to the claimant respondent/company the amount of Rs. 26.20 lacs encashed by SAIL out of the bank guarantee furnished for security deposit of similar amount, with further stipulation that the SAIL shall pay an interest @ 13% per annum from the date of issue of award dated 1.12.1997. Such payment shall be made before 20th February, 1998 and after that date interest will be payable at the rate of 18% per annum. The said award was not challenged by SAIL either under section 30 or under section 15 of the Arbitration Act. Pursuant to the said award SAIL paid back the amount of Rs. 26.20 lacs but did not pay the interest payable on the said amount as per the award. The respondent/company consequently filed the award in court for a judgement upon the said award under section 17 of the said Act. It may be stated herewith that prior to the arbitration of the dispute between the parties by the said sole arbitrator an application under section 20 of the said Act was filed by the respondent/company in Alipore Court for making a reference for arbitration of the dispute between the parties. The said proceeding was not further pursued and the same stood dismissed for non-prosecution inasmuch as the parties had in the meantime referred the dispute to the aforesaid arbitrator." 4. In this context, Mr. Jayantra Mitra, learned senior counsel appearing on behalf of SAIL upon reference to the decisions of the Supreme Court reported in All India Reporter 1988 SC 2054 (Indian Rayon Corporation Limited vs. Raunag and Company Pvt. Ltd.); All India Reporter 2001 S.C. 1481 (East India Hotels Ltd. vs. Agra Development Authority) contended that the statutory requirement under section 14(2) of the Arbitration Act, 1940 having not been complied with by issuing notice of filing of the said award in court to the SAIL the trial court acted illegally by making the said award a rule of court ex parte. 5. The Supreme Court in the case of India Rayon Corpn.
5. The Supreme Court in the case of India Rayon Corpn. Ltd. (supra) held that in order to be effective both for the purpose of obtaining the judgement in terms of the award and for setting aside the award there must be (a) filing of the award in the proper court; (b) service of the notice by the court or its office to the parties concerned; (c) such notice need not necessarily be in writing. If the substance is clear the form of the notice is irrelevant. The filing in the court is necessary and the intimation thereof by the Registry of the Court to the parties concerned is essential. Beyond this there is no statutory requirement of any technical nature under section 14(2) of the Act. The decision of the Supreme Court in the case of East India Hotels (supra) is more or less in the same line. It held that notice under section 14(2) need not be in writing and it can also be oral. What is essential is that there must be service of notice or intimation or communication of the filing of the award to the parties, mode of service of such a notice being immaterial. But such information, communication and knowledge must be by or pursuant to order of the court. 6. In the case in hand it cannot be disputed that the substance of the award was clear to the SAIL. It was also within it's knowledge inasmuch as the SAIL paid up the principal amount of the award to the respondent/company pursuant to the award dated 1.12.1997. The records of the Misc. Case that arose out of an application under section 17 of the Act filed by the respondent/company revealed that the notice of filing of the award in court was issued upon SAIL by registered post which returned with the postal endorsement as 'refused'. Thereafter such notice was sent through Process Service. The return of such service was also received by the court. In course of hearing of this application, on behalf of the SAIL it was not sought to be established that such service of notice through Process Service was in fact not duly effected nor on the strength of any cogent material it could be established that the registered notice was not properly addressed or was not tendered to it.
In course of hearing of this application, on behalf of the SAIL it was not sought to be established that such service of notice through Process Service was in fact not duly effected nor on the strength of any cogent material it could be established that the registered notice was not properly addressed or was not tendered to it. That apart the petitioner/SAIL did not approach the trial court for setting aside the said ex parte decree in accordance with provision of Order 9 Rule 13 of the Code on the pleas as aforesaid. Mr. Animesh Ghosal, learned advocate appearing on behalf of the respondent/company upon reference to the decision of the Supreme Court in the case of Union of India and Ors. vs. Manager, M/s. Jain and Associates, reported in 2001(1) Supreme 593 contended that such a course having had not been taken it cannot be alleged in this proceeding that a notice under section 14(2) of the said Act was not served upon petitioner/SAIL. I am in agreement with Mr. Ghosal. On the face of the orders passed by the trial court in the said Misc. Case and also in the absence of any evidence and/or materials in support of the allegation as above made by the petitioner/SAIL there was no scope for the lower revisional court to determine the questions whether the notice under section 14(2) of the said Act was duly tendered to the petitioner/SAIL or not by the postal peon and/or the Process Server of the court and/or whether the same was duly received by it or not or whether upon due tender the same was refused or not, in exercise of jurisdiction under section 115A of the Court. 7. On the question of territorial jurisdiction the Single Bench decision of Calcutta High Court reported in All India Reporter 1960 Calcutta 421 (Ferro Allows Corporation Ltd. vs. A. K. Ghosh) as referred to by Mr. Mitra also cannot come in aid of the petitioner. The said decision laid down that once an application is made with reference to an Arbitration Agreement in one court no matter whether before or after filing of the award, that court will have conclusive jurisdiction to deal with all matters in connection with the reference including filing of the award and passing judgment in terms of the award.
The said decision laid down that once an application is made with reference to an Arbitration Agreement in one court no matter whether before or after filing of the award, that court will have conclusive jurisdiction to deal with all matters in connection with the reference including filing of the award and passing judgment in terms of the award. In this case, application under section 20 of the Arbitration Act for reference for an arbitration of the disputes between the parties was though not proceeded with but was filed in the self same court which passed the decree upon the award. The SAIL contested the said application in the said court without raising any objection as to the territorial jurisdiction. The Supreme Court decision reported in All India Reporter 1953 S.C. 313 ((Kunbha Mawji vs. Dominion of India) as referred to by Mr. Mitra is in the context of the scope and meaning of the phrase 'in any reference' appearing in section 31(4) of the said Act. The Supreme Court held that the phrase "in a reference" is comprehensive enough to cover also an application first made after the arbitration is completed and a final award made. Therefore the said decisions are no relevant for the present purpose. 8. Under the provisions of the Civil Procedure Code no objection as to place of suing shall be allowed to be raised in the appellate or revisional court unless such an objection as to the place of suing was taken in the court at the first instance at the earliest possible opportunity. The appellate or revisional court shall also not allow such objection unless there has been a consequent failure of justice. In this case, on behalf of the SAIL no material has been disclosed to establish that at the first instance when an application under section 20 of the Arbitration Act was filed in the self same court by the respondent/company, an objection was raised on behalf of it as to the place of suing. It has also not been established that because of the aforesaid proceeding before the trial Court at Alipore there has been a consequent failure of justice in respect of the petitioner/SAIL.
It has also not been established that because of the aforesaid proceeding before the trial Court at Alipore there has been a consequent failure of justice in respect of the petitioner/SAIL. It is not in dispute that the petitioner/SAIL has its principal and/ or subordinate office at a place in Calcutta where the cause of action for nonpayment of the interests on the principal amount pursuant to the award and also on the principle that the debtor must seek the creditor, arose. 9. In this connection, it may also be observed that the petitioner/SAIL did not disclose anywhere that it intends to challenge the award. On the contrary, pursuant to the said award the principal amount has been paid to the respondent/company. If encasement of bank guarantee by the SAIL in respect of security deposit for Rs. 26.20 lacs by the respondent/company was found unauthorised for which the award for similar amount was made and accepted by the petitioner/SAIL by making payment of the same then there is no reason as to why the petitioner/SAIL shall not be liable for payment of interest @ 13% per annum which is equivalent to the rate interest earned in an investment at the relevant point of time in the post office, from the date of encashment of bank guarantee till the date of the award for enjoying the fruits of that amount for all those years. Similarly, it has not been established as to why the petitioner/SAIL shall not be made liable for payment of interest @ 18% per annum after 28.2.1998 by which all payments were directed to be made. I, therefore, do not find any consequent failure of justice because of the territorial jurisdiction exercise by the trial court in making the award a rule of court in the facts and circumstances of the case as above. I, therefore, hold that both the courts below did not act illegally and/or with material irregularity in its exercise of jurisdiction by making the award a rule of court and also by affirming the same in exercise of power under section 115A of the court. This revisional application therefore, must fail. Hence, this application is dismissed. 10. Urgent xerox certified copy of this order, if applied for, be supplied to the parties, as expeditiously as possible. Revisional application dismissed.