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Madhya Pradesh High Court · body

2008 DIGILAW 579 (MP)

UNION OF INDIA v. N. J. DEVANI BUILDERS PVT. LTD.

2008-04-11

S.C.SHARMA

body2008
Judgment( 1. ) The petitioners / Union of India and its functionaries have filed the present petition under Article 227 of the Constitution of India and prayed for quashing the orders passed by the VI Additional District Judge, Gwalior dated 10th March, 2004 (Annexure P/l), 21st April, 2004 (Annexure P/2) and 30th April, 2004 (Annexure P/3) in execution case No.31 of 2003. The contention of the petitioners is that a tender was floated in respect of certain work under the control of the Garrison Engineer (Air Force), Maharajpura, Gwalior and the tender of the respondent was accepted. It has been further stated that the respondent was required to complete the work within a period of eighteen months from the date of award of the contract. It has also been alleged that the respondent was unable to complete the work within the time stipulated as per the terms and conditions of the agreement but physically completed the work on 12th October, 1991. It has been further stated that the respondent raised a dispute with regard to the extra claims and as they were not settled, the matter was referred for arbitration. The sole arbitrator appointed in the matter has delivered the award on 21st December, 2000. It has been further stated by the petitioners that the respondent has preferred an application under sections 14 and 17 of the Arbitration Act, 1940 before the civil Court at Ahmedabad, State of Gujarat for making the award as the Rule of the Court. A reply was submitted by the present petitioners before the civil Court at Ahmedabad and it has been stated in the present writ petition that the said miscellaneous civil case is still pending before the civil Court at Ahmedabad. It has also been stated in the writ petition that the respondent, later on, preferred an execution application before the Sixth Additional District Judge, Gwalior under section 36 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) and on 29th October, 2003 notices were issued by the executing Court. A reply was submitted by the Garrison Engineer, petitioner No. 3 and it was stated in the reply that parallel proceedings in respect of the same award cannot be permitted to continue. A reply was submitted by the Garrison Engineer, petitioner No. 3 and it was stated in the reply that parallel proceedings in respect of the same award cannot be permitted to continue. It has been further stated that in spite there being an objection regarding maintainability of the execution proceedings, the learned Sixth Additional District Judge, Gwalior has proceeded ahead in the matter without deciding the objections with regard to maintainability of the execution proceedings vide order dated 10th March, 2004 and issued direction for issuance of warrant of attachment. The petitioners being aggrieved by the orders passed by the executing Court have initially preferred a Miscellaneous Appeal before this Court and the same was registered as M.A. No. 448 of 2004 and an interim order was passed on 14th May, 2004.. However, a Division Bench of this Court vide order dated 29th January, 2007 disposed of the aforesaid miscellaneous appeal granting liberty to the petitioners to file a petition under Article 227 of the Constitution to challenge the interlocutory orders passed by the Sixth Additional District Judge, Gwalior. The petitioners thereafter filed the present petition challenging the orders passed by the Sixth Additional District Judge, Gwalior. in the execution proceedings. ( 2. ) The sole respondent has filed return and in the return, it has been stated by the respondent that the orders impugned dated 10th March, 2004 (Annexure P/l), dated 21 st April, 2004 (Annexure P/2) and dated 30th April, 2004 (Annexure P/3) passed by the learned Sixth Additional District Judge, Gwalior in execution case No.31 of 2003 now pending in the Court of the Second Additional District Judge, Gwalior as case No.55/2005 have been challenged in the year 2007, and therefore, the petition deserves to be dismissed on the ground of delay and laches. It has been further stated by the respondent that the execution proceedings have been initiated under section 36 of the Arbitration and Conciliation Act, 1996 . The stand of the respondent is that the work in question was completed in the year 1990-91 and the petitioners have not made payment to the respondent and as the payment was not being done, the matter was referred for arbitration and the sole arbitrator delivered the award on 21st December, 2000. The stand of the respondent is that the work in question was completed in the year 1990-91 and the petitioners have not made payment to the respondent and as the payment was not being done, the matter was referred for arbitration and the sole arbitrator delivered the award on 21st December, 2000. It has also been stated in the return that an application was preferred by the petitioners under section 34 of the Act of 1996 for setting aside the award passed by the sole arbitrator and the same was dismissed vide order dated 10th September, 2003 by the learned Court, copy whereof has been brought on record as Annexure R/l. It has been further stated in the return that after dismissal of the application preferred by the petitioners under section 34 of the Act, the same has not been challenged by the petitioners before any forum, and therefore, the award has attained finality. ( 3. ) The contention of the respondent is that the agreement was executed and the work was completed at Gwalior, and therefore, the civil Courts at Gwalior have jurisdiction in the matter. It has also been pointed out that the application preferred before the Ahmadabad Civil Court for making the award as the Rule of the Court had been withdrawn, and therefore, it is not a case of parallel proceeding pending before two Courts as averred by the petitioners. The respondent further contended that the order passed by the Sixth Additional District Judge, Gwalior does not suffer from any legal infirmity and prays for dismissal of the petition. ( 4. ) After having heard learned counsel for the parties and on perusal of the record, it is evident that in the present matter, a sole arbitrator was appointed by the petitioners and the arbitrator has delivered the award in question on 21st December 2000. The petitioners being aggrieved by the award passed by the arbitrator have preferred an application under section 34 of the Act of 1996, for setting aside the award but the same was dismissed vide order dated 10th September 2003 (Annexure R/l), and the same has not been challenged by the petitioners till date, therefore, the award has attained finality. The petitioners being aggrieved by the award passed by the arbitrator have preferred an application under section 34 of the Act of 1996, for setting aside the award but the same was dismissed vide order dated 10th September 2003 (Annexure R/l), and the same has not been challenged by the petitioners till date, therefore, the award has attained finality. It is further evident from the material available on record that initially the respondent has preferred an application for making the award Rule of the Court before the Civil Court at Ahmadabad, however, the same has been withdrawn subsequently by the respondent. It is further evident from the material on record that before the civil Court at Ahmadabad, an objection was raised by the petitioners with regard to the jurisdiction and maintainability of the application filed by the respondent for making the award passed by the arbitrator as the Rule of the Court before the civil Court at Ahmadabad on the ground that the construction work has been carried out Maharajpura near Gwalior, State of Madhya Pradesh, therefore the civil Court at Ahmadabad does not have any jurisdiction to entertain any such application. ( 5. ) As the agreement in question was executed, work has been carried out and some payment towards the work carried out by the respondent was made in Gwalior, hence this Court is of the firm opinion that the executing Court at Gwalior has jurisdiction to deal with the application filed by the respondent for execution of the award passed by the arbitrator under the provisions of the Act of 1996. The record further indicated that against the award passed by sole arbitrator, the petitioners have preferred an application under section 34 of the Act of 1996, for setting aside the arbitral award passed by the arbitrator and the same has been rejected by the Sixth Additional District Judge, Gwalior vide order dated 10th September 2003. Thus initially, the petitioners initiated the proceedings for setting aside the award tinder the provisions of the Act of 1996 but have not challenged the order passed in that regard by the competent Court and the same has resulted in attaining finality of the award passed by the sole arbitrator. ( 6. Thus initially, the petitioners initiated the proceedings for setting aside the award tinder the provisions of the Act of 1996 but have not challenged the order passed in that regard by the competent Court and the same has resulted in attaining finality of the award passed by the sole arbitrator. ( 6. ) The respondent has filed an application under the provisions of section 36 of the Act of 1996 for enforcement of the arbitral award dated 21st December, 2000 passed by the sole arbitrator. The section 36 of the Act of 1996 is relevant which reads as under: "Enforcement- Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court." ( 7. ) Thus, this Court is of the opinion that the respondent has preferred an application under section 36 of the Act of 1996 for execution of the award in question in accordance with the provisions of law. ( 8. ) During the course of arguments, it was also argued by the learned Assistant Solicitor General on behalf of the petitioners that the proceedings for arbitration have taken place under the provisions of the Arbitration Act, 1940, and therefore, the provisions of the Act of 1996 are not applicable in the facts and circumstances of the present case. ( 9. ) From a bare perusal of the entire material available on record, it is evident that the sole arbitrator has proceeded to decide the dispute in question under the provisions of the the Act of 1996. Annexure R/4 dated 31st July, 2000 is a written statement filed, under the signature of Shri S N Chatterjee Brig Chief Engineer. The defence on behalf of the Union of India to the statement of the claim made by the respondent (contractor) has been made under the provisions of the Act of 1996 on 20th September 2000 vide Annexure R/5. Again, it has been categorically mentioned that the reply has been filed under the Act of 1996. The defence on behalf of the Union of India to the statement of the claim made by the respondent (contractor) has been made under the provisions of the Act of 1996 on 20th September 2000 vide Annexure R/5. Again, it has been categorically mentioned that the reply has been filed under the Act of 1996. Not only this, the award was challenged under section, 34 of the Act of 1996 by the petitioners before the civil Court at Gwalior, however, the application was dismissed by the learned Court vide order dated 10th September, 2003 (Annexure R/l). Section 34 of the Act of 1996 reads as under: "Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). Section 34 of the Act of 1996 reads as under: "Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- , (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; Or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope, of the submission to arbitration: provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part; or (b) the Court finds that - (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation.- Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy, of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. Explanation.- Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy, of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award Or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), die Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award." ( 10. ) In the backdrop of die aforesaid facts and the provisions of law, the Apex Court in the case of Thyssen Stahlu Union GMBH vs. Steel Authority of India Limited, (1999) 9 SCC 334 as held under : "Section 85(2)(a) of the new Act is in two limbs: (1) provisions of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties, and (2) die new Act shall in relation to arbitral proceedings which commenced on or after the new Act came into force. The first limb can further be bifurcated into two: (a) provisions of die old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force, and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression "in relation to" is of the widest import as held by various decisions of this Court in Doypack Systems (p) Ltd. (1988) 2 SCC 299 , Mansukhlal Dhanraj Jain (1995) 2 SCC 665 , Dhanrajamal Gobindram AIR 1961 SC 1285 and Navin Chimicals Mfg (1993) 4 SCC 320 This expression "in relation to" has to be given full effect to, particularly when read in conjunction with the words "the provisions" of the old Act. That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word "to" could have sufficed and when the legislature has used the expression "in relation to", a proper meaning has to be given. This expression does not admit of restrictive meaning. The first limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of enforcement of the award under that Act." ( 11. ) In the present case, from the aforesaid, it is clear that the petitioners have filed an objection before the arbitrator under the provisions of the Act of 1996. More over, the Union of India and its functionaries have challenged the award passed by the sole arbitrator under section 34 of the Act of 1996, and therefore, the parties by their own conduct have accepted the applicability of the Act of 1996. In view of the above, there remains no manner of doubt that the provisions of the Act of 1996 are applicable in the facts and circumstances of the present case, and therefore, the respondent was justified in filing the application under section 36 of the Act of 1996 for execution of the award in question. ( 12. ) The Apex Court in the case of Delhi Transport Corporation Limited vs. Rose Advertising, (2003) 6 SCC 36 has observed that only conduct of the proceedings can be looked at to ascertain whether the Act of 1940 or the Act of 1996 shall be applicable and it has been held in paragraphs 5 and 7 as under: ".......The conduct of the arbitration proceedings and the participation of the parties therein shows that the parties acted under the 1996. Even the arbitrator proceeded on that understanding and gave his award in pursuance of the 1996 Act. Even the arbitrator proceeded on that understanding and gave his award in pursuance of the 1996 Act. Therefore, the impugned judgment of the High Court appears to be totally unassailable. We are unable to find any ground or reason to differ with the view taken; by the High Court on the main issue. The. question whether time for making an application for setting aside an award can be extended will have to be decided as and when an application for that purpose is made. Then alone the stage for a judicial decision on the point will arise. Therefore, at this stage we need not go into this question, the same is left open to be decided as and when occasion arises......" ( 13. ) In the present case, there was a specific clause in the agreement between the parties, i.e., condition No. 51 which read as under: "Laws governing the contract,- This contract shall be governed by the Indian laws for the time being in force." ( 14. ) In view of the aforesaid conclusion and by their own conduct, the parties have accepted the applicability of the provisions of the Act of 1996 and the execution proceedings have been preferred by the respondent under the provisions of section 36 of the Act of 1996 before the Sixth Additional District Judge, Gwalior which does not warrant any interference in the present proceedings. ( 15. ) Accordingly, this Court is of the firm opinion that the orders impugned in this petition dated 10th March, 2004 (Annexure P/l), dated 21st April. 2004 (Annexure P/2) and dated 30th April, 2004 (Annexure P/3) passed by learned Sixth Additional District Judge, Gwalior does not suffer from any vice or non-application of mind warranting interference in these proceedings under Article 227 of the Constitution. ( 16. ) The writ petition deserves to be and is hereby dismissed. No order as to cost. Petition dismissed