Research › Search › Judgment

Andhra High Court · body

2002 DIGILAW 1289 (AP)

Nicholas Piramal India Ltd. v. Cultor Food Science Inc.

2002-11-01

C.Y.SOMAYAJULU, R.M.BAPAT

body2002
C. Y. SOMAYAJULU, J. ( 1 ) THIS petition is filed to review the common order dated 12-12-2001 in A. A. O. No. 1285 of 2001 and C. R. P. No. 3497 of 2001. ( 2 ) FOR the sake of convenience we would hereinafter refer to the parties as they are arrayed in the appeal. ( 3 ) AT the outset we express our regret for signing the common order, sought to be reviewed, without correcting the typographical errors and mistakes that crept therein, which are noticed by us during the hearing of this petition. Since as per Section 152, Cr. P. C. , Court has power to correct such errors, we order the following corrections in the common order dated 12-12-2001. (I) In page 2 para 3 line 9 delete the word and after weltol PLUS and before culminated . (II) In para 4 at page 3 lines 18 and 19 delete the sentence reading "whatever strong words they are made, are not sufficient to establish fraud or misrepresentation the allegation of fraud" and substitute the sentence "in however strong words they might have been made, are not sufficient to establish fraud or misrepresentation and so the allegations relating to fraud". (III) In line 14 at page 4, para 4, delete the words and so in between the words filing of the suit and 1st . (IV) In line 14, para 6 at page 8, add the sentence reading in support of his contention after "kotak and CO. ". (V) In line 19 at page 10 substitute the words "were to culminate" in place of the word only can terminate in between the words even if and in an award ; delete the word which in between the words in an award and would . In line 20 of the same para substitute the word affect in place of the word effect . At the beginning of line 21 in the same para, add the sentence reading he did not enter into before the words the agreement , and delete the words was not entered into in between the words the agreement and and since ; substitute the word in in place of the word by in between the words himself and an . (VI) In line 7 of para 8 at page 11, add the words an injunction before the words restraining and the word the between the words restraining and kartha . In line 21 of para 10 on the same page substitute the sentence or relating to the contract in place of the sentence or relating to the contract in place of the sentence or related to the contracted . (VII) In line 13 at page 12 substitute the word with in place of and in between the words them and a consequential . (VIII) In line 3 at page 14 substitute the word sought in place of and and in line 9 on the same page substitute the words by observing in place of the word after holding and substitute the word has in place of had in between the words that it and jurisdiction . (IX) In line 3 of para 11 at page 17 substitute the word express in place of expressed . (X) In lines 12 and 13 of para 16 at page 21 delete the sentence for that reason and in view of the ratio in the said decision and in line 13 add the sentence reading since the said decision was before the word rendered under . In line 14 add the sentence in view of the ratio in in between the words repealed and sundaram Finance . (XI) In line 6 at page 23 delete the word already in between the words had and sought . (XII) In line 1 at page 26 add the word jurisdiction in between the words having and to . In lines 2 and 3 delete the sentence reading after dismissing the petition filed by 1st respondent to review the said order (I. A. No. 2390 of 2000) and in its place substitute the sentence reading and after having dismissed I. A. No. 2390 of 2000 filed by the 1st respondent to review the observation in the order in I. A. No. 1641 of 2000 directing the parties to approach the agreed forum . In line 5 substitute the word erroneous in place of the word incorrect . In line 5 substitute the word erroneous in place of the word incorrect . (XIII) In lines 12 and 13 at page 27 delete the sentence reading and that considerable money has to be spent to participate in those proceedings would not and in its place substitute the sentence reading and it involves spending of considerable amount of money for participation in those proceedings, is not and cannot . ( 4 ) THE point for consideration is whether there are grounds to review the common order dated 12-12-2001. ( 5 ) THIS application is filed mainly on the ground that distinction between the powers of the Court vis-a-vis the Arbitrator appointed under Domestic Arbitration as per Ss. 8 and 16 of the Arbitration and Conciliation Act, 1996 (the Act) and the arbitration that takes place under New York Convention as per Sections 44 and 45 of the Act was not kept in view while passing the order dated 12-12-2001 sought to be reviewed. The basis for the said assumption of the 1st respondent is that in para 26 of the common order it was observed that interference by Civil Court should be minimal in view of Section 16 of the Act, when Section 16 of the Act applies only to domestic arbitrations but does not apply to international arbitrations covered by New York Convention, which are governed by Section 45 of the Act, corresponding to Section 3 of Foreign Awards (Recognition and Enforcement) Act, 1961 (1961 Act ). The contention of the learned counsel for 1st respondent is that law relating to arbitration covered by New York Convention remained the same, as under 1961 Act, even after the coming into force of the Act, by relying on PWH Analgen v. Damodar Ropeways, 1996 (2) CHN 97, where it is held in para 34 at page 110 that despite repealing the 1961 Act, Chapter I, Part II of the Arbitration and Conciliation Ordinance, 1996 (which is the same as Chapter I, Part II of the Act) substantially re-enacted the provisions thereof with some modifications and that Section 44 of the Ordinance materially re-enacted Section 2 of 1961 Act, Section 45 replaced Section 4, Section 47 replaced Section 6, Section 48 replaced Section 7 and Section 57 replaced Section 9 (a) of 1961 Act. Reliance is also placed on the observations in paras 36 to 38 of the said Judgment, which read as under-" (I) Under the 1961 Act an application under S. 3 could be made to a Court before which a legal proceeding was pending at any time after appearance and before filing a written statement or taking any other step in the proceeding. Under S. 45 of the Ordinance there does not appear to be any such time limit placed on the making of an application. (II) The second major difference relates to the nature of the power to be exercised by the Court before which the application is made. Under S. 3 the power of the Court to make an order staying the legal proceedings pending before it. Under S. 45 of the Ordinance the Court is required to refer the parties to arbitration. Apart from these two differences the substance of the two sections is similar; namely (i) an application may be made by one of the parties to an arbitration agreement or any person claiming through or under him; (ii) the arbitration agreement must be one to which the New York Convention applies; (III) a proceeding must be pending before a Court; (iv) the legal proceedings must be in respect of a matter agreed to be referred; and (v) unless the agreement is found null and void, inoperative or incapable of being performed, the Court is bound to exercise its powers under the section. 38. By including substantially similar provisions in S. 45 of the Ordinance it is clear that it was not the intention to destroy the right of a petitioner under S. 3 of the 1961 Act at all. If anything, the Ordinance has strengthened the right. There being no different intention in the Ordinance within the meaning of S. 6 of the General Clauses Act, I hold that PWH s application under S. 3 of the 1961 Act is still maintainable. " it is further contended by the learned counsel for the 1st respondent that the ratio in Renusagar Power Co. There being no different intention in the Ordinance within the meaning of S. 6 of the General Clauses Act, I hold that PWH s application under S. 3 of the 1961 Act is still maintainable. " it is further contended by the learned counsel for the 1st respondent that the ratio in Renusagar Power Co. Ltd. v. General Electric Company, AIR 1985 SC 1156 and Smita Conductors Ltd. v. Euro Alloys Ltd. , 2001 (7) SCC 728 , is that the validity and effect of arbitration agreement in respect of International Arbitration can be determined by the Court (1) before the commencement of arbitration proceedings, (2) during the pendency of arbitration proceedings, and (3) after the award is made and filed into Court, when civil Court in India is seisin of the issue relating to the validity of the arbitration agreement, even when arbitration proceedings are pending, it is incumbent upon the Court to decide the issue relating to the validity of the arbitration agreement in the first instance, because the decision of the Court would be binding on the arbitrator. He further contended that question of prima facie case, balance of convenience, and irreparable loss arise when injunction is sought under Rules 1 and 2 of Order 39, C. P. C. but not in cases where injunction is sought under Section 151, C. P. C. and since injunction sought by the 1st respondent is not covered by Rules 1 and 2 of Order 39, C. P. C. , the question would be whether 1st respondent is entitled to injunction under Section 151, C. P. C. He relied on Rajnibai (Smt.) alias Mannubai v. Kamla Devi (Smt.) 1996 (2) SCC 225 in support of his contention that Court has power to grant injunction under Section 151, C. P. C. in cases not covered by Rules 1 and 2 of Order 39, C. P. C. His contention is that where an injunction is to be granted under Section 151, C. P. C. question of balance of convenience and prima facie case pale into insignificance, and in this type of cases, in the interests of injustice, injunction should automatically follow on the filing of the suit, as otherwise the purpose of filing the suit would be lost. He relied on Surjit Singh v. Union of India, (1997) 10 SCC 592 , where it is held that when there is an error apparent on the face of the record and when a law is not properly interpreted, the Court should review the judgment; S. Nagaraj v. State of Karnataka, 1993 (5) SLR 1, where it is held that the Court is not precluded from recalling or reviewing its own order if it is satisfied that it is necessary to do so for the sake of justice; C. S. T. v. Pine Chemicals Limited, (1995) SCC 58, where it is held that interpretation of law, inconsistent with the earlier decisions delivered by a coordinate Bench and Larger Bench, amounts to an error apparent on the face of the record and hence can be reviewed; Natesa Naicker v. Sambanda Chettiar, AIR 1941 Madras 918, where it is held that omission to notice correct legal position amounts to an error apparent on the face of the record and in such cases the Court can view its earlier Judgment; Thungabhadra Industries Ltd. v. Govt. of A. P. AIR 1964 SC 1372 , where it is held that Supreme Court s refusal to entertain an application for special leave is not a bar to the High Court to review its Judgment, if there are grounds for such review; Murari Rao v. Balvanth Dikshit, AIR 1924 Madras 98, where it is held that the word error need not necessarily be limited to "errors of fact" and error of law also would come within the meaning of Rule 1 of Order 47 C. P. C. ; Oriental Insurance Co. Ltd. v. Gokul Prasad Maniklal Agarwal, (1999) 7 SCC 578 , where it is held that wrong explanation of a counsel relating to the rule position is a good ground for review and K. L. Nandakumaran Nair v. K. I. Philip, (2001) 8 SCC 537 , where it is held that non-consideration of important documents is a ground for review. He contended that since C. M. P. 21689 of 2001 filed under Rule 27 of Order 41, C. P. C. to receive certain documents as additional evidence was not considered at the time of disposal of the C. M. A. , it resulted in grave injustice to the 1st respondent and so the common order dated 12-12-200 may be reviewed. He contended that since C. M. P. 21689 of 2001 filed under Rule 27 of Order 41, C. P. C. to receive certain documents as additional evidence was not considered at the time of disposal of the C. M. A. , it resulted in grave injustice to the 1st respondent and so the common order dated 12-12-200 may be reviewed. ( 6 ) THE contention of the learned counsel for the appellant is that there are no grounds for review, since all the pleas now raised were considered in the common order and so the remedy, if any, for the 1st respondent is to file an appeal, and that power to review can be exercised only for correction of a mistake but not to substitute a decision already made, as a proceeding for review is not an appeal in disguise. He contended that in cases where there is a possibility of taking two views, the fact that the Court took one such view is not a ground for review, and so this petition for review is not maintainable. He relied on Lily Thomas v. Union of India, 2000 Cri LJ 2433 and Northern India Caterers v. L. T. Governor Delhi, 1980 Tax LR 1657, in support of his contentions. ( 7 ) WE are not able to agree with the contention of the learned counsel for the 1st respondent that non-consideration of C. M. P. No. 21689 of 2001 at the time of disposal of the C. M. A. resulted in either injustice or grave injustice to the 1st respondent. The documents sought to be introduced as additional evidence were the written statement filed by the appellant in the suit, the rejoinder filed by the 1st respondent in the suit and application filed by the 1st respondent to receive the rejoinder and a copy of the plaint in O. S. No. 4 of 2001 filed by the Principal of the 1st respondent against the appellant. Written statement filed by the 1st respondent in the suit is pleading. Rejoinder, if received, would also be pleading within the meaning of Order 6, C. P. C. , Since pleadings form part of the record, they need not be marked and can be taken into consideration even without their being marked. Written statement filed by the 1st respondent in the suit is pleading. Rejoinder, if received, would also be pleading within the meaning of Order 6, C. P. C. , Since pleadings form part of the record, they need not be marked and can be taken into consideration even without their being marked. Therefore, non-marking of the written statement filed by the appellant, the application to receive rejoinder and the rejoinder filed by the 1st respondent in the trial Court cannot be said to have caused any prejudice to the 1st respondent. The other document i. e. , copy of the plaint in O. S. No. 4 of 2001, filed by the Principal of the 1st respondent for a declaration that the agreement, (on the basis of which appellant invoked arbitration) and other allied agreements are null and void has no relevance for deciding I. A. No. 1352 of 2000 because the petition for injunction filed by the 1st petitioner cannot be decided on the basis of the pleadings in another suit. So the non-consideration of plaint in O. S. No. 4 of 2001 cannot be said to have caused any prejudice to the 1st respondent. Therefore, non-passing of an order either allowing or dismissing C. M. P. No. 21689 of 2001 at the time of disposal of the appeal is not and cannot be a ground for seeking review. ( 8 ) THE contention of the learned counsel for the 1st respondent that question of prima facie case, balance of convenience and irreparable injury need be considered only in applications for injunction filed under Rules 1 and 2 of Order 39, C. P. C. , but not in cases where injunction is sought under Section 151, C. P. C. has no force. Issuance of injunctions is governed by Section 37 of the Specific Relief Act, which lays down that injunctions can be either temporary or perpetual, and temporary injunctions are such as to continue until a specified time or until further orders of the Court and can be granted at any stage of a suit and are regulated by C. P. C. and perpetual injunctions can be granted only by decree upon merits of the suit. I. A. No. 1352 of 2000 out of which the C. M. A. arose, was filed for a temporary injunction, which can be granted either under Order 39, Rules 1 and 2, C. P. C. or Section 151, C. P. C. An injunction under Section 151, C. P. C. can be granted only in situations not covered either by Rule 1 or Rule 2 of Order 3, C. P. C. as held by the Supreme Court in Manohar Lal Chopra v. Rai Bahadur Raja Seth Hiralal, AIR 1962 SC 527 and Rajani Bai s case (supra ). Therefore, it goes without saying that principles for granting temporary injunction either under Rules 1 and 2 of Order 39, C. P. C. or under Section 151, C. P. C. are, and should be, the same. We feel it relevant to mention that in I. A. No. 1352 of 2000 1st respondent did not seek injunction under Section 151, C. P. C. but filed that petition under Order 3, Rule 1, C. P. C. only even without quoting Section 151, C. P. C. That fact, by itself, may not be a ground for dismissing the petition for injunction, if 1st respondent is otherwise entitled to the relief of injunction under Section 151, C. P. C. because not quoting the correct provision of law is not a ground to refuse the relief if the party is entitled to such relief under some other provision which is not quoted. It is now admitted by the learned counsel for 1st respondent that Rule 1 of Order 39, C. P. C. does not apply to the facts of this case. So if at all 1st respondent has to seek injunction under Section 151, C. P. C,. If we may say so the contention of the learned counsel for the 1st respondent that prima facie case need not be considered when injunction is sought under Section 151, C. P. C. stands negatived, in a way, by the fourth contention raised before the Supreme Court by the counsel for Renu Sagor in Renu Sagar case (supra) relied on by the learned counsel for 1st respondent by urging that Renu Sagar had made out a prima facie case by raising serious triable issues in the suit and that that fact would enable Renu Sagar to claim injunction restraining arbitration proceedings. The well settled principles for granting a temporary injunction either under Order 39, Rules 1 and 2, C. P. C. or under Section 151, C. P. C. in favour of a party, are (i) prima facie case, (ii) balance of convenience and (iii) irreparable loss. In The Union of India Rep. by the G. M. Telephones, Hyderabad v. Jeetal Jaiswal, 1988 (2) Law Summary 46 (SC) (Which arose under Order 39, Rule 1, C. P. C.) the Supreme Court held that apart from prima facie case, the party seeking injunction has to establish balance of convenience and irreparable injury also. That principle would apply when temporary injunction is to be granted under Section 151, C. P. C. also. Since granting or refusing injunction, which is an equitable relief, is in the judicial discretion of the Court, in appropriate cases i. e. , cases where the person seeking injunction did not come to Court with clean hands, or is guilty of laches and negligence, even if the three ingredients of prima facie case, balance of convenience and irreparable loss are established by him, the Court can refuse to exercise its judicial discretion in his favour, and can refuse to grant an injunction in his favour. ( 9 ) WE feel it relevant to extract Section 45 of the Act, which reads as under :"notwithstanding anything contained in part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed". (Emphasis supplied) it is thus clear what Section mandates is the Court referring the parties to arbitration, when there is a valid agreement between them, and does not speak anything about the Court granting an injunction restraining the arbitration proceedings already initiated before the filing of the suit. Power to issue injunction should not be confused with the power to grant stay under Section 45 of the Act. Power to issue injunction should not be confused with the power to grant stay under Section 45 of the Act. If the contention of the learned counsel for the 1st respondent that when a suit questioning the validity of an arbitration agreement is filed (during the pendency of proceedings for arbitration already commenced by the other party on the basis of such agreement) injunction from proceeding with arbitration should automatically follow were to be accepted, it can lead to anomalous situations. Firstly it means that the Court is not governed by any guidelines for issuing an injunction. Secondly the intendment of the Act would get frustrated. Thirdly a situation may arise when the Court may on a petition filed by the opposite party under Section 45 of the Act, stay the proceedings in the suit. If injunction were to automatically follow at the behest of the party filing the suit, the result would be neither arbitration proceedings would go on because of the injunction, nor can there be a progress in the suit because of the stay granted under Section 45 of the Act. Such position could never have been contemplated by the Legislature, i. e. , Parliament. Therefore, the contention of the learned counsel for 1st respondent that injunction should automatically follow when a suit questioning the validity of the arbitration agreement is filed has no force. ( 10 ) IN Renu Sagar case (supra) and Sunita Conductors case the Supreme Court, no doubt, held that the power to stay proceeding in the suit can be exercised either before or during the pendency of the arbitration proceedings, in a petition filed under Section 3 of 1961 Act, corresponding to Section 45 of the Act. In Renu Sagar case (supra) the Supreme Court was considering the application for injunction filed by Renu Sagar restraining arbitration proceedings and the application filed by G. E. C. for stay of the suit filed by Renu Sagar together, and was considering the issue of stay and injunction together and did not separately consider the issues relating to power of the Court to grant injunction and the power of the Court to grant stay under Section 3 of 1961 Act. I. A. No. 1352 of 2000, out of which the C. M. A. arose, was not filed under Section 45 of the Act. I. A. No. 1352 of 2000, out of which the C. M. A. arose, was not filed under Section 45 of the Act. In fact I. A. No. 1640 of 2000 was filed by the appellant under Section 45 of the Act to stay the suit pending arbitration. By separate orders the learned trial Judge allowed I. A. No. 1352 of 2000 and dismissed I. A. No. 1640 of 2000. So appellant filed C. M. A. and C. R. P. questioning the orders of the trial Court in those two I. As. since both the C. M. A. and C. R. P. were heard together, and since we decided to remit I. A. No. 1640 of 2000 to the trial Court, we did not feel it proper or appropriate to deal with the question relating to the enforceability or otherwise of the agreement between the parties for disposal of the C. M. A. because any finding given by us on that point might cause prejudice to the affected party during the hearing of I. A. No. 1640 of 2000 before the learned trial Judge, and so we are refrained from deciding the question of validity and enforceability of the agreement and confined ourselves to the three ingredients required for granting temporary injunction. ( 11 ) IN view of the above, the point for consideration in the appeal was whether 1st respondent is entitled to the temporary injunction sought for which purpose it has to establish prima facie case, balance of convenience and irreparable loss. We feel it relevant to extract the observations in para 55 of Renu Sagar. "as explained earlier the scheme that emerges on a combined reading of Ss. 3 and 7 of the Foreign Awards Act (1961 Act) clearly contemplates that questions of existence, validity or effect (scope) of the arbitration agreement itself, in cases where such agreement is wide enough to include within its ambit such questions, may be decided by the arbitrators initially but their determination is subject to the decision of the Court and such decision of the Court can be had either before the arbitration proceedings commence or during their pendency, if the matter is decided in a Section 3 petition or can be had under S. 7 after the award is made and filed in the Court and is sought to be enforced by a party thereto. In the face of such scheme envisaged by the Foreign Awards Act which governs this case it will be difficult to accept the contention that the arbitrators will have no jurisdiction to decide questions regarding the existence, validity or effect (scope) of the arbitration agreement. In fact the scheme makes for avoidance of dilatory tactics on the part of any party to such agreement by merely raising a plea of lack of arbitrator s competence - and a frivolous plea at that - and enable the arbitrator to determine the plea one way or the other and if negatived to proceed to make his award with the further safeguard that the Court would be in a position to entertain and decide the same plea finally when the award is sought to be enforced. All that condition (iii) of S. 3 requires is that the legal proceedings must be in respect of a matter "agreed to be referred to the arbitration" and there is no warrant to add further words namely, "agree to be referred to the arbitration for final determination". Obviously if the occasion to decide the question of arbitrator s jurisdiction arises at an earlier stage namely in Section 3 petition the Court has to decide it before granting stay of the legal proceedings and such decision of the court on that question will be conclusive and binding on the arbitrator and the question before him will then become academic. It is thus clear that under the scheme questions of existence, validity or effect (scope) of the arbitration agreement itself, in cases where the arbitration clause embraces within its scope such question, (unless decided by the Court in a Section 3 petition) could be initially determined by the arbitrators, which would be subject to the final decision of the Court. . . . . . . . . . . . . . . . . . . In other words, there is nothing in the general law of arbitration either English or Indian which prevents the arbitrators or an umpire from deciding questions of their own jurisdiction provisionally or tentatively and to proceed to make their awards on that basis, though it is clear that their provisional or tentative decision on questions of their own jurisdiction would be subject to the final determination by the Court and if the Court takes a contrary view their award will not be given effect to and in our view this is exactly the scheme of the Foreign Awards Act. " (Underlining mine) keeping the above observations in view, and also in view of the fact that the C. M. A. arose out of an order granting injunction, by the trial Court which earlier by an order dated 31-10-2000 in I. A. No. 1640 of 2000 directed the parties to approach the agreed forum and raise all the pleas before it and observed that the Tribunal itself can decide the plea relating to its jurisdiction, and in view of the decision of the Supreme Court in M/s. Sundaram Finance Ltd. v. M/s. N. E. P. C. India Ltd. , AIR 1999 SC 565 , we observed, in the common order dated 12-12-2001, that interference by Civil Court (by granting injunction) should be minimal. In the facts and circumstances of the case it was held that the 1st respondent did not establish a prima facie case and that balance of convenience is not in its favour and that it would not suffer any loss much less irreparable loss it injunction is not granted in its favour. ( 12 ) FOR the above reasons the decisions relied on by the learned counsel for the 1st respondent have no application for deciding this review petition and we do not find any error apparent on the face of the record or misconstruction of ruling of any Court. ( 13 ) SO we do not find any grounds for reviewing the common order dated 12-12-2000. The point is answered accordingly. ( 14 ) IN the result, the petition is dismissed with costs. Advocate s fee is fixed at Rs. 1,000/ -. The typographical and other accidental errors in the common orders dated 12-12-2001 pointed out in para 3 above be carried out. Petition dismissed.