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2005 DIGILAW 148 (KER)

The Western India Cottons Ltd. v. The Kerala State Electricity Board

2005-02-22

K.A.ABDUL GAFOOR, K.THANKAPPAN

body2005
Judgment :- Abdul Gafoor, J. The Electricity Board is the appellant. There was an arbitration between the appellant and the respondent. The arbitrator passed an award. This was sought to be converted as a decree by the first respondent. In this proceedings the Electricity Board filed an objection alleging misconduct and lack of jurisdiction of the arbitrator and seeking to set it aside the award. Contentions from either side were considered and a decree was passed, in terms of award. It is under challenge in this appeal. 2. It is contended by the appellant that neither the arbitrator nor the court below appreciated the contention of the appellant that the arbitrator did not have jurisdiction to entertain the claims in terms of Section 76 of the Electricity Supply Act, 1948 which has been duly referred to in clause 26 of Ext.A76(a) agreement. Section 76 of the Act enables arbitration, only if such claims are required to be referred to arbitration. None of the claims comes within the purview of Section 76. So the claims were not arbitrable at all. Having thus entertained the claims beyond the agreement, the arbitrator has acted beyond the agreement and thus misconducted, it is submitted. Several decisions have been cited to elucidate this contention. 3. On the other hand, it is contended by the respondent that this court in the common order CRP.1699/89 and OP.166/88 between the parties had come to a finding that the appellant/Electricity Board is barred from raising such contention. The Board cannot dispute the agreements under Ext.A76 and A76(a). Clause 26 of Ext.76(a) contained the arbitration clause. In the light of this arbitration clause, the claims raised were arbitrable and there was no jurisdictional error or consequent misconduct to invite interference under Section 33 of the Arbitration Act, 1940, it is submitted. 4. Ext.A76 and A76(a) are two agreements entered into between the appellant and the respondent on 1/9/1973 with regard to the supply of power by the appellant to the respondent. It is contended that Ext.A7 is in the statutory form where as Ext.A76(a) was not. That agreement has been entered into by the Assistant Engineer of the concerned section on behalf of the Board. 5. The arbitration clause contained in Ext.A76(a) reads as under. It is contended that Ext.A7 is in the statutory form where as Ext.A76(a) was not. That agreement has been entered into by the Assistant Engineer of the concerned section on behalf of the Board. 5. The arbitration clause contained in Ext.A76(a) reads as under. “Any dispute or difference arising between the consumer and the supplier or his respective electrical engineer as to the supply of electrical energy hereunder of the pressure thereof or as to the rates of supply or as to interpretation of this agreement or the right of the supplier or the consumer respectively to determine the same or any other question, matter or thing arising hereunder shall be referred to arbitration as provided under Section 76 of the Electricity Supply Act, 1948. The arbitrator’s decision thereon shall be final and the provisions of the Arbitration Act of 1940 or any other statutory modification thereof for the time being in force shall apply to any such reference.” The claim was raised alleging that there was shortage of frequency of electrical energy and electrical interruptions contrary to what has been agreed to in Ext.A76 and A76(a). The company raised claims for damages as the Board did not supply power in terms of the agreement. As the appellant Board did not agree for appointment of arbitrators, O.S.3 of 1983 was filed by the respondent. The arbitrators appointed by either side did not agree on the decision. This resulted in appointment of an umpire. Umpire gave his opinion and it is transformed into a decree by the impugned judgment. 6. During the period subsequent to the one covered by O.S.3 of 1983, there was further reference to the arbitrator. In the mean time, the Board filed O.P.78 of 1988 before the Sub Court, Tellicherry seeking to set aside Ext.A76(a) agreement itself. The court dismissed that petition. 6. During the period subsequent to the one covered by O.S.3 of 1983, there was further reference to the arbitrator. In the mean time, the Board filed O.P.78 of 1988 before the Sub Court, Tellicherry seeking to set aside Ext.A76(a) agreement itself. The court dismissed that petition. It is in that situation, CRP.1699/89 was filed before this court, wherein this court came to the finding as follows: “We find that the finding, expressed or implied by the Court in O.S.3 of 1983 that there was in existence a valid arbitration clause in the agreement between the parties and that arbitration clause embraced the claim now made by the company and resisted by the Board would necessarily bar the Board from seeking to raise the contention that there existed no arbitration clause at all in the particular agreement between the parties and that clause did not embrace the claim not put forward by the company” 7. This finding has become final. The parties cannot avoid this finding. Necessarily, the claim raised by the respondent company is one which can be arbitrated as found by this court and clause 26 in Ext.A76(a) duly embraced the claim, now put forward by the company. The Board is debarred from urging any contention to the contrary, in terms of the said judgment in CRP.1699/89, having not filed any appeal there from. 8. The contention now urged is that clause 26 referred to supra provides that the arbitration shall be as envisaged in Section 76 of the Electricity Supply Act, 1948. Section 76 only enables reference of the matters covered by the Act, for arbitration. Claims raised are not interms of any of the provisions of the Act. Therefore, the arbitrator did not have jurisdiction to pass the award. Adequacy of frequency or the interruption of supply of energy are beyond the purview of Section 76. 9. If we accept this contention, necessarily we will be sitting in appeal over the findings contained in the judgments in CRP.1699/89 between the parties. It had been held by this Court that the claim raised by the respondent/company is within the fold of clause 26 in Ext.76(a). The appellant is barred from raising that contention even taking shelter under Section 76, after having obtained an adverse finding in the order in CRP.1699/89. 10. It had been held by this Court that the claim raised by the respondent/company is within the fold of clause 26 in Ext.76(a). The appellant is barred from raising that contention even taking shelter under Section 76, after having obtained an adverse finding in the order in CRP.1699/89. 10. Of course, the counsel for the Board is well justified in contending that jurisdictional aspect will come within the misconduct referred to in Section 30 of the Arbitration Act, 1940. It is trite now. But, there arises no question of jurisdictional error in this case as the claim raised by the company is within the fold of clause 26 of Ext.A76(a) as found by this court in the order CRP.1699/89. In such circumstances, we are unable to see any jurisdictional error so far as the verdict of the umpire which has been transformed into a decree by the court below. Consequently, the appeal shall fail and is dismissed. 11. We will now consider the maintainability of arbitration petition No.1/2004 filed by the company. There was inadequacy of frequency or the interruption in supply of electrical energy, according to them, for the period subsequent to that agitated in O.S.3 of 1983. In terms of Ext.A76 and A76(a) referred to above the parties appointed their nominees as arbitrators. While the arbitration was so pending, O.P.78 of 1988 filed by the Electricity Board to set aside Ext.A76(a) was dismissed and it was challenged in CRP.1688/89. When that C.R.P. came up for hearing, it was disclosed that the arbitration proceedings had come to an end. The Electricity Board at the time of hearing of CRP.1699/89 expressed an opinion that appointment of a retired Supreme Court Judge or a judge of this Court, as arbitrator will meet the ends of justice. Hence, this court in that order, appointed Justice B.M. Thulsidas (retired) as the sole arbitrator in substitution of the arbitrators appointed by the parties and fixed a time limit of six months, for the substituted arbitrator, to give his verdict. That period had been extended by this court on application by the parties. This court at the time of appointment, directed the parties to obtain records from the former arbitrators and to hand it over to the new arbitrator. The new arbitrator has now given his verdict and filed it before this court. That period had been extended by this court on application by the parties. This court at the time of appointment, directed the parties to obtain records from the former arbitrators and to hand it over to the new arbitrator. The new arbitrator has now given his verdict and filed it before this court. Therefore the company filed this petition in terms of Section 17 of Arbitration Act 1940. It is contended that as this court has appointed the arbitrator as per order CRP.1699/89, necessarily, this court can also pass appropriate orders in terms of Section 17. The decisions of the Apex court reported in State of Madhya Pradesh v. M/s. Sath and Skelton (P) Ltd. & Others (1972 SC 1507), M/s. Guru Nanak Foundation v. M/s. Rattan Singh & Sons (AIR 1981 SC 2075) and State of Kerala & Others v. Arya refrigeration and A/c. Co. & Others (2004 (7) SC 546) are relied. The decision of this court reported in Mamman v. Premier Morarji Chemicals Co. Ltd. (1984 KLT 577) is also relied on. 12. It is contended by the Electricity Board that this court does not have any jurisdiction in terms of Section 17 to entertain this petition, as this court is not a Civil Court as defined in Section 2(c) of Arbitration Act. The petition under Section 17 can be entertained only by a Civil Court, which does have the jurisdiction. This court substituted an arbitrator in place of the two appointed by the parties, to continue the self same proceedings and not to initiate any fresh proceedings. Therefore, the petitioner company will not have any added privilege by reason of substitution of the then existing arbitrators, to apply to this court under Section 17. 13. We see that in the decided cases relied on, arbitrator was appointed by the High Court or the Supreme Court as the case may be, in proceedings relating to, or arising from the appointment of arbitrators. On the other hand, in this case, there was no initiation of the proceedings for appointment of arbitrators either by the company or by the board. On the other hand, when a dispute was raised, either party named its nominee as arbitrator and they had commenced their proceedings. If such proceedings had been terminated, necessarily, the parties would have the option to approach the civil court only. On the other hand, when a dispute was raised, either party named its nominee as arbitrator and they had commenced their proceedings. If such proceedings had been terminated, necessarily, the parties would have the option to approach the civil court only. This court as per order CRP.1699/89 only substituted a new arbitrator in place of the arbitrators appointed by the parties, to continue the same proceedings, that too on agreement by the parties. Therefore, what the new arbitrator appointed by this court had to deal with was the arbitration which had proceeded at the instance of the parties. So, on finalization of the proceedings by the arbitrator, follow up has to be taken before the civil court and not before this court. This court cannot therefore entertain an application under Section 17. It shall have to be entertained by the appropriate court having jurisdiction in terms of Section 17. The Petition is accordingly dismissed. The registry shall forward the award as well as the records of Arbitration Petition No.1/2004 to the appropriate civil court, having jurisdiction in the matter.