S. B. L. (India) Ltd. v. Ram Chandra Construction & Carriers Pvt. Ltd.
2007-03-13
VINEET KOTHARI
body2007
DigiLaw.ai
JUDGMENT 1. - The first appeal No. 245/95 was originally filed by the applicant S.B.L. (India) Limited under Section 96 of the Act. On an application filed jointly by the parties on 27.5.96 for seeking the dispute to be referred to the sole Arbitrator Hon'ble Justice N.M. Kasliwal, a retired Judge of Hon'ble Supreme Court of India, this court disposed of the first appeal on the same date i.e. 27.5.96 referring the dispute between the parties for arbitration vide order dated 27.5.96. 2. The learned Arbitrator undertook the proceedings in pursuance of the said reference and passed the award on 20.4.98. The appellant S.B.L. (India) Ltd. has approached this court by way of present misc. application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to be as "Act of 1996") for setting aside the Arbitration Award dated 20.4.98 on various grounds. 3. To this, the opposite side has raised an objection as to the maintainability of this application under Section 34 of the Act on the ground that this court is not the 'Court' as defined in Section 2(e) of the Act of 1996. 4. The arguments on this preliminary objection were heard at length. 5. Mr. A.K. Bhandari, learned counsel appearing for the applicant S.B.L. (India) Ltd. drew the attention of this court to provisions of the Arbitration and Conciliation Act, 1996 particularly Sections 8, 34 and 42 of the Act of 1996. The definition of "Court" under Section 2(e) of the Act and Section 42 dealing with the jurisdiction of the court are reproduced hereinbelow for ready reference : "2(e) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes;" 42.
Jurisdiction : Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other court." 6. Canvassing his argument, Mr. Bhandari relying on the following judgments submitted that once an application under Part I of the Act of 1996 was made to this court, Section 42 of the Act will vest this court alone with the jurisdiction to deal with all subsequent applications arising out of that agreement and the arbitral proceedings and no other court will have jurisdiction to deal with such application. According to him, present application under Section 34 of the Act would thus lie before this court only and not before any other court. Reliance was placed by him on Sarkar Enterprises v. Garden Reach Shipbuilders & Engineers Ltd. (2002 (suppl.) Arb. LR 288 (Calcutta) , Damayanti Builders v. Union of India (2003(3) Arb. LR 530 (Delhi)] , Ram Prasad Sharma v. Jharkhand State Housing Board and ors. (2005(2) Arb. LR 547 (Jharkhand)] , Pandey & Co. Builders Pvt. Ltd. v. State of Bihar and anr. (2006(1) Arb. LR 601 (Patna)] and Moulana Asad Madani and ors. v. Abdul Hafiz (2006(4) Arb. LR 146 (Delhi)] . In all these judgments, High Court referred the matter to arbitration while dealing with the case in writ jurisdiction under Art. 226 of the Constitution of India and on the application of t e parties, referred the case to arbitration and when an occasion arose for challenging such award by way of application under Section 34 of the Act, the respective High Courts entertained such application in the High Court. 7. Per contra, Mr. Anil Mehta, learned counsel appearing for the side opposite drew the attention of this court towards the judgment of this Court i.e. Godara Construction Co. v. State of Rajasthan and anr. 2003(4) WLC (Raj.) 703 : (2004(1) Arb. LR 208 (Raj.)] and judgment of Hon'ble Supreme court in P. Anand Gajapathi Raju and ors. v. P.V.G. Raju (Dead) and ors.
Anil Mehta, learned counsel appearing for the side opposite drew the attention of this court towards the judgment of this Court i.e. Godara Construction Co. v. State of Rajasthan and anr. 2003(4) WLC (Raj.) 703 : (2004(1) Arb. LR 208 (Raj.)] and judgment of Hon'ble Supreme court in P. Anand Gajapathi Raju and ors. v. P.V.G. Raju (Dead) and ors. (2000) 4 SCC 539 and he submitted that the application by the parties before this court moved an 27.5.96 is an application for allowing the parties to settle the dispute out of the court and that application at best can be construed as an application under Section 8 of the Act of 1996 and that application is not the application of the nature referred to in Section 42 of the Act so as to vest this court alone to the exclusion of other courts, the further jurisdiction to deal with all subsequent applications arising out of that agreement and the arbitral proceedings. He submitted that para 8 of the Hon'ble Supreme Court Judgment in P. Anand Gajapathi Raju case (supra) clinches the issue and there is no scope for now arguing that such an application under Section 34 of the Act can maintained in this court on the strength of the language of Section 42 of the Act. Ho further relied upon the judgment of this court by Coordinate Bench in Godara Construction Company (supra) wherein this court has clearly laid down that "the Court" to which reference is made under Section 42 of the Act, ought to be a Court as defined in Section 2(e) of the Act. High Court exercising extra ordinary jurisdiction under Art. 226 and 227 of the Constitution does not come within its purview. 8. Having considered the rival submissions of the parties and upon careful reading of the cited cases laws at the bar, this court is of the view that this application under Section 34 of the Act is misconceived and not maintainable before High Court. 9. Section 2(e) of the Act has defined the term "Court" in clear terms and says that principal civil court of original jurisdiction in a district, shall be the court for the purpose of the Act and shall include the High Court only when it exercises its ordinary original civil jurisdiction.
9. Section 2(e) of the Act has defined the term "Court" in clear terms and says that principal civil court of original jurisdiction in a district, shall be the court for the purpose of the Act and shall include the High Court only when it exercises its ordinary original civil jurisdiction. It is not the case of the parties before me that the High Court while exercising the appellate jurisdiction under Section 96 of the CPC, in first appeal in which the said application was filed seeking to refer the case for arbitration High Court was exercising original civil jurisdiction. In the considered opinion of this court, the Hon'ble Supreme Court has put this argument beyond the pale of doubt in para 8 of the aforesaid cited judgment in P. Anand Gajapathi Raju (supra) wherein it has been held that all the rights, obligations and remedies of the parties would now be governed by the new Act, once the matter is referred to the Arbitration, including the right to challenge the award. The court did not rest there but further stated that application under Section 8 of the new Act would not be such an application as contemplated under Section 42 of the Act, as the court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent court within the meaning of Section 2(e) of the Act. This court also in no uncertain terms said in Godara Construction's case that once the matter is referred to arbitration, the provisions of the Arbitration and Conciliation Act, 2006 have to be applied and taken to logical conclusion. 10. The intention of the Act of 1996 is very clear. Not only it seeks to minimise the interference of the courts in arbitration proceedings under that Act, but also the ground of challenge to arbitral award which has the force of decree without being made rule of court as was formerly envisaged under the Act of 1940 but also grounds of appeal have also been curtailed to the bare minimum as stipulated in Section 37 of the Act. 11. If the arguments of Mr.
11. If the arguments of Mr. Bhandari, for the applicant were to be accepted, it would render the appeal against the order of District Court falling within the definition of Court under Section 2(e) of the Act as provided in Section 37 of the Act, nugatory. Therefore, respectively following the aforesaid judgment of Hon'ble Supreme Court in P. Anand Gajapathi Raju (supra) case and judgment of learned Single Judge of this court in Godara Construction case, this court holds that the present application under Section 34 of the Act for setting aside the Arbitration Award cannot be maintained in High Court merely because during the pendency of first appeal under Section 96 CPC the parties applied to this court and matter was referred to arbitration by this court, as High Court while exercising appellate jurisdiction under Section 96 of the CPC cannot be said to be High Court exercising its original civil jurisdiction and therefore is not the court under Section 2(e) of the Act. The application filed before this Court by parties seeking reference cannot be said to be application as envisaged under Section 42 of the Act, as the same cannot be said to be an application in respect of an Arbitration Agreement. The said application even if construed to be an application under Section 8 of the Act, cannot vest the High Court with exclusive jurisdiction in terms of Section 42 of the Act because High Court while exercising its appellate jurisdiction is not the 'Court' as defined under Section 2(e) of the Act. A closer reading of section 42 of the Act also indicates that in order to regulate the proceedings in one court as defined in section 2(e) of the Act, where nature of dispute or cause of action arises in different territorial jurisdictions of different courts, in order to avoid multiplicity or overlapping and to avoid conflict of decision, one of such different courts is vested with exclusive jurisdiction by virtue of section 42 of the Act. But none the less for the purpose of interpreting Section 42, the court should always be 'court' as defined in section 2(e) of the Act. High Court in appellate jurisdiction under Section 96 CPC or under Art. 226 or 227 of the Constitution of India cannot be said to be the court as defined under Section 2(e) of the Act. 12.
High Court in appellate jurisdiction under Section 96 CPC or under Art. 226 or 227 of the Constitution of India cannot be said to be the court as defined under Section 2(e) of the Act. 12. Learned counsel for the applicant in the end also faintly urged that since the application was filed on 27.5.96 prior to coming into force of Arbitration & Conciliation Act, 1996 on 16.8.96, the provisions of the old Arbitration Act, 1940 would apply and not the provisions of the Act of 1996. This argument has no force in view of the fact that the arbitration proceedings were continued and carried out under the Act of 1996 by the learned Arbitrator with the consent of the parties and even the award was passed under the Act of 1996 much after coming into force of Act of 1996 and even admittedly the present application has been moved by the applicant only under Section 34 of the New Act of 1996 only. For all these reasons, this argument is not available to the learned counsel for the appellant, hence it is rejected. 13. The case law relied upon by the learned counsel for the applicant are distinguishable and cannot be applied in view of binding proceedings of this court and Supreme Court of India cited above. 14. The present Misc. application, therefore, deserves to be dismissed and is accordingly dismissed. this would not however come in the way of applicants for applying under Section 34 to the appropriate court even now and they would also be free to seek the condonation of delay in such court in accordance with law. The Misc. application under Section 34 of the Arbitration & Conciliation Act, 1996 is accordingly dismissed as not maintainable. No order as to Costs.Application Dismissed. *******