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2010 DIGILAW 2287 (PNJ)

Punjab Agro Industries Corporation Limited v. Kewal Singh Dhillon

2010-08-11

PERMOD KOHLI

body2010
Judgment Permod Kohli, J. 1. The petitioner entered into an agreement dated 23.7.1986 (Annexure P-1) for setting up of a Project through a company to be jointly promoted by the parties. It appears that some disputes arose between the parties. The agreement contained an Arbitration Clause 36 for settlement of the disputes between the parties. Clause 36 reads as under: "36. A11 differences anal disputes between the parties hereto on any clause or matter herein contained or their respective rights, claims or liabilities hereunder or otherwise however, in relation to or arising out of this agreement, shall be referred to arbitration by two arbitrators (one to be appointed by each party), who shall before proceeding with the reference, appoint an umpire and such arbitration shall be governed by the Indian Arbitration Act, 1940, or any modification or re-enactment thereof for the time being in force." Since Clause 36 provides for settlement of disputes through the arbitral Tribunal comprising of two Arbitrators, one to be appointed by each party, the petitioner claims to have invoked the said Clause by issuing a notice to respondents appointing one Shri R.T. Jindal, IAS as its Arbitrator and vide another notice dated 19.3.1997, the petitioner called upon the respondent to appoint his Arbitrator in terms of Clause 36. It appears that respondent did not respond. The petitioner accordingly filed application under Section 11 (4) of the Arbitration and Conciliation Act, 1996 (hereinafter called as the Act) in the Court of Civil Judge (Sr. Division), Chandigarh for appointment of the Arbitrators. Civil Judge (Sr. Division), Chandigarh rejected the application of the petitioner vide order dated 16.2.2002 (Annexure P-5). It is this order which is under challenge in the present writ petition. 2. This petition came to be dismissed vide order dated 7.7.2006 passed by a Division Bench of this Court on the preliminary objections raised by the respondents regarding the maintainability of the writ petition. Judgment of the Honble Division Bench was challenged before the Honble Supreme court by the petitioner. Honble Supreme Court vide its order dated 25.8.2008 reported as "Punjab Agro Industries Corporation Limited v. Kewal Singh Dhillon, (2008) 10 SCC 128" set aside the judgment of the Division Bench dated 7.7.2006 holding that the writ petition under Article 226 of the Constitution of India is maintainable and remanded the case back to this Court for disposal, in accordance with law. It is under these circumstances this writ petition came up for consideration. 3. Mr. Amit Jhanji, learned counsel for the respondent has again questioned the maintainability of the writ petition, in view of the Constitution Bench judgment of the Honble Supreme in the case of M/s S.B.P. & Co. v. M/s. Patel Engineering Ltd. & Anr., 2005 (4) RCR (Civil) 747. In the aforesaid judgment, Honble Supreme Court held that order passed under Section 11 (6) by Honble the Chief Justice or his designate is a judicial order and writ is not maintainable. The order becomes appealable before the Honble Apex Court. The objection raised by Mr. Jhanji is to be rejected, in view of the clear and categorical dictum of the judgment in the Punjab Agro Industries Corporation Limited (supra) remanding the case to this Court. The relevant observations of the Honble Supreme Court may be noticed as under :- "9. We have already noticed that though the order under Section 11(4) is a judicial order, having regard to Section 11(7) relating to finality of such orders and the absence of any provision for appeal, the order of the Civil Judge was open to challenge in a writ petition under Article 227 of the Constitution. The decision in SBP does not bar such a writ petition. The observations of this Court in SBP that against an order under Section 11 of the Act, only an appeal under Article 136 of the Constitution would lie, is with reference to the orders made by the Chief Justice of a High Court or by the designate Judge of that High Court. The said observations do not apply to a subordinate Court functioning as designate of the Chief Justice. 10. This Court has repeatedly stressed that Article 136 is not intended to permit direct access to this Court where other equally efficacious remedy is available and the question involved is not of any public importance; and that this Court will not ordinarily exercise its jurisdiction under Article 136, unless the appellant has exhausted all other remedies open to him. Therefore, the contention that the order of the Civil Judge, Senior Division rejecting a petition under Section 11 of the Act could only be challenged, by recourse to Article 136 is untenable. The decision in SBP did not affect the maintainability of the writ petition filed by the appellant before the High Court." 4. Therefore, the contention that the order of the Civil Judge, Senior Division rejecting a petition under Section 11 of the Act could only be challenged, by recourse to Article 136 is untenable. The decision in SBP did not affect the maintainability of the writ petition filed by the appellant before the High Court." 4. Mr. Nehra, learned counsel for the petitioner has vehemently argued that the order passed by the Civil Judge (Sr. Division) rejecting the application is liable to be quashed being without jurisdiction, in view of the Constitution Bench judgment of the Honble Supreme Court in the case of M/s. S.B.P. & Co. (supra) wherein following observations have been made :- "46. 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 judgment of that Court and by the Chief Justice of 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 exercise of his power and on the qualification of the arbitrat or arbitrators. The Chief Justice or the Judge designated 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 Judge designate. (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. (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 abitrator, the High Court would not interfere with orders passed by the arbitrator or the arbiral 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 Article 136 of the Constitution of India to the Supreme Court. (viii) 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 Railway Corp. Ltd. & AnR v. Rani Construction Pvt. Ltd. 2001(1) R.C.R.(Civil) 263 :(2002) 2 SCC 388 (supra) 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 arbiter 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 transfered, to be dealt with by the Chief Justice of the concerned Court or a Judge of that Court, designated by the Chief Justice. (xii) The decision in Konkan Railway Corpn. Ltd. & anr. (xii) The decision in Konkan Railway Corpn. Ltd. & anr. v. Rani Construction Pvt. Ltd., (2002) 2 SCC 388 (supra) is overruled." From the above decision, it has emerged that the power under Section 11(6) to appoint arbitrator could not be delegated to a District Judge or a Subordinate Judge under any Scheme formulated by the Chief Justice. The Chief Justice could only designate a Judge of the High Court to exercise the power under Section 11(6) of the Act. Honble Supreme Court, however, under directions (x) (xi) saved the orders passed for appointment of arbitrators or arbitral tribunal made by the Subordinate Judges under Section 11(6) of the Act. From the careful perusal of the directions, it appears that the Honble Supreme Court has only saved those orders where abitrators/arbitral tribunals were appointed. The object seems to be not to nullify the arbitration proceedings which have commenced on appointment of the arbitrator and in some cases might have concluded in passing of the awards by the arbitral tribunals. In my considered view, under directions (x) and (xi), only the orders appointing the arbitral tribunals/arbitratos have been saved and there is no judicial protection in respect to an order rejecting the application. Such an order would come within the teeth of dictum of judgment of Supreme Court in S.B.P. & Co. (supra). Without going into other contentions of the parties regarding merits and demerits of the impugned order passed by the Civil Judge (Sr. Division), the impugned order dated 16.2.2002 (Annexure P-5) passed by the Civil Judge (Sr. Division), Chandigarh is declared as nullity and without jurisdiction and the same is hereby set aside. As a consequence of the setting aside of the impugned order passed by the Civil Judge, the petitioners application under Section 11(4) of the Act is revived and will be deemed to be pending before the Civil Judge to be transferred in terms of the directions (xi) contained in the judgment passed in the case of M/s S.B.P. & Co. (supra). Disposed of accordingly.