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2009 DIGILAW 827 (GAU)

State of Tripura v. Babul Chandra Bhowmik

2009-11-25

T.NANDAKUMAR SINGH

body2009
JUDGMENT T.N.K. Singh, J. 1. Heard Mr. Somik Deb and Mr. D.C. Nath, learned Counsels appearing for the petitioner as well as Mr. S.M. Chakraborty, learned senior advocate, assisted by Ms. P. Chakraborty, learned Advocate appearing for the respondent. 2. In the present revision petition, the order dated 28.1.2009 passed by the District Judge, West Tripura, Agartala in Misc. (Arb.) No. 10 of 2008, rejecting the application preferred by the present petitioner-State under Section 34 of the Arbitration and Conciliation Act, 1996 has been put to challenge. The following facts are admitted by both the parties: In the year 1996, the NIT of construction of a Block Office at Rupaichari, South Tripura was issued by the Executive Engineer, Southern Division No. 2, and in response to that NIT, the respondent-Shri Babul Chandra Bhowmik submitted his bid and he was found successful. Thereafter, an agreement was executed between the petitioner and the respondent, stipulating 29.7.1997 to be the date for completion of the said work. In the said agreement it was also resolved that the stipulated period of 12 months for completion of the contract work was to be reckoned from the date of commencement of the said work. The said contract work was settled for Rs. 17,87,323/- and work order dated 27.11.1996 was issued in favour of the respondent-Shri Babul Chandra Bhowmik. Under the aforesaid agreement between the parties for the said contract work, it was also stated that, the Chief Engineer, PWD will be the appointing authority of the Arbitrator. On the failure of the Chief Engineer, PWD, who had been agreed by the parties as the authority for appointment of the Arbitrator for the said contract work to appoint the Arbitrator, the respondent had approached the District Judge, West Tripura, Agartala who was the designated authority under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act, 1996)'). 4. It is the submission of both the parties that before the decision of the Apex Court (Seven Judges) on 26.10.2005 in SBP and Co. v. Patel Engineering Ltd. and Anr. (2005) 8 SCC 618 , the Principal Civil Court i.e. the District Judge, West Tripura, Agartala was the designated authority under Section 11(6) of the Act, 1996. The learned District Judge, West Tripura, Agartala, vide his order dated 22.8.2005 appointed the Arbitrator for the said contract work who had made the impugned arbitral award dated 26.4.2008. (2005) 8 SCC 618 , the Principal Civil Court i.e. the District Judge, West Tripura, Agartala was the designated authority under Section 11(6) of the Act, 1996. The learned District Judge, West Tripura, Agartala, vide his order dated 22.8.2005 appointed the Arbitrator for the said contract work who had made the impugned arbitral award dated 26.4.2008. 5. The petitioner, being aggrieved by the impugned arbitral award dated 26.4.2008 filed by the application before the learned District Judge, West Tripura, Agartala under Section 34 of the Act, 1996 for setting aside of the said arbitral award for the reasons and grounds mentioned therein. A preliminary objection was raised by the present respondent as to the territorial jurisdiction of the learned District Judge, West Tripura, Agartala for the reason that the said contract work was executed outside the territorial jurisdiction of the learned District Judge, West Tripura, Agartala. After hearing both the parties, the learned District Judge, West Tripura, Agartala passed the impugned order dated 28.1.2009 by accepting the preliminary objection raised by the present respondent as to the territorial jurisdiction of the learned District Judge, West Tripura, Agartala, and returned the said application under Section 34 of the Act, 1996 to the present petitioner after coming to a finding that the District Judge, West Tripura, Agartala has no territorial jurisdiction to entertain the said application under Section 34 of the Act, 1996, inasmuch as the said arbitral award was in respect of the contract work executed within the territorial jurisdiction of the learned District Judge, South Tripura, Udaipur. Hence, the present revision petition. 6. Mr. Somik Deb, learned Counsel appearing for the petitioner contended that Section 42 of the Act, 1996 provides that any application in respect of the impugned arbitral award has to be made before the Court who appointed the Arbitrator as that Court alone shall have jurisdiction over the arbitral proceeding and all subsequent applications arising out of that agreement. Section 42 of the Act, 1996 reads as follows: 42. Section 42 of the Act, 1996 reads as follows: 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. 7. Admittedly, the District Judge, West Tripura, Agartala who was the competent authority by that time under Section 11(6) of the Act, 1996 to appoint the Arbitrator for the said contract work, appointed the Arbitrator who made the impugned arbitral award dated 26.4.2008. In support of his contention, Mr. Somik Deb, learned Counsel appearing for the petitioner also referred to the decision of the Apex Court (Seven Judges) in SBP and Co.'s case (supra), wherein the Apex Court in a very clear term held that in an arbitration proceedings preceded by the appointment of the Arbitrator under Section 11(6) of the Act, 1996, that Arbitrator appointed under Section 11(6) of the Act, 1991 has no power and jurisdiction to decide the territorial jurisdiction by invoking Section 16 of the Act, 1996. Para Nos. 20, 38 and 47 of the SCC in SBP and Co.'s case (supra) read as follows: 20. Section 16 is said to be the recognition of the principle of Kompetenz-Kompetenz. The fact that the Arbitral Tribunal has the competence to rule on its own jurisdiction and to define the contours of its jurisdiction, only means that when such issues arise before it, the Tribunal can, and possibly, ought to decide them. This can happen when the parties have gone to the Arbitral Tribunal without recourse to Sections 8 or 11 of the Act. But where the jurisdictional issues and decided under these sections, before a reference is made, Section 16 cannot be held to empower the Arbitral Tribunal to ignore the decision given by the judicial authority or the Chief Justice before the reference to it was made. The competence to decide does not enable the Arbitral Tribunal to get the over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it. The competence to decide does not enable the Arbitral Tribunal to get the over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it. That is the position arising out of Section 11(7) of the Act read with Section16 thereof. The finality given to the order of the Chief Justice on the matters within his competence under Section 11 of the Act are incapable of being reopened before the Arbitral Tribunal. In Konkan Rly. Corporation Ltd. v. Rani Construction (P) Ltd. (2002) 2 SCC 388 , what is considered is only the fact that under Section 16, the Arbitral Tribunal has the right to rule on its own jurisdiction and any objection, with respect to the existence or validity of the arbitration agreement. What is the impact of Section 11(7) of the Act on the Arbitral Tribunal constituted by an order under Section 11(6) of the Act, was not considered. Obviously/this was because of the view taken in that decision that the Chief Justice is not expected to decide anything while entertaining a request under Section 11(6)of the Act and is only performing an administrative function in appointing an Arbitral Tribunal. Once it is held that there is an adjudicatory function entrusted to the Chief Justice by the Act, obviously, the right of the Arbitral Tribunal to go behind the order passed by the Chief Justice would take another hue and would be controlled by Section 11(7) of the Act. 38. It is true that finality under Section 11(7) of the Act is attached only to a decision of the Chief Justice on a matter entrusted by Sub-section (4) or Sub-section (5) or sub- section (6) of that section. Sub-section (4) deals with the existence of an appointment procedure and the failure of a party to appoint the arbitrator within 30 days from the receipt of a request to do so from the other party or when the two appointed arbitrators fail to agree on the presiding arbitrator within 30 days of their appointment. Sub-section (4) deals with the existence of an appointment procedure and the failure of a party to appoint the arbitrator within 30 days from the receipt of a request to do so from the other party or when the two appointed arbitrators fail to agree on the presiding arbitrator within 30 days of their appointment. Sub-section (5) deals with the parties falling to agree in nominating a sole arbitrator within 30 days of the request in that behalf made by one of the parties to the arbitration agreement and Sub-section (6) deals with the Chief Justice appointing an arbitrator or an Arbitral Tribunal when the party or the two arbitrators or a person including an institution entrusted with the function, fails to perform the same. The finality, at first blush, could be said to be only on the decision of these matters. But the basic requirement for exercising his power under Section 11(6), is the existence of an arbitration agreement in terms of Section 7 of the Act and the applicant before the Chief Justice being shown to be a party to such an agreement. It would also include the question of the existence of jurisdiction in him to entertain the request and an enquiry whether at lest a part of the cause of action has arisen within the State concerned. Therefore, a decision on jurisdiction and on the existence of the arbitration agreement and of the person making the request being a party to that agreement and the subsistence of an arbitrable dispute require to be decided and the decision of these aspects is a prelude to the Chief Justice considering whether the requirements of Sub-section (4), Sub-section (5) or Sub-section (6) of Section 11 are satisfied when approached with the request for appointment of an arbitrator. It is difficult to understand the finality referred to in Section 11(7) as excluding the decision of his competence and the locus standi of the party which seeks to invoke his jurisdiction to appoint an arbitrator. Viewed from that angles, the decision on all these aspects rendered by the Chief Justice would attain finality and it is obvious that the decision on these aspects could be taken only after notice to the parties and after hearing them. 47. Viewed from that angles, the decision on all these aspects rendered by the Chief Justice would attain finality and it is obvious that the decision on these aspects could be taken only after notice to the parties and after hearing them. 47. We, therefore, sum up our conclusions as follows: (i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power. (ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice or India to another Judge of the Supreme Court. (iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of the Chief Justice as conferred by the statute. (iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge. (v) Designation of a District Judge as the authority under Section 11(6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act. (vi) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would not interfere with the orders passed by the arbitrator or the Arbitral Tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Section 37 of the Act or in terms of Section 34 of the Act. (vii) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that Court is a judicial order, an appeal will lie against that order only under Article136 of the Constitution to the Supreme Court. (vii) There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under Section 11(6) of the Act. (ix) In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act. (x) Since all were guided by the decision of this Court in Konkan Rly. Corporation Ltd. v. Rani Construction (P) Ltd. (2002) 2 SCC 388 , and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11(6) of the Act. (xi) Where District Judges had been designated by the Chief Justice of the High Court under Section 11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the High Court concerned or a Judge of that Court designated by the Chief Justice. (xii) The decision in Konkan Rly. Corporation Ltd. v. Rani Construction (P) Ltd. (2002) 2 SCC 388 , is overruled. 8. The aforesaid submission made by Mr. Somik Deb, learned Counsel appearing for the petitioner regarding the jurisdiction of the learned District Judge, West Tripura, Agartala to entertain the application under Section 34 of the Act, 1996 is not disputed by Mr. S.M. Chakraborty, learned senior counsel appearing for the respondent. 8. The aforesaid submission made by Mr. Somik Deb, learned Counsel appearing for the petitioner regarding the jurisdiction of the learned District Judge, West Tripura, Agartala to entertain the application under Section 34 of the Act, 1996 is not disputed by Mr. S.M. Chakraborty, learned senior counsel appearing for the respondent. The corollary of the judgment is that the learned District Judge, West Tripura, Agartala is the only competent authority in the facts and circumstances of this case to entertain the application under Section 34 of the Act, 1996, inasmuch as, admittedly, the learned District Judge, West Tripura, Agartala is the authority who had appointed the Arbitrator in the present arbitration proceedings. 9. For the reasons discussed above, the impugned order dated 28.1.2009 passed by the learned District Judge, West Tripura, Agartala in Misc. (Arb.) No. 10 of 2008 is hereby set aside. The parties are directed to appear before the learned District Judge, West Tripura, Agartala on 19.12.2009 with the certified copy of this judgment and order for further proceedings by accepting the application under Section 34 of the Act, 1996, which had been returned to the petitioner. 10. With the aforesaid observations and directions, this revision petition is disposed of.