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Madhya Pradesh High Court · body

2002 DIGILAW 909 (MP)

Mohan Aluminium Orchards Pvt. Ltd. v. M. P. E. B.

2002-10-01

ARUN MISHRA

body2002
Judgment ( 1. ) PETITIONER is assailing the interlocutory order (P-11) passed by the Arbitrators on 17-8-2002 under Section 16 (2) read with Section 16 (4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ). ( 2. ) PETITIONER filed an application (P-8) under Section 16 (2) read with Section 16 (4) of the Act raising the objection to the effect that there is no arbitration agreement in existence, as such the proceedings are not maintainable at the behest of M/s. Klen and Marshal (M and E) Ltd. Another question raised is whether any award can be passed which may be binding on other consortium members. Petitioner submitted that such a plea cannot be precluded merely because arbitrators were appointed or there was participation in the appointment of arbitrator by the parties. The initiation of these proceedings and its continuation is without authority of law and contrary to the contract entered into in pursuance to order dated 29-3-1996. The learned arbitrators have held that they have the jurisdiction as the matter has been decided by this Court in Misc. Appeal No. 232/99; question of jurisdiction was also dealt with in order (P-5) dated 8-3-2001; thereafter much water has flown down in the river Narbada and the Tribunal proceeded to record evidence; one witness was cross-examined and discharged; the other witness was to be examined on affidavit and he was being cross-examined when the presiding arbitrator resigned on an objection raised by the Council for MPEB. Thereafter new presiding arbitrator was appointed and in the meeting dated 13-7-2002, it was agreed that the proceedings from that stage should continue. After lapse of four years, the question of jurisdiction has been raised which apparently with a view to delay the proceedings. The application has been rejected. ( 3. ) SHRI Naman Nagrath, learned Counsel for petitioner submitted that this Court while dealing with Misc. Appeal No. 232/99 has not dealt with the question of jurisdiction of the arbitrators as such the learned arbitrators erred in law in not considering the application filed by the petitioner on merit and have erred in rejecting the same as per order (P-11) which has been impugned in the instant writ petition. This Court as per order (P-5) passed in Misc. Appeal No. 232/99, decided another appeal M. A. No. 2348/99 also. This Court as per order (P-5) passed in Misc. Appeal No. 232/99, decided another appeal M. A. No. 2348/99 also. In appeals, orders passed by the arbitrators dated 30-10-98/4-11-98 were questioned and the quashment was sought of the entire proceedings pending before the arbitrators. ( 4. ) THE petitioner M/s. Mohan Aluminium Ltd. , filed an application that the Tribunal has no jurisdiction to decide the matter as M/s. Mohan Aluminium Ltd. had never agreed to appoint arbitrators and that the arbitrators were not appointed by the firm, petitioner declined to take part in the arbitration proceedings. The Arbitral Tribunal in the meantime passed an order on dated 2-5-98 to the effect that no further payment be made to any one including M/s. Klen and Marshalls towards any dues against the contract of supply of conductors and during the pendency of the arbitration proceedings. Said order passed on 2- 5-98 was modified on 29-6-98. M/s. Mohan Aluminium Pvt. Ltd. preferred Misc. Appeal No. 2348/99; this was the submission raised before this Court that M/s. Klen and Marshalls have no locus standi to file arbitration application and to appoint the arbitrators as they have not supplied even an inch of the said conductors. It was further contended that Arbitral Tribunal has no jurisdiction to issue notices to the members of the consortium as the members of the consortium including M/s. Mohan Aluminium Pvt. Ltd. have not appointed any of the arbitrators. This Court considered the question and held that:- "20. Now I shall proceed to consider the question of giving notices to the members of the consortium by the Arbitral Tribunal. M/s. Klen and Marshalls are the representative of the consortium and therefore whatever is done by M/s Klen and Marshalls shall be deemed to have been done on behalf of the consortium. However, it is also clear that M/s. Klen and Marshalls being representative of the consortium cannot go beyond the authority given to him by the members of the consortium as laid down in the consortium agreement. Undisputedly appointment of arbitrators is founded upon the agreement between the Board and M/s. Klen and Marshalls. The said agreement is no way related to the subsequent agreement dated 20-8-1997 between the Board and M/s. Mohan Aluminium Pvt. Ltd. , which has its own independent existence. Undisputedly appointment of arbitrators is founded upon the agreement between the Board and M/s. Klen and Marshalls. The said agreement is no way related to the subsequent agreement dated 20-8-1997 between the Board and M/s. Mohan Aluminium Pvt. Ltd. , which has its own independent existence. The Arbitral Tribunal therefore could not proceed to consider any dispute between the Board and M/s. Mohan Aluminium Pvt. Ltd. arising out of subsequent agreement between them. A perusal of the consortium agreement however clearly establishes that the commitments made and liabilities incurred M/s. Klen and Marshalls shall be binding on the consortium members. M/s. Klen and Marshalls were authorized to incur liabilities and receive instructions for and on behalf of any of the consortium members and entire execution of the contract, therefore, the act of M/s. Klen and Marshalls shall be binding on the members of the consortium including M/s. Mohan Aluminium Pvt. Ltd. If, however, M/s. Klen and Marshalls acts beyond the power given to them by the consortium members, such acts of the representative shall not be binding on consortium members, since the agreement entered into between M/s. Klen and Marshalls and the Board contains an arbitration clause, M/s. Klen and Marshalls acted within their authority to file an application for appointment of an arbitrator. The decision of the Arbitral Tribunal, therefore, shall be binding on the consortium members including M/s. Mohan Aluminium Pvt. Ltd. to the extent as enumerated in the consortium agreement. 21. It is, thus, clear that the present Arbitral Tribunal has jurisdiction to adjudicate the dispute between the Board and M/s. Klen and Marshalls as representative of the consortium but such arbitral proceedings shall be limited to the agreement entered into between the Board and M/s. Klen and Marshalls as representative of the consortium. However, the present Arbitral Tribunal has no jurisdiction to adjudicate the dispute between the Board and M/s. Mohan Aluminium Pvt. Ltd. regarding fresh agreement dated 20-8-1997. 22. Under the above circumstances, the Arbitral Tribunal may or may not issue notices to consortium members including M/s. Mohan Aluminium Pvt. Ltd. Since M/s. Klen and Marshalls have been working as representative of consortium, therefore, in my considered view the Arbitral Tribunal has rightly decided to issue notices to the members of the consortium. 22. Under the above circumstances, the Arbitral Tribunal may or may not issue notices to consortium members including M/s. Mohan Aluminium Pvt. Ltd. Since M/s. Klen and Marshalls have been working as representative of consortium, therefore, in my considered view the Arbitral Tribunal has rightly decided to issue notices to the members of the consortium. It is unfortunate that M/s Mohan Aluminium Pvt. Ltd. did not think it proper to participate in the arbitral proceedings presumably on the ground that the Arbitral Tribunal has no jurisdiction to adjudicate the dispute regarding the subsequent agreement. 23. It has also been contended by Shri Nagesh, learned Counsel appearing for M/s. Mohan Aluminium Pvt. Ltd. , that the Arbitral Tribunal itself decided that it has jurisdiction to entertain and adjudicate the dispute between the Board and M/s. Klen and Marshalls which according to him is not legally permissible. After giving thoughtful consideration to the above contention of Shri Nagesh, I am of the view that this contention cannot be accepted. Under Section 16 of the Act, the Arbitral Tribunal has powers to rule on its jurisdiction and therefore the Arbitral Tribunal has rightly considered and decided the point of jurisdiction. " ( 5. ) THIS Court has observed that appointment of arbitrators is founded upon the agreement between the Board and M/s. Klen and Marshalls. The said agreement is no way related tot he subsequent agreement dated 20-8-1997 between the Board and M/s. Mohan Aluminium Pvt. Ltd. , which has its own independent existence. This Court has also opined that a perusal of the consortium agreement clearly establishes that the commitments made and liabilities incurred by M/s. Klen and Marshalls shall be binding on the consortium members. M/s. Klen and Marshalls were authorised to incur liabilities and receive instructions for an on behalf of any of the consortium members and entire execution of the contract, therefore, the act of M/s. Klen and Marshalls shall be binding on the members of the consortium including M/s. Mohan Aluminium Pvt. Ltd. If, however, M/s. Klen and Marshalls acts beyond the power given to them by the consortium members, such acts of the representative shall not be binding on consortium members. Since the agreement entered into between M/s. Klen and Marshalls and the Board contains an arbitration clause, M/s. Klen and Marshalls acted within their authority to file an application for appointment of an arbitrator. ( 6. Since the agreement entered into between M/s. Klen and Marshalls and the Board contains an arbitration clause, M/s. Klen and Marshalls acted within their authority to file an application for appointment of an arbitrator. ( 6. ) EXACTLY, these questions have been reagitated by filing application (P-8 ). ( 7. ) I find no infirmity in the interlocutory order passed by the arbitrators. Writ petition is devoid of merit and is dismissed.